Attached files
file | filename |
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8-K - FORM 8-K - SIGMATRON INTERNATIONAL INC | c55533e8vk.htm |
EX-10.2 - EX-10.2 - SIGMATRON INTERNATIONAL INC | c55533exv10w2.htm |
EX-10.1 - EX-10.1 - SIGMATRON INTERNATIONAL INC | c55533exv10w1.htm |
EX-99.1 - EX-99.1 - SIGMATRON INTERNATIONAL INC | c55533exv99w1.htm |
Exhibit 10.3
PROMISSORY NOTE
$2,500,000.00 | Chicago, Illinois January 8, 2010 |
FOR VALUE RECEIVED, the undersigned SIGMATRON INTERNATIONAL, INC. (Borrower) promises to pay
to the order of WELLS FARGO HSBC TRADE BANK, NATIONAL ASSOCIATION (Bank) at its office at 230 W.
Monroe Street, 29th Floor, Chicago, IL 60606, or at such other place as the holder
hereof may designate, in lawful money of the United States of America and in immediately available
funds, the principal sum of Two Million Five Hundred Thousand Dollars ($2,500,000.00), with
interest thereon as set forth herein. All references to Wells Fargo Bank in this Note shall mean
Wells Fargo Bank, National Association.
1. INTEREST:
(a) Interest. The outstanding principal balance of this Note shall bear interest at
Six and Forty Two One Hundredths of One Percent (6.42%) per annum (computed on the basis of a
360-day year, actual days elapsed).
(b) Payment of Interest. Interest accrued on this Note shall be payable on the first
day of each month, commencing February 1, 2010.
(c) Default Interest. From and after the maturity date of this Note, or such earlier
date as all principal owing hereunder becomes due and payable by acceleration or otherwise, or at
Banks option upon the occurrence, and during the continuance of an Event of Default, the
outstanding principal balance of this Note shall bear interest at an increased rate per annum
(computed on the basis of a 360-day year, actual days elapsed) equal to four percent (4%) above the
rate of interest then in effect.
2. REPAYMENT AND PREPAYMENT:
(a) Repayment. Principal shall be payable on the first day of each month in
installments of Eight Thousand Three Hundred Thirty Three Dollars ($8,333.00) each, commencing
February 1, 2010, and continuing up to and including January 1, 2015, with a final installment
consisting of all remaining unpaid principal due and payable in full on January 8, 2015. The entire
principal balance and accrued interest hereon shall be due and payable upon the occurrence of an
Event of Default or the termination (including repayment in full) of the Credit Agreement (as
hereinafter defined).
(b) Application of Payments. Each payment made on this Note shall be credited first,
to any interest then due and second, to the outstanding principal balance hereof.
(c) Prepayment. Borrower may prepay principal on this Note in the minimum amount of
Two Hundred Fifty Thousand Dollars ($250,000.00); provided however, that if the outstanding
principal balance of this Note is less than said amount, the minimum prepayment amount shall be the
entire outstanding principal balance hereof. In consideration of Bank providing this prepayment
option to Borrower, or if this Note shall become due and payable at any time prior to the maturity
date hereof by acceleration or otherwise, Borrower shall pay to
Bank immediately upon demand a fee which is the sum of the discounted monthly differences
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for each
month from the month of prepayment through the month in which said maturity date occurs, calculated
as follows for each such month:
(i) | Determine the amount of interest which would have accrued each month on the amount prepaid at the interest rate applicable to such amount had it remained outstanding until the maturity date hereof. | ||
(ii) | Subtract from the amount determined in (i) above the amount of interest which would have accrued for the same month on the amount prepaid for the remaining term until the maturity date hereof at the Money Market Funds Rate in effect on the date of prepayment for new loans made for such term and in a principal amount equal to the amount prepaid. | ||
(iii) | If the result obtained in (ii) for any month is greater than zero, discount that difference by the Money Market Funds Rate used in (ii) above. |
Borrower acknowledges that prepayment of such amount may result in Bank incurring additional costs,
expenses and/or liabilities, and that it is difficult to ascertain the full extent of such costs,
expenses and/or liabilities. Borrower, therefore, agrees to pay the above-described prepayment fee
and agrees that said amount represents a reasonable estimate of the prepayment costs, expenses
and/or liabilities of Bank. If Borrower fails to pay any prepayment fee when due, the amount of
such prepayment fee shall thereafter bear interest until paid at a rate per annum four percent
(4.00%) above Banks Prime Rate in effect from time to time (computed on the basis of a 360-day
year, actual days elapsed).
The Money Market Funds Rate means the rate per annum which Wells Fargo Bank estimates and quotes
to its borrowers as the rate, adjusted for reserve requirements, federal deposit insurance and any
other amount which Wells Fargo Bank deems appropriate, at which funds in the amount of a loan and
for a period of time comparable to the term of such loan are available for purchase in the money
market on the date such loan is made, with the understanding that the Money Market Funds Rate is
Wells Fargo Banks estimate only and that Wells Fargo Bank is under no obligation to actually
purchase and/or match funds for any transaction. This rate is not fixed by or related in any way
to any rate that Wells Fargo Bank quotes or pays for deposits accepted through its branch system.
All prepayments of principal shall be applied on the most remote principal installment or
installments then unpaid.
The Borrower shall be required to prepay amounts outstanding under the credit facilities described
herein, without premium or penalty (other than any funding losses resulting from prepayment of the
Line of Credit Note and the Term Loan bearing interest at LIBOR other than on the last day of the
relevant interest period or other break funding costs) as follows: i) 100% of the net cash proceeds
for the sale or disposition of assets outside the ordinary course or business; provided that so
long as no Event of Default has occurred and is continuing, proceeds of insurance may be applied by
the Borrower for the purchase of replacement property and the Borrower may retain the proceeds of
the disposition of obsolete or worn out property consistent with reasonable and customary
practices, (ii) 100% of the net cash proceeds of any issuance or sale by the Borrower of any
indebtedness other than indebtedness permitted by Section 5.3 of the Credit Agreement and (iii)
100% of the net cash proceeds of any issuance or sale by the Borrower of equity securities in each
case applied first to the Term Loan in the inverse order of maturity and then to the Line of
Credit.
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3. EVENTS OF DEFAULT:
This Note is made pursuant to and is subject to the terms and conditions of that certain
Credit Agreement between Borrower and Bank dated as of January 8, 2010, as amended from time to
time (the Credit Agreement). Any default in the payment or performance of any obligation under
this Note, or any defined event of default under the Credit Agreement, shall constitute an Event
of Default under this Note.
4. MISCELLANEOUS:
(a) Remedies. Upon the sale, transfer, hypothecation, assignment or other
encumbrance, whether voluntary, involuntary or by operation of law, of all or any interest in any
real property securing this Note, or upon the occurrence of any Event of Default, the holder of
this Note, at the holders option, may declare all sums of principal and interest outstanding
hereunder to be immediately due and payable without presentment, demand, notice of nonperformance,
notice of protest, protest or notice of dishonor, all of which are expressly waived by Borrower.
Borrower shall pay to the holder immediately upon demand the full amount of all payments, advances,
charges, costs and expenses, including reasonable attorneys fees (to include outside counsel fees
and all allocated costs of the holders in-house counsel), expended or incurred by the holder in
connection with the enforcement of the holders rights and/or the collection of any amounts which
become due to the holder under this Note, and the prosecution or defense of any action in any way
related to this Note, including without limitation, any action for declaratory relief, whether
incurred at the trial or appellate level, in an arbitration proceeding or otherwise, and including
any of the foregoing incurred in connection with any bankruptcy proceeding (including without
limitation, any adversary proceeding, contested matter or motion brought by Bank or any other
person) relating to Borrower or any other person or entity.
(b) Obligations Joint and Several. Should more than one person or entity sign this
Note as a Borrower, the obligations of each such Borrower shall be joint and several.
(c) Governing Law. This Note shall be governed by and construed in accordance with
the laws of the State of Illinois, but giving effect to federal laws applicable to national banks.
(d) Amendment. This Note may be amended or modified only in writing signed by each
party hereto. If any provision of this Note shall be held to be prohibited by or invalid under
applicable law such provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or any remaining provisions of
this Note.
5. ARBITRATION:
(a) Arbitration. The parties hereto agree, upon demand by any party, to submit to
binding arbitration all claims, disputes and controversies between or among them (and their
respective employees, officers, directors, attorneys, and other agents), whether in tort, contract
or otherwise, in any way arising out of or relating to (i) any credit subject hereto, or this Note
or any other contract, instrument or document relating to this Note, and their negotiation,
execution, collateralization, administration, repayment, modification, extension, substitution,
formation, inducement, enforcement, default or termination; or (ii) requests for additional credit.
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(b) Governing Rules. Any arbitration proceeding will (i) proceed in a location in
Chicago, Illinois selected by the American Arbitration Association (AAA); (ii) be governed by the
Federal Arbitration Act (Title 9 of the United States Code), notwithstanding any conflicting choice
of law provision in any of the documents between the parties; and (iii) be conducted by the AAA, or
such other administrator as the parties shall mutually agree upon, in accordance with the AAAs
commercial dispute resolution procedures, unless the claim or counterclaim is at least
$1,000,000.00 exclusive of claimed interest, arbitration fees and costs in which case the
arbitration shall be conducted in accordance with the AAAs optional procedures for large, complex
commercial disputes (the commercial dispute resolution procedures or the optional procedures for
large, complex commercial disputes to be referred to herein, as applicable, as the Rules). If
there is any inconsistency between the terms hereof and the Rules, the terms and procedures set
forth herein shall control. Any party who fails or refuses to submit to arbitration following a
demand by any other party shall bear all costs and expenses incurred by such other party in
compelling arbitration of any dispute. Nothing contained herein shall be deemed to be a waiver by
any party that is a bank of the protections afforded to it under 12 U.S.C. §91 or any similar
applicable state law.
(c) No Waiver of Provisional Remedies, Self-Help and Foreclosure. The arbitration
requirement does not limit the right of any party to (i) foreclose against real or personal
property collateral; (ii) exercise self-help remedies relating to collateral or proceeds of
collateral such as setoff or repossession; or (iii) obtain provisional or ancillary remedies such
as replevin, injunctive relief, attachment or the appointment of a receiver, before during or after
the pendency of any arbitration proceeding. This exclusion does not constitute a waiver of the
right or obligation of any party to submit any dispute to arbitration or reference hereunder,
including those arising from the exercise of the actions detailed in sections (i), (ii) and (iii)
of this paragraph.
(d) Arbitrator Qualifications and Powers. Any arbitration proceeding in which the
amount in controversy is $5,000,000.00 or less will be decided by a single arbitrator selected
according to the Rules, and who shall not render an award of greater than $5,000,000.00. Any
dispute in which the amount in controversy exceeds $5,000,000.00 shall be decided by majority vote
of a panel of three arbitrators; provided however, that all three arbitrators must actively
participate in all hearings and deliberations. The arbitrator will be a neutral attorney licensed
in the State of Illinois or a neutral retired judge of the state or federal judiciary of Illinois,
in either case with a minimum of ten years experience in the substantive law applicable to the
subject matter of the dispute to be arbitrated. The arbitrator will determine whether or not an
issue is arbitratable and will give effect to the statutes of limitation in determining any claim.
In any arbitration proceeding the arbitrator will decide (by documents only or with a hearing at
the arbitrators discretion) any pre-hearing motions which are similar to motions to dismiss for
failure to state a claim or motions for summary adjudication. The arbitrator shall resolve all
disputes in accordance with the substantive law of Illinois and may grant any remedy or relief that
a court of such state could order or grant within the scope hereof and such ancillary relief as is
necessary to make effective any award. The arbitrator shall also have the power to award recovery
of all costs and fees, to impose sanctions and to take such other action as the arbitrator deems
necessary to the same extent a judge could pursuant to the Federal Rules of Civil Procedure, the
Illinois Rules of Civil Procedure or other applicable law. Judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction. The institution and maintenance of an
action for judicial relief or pursuit of a provisional or ancillary remedy shall not constitute a
waiver of the right of any party, including the plaintiff, to submit the controversy or claim to
arbitration if any other party contests such action for judicial relief.
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(e) Discovery. In any arbitration proceeding, discovery will be permitted in
accordance with the Rules. All discovery shall be expressly limited to matters directly relevant
to the dispute being arbitrated and must be completed no later than 20 days before the hearing
date. Any requests for an extension of the discovery periods, or any discovery disputes, will be
subject to final determination by the arbitrator upon a showing that the request for discovery is
essential for the partys presentation and that no alternative means for obtaining information is
available.
(f) Class Proceedings and Consolidations. No party hereto shall be entitled to join
or consolidate disputes by or against others in any arbitration, except parties who have executed
this Note or any contract, instrument or document relating to this Note, or to include in any
arbitration any dispute as a representative or member of a class, or to act in any arbitration in
the interest of the general public or in a private attorney general capacity.
(g) Payment Of Arbitration Costs And Fees. The arbitrator shall award all costs and
expenses of the arbitration proceeding.
(h) Miscellaneous. To the maximum extent practicable, the AAA, the arbitrators and
the parties shall take all action required to conclude any arbitration proceeding within 180 days
of the filing of the dispute with the AAA. No arbitrator or other party to an arbitration
proceeding may disclose the existence, content or results thereof, except for disclosures of
information by a party required in the ordinary course of its business or by applicable law or
regulation. If more than one agreement for arbitration by or between the parties potentially
applies to a dispute, the arbitration provision most directly related to the documents between the
parties or the subject matter of the dispute shall control. This Note may be amended or modified
only in writing signed by each party hereto. If any provision of this Note shall be held to be
prohibited by or invalid under applicable law such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of such provision or
any remaining provisions of this Note. This arbitration provision shall survive termination,
amendment or expiration of any of the documents or any relationship between the parties.
IN WITNESS WHEREOF, the undersigned has executed this Note as of the date first written above.
SIGMATRON INTERNATIONAL, INC. |
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By: | /s/ Linda K. Frauendorfer | |||
By: | CFO | |||
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