PROMISSORY NOTE
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Principal Loan Date Maturity Loan No. Call Collateral Account Officer Initials
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$6,300,000 09-22-1998 09-05-1999 3000009903 403 302 E 357577 JCT02
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References in the shaded area are for Lender's use only and do not limit the applicability of this document
to any particular loan or item.
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Borrower: PACIFIC AEROSPACE & ELECTRONICS, INC. LENDER: KEYBANK NATIONAL ASSOCIATION
000 XXXX XXXXXXX XXXX WEN/ML COMMERCIAL BANKING CENTER
WENATCHEE, WA 98801 000 XXXXX XXXXXXXXX XXXXXX
P. O. BOX 1301 WA-31-35-0000
XXXXXXXXX, XX 00000
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Principal Amount: $6,300,000.00 Initial Rate: 8.000% Date of Note: September 22, 1998
PROMISE TO PAY. PACIFIC AEROSPACE & ELECTRONICS, INC. ("Borrower") promises to
pay to KEYBANK NATIONAL ASSOCIATION ("Lender") or order, in lawful money of the
United States of America, the principal amount of Six Million Three Hundred
Thousand & 00/100 Dollars (($6,300,000.00) or so much as may be outstanding,
together with interest on the unpaid outstanding principal balance of each
advance. Interest shall be calculated from the date of each advance until
repayment of each advance.
PAYMENT. Borrower shall pay this loan on demand, or if no demand is made, in one
payment of all outstanding principal plus all accrued unpaid interest on
September 5, 1999. In addition, Xxxxxxxx will pay regular monthly payments of
accrued unpaid interest beginning November 5, 1998, and all subsequent interest
payments are due on the same day of each month after that. Interest on this Note
is computed on a 365/360 simple interest basis; that is, by applying the ratio
of the annual interest rate over a year of 360 days, times the outstanding
principal balance, times the actual number of days the principal balance is
outstanding. Borrower will pay Lender at Xxxxxx's address shown above or at such
other place as Lender may designate in writing. Unless otherwise agreed or
required by applicable law, payments will be applied first to accrued unpaid
interest, then to principal, and any remaining amount to any unpaid collection
costs and late charges.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from
time to time based on changes in an index which is the Prime Rate announced by
Xxxxxx (the "Index"). The Interest rate will change automatically and
correspondingly on the date of each announced change of the Index by Xxxxxx. The
Index is not necessarily the lowest rate charged by Lender on its loans and is
set by Lender in its sole discretion. If the Index becomes unavailable during
the term of this loan, the Lender may designate a substitute index after
notifying Borrower. Lender will tell Borrower the current index rate upon
Xxxxxxxx's request. Borrower understands that Lender may make loans based on
other rates as well. The interest rate change will not occur more often than
each day that the Index changes. The Index currently is 8.500% per annum. The
interest rate to be applied to the unpaid principal balance of this Note will be
at a rate of 0.500 percentage points under the Index, resulting in an initial
rate of 8.000% per annum. NOTICE: Under no circumstances will the interest rate
on this Note be more than the maximum rate allowed by applicable law.
PREPAYMENT. Xxxxxxxx agrees that all loan fees and other prepaid finance charges
are earned fully as of the date of the loan and will not be subject to refund
upon early payment (whether voluntary or as a result of default), except as
otherwise required by law. Except for the foregoing, Borrower may pay without
penalty all or a portion of the amount owed earlier than it is due. Early
payments will not, unless agreed to by Xxxxxx in writing, relieve Borrower or
Xxxxxxxx's obligation to continue to make payments of accrued unpaid interest.
Rather, they will reduce the principal balance due.
LATE CHARGE. If a payment is 10 days or more late, Borrower will be charged
5.000% of the regularly scheduled payment or $50.00, whichever is greater.
DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payment when due. (b) Borrower breaks any promise
Borrower has made to Lender, or Borrower fails to comply with or to perform when
due any other term, obligation, covenant, or condition contained in this Note or
any agreement related to this Note. (c) Any representation or statement made or
furnished to Lender by Borrower or on Xxxxxxxx's behalf is false or misleading
in any material respect either now or at the time made or furnished. (x)
Xxxxxxxx becomes insolvent, a receiver is appointed for any part of Xxxxxxxx's
property, Xxxxxxxx makes an assignment for the benefit of creditors, or any
proceeding is commenced either by Borrower or against Borrower under any
bankruptcy or insolvency laws. (e) Any creditor tries to take any of Xxxxxxxx's
property on or in which Xxxxxx has a lien or security Interest. This includes a
garnishment of any of Xxxxxxxx's accounts with Xxxxxx. (f) Any guarantor dies or
any of the other events described in this default section occurs with respect to
any guarantor of this Note. (g) A material adverse change occurs in Borrower's
financial condition, or Xxxxxx believes the prospect of payment or performance
of the Indebtedness is impaired.
If any default, other than a default in payment, is curable and if Borrower has
not been given a notice of a breach of the same provision of this Note within
the preceding twelve (12) months, it may be cured (and no event of default will
have occurred) if Borrower, after receiving written notice from Lender demanding
cure of such default: (a) cures the default within fifteen(15) days; or (b) if
the cure requires ore than fifteen (15) days, immediately initiates steps which
Lender deems in Xxxxxx's sole discretion to be sufficient to cure the default
and thereafter continues and completes all reasonable and necessary steps
sufficient to produce compliance as soon as reasonably practical.
LENDER'S RIGHTS. Upon default, Xxxxxx may declare the entire unpaid balance on
this Note and all accrued unpaid interest immediately due, without notice, and
then Borrower will pay that amount. Upon default, including failure to pay upon
final maturity, Lender at is option, may also, if permitted under applicable
law, increase the variable interest rate on this Note 5.000 percentage points
over the Index while the default remains uncured. The interest rate will not
exceed the maximum rate permitted by applicable law. Lender may hire or pay
someone else to help collect this Note if Borrower does not pay. Xxxxxxxx also
will pay Lender that amount. This includes, subject to any limits under
applicable law, Xxxxxx's attorneys' fees and Xxxxxx's legal expenses whether or
not there is a lawsuit, including attorneys' fees and legal expenses for
bankruptcy proceedings (including efforts to modify or vacate any automatic stay
or injunction), appeals, and any anticipated post-judgment collection services.
If not prohibited by applicable law, Xxxxxxxx also will pay any court costs, in
addition to all other sums provided by law. This Note has been delivered to
Lender and accepted by Xxxxxx in the State of Washington. If there is a lawsuit,
Xxxxxxxx agrees upon Xxxxxx's request to submit to the jurisdiction of the
courts of King or Xxxxxx County, the State of Washington. Xxxxxx and Xxxxxxxx
hereby waive the right to any jury trial in any action, proceeding or
counterclaim brought by either Xxxxxx or Borrower against the other. This Note
shall be governed by and construed in accordance with the laws of the State of
Washington.
DISHONORED ITEM FEE. Borrower will pay a fee to Lender of $10.00 if Borrower
makes a payment on Borrower's loan and the check or preauthorized charge with
which Borrower pays is later dishonored.
09-22-1998 PROMISSORY NOTE Page 2
Loan No 3000009903 (Continued)
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LINE OF CREDIT. This Note evidences a revolving line of credit. Advances under
this Note may be requested either orally or in writing by Borrower or by an
authorized person. Lender may, but need not, require that all oral requests be
confirmed in writing. All communications, instructions, or directions by
telephone or otherwise to Lender are to be directed to Xxxxxx's office shown
above. The following party or parties are authorized to request advances under
the line of credit until Xxxxxx receives from Borrower at Xxxxxx's address shown
above written notice of revocation of their authority: XXXXXX X. XXXXXX, CEO &
PRESIDENT; XXXX X. XXXXX, VICE PRESIDENT, CHIEF FINANCIAL OFFICER, TREASURER;
and XXXXXX X. XXXXXXX, SECRETARY. Xxxxxxxx agrees to be liable for all sums
either: (a) advanced in accordance with the instructions of an authorized person
or (b) credited to any of Xxxxxxxx's accounts with Xxxxxx. The unpaid principal
balance owing on this Note at any time may be evidenced by endorsements on this
Note or by Xxxxxx's internal records, including daily computer print-outs.
Lender will have no obligation to advance funds under this Note if: (a) Borrower
or any guarantor is in default under the terms of this Note or any agreement
that Borrower or any guarantor has with Lender, including any agreement made in
connection with the signing of this Note; (b) Borrower or any guarantor ceases
doing business or is insolvent; (c) any guarantor seeks, claims or otherwise
attempts to limit, modify or revoke such guarantor's guarantee of this Note or
any other loan with Lender; or (d) Borrower has applied funds provided pursuant
to this Note for purposes other than those authorized by Lender.
ADDITIONAL PROVISION. Any advance that Lender in its sole discretion may permit
after the final payment date provided in this Note will be due on demand and
otherwise subject to the terms of this Note.
LIBOR ADDENDUM. THE TERMS IN THE LIBOR ADDENDUM ATTACHED TO THIS NOTE ARE
INCORPORATED HEREIN.
PRIOR NOTE. This Note is a renewal of that Promissory Note from Borrower to
Lender dated JUNE 30, 1997, IN THE ORIGINAL PRINCIPAL AMOUNT OF $3,500,000.00.
GENERAL PROVISIONS. This Note is payable on demand. The inclusion of specific
default provisions or rights of Lender shall not preclude Xxxxxx's right to
declare payment of this Note on its demand. Lender may delay or forgo enforcing
any of its rights or remedies under this Note without losing them. Borrower and
any other person who signs, guarantees or endorses this Note, to the extent
allowed by law, waive presentment, demand for payment, protest and notice of
dishonor. Upon any change in the terms of this Note, and unless otherwise
expressly stated in writing, no party who signs this Note, whether as maker,
guarantor, accommodation maker or endorser, shall be released from liability.
All such parties agree that Lender may renew or extend (repeatedly and for any
length of time) this loan, or release any party or guarantor or collateral; or
impair, fail to realize upon or perfect Xxxxxx's security interest in the
collateral; and take any other action deemed necessary by Lender without the
consent of or notice to anyone. All such parties also agree that Xxxxxx may
modify this loan without the consent of or notice to anyone other than the party
with whom the modification is made.
PRIOR TO SIGNING THIS NOTE, XXXXXXXX READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. XXXXXXXX AGREES TO
THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THE NOTE.
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ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO FORBEAR
FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.
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BORROWER:
PACIFIC AEROSPACE & ELECTRONICS, INC.
By: /s/ XXXXXX X. XXXXXX
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XXXXXX X. XXXXXX, CEO & PRESIDENT
