EXHIBIT 10.2
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CREDIT AGREEMENT
THIS AGREEMENT is entered into as of June 1, 1998, by and
between XXXXXXX MANUFACTURING CO., INC., a California corporation
("Borrower"), and XXXXX FARGO BANK, NATIONAL ASSOCIATION
("Bank").
RECITAL
Borrower has requested from Bank the credit accommodation
described below, and Bank has agreed to provide said credit
accommodation to Borrower on the terms and conditions contained
herein.
NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Bank and Borrower
hereby agree as follows:
ARTICLE I
THE CREDIT
SECTION 1.1. TERM COMMITMENT.
(a) Term Commitment. Subject to the terms and conditions
of this Agreement, Bank hereby agrees to make advances to
Borrower from time to time up to and including June 1, 2000, not
to exceed the aggregate principal amount of Nine Million Two
Hundred Dollars ($9,200,000.00) ("Term Commitment"), the
proceeds of which shall be used to finance Borrower's general
corporate purposes, and which shall be converted, at Borrower's
request, on June 1, 2000, to a term loan, as described more fully
below. Borrower's obligation to repay advances under the Term
Commitment shall be evidenced by a promissory note substantially
in the form of Exhibit A attached hereto ("Term Commitment Note"),
all terms of which are incorporated herein by this reference.
(b) Borrowing and Repayment. Borrower may from time to
time during the period in which Bank will make advances under the
Term Commitment borrow and partially or wholly repay its
outstanding borrowings, and reborrow, subject to all the
limitations, terms and conditions contained herein; provided
however, that the total outstanding borrowings under the Term
Commitment shall not exceed the maximum principal amount
available thereunder, as set forth above. The outstanding
principal balance of the Term Commitment shall be due and payable
in full on June 1, 2000; provided however, that so long as
Borrower is in compliance on said date with all terms and
conditions contained herein and in any other documents evidencing
the Term Commitment, Bank agrees, at borrowers request, to
restructure repayment of said outstanding principal balance so
that principal shall be amortized over five (5) years and shall be
repaid in sixty (60) equal monthly installments, as set forth in
the promissory note executed by Borrower on said date to evidence
the new repayment schedule.
(c) Prepayment. Borrower may prepay principal on the Term
Commitment solely in accordance with the provisions of the Term
Commitment Note.
(d) Letter of Credit Subfeature. As a subfeature under the
Term Commitment, Bank agrees from time to time until the Conversion
Date to issue Standby letters of credit for the account of
Borrower to finance Borrower's workers' compensation insurance
requirements (each, a "Letter of Credit" and collectively,
"Letters of Credit"); provided however, that the form and
substance of each Letter of Credit shall be subject to approval
by Bank, in its sole discretion; and provided further, that the
aggregate undrawn amount of all outstanding Letters of Credit
shall not at any time exceed One Million Six Hundred Thousand
Dollars ($1,600,000.00). Each Letter of Credit shall be issued
for a term designated by Borrower; provided however, that no Letter
of Credit shall have an expiration date subsequent to the Conversion
Date. The undrawn amount of all Letters of Credit shall be reserved
under the Line of Credit and shall not be available for
borrowings thereunder. Each Letter of Credit shall be subject to
the additional terms and conditions of the Letter of Credit
Agreement and related documents, if any, required by Bank in
connection with the issuance thereof (each, a "Letter of Credit
Agreement" and collectively, "Letter of Credit Agreements").
Each draft paid by Bank under a Letter of Credit shall be deemed
an advance under the Line of Credit and shall be repaid by
Borrower in accordance with the terms and conditions of this
Agreement applicable to such advances; provided however, that if
advances under the Line of Credit are not available, for any
reason, at the time any draft is paid by Bank, then Borrower
shall immediately pay to Bank the full amount of such draft,
together with interest thereon from the date such amount is paid
by Bank to the date such amount is fully repaid by Borrower, at
the rate of interest applicable to advances under the Line of
Credit. In such event Borrower agrees that Bank, in its sole
discretion, may debit any demand deposit account maintained by
Borrower with Bank for the amount of any such draft.
SECTION 1.2. INTEREST/FEES.
(a) Interest. The outstanding principal balance of the
Term Commitment shall bear interest at the rate of interest set
forth in the Term Commitment Note.
(b) Computation and Payment. Interest shall be computed on
the basis of a 360-day year, actual days elapsed. Interest shall
be payable at the times and place set forth in the Term
Commitment Note.
(c) Unused Commitment Fee. Borrower shall pay to Bank a
fee equal to one-eighth percent (1/8%) per annum (computed on the
basis of a 360-day year, actual days elapsed) on the average
daily unused amount of the Term Commitment, which fee shall be
calculated on a monthly basis by Bank and shall be due and
payable by Borrower in arrears within ten (10) days after each
billing is sent by Bank.
(d) Letter of Credit Fees. Borrower shall pay to Bank
(i) fees upon the issuance of each Letter of Credit equal to
three quarters percent (0.75%) per annum (computed on the basis
of a 360-day year, actual days elapsed) of the face amount thereof,
and (ii) fees upon the payment or negotiation by Bank of each draft
under any Letter of Credit and fees upon the occurrence of any
other activity with respect to any Letter of Credit (including
without limitation, the transfer, amendment or cancellation of
any Letter of Credit) determined in accordance with Bank's
standard fees and charges then in effect for such activity.
SECTION 1.3. COLLECTION OF PAYMENTS. Borrower authorizes
Bank to collect all principal, interest and fees due under the
Term Commitment by charging Borrower's demand deposit account
number 4103-117438 with Bank, or any other demand deposit account
maintained by Borrower with Bank, for the full amount thereof.
Should there be insufficient funds in any such demand deposit
account to pay all such sums when due, the full amount of such
deficiency shall be immediately due and payable by Borrower.
SECTION 1.4. GUARANTIES. All indebtedness of Borrower to
Bank shall be guaranteed by Xxxxxxx Dura Vent Company, Inc.
("SDV") and Xxxxxxx Strong-Tie Company, Inc. ("SST") (each, a
"Guarantor") in the principal amount of Nine Million Two Hundred
Thousand Dollars ($9,200,000.00) each, as evidenced by and subject
to the terms of guaranties in form and substance satisfactory to Bank.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Borrower makes the following representations and warranties
to Bank, which representations and warranties shall survive the
execution of this Agreement and shall continue in full force and
effect until the full and final payment, and satisfaction and
discharge, of all obligations of Borrower to Bank subject to this
Agreement.
SECTION 2.1. LEGAL STATUS. Borrower is a corporation,
duly organized and existing and in good standing under the laws
of the state of California, and is qualified or licensed to do
business (and is in good standing as a foreign corporation, if
applicable) in all jurisdictions in which such qualification or
licensing is required and in which the failure to so qualify or to
be so licensed could have a material adverse effect on Borrower.
SECTION 2.2. AUTHORIZATION AND VALIDITY. This Agreement,
the Term Commitment Note, and each other document, contract and
instrument required hereby or at any time hereafter delivered to
Bank in connection herewith (collectively, the "Loan Documents")
have been duly authorized, and upon their execution and delivery
in accordance with the provisions hereof will constitute legal,
valid and binding agreements and obligations of Borrower or the
party which executes the same, enforceable in accordance with
their respective terms.
SECTION 2.3. NO VIOLATION. The execution, delivery and
performance by Borrower of each of the Loan Documents do not
violate any provision of any law or regulation, or contravene any
provision of the Articles of Incorporation or By-Laws of
Borrower, or result in any breach of or default under any
contract, obligation, indenture or other instrument to which
Borrower is a party or by which Borrower may be bound.
SECTION 2.4. LITIGATION. There are no pending, or to the
best of Borrower's knowledge threatened, actions, claims,
investigations, suits or proceedings by or before any
governmental authority, arbitrator, court or administrative
agency which could have a material adverse effect on the
financial condition or operation of Borrower other than those
disclosed by Borrower to Bank.
SECTION 2.5. FINANCIAL STATEMENT. The financial statement
of Borrower dated December 31, 1997, a true copy of which has been
delivered by Borrower to Bank prior to the date hereof, (a) is
complete and correct in all material respects and presents fairly the
financial condition of Borrower, (b) discloses all liabilities of
Borrower that are required to be reflected or reserved against
under generally accepted accounting principles, and (c) has been
prepared in accordance with generally accepted accounting
principles consistently applied. Since the date of such
financial statement there has been no material adverse change in
the financial condition of Borrower, nor has Borrower mortgaged,
pledged, granted a security interest in or otherwise encumbered
any of its assets or properties except in favor of Bank or as
otherwise permitted by Bank in writing.
SECTION 2.6. INCOME TAX RETURNS. Borrower has no
knowledge of any pending assessments or adjustments of its income
tax payable with respect to any year.
SECTION 2.7. NO SUBORDINATION. There is no agreement,
indenture, contract or instrument to which Borrower is a party or
by which Borrower may be bound that requires the subordination in
right of payment of any of Borrower's obligations subject to this
Agreement to any other obligation of Borrower.
SECTION 2.8. PERMITS, FRANCHISES. Borrower possesses, all
permits, consents, approvals, franchises and licenses required and
rights to all trademarks, trade names, patents, and fictitious names,
if any, necessary to enable it to conduct the business in which it is
now engaged in compliance with applicable law, except those which, if
not possessed, are not reasonably likely to have a material adverse
effect on Borrower's financial condition or operations.
SECTION 2.9. ERISA. Borrower is in compliance in all
material respects with all applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended or recodified
from time to time ("ERISA"); Borrower has not violated any
provision of any defined employee pension benefit plan (as
defined in ERISA) maintained or contributed to by Borrower (each,
a "Plan"); no Reportable Event as defined in ERISA has occurred
and is continuing with respect to any Plan initiated by Borrower;
Borrower has met its minimum funding requirements under ERISA
with respect to each Plan; and each Plan will be able to fulfill
its benefit obligations as they come due in accordance with the
Plan documents and under generally accepted accounting
principles.
SECTION 2.10. OTHER OBLIGATIONS. Borrower is not in
default on any obligation for borrowed money, any purchase money
obligation or any other material lease, commitment, contract,
instrument or obligation.
SECTION 2.11. ENVIRONMENTAL MATTERS. Except as disclosed
by Borrower to Bank in writing prior to the date hereof, Borrower
is in compliance in all material respects with all applicable
federal or state environmental, hazardous waste, health and
safety statutes, and any rules or regulations adopted pursuant
thereto, which govern or affect any of Borrower's operations
and/or properties, including without limitation, the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, the Superfund Amendments and Reauthorization Act of
1986, the Federal Resource Conservation and Recovery Act of 1976,
and the Federal Toxic Substances Control Act, as any of the same
may be amended, modified or supplemented from time to time. None
of the operations of Borrower is the subject of any federal or
state investigation evaluating whether any remedial action
involving a material expenditure is needed to respond to a
release of any toxic or hazardous waste or substance into the
environment. Borrower has no material contingent liability in
connection with any release of any toxic or hazardous waste or
substance into the environment.
ARTICLE III
CONDITIONS
SECTION 3.1. CONDITIONS OF INITIAL EXTENSION OF CREDIT.
The obligation of Bank to extend any credit contemplated by this
Agreement is subject to the fulfillment to Bank's satisfaction of
all of the following conditions:
(a) Approval of Bank Counsel. All legal matters incidental
to the extension of credit by Bank shall be satisfactory to
Bank's counsel.
(b) Documentation. Bank shall have received, in form and
substance satisfactory to Bank, each of the following, duly
executed:
(i) This Agreement and the Notes.
(ii) Corporate Borrowing Resolution.
(iii) Corporate Resolution Authorizing Execution of Guaranty
from SDV and SST.
(iv) Continuing Guaranties from SDV and SST.
(v) Foreign Exchange Agreement.
(vi) Continuing Standby Letter of Credit Agreement.
(vii) Such other documents as Bank may require under any
other Section of this Agreement.
(c) Financial Condition. There shall have been no material
adverse change, as determined by Bank, in the financial condition
or business of Borrower or any guarantor hereunder, nor any
material decline, as determined by Bank, in the market value of
any collateral required hereunder or a substantial or material
portion of the assets of Borrower or any such guarantor.
SECTION 3.2. CONDITIONS OF EACH EXTENSION OF CREDIT. The
obligation of Bank to make each extension of credit requested by
Borrower hereunder shall be subject to the fulfillment to Bank's
satisfaction of each of the following conditions:
(a) Compliance. The representations and warranties
contained herein and in each of the other Loan Documents shall be
true on and as of the date of the signing of this Agreement and
on the date of each extension of credit by Bank pursuant hereto,
with the same effect as though such representations and
warranties had been made on and as of each such date, and on each
such date, no Event of Default as defined herein, and no
condition, event or act which with the giving of notice or the
passage of time or both would constitute such an Event of
Default, shall have occurred and be continuing or shall exist.
(b) Documentation. Bank shall have received all additional
documents which may be required in connection with such extension
of credit.
ARTICLE IV
AFFIRMATIVE COVENANTS
Borrower covenants that so long as Bank remains committed to
extend credit to Borrower pursuant hereto, or any liabilities
(whether direct or contingent, liquidated or unliquidated) of
Borrower to Bank under any of the Loan Documents remain
outstanding, and until payment in full of all obligations of
Borrower subject hereto, Borrower shall, unless Bank otherwise
consents in writing:
SECTION 4.1. PUNCTUAL PAYMENTS. Punctually pay all
principal, interest, fees or other liabilities due under any of
the Loan Documents at the times and place and in the manner
specified therein.
SECTION 4.2. ACCOUNTING RECORDS. Maintain adequate books
and records in accordance with generally accepted accounting
principles consistently applied.
SECTION 4.3. FINANCIAL STATEMENTS. Provide to Bank all of
the following, in form and detail satisfactory to Bank:
(a) not later than 120 days after and as of the end of each
fiscal year, an audited consolidated financial statement of Borrower
accompanied by the unqualified opionion of an independent certified
public accountant and a Borrower prepared consolidating financial
statement of Borrower, SDV and SST, each to include balance sheet,
income statement and statement of cash flow;
(b) not later than 60 days after and as of the end of each
fiscal quarter, a consolidated and consolidating financial
statement of Borrower, SDV and SST, prepared by Borrower, to
include balance sheet and income statement;
(c) from time to time such other information as Bank may
reasonably request.
SECTION 4.4. COMPLIANCE. Preserve and maintain all
licenses, permits, governmental approvals, rights, privileges and
franchises necessary for the conduct of its business; and comply
with the provisions of all documents pursuant to which Borrower
is organized and/or which govern Borrower's continued existence
and with the requirements of all laws, rules, regulations and
orders of any governmental authority applicable to Borrower
and/or its business, except those which, if not preserved,
maintained or complied with, are not reasonably likely to have a
material adverse effect on Borrower's financial condition or
operations.
SECTION 4.5. INSURANCE. Maintain and keep in force
insurance of the types and in amounts customarily carried in
lines of business similar to that of Borrower.
SECTION 4.6. TAXES AND OTHER LIABILITIES. Pay and
discharge when due any and all indebtedness, obligations,
assessments and taxes, both real or personal, including without
limitation federal and state income taxes and state and local
property taxes and assessments, except such (a) as Borrower may
in good faith contest or as to which a bona fide dispute may
arise, and (b) for which Borrower has made provision, to Bank's
satisfaction, for eventual payment thereof in the event Borrower
is obligated to make such payment.
SECTION 4.7. FINANCIAL CONDITION. Maintain Borrower's
financial condition as follows using generally accepted
accounting principles consistently applied and used consistently
with prior practices (except to the extent modified by the
definitions herein):
(a) Tangible Net Worth not at any time less than
$100,000,000.00 plus, in each fiscal year commencing with fiscal
year beginning January 1, 1998, on a cumulative basis, an amount
equal to 50% of net profit after taxes in the immediately
preceding fiscal year, with no deductions for losses, with
"Tangible Net Worth" defined as the aggregate of total
stockholders' equity plus subordinated debt less any intangible
assets.
(b) Total Liabilities divided by Tangible Net Worth not at
any time greater than 1.5 to 1.0, with "Total Liabilities"
defined as the aggregate of current liabilities and non-current
liabilities (inclusive of all contingent liabilities) less
subordinated debt, and with "Tangible Net Worth" as defined
above.
(c) Net income after taxes not less than $1.00 on an annual
basis, determined as of each fiscal year end.
(d) EBITDA Coverage Ratio not less than 1.5 to 1.0 as of
each fiscal year end after the Conversion Date, with "EBITDA"
defined as net profit before tax plus interest expense (net of
capitalized interest expense), depreciation expense and amortization
expense and other non-cash expenses, and with "EBITDA Coverage
Ratio" defined as EBITDA divided by the aggregate of total
interest expense plus the prior period current maturity of long-
term debt and the prior period current maturity of subordinated
debt.
SECTION 4.10. NOTICE TO BANK. Promptly (but in no event
more than five (5) days after the occurrence of each such event
or matter) give written notice to Bank in reasonable detail of:
(a) the occurrence of any Event of Default, or any condition,
event or act which with the giving of notice or the passage of
time or both would constitute an Event of Default; (b) any change
in the name or legal structure of Borrower; or (c) the
occurrence and nature of any material Reportable Event or
Prohibited Transaction, each as defined in ERISA, or any funding
deficiency with respect to any Plan.
SECTION 4.11. YEAR 2000 COMPLIANCE. Perform all acts
reasonably necessary to ensure that (a) Borrower and any business
in which Borrower holds a substantial interest, and (b) all
customers, suppliers and vendors that are material to Borrower's
business, become Year 2000 Compliant in a timely manner. As used
herein, "Year 2000 Compliant" shall mean, in regard to any
entity, that all software, hardware, firmware, equipment, goods
or systems material to the business operations or financial
condition of such entity, will properly perform date sensitive
functions before, during and after the year 2000. Borrower
shall, immediately upon request, provide to Bank such
certifications or other evidence of Borrower's compliance with
the terms hereof as Bank may from time to time require.
ARTICLE V
NEGATIVE COVENANTS
Borrower further covenants that so long as Bank remains
committed to extend credit to Borrower pursuant hereto, or any
liabilities (whether direct or contingent, liquidated or
unliquidated) of Borrower to Bank under any of the Loan Documents
remain outstanding, and until payment in full of all obligations
of Borrower subject hereto, Borrower will not without Bank's
prior written consent:
SECTION 5.1. USE OF FUNDS. Use any of the proceeds of any
credit extended hereunder except for the purposes stated in
Article I hereof.
SECTION 5.2. OTHER INDEBTEDNESS. Create, incur, assume or
permit to exist any indebtedness or liabilities resulting from
borrowings, loans or advances, whether secured or unsecured,
matured or unmatured, liquidated or unliquidated, joint or
several, except (a) the liabilities of Borrower to Bank, (b) any
other liabilities of Borrower existing as of, and disclosed to
Bank prior to, the date hereof, (including liabilities incurred
after the date hereof under commitments in favor of Borrower in
existence as of, and disclosed to Bank prior to, the date hereof)
(c) unsecured liabilities incurred after the date hereof in an
aggregate amount, in addition to the liabilities described in
clause (b), not to exceed $10,000,000.00, and (c) liabilities
incurred to purchase or refinance real estate, not to exceed the
lessor of (i) 100% of purchase price or (ii) appraised value.
SECTION 5.5. MERGER, CONSOLIDATION, TRANSFER OF ASSETS.
Merge into or consolidate with any other entity; make any
substantial change in the nature of Borrower's business as
conducted as of the date hereof; acquire all or substantially all
of the assets of any other entity; except acquisitions with an
aggregate consideration not to exceed $20,000,000.00 per fiscal
year, on a consolidated basis with SHI, SDV and SST; nor sell,
lease, transfer or otherwise dispose of all or a substantial or
material portion of Borrower's assets except in the ordinary
course of its business.
SECTION 5.6. GUARANTIES. Guarantee or become liable in
any way as surety, endorser (other than as endorser of negotiable
instruments for deposit or collection in the ordinary course of
business), accommodation endorser or otherwise for, nor pledge or
hypothecate any assets of Borrower as security for, any
liabilities or obligations of any other person or entity in an
aggregate amount at any time in excess of $25,000,000.00, except
any of the foregoing in favor of Bank in favor of Union Bank of
California.
SECTION 5.9. PLEDGE OF ASSETS. Mortgage, pledge, grant or
permit to exist a security interest in, or lien upon, all or any
portion of Borrower's assets now owned or hereafter acquired,
except any of the foregoing in favor of Bank or which is existing
as of, and disclosed to Bank in writing prior to, the date
hereof and except for liens in real estate granted to secure
liabilities permitted in Section 5.2 (c).
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.1. The occurrence of any of the following shall
constitute an "Event of Default" under this Agreement:
(a) Borrower shall fail to pay when due any principal,
interest, fees or other amounts payable under any of the Loan
Documents.
(b) Any financial statement or certificate furnished to
Bank in connection with, or any representation or warranty made
by Borrower or any other party under this Agreement or any other
Loan Document shall prove to be incorrect, false or misleading in
any material respect when furnished or made.
(c) Any default in the performance of or compliance with
any obligation, agreement or other provision contained herein or
in any other Loan Document (other than those referred to in
subsections (a) and (b) above), and with respect to any such
default which by its nature can be cured, such default shall
continue for a period of twenty (20) days from its occurrence.
(d) Any default in the payment or performance of any
obligation, or any defined event of default, under the terms of
any contract or instrument (other than any of the Loan Documents)
pursuant to which Borrower or any guarantor hereunder has
incurred any debt or other liability to any person or entity,
including Bank.
(e) The filing of a notice of judgment lien against
Borrower or any guarantor hereunder; or the recording of any
abstract of judgment against Borrower or any guarantor hereunder
in any county in which Borrower or such guarantor has an interest
in real property; or the service of a notice of levy and/or of a
writ of attachment or execution, or other like process, against
the assets of Borrower or any guarantor hereunder; or the entry
of a judgment against Borrower or any guarantor hereunder; and
with respect to any of the foregoing, the amount in dispute
exceeds $5,000,000.00.
(f) Borrower or any guarantor hereunder shall become
insolvent, or shall suffer or consent to or apply for the
appointment of a receiver, trustee, custodian or liquidator of
itself or any of its property, or shall generally fail to pay its
debts as they become due, or shall make a general assignment for
the benefit of creditors; Borrower or any guarantor hereunder
shall file a voluntary petition in bankruptcy, or seeking
reorganization, in order to effect a plan or other arrangement
with creditors or any other relief under the Bankruptcy Reform
Act, Title 11 of the United States Code, as amended or recodified
from time to time ("Bankruptcy Code"), or under any state or
federal law granting relief to debtors, whether now or hereafter
in effect; or any involuntary petition or proceeding pursuant to
the Bankruptcy Code or any other applicable state or federal law
relating to bankruptcy, reorganization or other relief for
debtors is filed or commenced against Borrower or any guarantor
hereunder (and such involuntary proceeding is not vacated or
dismissed within 60 days after its occurrence, provided that Bank
shall not be required to make advances during such period), or
Borrower or any such guarantor shall file an answer admitting the
jurisdiction of the court and the material allegations of any
involuntary petition; or Borrower or any such guarantor shall be
adjudicated a bankrupt, or an order for relief shall be entered
against Borrower or any such guarantor by any court of competent
jurisdiction under the Bankruptcy Code or any other applicable
state or federal law relating to bankruptcy, reorganization or
other relief for debtors.
(g) There shall exist or occur any event or condition which
Bank in good faith believes impairs, or is substantially likely
to impair, the prospect of payment or performance by Borrower of
its obligations under any of the Loan Documents.
(h) The dissolution or liquidation of Borrower or any
guarantor hereunder; or Borrower or any such guarantor shall take
action seeking to effect the dissolution or liquidation of
Borrower or such guarantor.
SECTION 6.2. REMEDIES. Upon the occurrence of any Event
of Default: (a) all indebtedness of Borrower under each of the
Loan Documents, any term thereof to the contrary notwithstanding,
shall at Bank's option and without notice become immediately due
and payable without presentment, demand, protest or notice of
dishonor, all of which are hereby expressly waived by each
Borrower; (b) the obligation, if any, of Bank to extend any
further credit under any of the Loan Documents shall immediately
cease and terminate; and (c) Bank shall have all rights, powers
and remedies available under each of the Loan Documents, or
accorded by law, including without limitation the right to resort
to any or all security for any credit accommodation from Bank
subject hereto and to exercise any or all of the rights of a
beneficiary or secured party pursuant to applicable law. All
rights, powers and remedies of Bank may be exercised at any time
by Bank and from time to time after the occurrence of an Event of
Default, are cumulative and not exclusive, and shall be in
addition to any other rights, powers or remedies provided by law
or equity.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1. NO WAIVER. No delay, failure or
discontinuance of Bank in exercising any right, power or remedy
under any of the Loan Documents shall affect or operate as a
waiver of such right, power or remedy; nor shall any single or
partial exercise of any such right, power or remedy preclude,
waive or otherwise affect any other or further exercise thereof
or the exercise of any other right, power or remedy. Any waiver,
permit, consent or approval of any kind by Bank of any breach of
or default under any of the Loan Documents must be in writing and
shall be effective only to the extent set forth in such writing.
SECTION 7.2. NOTICES. All notices, requests and demands
which any party is required or may desire to give to any other
party under any provision of this Agreement must be in writing
delivered to each party at the following address:
BORROWER: XXXXXXX MANUFACTURING CO., INC.
0000 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000-0000
BANK: XXXXX FARGO BANK, NATIONAL ASSOCIATION
Mt. Diablo RCBO
0000 Xxxxxx Xxxx Xxxx, Xxxxx 000
Xxxxxxx, XX 00000
or to such other address as any party may designate by written
notice to all other parties. Each such notice, request and
demand shall be deemed given or made as follows: (a) if sent by
hand delivery, upon delivery; (b) if sent by mail, upon the
earlier of the date of receipt or three (3) days after deposit in
the U.S. mail, first class and postage prepaid; and (c) if sent
by telecopy, upon receipt.
SECTION 7.3. COSTS, EXPENSES AND ATTORNEYS' FEES.
Borrower shall pay to Bank immediately upon demand the full
amount of all payments, advances, charges, costs and expenses,
including reasonable attorneys' fees (to include outside counsel
fees and all allocated costs of Bank's in-house counsel),
expended or incurred by Bank in connection with (a) the
enforcement of Bank's rights and/or the collection of any amounts
which become due to Bank under any of the Loan Documents, and
(b) the prosecution or defense of any action in any way related
to any of the Loan Documents, including without limitation, any
action for declaratory relief, whether incurred at the trial or
appellate level, in an arbitration proceeding or otherwise, and
including any of the foregoing incurred in connection with any
bankruptcy proceeding (including without limitation, any
adversary proceeding, contested matter or motion brought by Bank
or any other person) relating to any Borrower or any affiliated
person or entity.
SECTION 7.4. SUCCESSORS, ASSIGNMENT. This Agreement shall
be binding upon and inure to the benefit of the heirs, executors,
administrators, legal representatives, successors and assigns of
the parties; provided however, that Borrower may not assign or
transfer its interest hereunder without Bank's prior written
consent. Bank reserves the right to sell, assign, transfer,
negotiate or grant participations in all or any part of, or any
interest in, Bank's rights and benefits under each of the Loan
Documents. In connection therewith, Bank may disclose all
documents and information which Bank now has or may hereafter
acquire relating to any credit extended by Bank to Borrower,
Borrower or its business, any guarantor hereunder or the business
of such guarantor, or any collateral required hereunder.
SECTION 7.5. ENTIRE AGREEMENT; AMENDMENT. This Agreement
and the other Loan Documents constitute the entire agreement
between Borrower and Bank with respect to any extension of credit
by Bank subject hereto and supersede all prior negotiations,
communications, discussions and correspondence concerning the
subject matter hereof. This Agreement may be amended or modified
only in writing signed by each party hereto.
SECTION 7.6. NO THIRD PARTY BENEFICIARIES. This Agreement
is made and entered into for the sole protection and benefit of
the parties hereto and their respective permitted successors and
assigns, and no other person or entity shall be a third party
beneficiary of, or have any direct or indirect cause of action or
claim in connection with, this Agreement or any other of the Loan
Documents to which it is not a party.
SECTION 7.7. TIME. Time is of the essence of each and
every provision of this Agreement and each other of the Loan
Documents.
SECTION 7.8. SEVERABILITY OF PROVISIONS. If any provision
of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity without invalidating the
remainder of such provision or any remaining provisions of this
Agreement.
SECTION 7.9. COUNTERPARTS. This Agreement may be executed
in any number of counterparts, each of which when executed and
delivered shall be deemed to be an original, and all of which
when taken together shall constitute one and the same Agreement.
SECTION 7.10. GOVERNING LAW. This Agreement shall be
governed by and construed in accordance with the laws of the
State of California.
SECTION 7.11. ARBITRATION.
(a) Arbitration. Upon the demand of any party, any Dispute
shall be resolved by binding arbitration (except as set forth in
(e) below) in accordance with the terms of this Agreement. A
"Dispute" shall mean any action, dispute, claim or controversy of
any kind, whether in contract or tort, statutory or common law,
legal or equitable, now existing or hereafter arising under or in
connection with, or in any way pertaining to, any of the Loan
Documents, or any past, present or future extensions of credit
and other activities, transactions or obligations of any kind
related directly or indirectly to any of the Loan Documents,
including without limitation, any of the foregoing arising in
connection with the exercise of any self-help, ancillary or other
remedies pursuant to any of the Loan Documents. Any party may by
summary proceedings bring an action in court to compel
arbitration of a Dispute. Any party who fails or refuses to
submit to arbitration following a lawful demand by any other
party shall bear all costs and expenses incurred by such other
party in compelling arbitration of any Dispute.
(b) Governing Rules. Arbitration proceedings shall be
administered by the American Arbitration Association ("AAA") or
such other administrator as the parties shall mutually agree upon
in accordance with the AAA Commercial Arbitration Rules. All
Disputes submitted to arbitration shall be resolved in accordance
with the Federal Arbitration Act (Title 9 of the United States
Code), notwithstanding any conflicting choice of law provision in
any of the Loan Documents. The arbitration shall be conducted at
a location in California selected by the AAA or other
administrator. If there is any inconsistency between the terms
hereof and any such rules, the terms and procedures set forth
herein shall control. All statutes of limitation applicable to
any Dispute shall apply to any arbitration proceeding. All
discovery activities shall be expressly limited to matters
directly relevant to the Dispute being arbitrated. Judgment upon
any award rendered in an arbitration may be entered in any court
having jurisdiction; provided however, that nothing contained
herein shall be deemed to be a waiver by any party that is a bank
of the protections afforded to it under 12 U.S.C. Section 91 or any
similar applicable state law.
(c) No Waiver; Provisional Remedies, Self-Help and
Foreclosure. No provision hereof shall limit the right of any
party to exercise self-help remedies such as setoff, foreclosure
against or sale of any real or personal property collateral or
security, or to obtain provisional or ancillary remedies,
including without limitation injunctive relief, sequestration,
attachment, garnishment or the appointment of a receiver, from a
court of competent jurisdiction before, after or during the
pendency of any arbitration or other proceeding. The exercise of
any such remedy shall not waive the right of any party to compel
arbitration or reference hereunder.
(d) Arbitrator Qualifications and Powers; Awards.
Arbitrators must be active members of the California State Bar or
retired judges of the state or federal judiciary of California,
with expertise in the substantive laws applicable to the subject
matter of the Dispute. Arbitrators are empowered to resolve
Disputes by summary rulings in response to motions filed prior to
the final arbitration hearing. Arbitrators (i) shall resolve all
Disputes in accordance with the substantive law of the state of
California, (ii) may grant any remedy or relief that a court of
the state of California could order or grant within the scope
hereof and such ancillary relief as is necessary to make
effective any award, and (iii) shall have the power to award
recovery of all costs and fees, to impose sanctions and to take
such other actions as they deem necessary to the same extent a
judge could pursuant to the Federal Rules of Civil Procedure, the
California Rules of Civil Procedure or other applicable law. Any
Dispute in which the amount in controversy is $5,000,000 or less
shall be decided by a single arbitrator who shall not render an
award of greater than $5,000,000 (including damages, costs, fees
and expenses). By submission to a single arbitrator, each party
expressly waives any right or claim to recover more than
$5,000,000. Any Dispute in which the amount in controversy
exceeds $5,000,000 shall be decided by majority vote of a panel
of three arbitrators; provided however, that all three
arbitrators must actively participate in all hearings and
deliberations.
(e) Judicial Review. Notwithstanding anything herein to
the contrary, in any arbitration in which the amount in
controversy exceeds $25,000,000, the arbitrators shall be
required to make specific, written findings of fact and
conclusions of law. In such arbitrations (i) the arbitrators
shall not have the power to make any award which is not supported
by substantial evidence or which is based on legal error, (ii) an
award shall not be binding upon the parties unless the findings
of fact are supported by substantial evidence and the conclusions
of law are not erroneous under the substantive law of the state
of California, and (iii) the parties shall have in addition to
the grounds referred to in the Federal Arbitration Act for
vacating, modifying or correcting an award the right to judicial
review of (A) whether the findings of fact rendered by the
arbitrators are supported by substantial evidence, and (B)
whether the conclusions of law are erroneous under the
substantive law of the state of California. Judgment confirming
an award in such a proceeding may be entered only if a court
determines the award is supported by substantial evidence and not
based on legal error under the substantive law of the state of
California.
(f) Real Property Collateral; Judicial Reference.
Notwithstanding anything herein to the contrary, no Dispute shall
be submitted to arbitration if the Dispute concerns indebtedness
secured directly or indirectly, in whole or in part, by any real
property unless (i) the holder of the mortgage, lien or security
interest specifically elects in writing to proceed with the
arbitration, or (ii) all parties to the arbitration waive any
rights or benefits that might accrue to them by virtue of the
single action rule statute of California, thereby agreeing that
all indebtedness and obligations of the parties, and all
mortgages, liens and security interests securing such
indebtedness and obligations, shall remain fully valid and
enforceable. If any such Dispute is not submitted to
arbitration, the Dispute shall be referred to a referee in
accordance with California Code of Civil Procedure Section 638 et
seq., and this general reference agreement is intended to be
specifically enforceable in accordance with said Section 638. A
referee with the qualifications required herein for arbitrators
shall be selected pursuant to the AAA's selection procedures.
Judgment upon the decision rendered by a referee shall be entered
in the court in which such proceeding was commenced in accordance
with California Code of Civil Procedure Sections 644 and 645.
(g) Miscellaneous. To the maximum extent practicable, the
AAA, the arbitrators and the parties shall take all action
required to conclude any arbitration proceeding within 180 days
of the filing of the Dispute with the AAA. No arbitrator or
other party to an arbitration proceeding may disclose the
existence, content or results thereof, except for disclosures of
information by a party required in the ordinary course of its
business, by applicable law or regulation, or to the extent
necessary to exercise any judicial review rights set forth
herein. If more than one agreement for arbitration by or between
the parties potentially applies to a Dispute, the arbitration
provision most directly related to the Loan Documents or the
subject matter of the Dispute shall control. This arbitration
provision shall survive termination, amendment or expiration of
any of the Loan Documents or any relationship between the
parties.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day and year first written
above.
XXXXX FARGO BANK,
XXXXXXX MANUFACTURING CO., INC. NATIONAL ASSOCIATION
By: /s/Xxxxx Xxxxxx By: /s/Xxxxx Xxxxxxxx
--------------------------- ----------------------------
for Xxxxx Xxxxxxxx
Vice President
Title: Sec., Treas., & C.F.O.
------------------------
By: /s/Xxxxxx X Xxxxxxxxx
---------------------------
Title: C.E.O.
------------------------
TERM COMMITMENT NOTE
$9,200,000.00 Concord, California
June 1, 1998
FOR VALUE RECEIVED, the undersigned XXXXXXX MANUFACTURING
CO., INC. ("Borrower") promises to pay to the order of XXXXX
FARGO BANK, NATIONAL ASSOCIATION ("Bank") at its office at Mt.
Diablo RCBO, 0000 Xxxxxx Xxxx Xxxx, Xxxxx 000, Xxxxxxx,
Xxxxxxxxxx, or at such other place as the holder hereof may
designate, in lawful money of the United States of America and in
immediately available funds, the principal sum of Nine Million
Two Hundred Thousand Dollars ($9,200,000.00), or so much thereof
as may be advanced and be outstanding, with interest thereon, to
be computed on each advance from the date of its disbursement as
set forth herein.
DEFINITIONS:
As used herein, the following terms shall have the meanings
set forth after each, and any other term defined in this Note
shall have the meaning set forth at the place defined:
(a) "Business Day" means any day except a Saturday, Sunday
or any other day on which commercial banks in California are
authorized or required by law to close.
(b) "Fixed Rate Term" means a period commencing on a
Business Day and continuing for one (1), two (2), three (3) or
six (6) months, as designated by Borrower, during which all or a
portion of the outstanding principal balance of this Note bears
interest determined in relation to LIBOR; provided however, that
no Fixed Rate Term may be selected for a principal amount less
than Five Hundred Thousand Dollars ($500,000.00); and provided
further, that no Fixed Rate Term shall extend beyond the
scheduled maturity date hereof. If any Fixed Rate Term would end
on a day which is not a Business Day, then such Fixed Rate Term
shall be extended to the next succeeding Business Day.
(c) "LIBOR" means the rate per annum (rounded upward, if
necessary, to the nearest whole 1/8 of 1%) and determined
pursuant to the following formula:
LIBOR = Base LIBOR
-------------------------------
100% - LIBOR Reserve Percentage
(i) "Base LIBOR" means the rate per annum for United States
dollar deposits quoted by Bank as the Inter-Bank Market Offered
Rate, with the understanding that such rate is quoted by Bank for
the purpose of calculating effective rates of interest for loans
making reference thereto, on the first day of a Fixed Rate Term
for delivery of funds on said date for a period of time
approximately equal to the number of days in such Fixed Rate Term
and in an amount approximately equal to the principal amount to
which such Fixed Rate Term applies. Borrower understands and
agrees that Bank may base its quotation of the Inter-Bank Market
Offered Rate upon such offers or other market indicators of the
Inter-Bank Market as Bank in its discretion deems appropriate
including, but not limited to, the rate offered for U.S. dollar
deposits on the London Inter-Bank Market.
(ii) "LIBOR Reserve Percentage" means the reserve percentage
prescribed by the Board of Governors of the Federal Reserve
System (or any successor) for "Eurocurrency Liabilities" (as
defined in Regulation D of the Federal Reserve Board, as
amended), adjusted by Bank for expected changes in such reserve
percentage during the applicable Fixed Rate Term.
(d) "Prime Rate" means at any time the rate of interest
most recently announced within Bank at its principal office as
its Prime Rate, with the understanding that the Prime Rate is one
of Bank's base rates and serves as the basis upon which effective
rates of interest are calculated for those loans making reference
thereto, and is evidenced by the recording thereof after its
announcement in such internal publication or publications as Bank
may designate.
INTEREST:
(a) Interest. The outstanding principal balance of this
Note shall bear interest (computed on the basis of a 360-day
year, actual days elapsed) either (i) at a fluctuating rate per
annum one-half percent (.50%) below the Prime Rate in effect from
time to time, or (ii) at a fixed rate per annum determined by
Bank to be three-quarters percent (.75%) above LIBOR in effect on
the first day of the applicable Fixed Rate Term. When interest
is determined in relation to the Prime Rate, each change in the
rate of interest hereunder shall become effective on the date
each Prime Rate change is announced within Bank. With respect to
each LIBOR selection hereunder, Bank is hereby authorized to note
the date, principal amount, interest rate and Fixed Rate Term
applicable thereto and any payments made thereon on Bank's books
and records (either manually or by electronic entry) and/or on
any schedule attached to this Note, which notations shall be
prima facie evidence of the accuracy of the information noted.
(b) Selection of Interest Rate Options. At any time any
portion of this Note bears interest determined in relation to
LIBOR, it may be continued by Borrower at the end the Fixed Rate
Term applicable thereto so that all or a portion thereof bears
interest determined in relation to the Prime Rate or to LIBOR for
a new Fixed Rate Term designated by Borrower. At any time any
portion of this Note bears interest determined in relation to the
Prime Rate, Borrower may convert all or a portion thereof so that
it bears interest determined in relation to LIBOR for a Fixed
Rate Term designated by Borrower. At such time as Borrower
requests an advance hereunder or wishes to select a LIBOR option
for all or a portion of the outstanding principal balance hereof,
and at the end of each Fixed Rate Term, Borrower shall give Bank
notice specifying: (i) the interest rate option selected by
Borrower; (ii) the principal amount subject thereto; and (iii)
for each LIBOR selection, the length of the applicable Fixed Rate
Term. Any such notice may be given by telephone so long as, with
respect to each LIBOR selection, (A) Bank receives written
confirmation from Borrower not later than three (3) Business Days
after such telephone notice is given, and (B) such notice is
given to Bank prior to 10:00 a.m., California time, on the first
day of the Fixed Rate Term. For each LIBOR option requested
hereunder, Bank will quote the applicable fixed rate to Borrower
at approximately 10:00 a.m., California time, on the first day of
the Fixed Rate Term. If Borrower does not immediately accept the
rate quoted by Bank, any subsequent acceptance by Borrower shall
be subject to a redetermination by Bank of the applicable fixed
rate; provided however, that if Borrower fails to accept any such
rate by 11:00 a.m., California time, on the Business Day such
quotation is given, then the quoted rate shall expire and Bank
shall have no obligation to permit a LIBOR option to be selected
on such day. If no specific designation of interest is made at
the time any advance is requested hereunder or at the end of any
Fixed Rate Term, Borrower shall be deemed to have made a Prime
Rate interest selection for such advance or the principal amount
to which such Fixed Rate Term applied.
(c) Additional LIBOR Provisions.
(i) If Bank at any time shall determine that for any reason
adequate and reasonable means do not exist for ascertaining
LIBOR, then Bank shall promptly give notice thereof to Borrower.
If such notice is given and until such notice has been withdrawn
by Bank, then (A) no new LIBOR option may be selected by
Borrower, and (B) any portion of the outstanding principal
balance hereof which bears interest determined in relation to
LIBOR, subsequent to the end of the Fixed Rate Term applicable
thereto, shall bear interest determined in relation to the Prime
Rate.
(ii) If any law, treaty, rule, regulation or determination
of a court or governmental authority or any change therein or in
the interpretation or application thereof (each, a "Change in
Law") shall make it unlawful for Bank (A) to make LIBOR options
available hereunder, or (B) to maintain interest rates based on
LIBOR, then in the former event, any obligation of Bank to make
available such unlawful LIBOR options shall immediately be
cancelled, and in the latter event, any such unlawful LIBOR-based
interest rates then outstanding shall be converted, at Bank's
option, so that interest on the portion of the outstanding
principal balance subject thereto is determined in relation to
the Prime Rate; provided however, that if any such Change in Law
shall permit any LIBOR-based interest rates to remain in effect
until the expiration of the Fixed Rate Term applicable thereto,
then such permitted LIBOR-based interest rates shall continue in
effect until the expiration of such Fixed Rate Term. Upon the
occurrence of any of the foregoing events, Borrower shall pay to
Bank immediately upon demand such amounts as may be necessary to
compensate Bank for any fines, fees, charges, penalties or other
costs incurred or payable by Bank as a result thereof and which
are attributable to any LIBOR options made available to Borrower
hereunder, and any reasonable allocation made by Bank among its
operations shall be conclusive and binding upon Borrower.
(iii) If any Change in Law or compliance by Bank with any
request or directive (whether or not having the force of law)
from any central bank or other governmental authority shall:
(A) subject Bank to any tax, duty or other charge with
respect to any LIBOR options, or change the basis of
taxation of payments to Bank of principal, interest,
fees or any other amount payable hereunder (except for
changes in the rate of tax on the overall net income of
Bank); or
(B) impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against
assets held by, deposits or other liabilities in or for
the account of, advances or loans by, or any other
acquisition of funds by any office of Bank; or
(C) impose on Bank any other condition;
and the result of any of the foregoing is to increase the cost to
Bank of making, renewing or maintaining any LIBOR options
hereunder and/or to reduce any amount receivable by Bank in
connection therewith, then in any such case, Borrower shall pay
to Bank immediately upon demand such amounts as may be necessary
to compensate Bank for any additional costs incurred by Bank
and/or reductions in amounts received by Bank which are
attributable to such LIBOR options. In determining which costs
incurred by Bank and/or reductions in amounts received by Bank
are attributable to any LIBOR options made available to Borrower
hereunder, any reasonable allocation made by Bank among its
operations shall be conclusive and binding upon Borrower.
(d) Payment of Interest. Interest accrued on this Note
shall be payable on the first day of each month, commencing July
1, 1998.
(e) Default Interest. From and after the maturity date of
this Note, or such earlier date as all principal owing hereunder
becomes due and payable by acceleration or otherwise, the
outstanding principal balance of this Note shall bear interest
until paid in full at an increased rate per annum (computed on
the basis of a 360-day year, actual days elapsed) equal to four
percent (4%) above the rate of interest from time to time
applicable to this Note.
BORROWING AND REPAYMENT:
(a) Borrowing. Borrower may from time to time during the
term of this Note borrow, partially or wholly repay its
outstanding borrowings, and reborrow, subject to all of the
limitations, terms and conditions of this Note and of any
document executed in connection with or governing this Note;
provided however, that the outstanding principal balance of this
Note shall not exceed the principal amount stated above. The
unpaid principal balance of this obligation at any time shall be
the total amounts advanced hereunder by the holder hereof less
the amount of principal payments made hereon by or for any
Borrower, which balance may be endorsed hereon from time to time
by the holder. The outstanding principal balance of this Note
shall be due and payable in full on June 1, 2000, subject to
possible conversion to a term loan as set forth in the Credit
Agreement, defined below.
(b) Advances. Advances hereunder, to the total amount of
the principal sum stated above, may be made by the holder at the
oral or written request of (i) Xxxxxx Xxxxxxxxx or Xxxxx Xxxxxx
or Xxxxx Xxxxxxxxx, any one acting alone, who are authorized to
request advances and direct the disposition of any advances until
written notice of the revocation of such authority is received by
the holder at the office designated above, or (ii) any person,
with respect to advances deposited to the credit of any account
of any Borrower with the holder, which advances, when so
deposited, shall be conclusively presumed to have been made to or
for the benefit of each Borrower regardless of the fact that
persons other than those authorized to request advances may have
authority to draw against such account. The holder shall have no
obligation to determine whether any person requesting an advance
is or has been authorized by any Borrower.
(c) Application of Payments. Each payment made on this
Note shall be credited first, to any interest then due and
second, to the outstanding principal balance hereof. All
payments credited to principal shall be applied first, to the
outstanding principal balance of this Note which bears interest
determined in relation to the Prime Rate, if any, and second, to
the outstanding principal balance of this Note which bears
interest determined in relation to LIBOR, with such payments
applied to the oldest Fixed Rate Term first.
PREPAYMENT:
(a) Prime Rate. Borrower may prepay principal on any
portion of this Note which bears interest determined in relation
to the Prime Rate at any time, in any amount and without penalty.
(b) LIBOR. Borrower may prepay principal on any portion of
this Note which bears interest determined in relation to LIBOR at
any time and in the minimum amount of Five Hundred Thousand
Dollars ($500,000.00); provided however, that if the outstanding
principal balance of such portion of this Note is less than said
amount, the minimum prepayment amount shall be the entire
outstanding principal balance thereof. In consideration of Bank
providing this prepayment option to Borrower, or if any such
portion of this Note shall become due and payable at any time
prior to the last day of the Fixed Rate Term applicable thereto
by acceleration or otherwise, Borrower shall pay to Bank
immediately upon demand a fee which is the sum of the discounted
monthly differences for each month from the month of prepayment
through the month in which such Fixed Rate Term matures,
calculated as follows for each such month:
(i) Determine the amount of interest which would have
accrued each month on the amount prepaid at the
interest rate applicable to such amount had it remained
outstanding until the last day of the Fixed Rate Term
applicable thereto.
(ii) Subtract from the amount determined in (i) above the
amount of interest which would have accrued for the
same month on the amount prepaid for the remaining term
of such Fixed Rate Term at LIBOR in effect on the date
of prepayment for new loans made for such term and in a
principal amount equal to the amount prepaid.
(iii) If the result obtained in (ii) for any month is greater
than zero, discount that difference by LIBOR used in
(ii) above.
Each Borrower acknowledges that prepayment of such amount may
result in Bank incurring additional costs, expenses and/or
liabilities, and that it is difficult to ascertain the full
extent of such costs, expenses and/or liabilities. Each
Borrower, therefore, agrees to pay the above-described prepayment
fee and agrees that said amount represents a reasonable estimate
of the prepayment costs, expenses and/or liabilities of Bank. If
Borrower fails to pay any prepayment fee when due, the amount of
such prepayment fee shall thereafter bear interest until paid at
a rate per annum two percent (2.0%) above the Prime Rate in
effect from time to time (computed on the basis of a 360-day
year, actual days elapsed). Each change in the rate of interest
on any such past due prepayment fee shall become effective on the
date each Prime Rate change is announced within Bank.
EVENTS OF DEFAULT:
This Note is made pursuant to and is subject to the terms
and conditions of that certain Credit Agreement between Borrower
and Bank dated as of June 1, 1998, as amended from time to time
(the "Credit Agreement"). Any default in the payment or
performance of any obligation under this Note, or any defined
event of default under the Credit Agreement, shall constitute an
"Event of Default" under this Note.
MISCELLANEOUS:
(a) Remedies. Upon the occurrence of any Event of Default,
the holder of this Note, at the holder's option, may declare all
sums of principal and interest outstanding hereunder to be
immediately due and payable without presentment, demand, notice
of nonperformance, notice of protest, protest or notice of
dishonor, all of which are expressly waived by each Borrower, and
the obligation, if any, of the holder to extend any further
credit hereunder shall immediately cease and terminate. Each
Borrower shall pay to the holder immediately upon demand the full
amount of all payments, advances, charges, costs and expenses,
including reasonable attorneys' fees (to include outside counsel
fees and all allocated costs of the holder's in-house counsel),
expended or incurred by the holder in connection with the
enforcement of the holder's rights and/or the collection of any
amounts which become due to the holder under this Note, and the
prosecution or defense of any action in any way related to this
Note, including without limitation, any action for declaratory
relief, whether incurred at the trial or appellate level, in an
arbitration proceeding or otherwise, and including any of the
foregoing incurred in connection with any bankruptcy proceeding
(including without limitation, any adversary proceeding,
contested matter or motion brought by Bank or any other person)
relating to any Borrower or any other person or entity.
(b) Obligations Joint and Several. Should more than one
person or entity sign this Note as a Borrower, the obligations of
each such Borrower shall be joint and several.
(c) Governing Law. This Note shall be governed by and
construed in accordance with the laws of the State of California.
IN WITNESS WHEREOF, the undersigned has executed this Note
as of the date first written above.
XXXXXXX MANUFACTURING CO., INC.
By: /s/Xxxxx Xxxxxx
---------------------------------
Title: C.F.O., Sec. & Treas.
------------------------------
By: /s/Xxxxxx X Xxxxxxxxx
---------------------------------
Title: C.E.O.
------------------------------
ADDENDUM TO PROMISSORY NOTE
(PRIME/LIBOR PRICING ADJUSTMENTS)
THIS ADDENDUM is attached to and made a part of that certain
promissory note executed by XXXXXXX MANUFACTURING CO., INC.
("Borrower") and payable to XXXXX FARGO BANK, NATIONAL
ASSOCIATION ("Bank"), or order, dated as of June 1, 1998, in the
principal amount of Nine Million Two Hundred Thousand Dollars
($9,200,000.00) (the "Note").
The following provisions are hereby incorporated into the
Note to reflect the interest rate adjustments agreed to by Bank
and Borrower:
INTEREST RATE ADJUSTMENTS:
(a) Initial Interest Rates. The initial interest rates
applicable to this Note shall be the rates set forth in the
"Interest" paragraph herein.
(b) Interest Rate Adjustments. In addition to any interest
rate adjustments resulting from changes in the Prime Rate, Bank
shall adjust the Prime Rate and LIBOR margins used to determine
the rates of interest applicable to this Note on a quarterly
basis, commencing with Borrower's fiscal quarter ending June 30,
1997, if required to reflect a change in Borrower's ratio of
Total Liabilities to Tangible Net Worth (as defined in the Credit
Agreement referenced herein), in accordance with the following
grid:
Applicable Applicable
Total Liabilities to Prime Rate LIBOR
Tangible Net Worth Margin Margin
------------------------ ---------- ----------
1.1 to 1.0 or greater -0.50% 1.0%
at least 0.5 to 1.0 but
less than 1.1 to 1.0 -0.50% 0.875%
less than 0.5 to 1.0 -0.50% 0.75%
Each such adjustment shall be effective on the first Business Day
of Borrower's fiscal quarter following the quarter during which
Bank receives and reviews Borrower's most current fiscal quarter-
end financial statements in accordance with any requirements
established by Bank for the preparation and delivery thereof.
IN WITNESS WHEREOF, this Addendum has been executed as of
the same date as the Note.
XXXXXXX MANUFACTURING CO., INC.
By: /s/Xxxxx Xxxxxx
---------------------------------
Title: C.F.O., Sec. & Treas.
------------------------------
By: /s/Xxxxxx X Xxxxxxxxx
---------------------------------
Title: C.E.O.
------------------------------
