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EXHIBIT 10.4(C)
PROMISSORY NOTE
(Acquisition Note)
$1,000,000.00 Phoenix, Arizona
August 28, 1995
FOR VALUE RECEIVED, the undersigned BOWMAR INSTRUMENT CORPORATION, an
Indiana corporation (hereinafter called "Maker"), promises to pay to the order
of BANK ONE, ARIZONA, NA, a national banking association (the "Payee"; Payee and
each subsequent transferee and/or owner of this Note, whether taking by
endorsement or otherwise, are herein successively called "Holder") at Post
Office Box 71, Phoenix, Arizona 85001, Attention: Commercial Banking A593, or at
such other place as Holder may from time to time designate in writing, the
principal sum of ONE MILLION AND NO/100 DOLLARS ($1,000,000.00) or so much
thereof as Holder may advance to or for the benefit of Maker plus interest
calculated on a daily basis (based on a 360-day year) from the date hereof on
the principal balance from time to time outstanding as hereinafter provided,
principal, interest and all other sums payable hereunder to be paid in lawful
money of the United States of America as follows:
A. Interest shall accrue on the unpaid principal balance of this
Note at the Floating Rate, provided, that Maker may elect, upon written
notice that is received by Holder at least ten (10) days prior to the
Conversion Date, that interest accrue at the Conversion Rate, in which
case, commencing on the Conversion Date, interest shall accrue at the
Conversion Rate. During the period that interest accrues at the Floating
Rate, the interest rate on this Note shall change from time to time on the
effective date of, and in conformity with, changes in the Prime Rate.
B. All accrued interest shall be due and payable on each Payment
Date prior to the Advance Termination Date.
C. Commencing on the first Payment Date on or after the Advance
Termination Date, unless and until Maker shall elect that interest accrue
under this Note at the Conversion Rate, monthly installments of interest
and principal shall be due and payable on each Payment Date each in a
principal amount sufficient to amortize the principal balance outstanding
on the Conversion Date over sixty (60) equal monthly installments, plus
all accrued and unpaid interest.
D. Should Maker elect that this Note bear interest at the Conversion
Rate, equal payments of principal and interest shall be due and payable in
consecutive monthly installments commencing on
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the first Payment Date after the Conversion Date, and continuing on each
Payment Date thereafter, each in an amount sufficient to fully amortize
the principal amount of this Note outstanding on the Conversion Date, at
the Conversion Rate, over an amortization period equal to number of months
remaining until the Maturity Date.
E. The entire unpaid principal balance, all accrued and unpaid
interest, and all other amounts payable under this Note shall be due and
payable in full on the Maturity Date.
As used in this Note:
"Advance Termination Date" means the date that is twelve (12) months
after the date of this Note.
"Business Day" means a day of the year on which banks are not
required or authorized to close in Phoenix, Arizona.
"Conversion Date" means the date on or after the Advance Termination
Date selected by Maker from which interest shall accrue under this Note at
the Conversion Rate.
"Conversion Rate" means the rate per annum equal to the sum of (i)
four percent (4%) per annum, and (ii) the yield to maturity of Treasury
Obligations having a maturity date nearest to the Maturity Date determined
two Business Days before the Conversion Date. The maturity date and yield
of said Treasury Obligations shall be determined by Holder, in its
absolute and sole discretion, on the basis of quotations published in The
Wall Street Journal or other comparable sources.
"Default Rate" means an interest rate per annum equal to four
percent (4%) above the rate that would otherwise be payable under the
terms of the respective Notes.
"Floating Rate" means the rate per annum equal to the sum of (i) one
and one half percent (1.5%) per annum, and (ii) the Prime Rate per annum
as in effect from time to time. The Floating Rate will change on each day
that the "Prime Rate" changes.
"Maturity Date" means July 31, 2001.
"Payment Date" means the first day of the first month after the
initial advance of proceeds under this Note and the first day of each
month thereafter, provided that if any such day is not a Business Day,
then such Payment Date should be the next successive Business Day.
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"Prime Rate" means the interest rate per annum publicly announced by
Bank One, Arizona, NA, a national banking association, or its successors,
in Phoenix, Arizona as its "prime rate" as in effect from time to time.
Maker acknowledges that the Prime Rate is not necessarily the best or
lowest rate offered by such Bank and such Bank may lend to its customers
at rates that are at, above or below its Prime Rate.
"Treasury Obligations" means United States Treasury debt
obligations.
Maker agrees to an effective rate of interest that is the rate stated
above plus any additional rate of interest resulting from any other charges in
the nature of interest paid or to be paid by or on behalf of Maker, or any
benefit received or to be received by Holder, in connection with this Note.
If any payment required under this Note is not paid when due, within
fifteen (15) days after the date such payment is due, then, at the option of
Holder, Maker shall pay a "late charge" equal to four percent (4%) of the amount
of that payment to compensate Holder for administrative expenses and other costs
of delinquent payments. This late charge may be assessed without notice, shall
be immediately due and payable and shall be in addition to all other rights and
remedies available to Holder.
All payments made on this Note shall be applied, to the extent of the
amount thereof, in the order of priority to be determined by Holder in its sole
discretion: (i) to the payment of costs, fees or other charges incurred in
connection with the indebtedness evidenced hereby: (ii) to the payment of
accrued interest; and/or (iii) to the reduction of the principal balance.
This Note is issued pursuant to that Loan Agreement (the "Loan Agreement")
of even date herewith between Maker and Payee and is secured by, among other
things, Mortgages of even date herewith, executed by Maker, as trustor, in favor
of Payee, as beneficiary, encumbering property situate in Fort Wayne, Indiana
and Acton, Massachusetts. Such Mortgages and all other documents or instruments
securing the indebtedness evidenced by this Note or executed or delivered in
connection with the indebtedness evidenced by this Note are hereinafter called
the "Security Documents."
Time is of the essence of this Note. At the option of Holder, the entire
unpaid principal balance, all accrued and unpaid interest and all other amounts
payable hereunder shall become immediately due and payable without notice upon
the failure to pay any sum due and owing hereunder as provided herein if such
failure continues for fifteen (15) days after notice thereof to Maker or upon
the occurrence of any Event of Default, as defined in the Loan Agreement or any
of the Security Documents.
After maturity, including maturity upon acceleration, the unpaid principal
balance, all accrued and unpaid interest and all other amounts payable hereunder
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shall bear interest at the Default Rate. Maker shall pay all costs and expenses,
including reasonable attorneys' fees and court costs, incurred in the collection
or enforcement of all or any part of this Note. All such costs and expenses
shall be secured by the Mortgages and by all other Security Documents. In the
event of any court proceedings, court costs and attorneys' fees shall be set by
the court and not by jury and shall be included in any judgment obtained by
Holder or Maker.
Maker may prepay the outstanding principal balance hereof, in whole or in
part, at any time prior to the Maturity Date. Subject to the right of Maker to
prepay this Note in full without prepayment premium in the event the RLC (as
defined in the Loan Agreement) is not renewed by Holder upon any scheduled
maturity thereunder, after the Conversion Date, with any such prepayments
(whether made voluntarily or involuntarily as a result of an acceleration of the
Maturity Date or otherwise), Maker shall also pay (a) all accrued and unpaid
interest on the principal being prepaid, (b) all other amounts then due and
payable by Maker to Holder under this Note, the Loan Agreement and the Security
Documents, and (c) a prepayment premium, if any, equal to the product of (i) the
Average Lost Monthly Interest Income and (ii) the number of months from the date
of prepayment to the Maturity Date (with any fraction of a month counted as a
month), discounted to present value at the Discount Rate over a period equal to
one-half of the number of months in (ii) above. At the option of Holder, in its
absolute and sole discretion, any prepayment shall be applied to installments
coming due hereunder in the inverse order of their due dates.
As used in the preceding paragraph:
"Average Lost Monthly Interest Income" means the amount determined
by dividing (i) the product of the Average Principal and the Lost Rate, by
(ii) 12, where:
"Average Principal" means the amount equal to either (i) one
half the sum of (A) the amount of principal being prepaid and (B)
the amount of principal that is scheduled to be due on the Maturity
Date ("Balloon Amount"), or (ii) the amount of principal being
prepaid, if such amount is less than the Balloon Amount; and
"Lost Rate" means the rate per annum equal to the percentage,
if any, by which (i) the yield to maturity of Treasury Obligations
having a maturity date nearest to the Maturity Date determined on
the date hereof exceeds (ii) the yield to maturity of Treasury
Obligations having a maturity date nearest to the Maturity Date
determined on the date of prepayment.
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"Discount Rate" means the rate per annum equal to the yield to
maturity of Treasury Obligations having a maturity date nearest to the
Maturity Date determined on the date of prepayment.
The maturity date and yield to maturity of Treasury Obligations shall be
determined by Holder, in its absolute and sole discretion, on the basis of
quotations published in The Wall Street Journal or other comparable sources.
Failure of Holder to exercise any option hereunder shall not constitute a
waiver of the right to exercise the same in the event of any subsequent default
or in the event of continuance of any existing default after demand for strict
performance hereof.
Maker and all sureties, guarantors and/or endorsers hereof (or of any
obligation hereunder) and accommodation parties hereon (severally each
hereinafter called a "Surety") each: (a) agree that the liability under this
Note of all parties hereto is joint and several; (b) severally waive any
exemption laws and right thereunder affecting the full collection of this Note;
(c) severally waive any and all formalities in connection with this Note to the
maximum extent allowed by law, including (but not limited to) demand, diligence,
presentment for payment, protest and demand, and notice of extension, dishonor,
protest, demand and nonpayment of this Note; and (d) consent that Holder may
extend the time of payment or otherwise modify the terms of payment of any part
or the whole of the debt evidenced by this Note, at the request of any other
person liable hereon, and such consent shall not alter nor diminish the
liability of any person hereon.
In addition, each Surety waives and agrees not to assert: (a) any right to
require Holder to proceed against Maker or any other Surety, to proceed against
or exhaust any security for the Note, to pursue any other remedy available to
Holder, or to pursue any remedy in any particular order or manner; (b) the
benefit of any statute of limitations affecting its liability hereunder or the
enforcement hereof; (c) the benefits of any legal or equitable doctrine or
principle of marshalling; (d) notice of the existence, creation or incurring of
new or additional indebtedness of Maker to Holder; (e) the benefits of any
statutory provision limiting the liability of a surety, including without
limitation the provisions of Sections 12-1641, et seq., of the Arizona Revised
Statutes; (f) any defense arising by reason of any disability or other defense
of Maker or by reason of the cessation from any cause whatsoever (other than
payment in full) of the liability of Maker for payment of the Note; and (g) the
benefits of any statutory provision limiting the right of Holder to recover a
deficiency judgment, or to otherwise proceed against any person or entity
obligated for payment of the Note, after any foreclosure or trustee's sale of
any security for the Note, including without limitation the benefits, if any, to
a Surety of Arizona Revised Statutes Section 33-814. Until payment in full of
the Note, no Surety shall have any right of subrogation and each hereby waives
any right to enforce any remedy which Holder now has, or may hereafter have,
against Maker or any other Surety, and waives any benefit of, and any right to
participate in, any security now or hereafter held by Holder.
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Maker agrees that to the extent Maker or any Surety makes any payment to
Holder in connection with the indebtedness evidenced by this Note, and all or
any part of such payment is subsequently invalidated, declared to be fraudulent
or preferential, set aside or required to be repaid by Holder or paid over to a
trustee, receiver or any other entity, whether under any bankruptcy act or
otherwise (any such payment is hereinafter referred to as a "Preferential
Payment"), then the indebtedness of Maker under this Note shall continue or
shall be reinstated, as the case may be, and, to the extent of such payment or
repayment by Holder, the indebtedness evidenced by this Note or part thereof
intended to be satisfied by such Preferential Payment shall be revived and
continued in full force and effect as if said Preferential Payment had not been
made.
Without limiting the right of Holder to bring any action or proceeding
against Maker or any Surety or against any property of Maker or any Surety (an
"Action") arising out of or relating to this Note or any indebtedness evidenced
hereby in the courts of other jurisdictions, Maker and each Surety hereby
irrevocably submit to the jurisdiction, process and venue of any Arizona State
or Federal court sitting in Phoenix, Arizona, and hereby irrevocably agree that
any Action may be heard and determined in such Arizona State court or in such
Federal court. Maker and all Sureties each hereby irrevocably waives, to the
fullest extent it may effectively do so, the defenses of lack of jurisdiction
over any person, inconvenient forum or improper venue, to the maintenance of any
Action in any jurisdiction.
This Note shall be binding upon Maker and its successors and assigns and
shall inure to the benefit of Payee, and any subsequent holders of this Note,
and their successors and assigns.
All notices required or permitted in connection with this Note shall be
given at the place and in the manner provided in the Loan Agreement for the
giving of notices.
This Note shall be governed by and construed according to the laws of the
State of Arizona.
IN WITNESS WHEREOF, these presents are executed as of the date first
written above.
BOWMAR INSTRUMENT CORPORATION, an
Indiana corporation
By: /s/ Joe G. Warren, Jr.
Name: Joe G. Warren, Jr.
Title: Vice President
MAKER
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