PROMISSORY NOTE
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Principal Loan Date Maturity Loan No Call / Colt Account Office Initials
$1,200,000.00 10/31/2001 03/31/2003 9001 2 / 7380 6810063 6231
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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.
Any item above containing "***" has been omitted
due to text length limitations.
Borrower: NACO INDUSTRIES, INC. Lender: ZIONS FIRST NATIONAL BANK
395 WEST 0000 XXXXX XXXXX XXXXXXXXXX XXXXXXX XXXXXX
XXXXX, XX 00000 000 XXXXX XXXX XXXXXX
XXXXX, XX 00000
Principal Amount: $1,200,000.00 Initial Rate: 7.250%
Date of Note: October 31, 2001
PROMISE TO PAY. NACO INDUSTRIES, INC. ("Borrower") promises to pay to ZIONS
FIRST NATIONAL BANK ("Lender"), or order, in lawful money of the United States
of America, the principal amount of One Million Two Hundred Thousand & 00/100
Dollars ($1,200,000.00) 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 will pay this loan in one payment of all outstanding principal
plus all accrued unpaid interest on March 31, 2003. In addition, Borrower will
pay regular monthly payments of all accrued unpaid interest due as of each
payment date, beginning December 1, 2001, with all subsequent interest payments
to be due on the same day of each month after that. 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. The annual interest rate for this Note is computed on a 365/360 basis;
that Is, by applying the ratio of the annual Interest rate over a year of 360
days, multiplied by the outstanding principal balance, multiplied by the actual
number of days the principal balance 13 outstanding. Borrower will pay Lender at
Lender'3 address shown above or at such other place as Lender may designate in
writing.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from
time to time based on changes in an independent index which is the Prime Rate.
Prime Rate means an index which is determined daily by the published commercial
loan variable rate index held by any two of the following banks: X.X. Xxxxxx
Xxxxx & Co., Xxxxx Fargo Bank N.A., and Bank of America N.A. In the event no two
of the above banks have the same published rate, the bank having the median rate
will establish the Prime Rate. This definition of Prime Rate is to be strictly
interpreted and is not intended to serve any purpose other than providing an
index to determine the variable interest rate used herein. It is not the lowest
rate at which Zions First National Bank may make loans to any of its customers,
either now or in the future. (the "Index"). The Index is not necessarily the
lowest rate charged by Lender on its loans. If the Index becomes unavailable
during the term of this loan, Lender may designate a substitute index after
notice to Borrower. Lender will tell Borrower the current Index rate upon
Xxxxxxxx's request. The interest rate change will not occur more often than each
Day. Borrower understands that Lender may make loans based on other rates as
well. The Index currently is 5.500% per annum. The interest rate to be applied
to the unpaid principal balance of this Note will be at a rate of 1.750
percentage points over the ' Index, resulting in an initial rate of 7.250% 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 Xxxxxxxx of
Xxxxxxxx's obligation to continue to make payments of accrued unpaid interest.
Rather, early payments will reduce the principal balance due. Xxxxxxxx agrees
not to send Xxxxxx payments marked 'paid in full", "without recourse", or
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similar language. If Borrower sends such a payment, Xxxxxx may accept it without
losing any of Xxxxxx's rights under this Note, and Borrower will remain
obligated to pay any further amount owed to Lender. All written communications
concerning disputed amounts, including any check or other payment instrument
that indicates that the payment constitutes 'payment in full" of the amount owed
or that is tendered with other conditions or limitations or as full satisfaction
of a disputed amount must be mailed or delivered to: Zions First National Bank,
P.O. Box 25822 Salt Lake City, UT 84125-0822.
INTEREST AFTER DEFAULT. Upon default, including failure to pay upon final
maturity, Lender, at its option, may, if permitted under applicable law,
increase the variable interest rate on this Note to 4.750 percentage points over
the Index. The interest rate will not exceed the maximum rate permitted by
applicable law.
DEFAULT. Each of the following shall constitute an event of default ('Event of
Default") under this Note:
Payment Default. Borrower fails to make any payment when due under this
Note. Other Defaults. Borrower fails to comply with or to perform any other
term, obligation, covenant or condition contained in this Note or in any of
the related documents or to comply with or to perform any term, obligation,
covenant or condition contained in any other agreement between Lender and
Borrower.
Default in Favor of Third Parties. Borrower or any Grantor defaults under
any loan, extension of credit, security agreement, purchase or sales
agreement, or any other agreement, in favor of any other creditor or person
that may materially affect any of Borrower's property or Borrower's ability
to repay this Note or perform Borrower's obligations under this Note or any
of the related documents.
False Statements. Any warranty, representation or statement made or
furnished to Lender by Borrower or on Borrower's behalf under this Note or
the related documents is false or misleading in any material respect,
either now or at the time made or furnished or becomes false or misleading
at any time thereafter.
Insolvency. The dissolution or termination of Xxxxxxxx's existence as a
going business, the insolvency of Xxxxxxxx, the appointment of a receiver
for any part of Xxxxxxxx's property, any assignment for the benefit of
creditors, any type of creditor workout, or the commencement of any
proceeding under any bankruptcy or insolvency laws by or against Borrower.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Borrower or by any
governmental agency against any collateral securing the loan. This includes
a garnishment of any of Xxxxxxxx's accounts, including deposit accounts,
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with Lender. However, this Event of Default shall not apply if there is a
good faith dispute by Xxxxxxxx as to the validity or reasonableness of the
claim which is the basis of the creditor or forfeiture proceeding and if
Borrower gives Xxxxxx written notice of the creditor or forfeiture
proceeding and deposits with Lender monies or a surety bond for the
creditor or forfeiture proceeding, in an amount determined by Lender, in
its sole discretion, as being an adequate reserve or bond for the dispute.
Events Affecting Guarantor. Any of the preceding events occurs with respect
to any Guarantor of any of the indebtedness or any Guarantor dies or
becomes incompetent, or revokes or disputes the validity of, or liability
under, any guaranty of the indebtedness evidenced by this Note. In the
event of a death, Lender, at its option, may, but shall not be required to,
permit the Guarantor's estate to assume unconditionally the obligations
arising under the guaranty in a manner satisfactory to Lender, and, in
doing so, cure any Event of Default.
Change In Ownership. Any change in ownership of twenty-five percent (25%)
or more of the common stock of Borrower.
Adverse Change. A material adverse change occurs in Borrower's financial
condition, or Xxxxxx believes the prospect of payment or performance of
this Note is impaired.
Insecurity. Lender in good faith believes itself insecure.
Cure Provisions. 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: (1)
cures the default within fifteen (15) days; or (2) if the cure requires
more 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 principal
balance on this Note and all accrued unpaid interest immediately due, and then
Borrower will pay that amount.
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ATTORNEYS' FEES; EXPENSES. Lender may hire or pay someone else to help collect
this Note if Borrower does not pay. Borrower will pay Lender that amount. This
includes, subject to any limits under applicable law, Xxxxxx's reasonable
attorneys' fees and Xxxxxx's legal expenses, whether or not there is a lawsuit,
including without limitation all reasonable attorneys' fees and legal expenses
for bankruptcy proceedings (including efforts to modify or vacate any automatic
stay or injunction), and appeals. If not prohibited by applicable law, Xxxxxxxx
also will pay any court costs, in addition to all other sums provided by law.
GOVERNING LAW. This Note will be governed by, construed and enforced In
accordance with federal law and the laws of the State of Utah. This Note has
been accepted by Xxxxxx in the State of Utah.
CHOICE OF VENUE. If there is a lawsuit, Xxxxxxxx agrees upon Xxxxxx's request to
submit to the jurisdiction of the courts of Salt Lake County, State of Utah.
DISHONORED ITEM FEE. Borrower will pay a fee to Lender of $15.00 if Borrower
makes a payment on Borrower's loan and the check or preauthorized charge with
which Borrower pays is later dishonored.
RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a
right of setoff in all Borrower's accounts with Lender (whether checking,
savings, or some other account). This includes all accounts Borrower holds
jointly with someone else and all accounts Borrower may open in the future.
However, this does not include any IRA or Xxxxx accounts, or any trust accounts
for which setoff would be prohibited by law. Borrower authorizes Xxxxxx, to the
extent permitted by applicable law, to charge or setoff all sums owing on the
indebtedness against any and all such accounts.
LINE OF CREDIT. This Note evidences a revolving line of credit. Advances under
this Note may be requested only in writing by Xxxxxxxx or as provided in this
paragraph. All communications, instructions, or directions by telephone or
otherwise to Lender are to be directed to Xxxxxx's office shown above. The
following persons currently are authorized, except as provided in this
paragraph, to request advances and authorize payments under the line of credit
until Xxxxxx receives from Borrower, at Xxxxxx's address shown above, written
notice of revocation of their authority: X. XXXXXXX XXXXXXX, President of NACO
INDUSTRIES, INC.; XXXXXXX X. XXXXX, Executive Vice President; XXXXX XXXXXXXX,
Vice President; and XXXXX X. XXXX, Chief Executive Officer of NACO INDUSTRIES,
INC. "PROVIDED, HOWEVER, THAT THE AMOUNT OF ANY ADVANCE REQUESTED BY EITHER
XXXXXXX X. XXXXX OR XXXXX XXXXXXXX MAY NOT EXCEED $100,000.00 UNLESS SUCH
REQUEST IS MADE JOINTLY, WITH EITHER X. XXXXXXX XXXXXXX OR XXXXX X. XXXX".
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
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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; (D) Borrower has applied funds provided pursuant to this Note for
purposes other than those authorized by Lender; or (El Lender in good faith
believes itself insecure.
ARBITRATION DISCLOSURES.
1. ARBITRATION IS FINAL AND BINDING ON THE PARTIES AND SUBJECT TO ONLY
VERY LIMITED REVIEW BY A COURT.
2. IN ARBITRATION THE PARTIES ARE WAIVING THEIR RIGHT TO LITIGATE IN
COURT, INCLUDING THEIR RIGHT TO A JURY TRIAL.
3. DISCOVERY IN ARBITRATION IS MORE LIMITED THAN DISCOVERY IN COURT.
4. ARBITRATORS ARE NOT REQUIRED TO INCLUDE FACTUAL FINDINGS OR LEGAL
REASONING IN THEIR AWARDS. THE RIGHT TO APPEAL OR SEEK MODIFICATION OF
ARBITRATORS' RULINGS IS VERY LIMITED.
5. A PANEL OF ARBITRATORS MIGHT INCLUDE AN ARBITRATOR WHO IS OR WAS
AFFILIATED WITH THE BANKING INDUSTRY.
6. ARBITRATION WILL APPLY TO ALL DISPUTES BETWEEN THE PARTIES, NOT JUST
THOSE CONCERNING THE AGREEMENT.
7. IF YOU HAVE QUESTIONS ABOUT ARBITRATION, CONSULT YOUR ATTORNEY OR THE
AMERICAN ARBITRATION ASSOCIATION.
(a)Any claim or controversy ('Dispute') between or among the parties and
their employees, agents, affiliates, and assigns, including, but not
limited to, Disputes arising out of or relating to this agreement, this
arbitration provision ("arbitration clause"), or any related agreements or
instruments relating hereto or delivered in connection herewith ('Related
Agreements'), and including, but not limited to, a Dispute based on or
arising from an alleged tort, shall at the request of any party be resolved
by binding arbitration in accordance with the applicable arbitration rules
of the American Arbitration Association (the 'Administrator"). The
provisions of this arbitration clause shall survive any termination,
amendment, or expiration of this agreement or Related Agreements. The
provisions of this arbitration clause shall supersede any prior arbitration
agreement between or among the parties.
(b) The arbitration proceedings shall be conducted in a city mutually
agreed by the parties. Absent such an agreement, arbitration will be
conducted in Salt Lake City, Utah or such other place as may be determined
by the Administrator. The Administrator and the arbitrators) shall have the
authority to the extent practicable to take any action to require the
arbitration proceeding to be completed and the arbitrators)' award issued
within 150 days of the filing of the Dispute with the Administrator. The
arbitrators) shall have the authority to impose sanctions on any party that
fails to comply with time periods imposed by the Administrator or the
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arbitrators), including the sanction of summarily dismissing any Dispute or
defense with prejudice. The arbitrators) shall have the authority to
resolve any Dispute regarding the terms of this agreement, this arbitration
clause, or Related Agreements, including any claim or controversy regarding
the arbitrability of any Dispute. All limitations periods applicable to any
Dispute or defense, whether by statute or agreement, shall apply to any
arbitration proceeding hereunder and the arbitrators) shall have the
authority to decide whether any Dispute or defense is barred by a
limitations period and, if so, to summarily enter an award dismissing any
Dispute or defense on that basis. The doctrines of compulsory counterclaim,
res judicata, and collateral estoppel shall apply to any arbitration
proceeding hereunder so that a party must state as a counterclaim in the
arbitration proceeding any claim or controversy which arises out of the
transaction or occurrence that is the subject matter of the Dispute. The
arbitrators) may in the arbitrators)' discretion and at the request of any
party: (1) consolidate in a single arbitration proceeding any other claim
arising out of the same transaction involving another party to that
transaction that is bound by an arbitration clause with Xxxxxx, such as
borrowers, guarantors, sureties, and owners of collateral; and (2)
consolidate or administer multiple arbitration claims or controversies as a
class action in accordance with Rule 23 of the Federal Rules of Civil
Procedure.
(c)The arbitrators) shall be selected in accordance with the rules of the
Administrator from panels maintained by the Administrator. A single
arbitrator shall have expertise in the subject matter of the Dispute. Where
three arbitrators conduct an arbitration proceeding, the Dispute shall be
decided by a majority vote of the three arbitrators, at least one of whom
must have expertise in the subject matter of the Dispute and at least one
of whom must be a practicing attorney. The arbitrators) shall award to the
prevailing party recovery of all costs and fees (including attorneys' fees
and costs, arbitration administration fees and costs, and arbitrators)'
fees). The arbitrators), either during the pendency of the arbitration
proceeding or as part of the arbitration award, also may grant provisional
or ancillary remedies including but not limited to an award of injunctive
relief, foreclosure, sequestration, attachment, replevin, garnishment, or
the appointment of a receiver.
(d)Judgement upon an arbitration award may be entered in any court having
jurisdiction, subject to the following limitation: the arbitration award is
binding upon the parties only if the amount does not exceed Four Million
Dollars ($4,000,000.00); if the award exceeds that limit, either party may
demand the right to a court trial. Such a demand must be filed with the
Administrator within thirty (30) days following the date of the arbitration
award; if such a demand is not made with that time period, the amount of
the arbitration award shall be binding. The computation of the total amount
of an arbitration award shall include amounts awarded for attorneys' fees
and costs, arbitration administration fees and costs, and arbitrators)'
fees.
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(e)No provision of this arbitration clause, nor the exercise of any rights
hereunder, shall limit the right of any party to: (1) judicially or
non-judicially foreclose against any real or personal property collateral
or other security; (2) exercise self-help remedies, including but not
limited to repossession and setoff rights; or (3) obtain from a court
having jurisdiction thereover any provisional or ancillary remedies
including 6ut not limited to injunctive relief, foreclosure, sequestration,
attachment, replevin, garnishment, or the appointment of a receiver. Such
rights can be exercised at any time, before or after initiation of an
arbitration proceeding, except to the extent such action is contrary to the
arbitration award. The exercise of such rights shall not constitute a
waiver of the right to submit any Dispute to arbitration, and any claim or
controversy related to the exercise of such rights shall be a Dispute to be
resolved under the provisions of this arbitration clause. Any party may
initiate arbitration with the Administrator. If any party desires to
arbitrate a Dispute asserted against such party in a complaint,
counterclaim, cross-claim, or third-party complaint thereto, or in an
answer or other reply to any such pleading, such party must make an
appropriate motion to the trial court seeking to compel arbitration, which
motion must be filed with the court within 45 days of service of the
pleading, or amendment thereto, setting forth such Dispute. If arbitration
is compelled after commencement of litigation of a Dispute, the party
obtaining an order compelling arbitration shall commence arbitration and
pay the Administrator's filing fees and costs within 45 days of entry of
such order. Failure to do so shall constitute an agreement to proceed with
litigation and waiver of the right to arbitrate. In any arbitration
commenced by a consumer regarding a consumer Dispute, Lender shall pay one
half of the Administrator's filing fee, up to $250.
(f)Notwithstanding the applicability of any other law to this agreement,
the arbitration clause, or Related Agreements between or among the parties,
the Federal Arbitration Act, 9 U.S.C. Section 1 et seq., shall apply to the
construction and interpretation of this arbitration clause. If any
provision of this arbitration clause should be determined to be
unenforceable, all other provisions of this arbitration clause shall remain
in full force and effect.
SUCCESSOR INTERESTS. The terms of this Note shall be binding upon Xxxxxxxx, and
upon Xxxxxxxx's heirs, personal representatives, successors and assigns, and
shall inure to the benefit of Lender and its successors and assigns.
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NOTIFY US OF INACCURATE INFORMATION WE REPORT TO CONSUMER REPORTING AGENCIES..
Please notify us if we report any inaccurate information about your account(s)
to a consumer reporting agency. Your written notice describing the specific
inaccuracy(ies) should be sent to us at the following address: ZIONS FIRST
NATIONAL BANK, LOGAN COMMERCIAL BANKING CENTER, 000 XXXXX XXXX XXXXXX, XXXXX, XX
00000
GENERAL PROVISIONS. 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, 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 Xxxxxx 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. The obligations
under this Note are joint and several.
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.
BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE.
BORROWER:
NACO INDUSTRIES, INC.
By:
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W XXXXXXX XXXXXXX,
President of NACO INDUSTRIES, INC.
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