EXHIBIT 10.5
PROMISSORY NOTE
$200,000 November 29, 2004
St. Charles County, Missouri
FOR VALUE RECEIVED, the undersigned, LMI Aerospace, Inc., a Missouri
corporation (the "Company"), hereby promises to pay to the order of Ronald S.
Saks ("Payee"), the principal sum of Two Hundred Thousand Dollars ($200,000).
Interest shall be payable on the outstanding balance of this Note at the rate of
twelve percent (12%) per annum, payable quarterly in arrears on the last
business day of each February, May, August and October, commencing February 28,
2005.
The entire principal amount of this Note shall be due and payable December
31, 2007, subject to mandatory or discretionary prepayment as hereinafter set
forth.
THE OBLIGATIONS EVIDENCED BY THIS NOTE ARE SUBJECT TO THE PROVISIONS OF
THAT CERTAIN SUBORDINATION AGREEMENT DATED AS OF NOVEMBER 29, 2004, ENTERED INTO
BY PAYEE FOR THE BENEFIT OF WELLS FARGO BUSINESS CREDIT, INC., A MINNESOTA
CORPORATION ("SENIOR LENDER"). PAYMENTS BY THE COMPANY UNDER THIS NOTE ARE
SUBJECT TO THE LIMITATIONS SET FORTH IN SUCH SUBORDINATION AGREEMENT.
This Note is one of a series of notes executed as of the date hereof
evidencing loans in aggregate amount of $1,000,000 and containing the same
interest, payment and maturity terms as set forth in this Note (collectively,
the "Notes").
Subject to limitations in the Subordination Agreement referred to above,
the Company may at any time and without penalty prepay all or any part of the
principal amount of this Note, together with accrued interest thereon, and the
Company shall be obligated to make prepayments on all Notes, in the proportion
of the original principal amount of each Note to the aggregate amount of loans
evidenced by all the Notes, promptly in the following circumstances:
(a) Holders of the Notes shall receive 100% of net proceeds from the
settlement or other resolution of ongoing litigation between the Company
and Lockheed Martin Corporation caused by cost overruns on certain C-130
components produced by the Company since 2002 for which a claim will be
filed in 2005.
(b) Provided that as of the date of sale referred to below, there is
at least $3,000,000 in excess Availability under the Company's revolving
credit facility with Senior Lender, Payee shall be entitled to receive
fifty percent (50%) of the net proceeds received from any sale of Tempco
Engineering, Inc. that are in excess of Senior Lender's lendable asset
value attributed to Tempco Engineering, Inc. as of the date of such sale.
Such lendable asset value shall be determined by adding the forced
liquidation value, as of the date of such sale, of equipment owned by
Tempco Engineering, Inc. to the amount of the Borrowing Base under the
Company's revolving credit facility with Senior Lender which is
attributable to Tempco Engineering, Inc. as of the date of such sale. The
forced liquidating value of such equipment owned by Tempco Engineering,
Inc. shall be determined by an appraiser selected by the Company's Senior
Lender in its sole discretion.
(c) After November 30, 2005, the Company may pay, and the Payee may
receive, principal payments of $250,000 for each quarter if the Company has
maintained at least $3,000,000 in average excess Availability under its
revolving credit facility with Senior Lender for at least ninety (90) days
immediately preceding such quarterly principal payment, which average
excess Availability shall be calculated on the last day of each such
quarter.
This Note and all of the other Notes are secured by the grant of lien by
the Company against the Company's real property and improvements located at
3010-3030 Highway 94, St. Charles County, Missouri as provided in a certain Deed
of Trust dated as of the date of this Note. The holder of this Note shall have
the benefit of all rights granted under such Deed of Trust.
This Note shall be governed by and interpreted in accordance with the
internal substantive laws of the State of Missouri, without giving effect to its
conflicts-of-law principles and regardless of the jurisdiction in which the
Company executes this Note.
Presentment, demand for payment, protest, notice of protest, notice of
dishonor and diligence in bringing suit against any party or to or any party
liable hereon are hereby waived by all present and future parties hereto,
whether as maker, endorser, surety or in any other capacity.
ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FOREBEAR
FROM ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH
DEBT ARE NOT ENFORCEABLE, REGARDLESS OF THE LEGAL THEORY UPON WHICH IT IS BASED,
THAT IS IN ANY WAY RELATED TO THE CREDIT AGREEMENT (THIS NOTE). TO PROTECT YOU
(THE COMPANY) AND US (THE PAYEE) FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY
AGREEMENTS WE REACH COVERING SUCH MATTERS ARE CONTAINED IN THE CREDIT AGREEMENT
(THIS NOTE AND THE DEED OF TRUST REFERRED TO HEREIN), WHICH ARE THE COMPLETE AND
EXCLUSIVE STATEMENTS OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE
IN WRITING TO MODIFY IT.
LMI AEROSPACE, INC.,
a Missouri corporation
By
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Payable at 3600 Mueller Road, St. Charles, Missouri 63301, or any other
address, written notice of which is given to the Company by the holder of this
Note.