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EXHIBIT 10.3
THIS PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), NOR UNDER ANY STATE SECURITIES LAW AND MAY NOT BE
PLEDGED, SOLD, ASSIGNED, HYPOTHECATED OR OTHERWISE TRANSFERRED UNTIL (1) A
REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE ACT AND ANY
APPLICABLE STATE SECURITIES LAW OR (2) THE COMPANY RECEIVES AN OPINION OF
COUNSEL REASONABLY SATISFACTORY IN FORM AND SUBSTANCE TO THE COMPANY'S COUNSEL
THAT THIS PROMISSORY NOTE MAY BE PLEDGED, SOLD, ASSIGNED, HYPOTHECATED OR
TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR
APPLICABLE STATE SECURITIES LAWS.
AMERICAN HOMESTAR CORPORATION
PROMISSORY NOTE
Dallas, Texas
March 15, 1999 $4,411,177.00
FOR VALUE RECEIVED, American Homestar Corporation, a Texas corporation
("Maker"), hereby promises to pay to the order of Zaring National Corporation,
an Ohio corporation ("Payee"), at such place as Payee or any subsequent holder
may from time to time direct Maker in writing, the principal sum of Four Million
Four Hundred and Eleven Thousand One Hundred and Seventy-Seven Dollars
($4,411,177.00), together with interest thereon which shall accrue at a rate
equal to the daily prime rate per annum as announced from time to time by PNC
Bank, National Association or its successor. Subject to any maximum interest
rate limitations specified by applicable law, if and when such prime rate
changes, then in each such event, the rate of interest hereunder will change
automatically without notice to Maker effective as of the date of such change.
All payments on this note (this "Note") shall be due and payable in lawful money
of the United States of America. This Note was issued in connection with the
transactions described in that certain Amended and Restated Securities Purchase
Agreement, dated as of March 15, 1999, by and among Maker, Payee, HomeMax, Inc.,
a Delaware corporation, and HomeMax Operating Properties, L.L.C., a Delaware
limited liability company (the "Purchase Agreement").
1. Principal and Interest Payments. Interest on this Note shall be due
and payable on the first day of each calendar quarter commencing on April 1,
1999 and continuing until the Note has been paid in full. The principal,
together with all accrued but unpaid interest hereon, shall be due and payable
in three annual installments beginning on the first anniversary of the date of
this Note with the first two annual installments to be in the amount of
$1,470,392.00 each and the third and final installment to be in the amount of
$1,470,393.00.
2. Prepayments. At the option of Maker, the unpaid principal balance of
this Note may be prepaid in whole together with all accrued but unpaid interest
at any time.
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3. Method of Payment. All payments made under this Note, whether of
principal or interest, shall be made by Maker to the holder hereof on the date
specified or provided herein and shall be delivered by means of certified or
cashiers' check or wire transfer of immediately available funds to an account
specified by the holder hereof. Whenever payment hereunder shall be due on a day
which is not a Business Day (as hereinafter defined), the date for payment
thereof shall be extended to the next succeeding Business Day. If the date for
any payment is extended by operation of law or otherwise, interest thereon shall
be payable for such extended time. "Business Day" means every day which is not a
Saturday, Sunday or legal holiday.
4. Events of Default. The following shall constitute events of default
("Events of Default") hereunder:
(a) failure of Maker to make any payment on this Note as and when
the same becomes due and payable in accordance with the terms hereof and the
continuance of such failure for a period of five (5) days after written notice
specifying such default has been delivered to Maker by Payee;
(b) failure of Maker to perform any other covenant contained herein,
if the same has continued for thirty (30) days after written notice specifying
such default has been delivered to Maker by Payee;
(c) if Maker makes an assignment for the benefit of creditors, or
petitions or applies for the appointment of a liquidator, receiver or custodian
(or similar official) of it or of any substantial part of its assets, or if
Maker commences any proceeding or case relating to it under the Bankruptcy Code
or any other bankruptcy, reorganization, arrangement, insolvency, readjustment
of debt, dissolution or liquidation or similar law of any jurisdiction, or takes
any action to authorize any of the foregoing; or
(d) if any petition or application of the type described in
subparagraph (c) immediately above is filed or if any such proceeding or case
described in subparagraph (c) is commenced against Maker and is not dismissed
within sixty (60) days, or if Maker indicates its approval thereof, consents
thereto or acquiesces therein, or if an order is entered appointing any such
liquidator or receiver or custodian (or similar official), or adjudicating Maker
bankrupt or insolvent, or approving a petition in any such proceeding, or if a
decree or order for relief is entered in respect of Maker in an involuntary case
under the Bankruptcy Code or any other bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation or similar law of
any jurisdiction.
In the event any one or more of the Events of Default specified above
occurs and is continuing, the holder of this Note may (i) accelerate the
maturity of this Note with notice to Maker at which time all such amounts shall
be immediately due and payable, (ii) proceed to protect and enforce its rights
either by suit in equity or by action at law, or by other appropriate
proceedings, whether for the specific performance of any covenant or agreement
contained in this Note or in aid of the exercise of any power or right granted
by this Note, or (iii) enforce any other legal or equitable right of the holder
of this Note.
5. Delay or Omission Not Waiver. No delay or omission on the part of the
holder of this
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Note in the exercise of any power, remedy or right under this Note, or under any
other instrument executed pursuant hereto, shall operate as a waiver thereof,
nor shall a single or partial exercise of any such power or right preclude any
other or further exercise thereof or the exercise of any other right or power
hereunder.
6. Waiver. Any term, covenant, agreement or condition of this Note may,
only with the written consent of Maker and Payee, be amended or compliance
therewith may be waived (either generally or in a particular instance and either
retroactively or prospectively), altered, modified or amended.
7. Attorneys' Fees and Costs. In the event an Event of Default shall
occur, and in the event that thereafter this Note is placed in the hands of an
attorney for collection, or in the event this Note is collected in whole or in
part through legal proceedings of any nature, then and in any such case Maker
promises to pay all costs of collection, including, but not limited to,
reasonable attorneys' fees and court costs incurred by the holder hereof on
account of such collection, whether or not suit is filed.
8. Successors and Assigns. All of the covenants, stipulations, promises
and agreements in this Note made by Maker and Payee (by virtue of its acceptance
of this Note) shall bind its successors and assigns, whether so expressed or
not.
9. Maximum Lawful Rate. It is the intent of the Maker and holder of
this Note to conform to and contract in strict compliance with applicable usury
law from time to time in effect. In no way, nor in any event or contingency
(including but not limited to prepayment, default, demand for payment, or
acceleration of the maturity of any obligation), shall the rate of interest
taken, reserved, contacted for, charged or received under this Note exceed the
highest lawful interest rate permitted under applicable law. If the holder of
this Note shall ever receive anything of value which is characterized as
interest under applicable law and which would apart from this provision be in
excess of the highest lawful interest rate permitted under applicable law, an
amount equal to the amount which would have been excessive interest shall,
without penalty, be applied to the reduction of the principal amount owing on
this Note in the inverse order of its maturity and not to the payment of
interest, or refunded to Maker or the other payor thereof if and to the extent
such amount which would have been excessive exceeds such unpaid principal. All
interest paid or agreed to be paid to the holder hereof shall, to the extent
permitted by applicable law, be amortized, prorated, allocated and spread
throughout the full stated term (including any renewal or extension) of this
Note so that the amount of interest on account of such obligation does not
exceed the maximum permitted by applicable law. As used in this Section, the
term "applicable law" shall mean the laws of the State of Texas or the federal
laws of the United States, whichever laws allow the greater interest, as such
laws now exist or may be changed or amended or come into effect in the future.
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10. Offset. Any and all amounts owing or to be paid by Maker hereunder
shall be subject to offset and reduction pro tanto by Offset Amounts (as that
term is defined in the Purchase Agreement) then due and payable by Payee to
Maker under the Purchase Agreement (whether or not Payee has pledged, sold,
assigned, hypothecated or otherwise transferred this Note), and any subsequent
holder of this Note takes the same subject to this Section 10.
11. Governing Law. This Note shall be governed by and construed in
accordance with the substantive laws (but not the rules governing conflicts of
laws) of the State of Texas.
12. Notice. All notices, demands or requests provided for or permitted
to be given under this Note must be in writing, and shall be given and be deemed
received as set forth in the Purchase Agreement.
13. Severability. In case any one or more of the provisions contained
in this Note shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or `unenforceability
shall not affect any other provision hereof.
EXECUTED as of the date first set forth above.
AMERICAN HOMESTAR CORPORATION
By:
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Laurence A. Dawson, Jr., President
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