PAYMENT AGREEMENT
EFFECTIVE: June 17, 1999
AMONG: Xxxxxx Snowboards, Inc. ("Xxxxxx")
AND: CRB Manufacturing, Inc.
Xxxxx & Xxxxxx, Inc.
Triax Metal Products, Inc.
Ameri-Tool Industries, Inc.
Edge Tech, Inc. (collectively, the
Classic Print Products, Inc. "Petitioning Creditors")
AND: Xxxxxx X. Xxxxxx, Inc. ("RKMI")
RECITALS:
I. On Xxxxx 00, 0000, XXX Manufacturing, Inc., Xxxxx & Xxxxxx, Inc. and
Triax Metal Products, Inc. filed an involuntary petition (the "Petition") under
Chapter 7 of the United States Bankruptcy Code against Xxxxxx in the United
States Bankruptcy Court for the District of Oregon, entitled IN RE XXXXXX
SNOWBOARDS, INC., Case No. 699-61663-fra7. Ameri-Tool Industries, Inc., Edge
Tech, Inc., and Classic Print Products, Inc. joined in the Petition on April 7,
1999.
A. On May 24, 1999, Xxxxxx and the Petitioning Creditors filed
with the Bankruptcy Court a Joint Motion to Dismiss Involuntary Petition based
on an out-of-court workout involving the undisputed, non-contingent, liquidated
claims of the Petitioning Creditors and of such other creditors of Xxxxxx who
affirmatively voted to accept the terms of the workout. By order entered by the
Bankruptcy Court on June 17, 1999, the Petition was dismissed (the "Dismissal
Order").
B. The Petitioning Creditors hold undisputed, non-contingent,
liquidated claims against Xxxxxx in the following amounts:
CRB Manufacturing, Inc. $156,889.20
Xxxxx & Xxxxxx, Inc. 41,823.84
Triax Metal Products, Inc. 26,485.63
Ameri-Tool Industries, Inc. 162,386.37
Edge Tech, Inc. 41,433,10
Classic Print Products, Inc. 96,972.31
C. The creditors listed in Exhibit A attached hereto (each a
"Participating Creditor") hold undisputed, non-contingent,
liquidated claims against Xxxxxx in the amounts set forth therein, and have
affirmatively voted to accept the terms of the workout. (The Petitioning
Creditors and the Participating Creditors are hereinafter collectively
referred to as the "Creditors", and the claims listed in Exhibit A attached
hereto and in Recital C above are hereinafter collectively referred to as the
"Claims.")
X. Xxxxxx and the Petitioning Creditors wish to document the
terms of the workout as set forth in this Payment Agreement (this "Agreement").
X. Xxxxxx wishes to designate RKMI as its disbursing agent for
purposes of distributing to the Creditors all sums that are required to be
distributed to them under the provisions of this Agreement, in accordance with
the subject to the terms and conditions specified in this Agreement (RKMI acting
in its capacity as such disbursing agent for Xxxxxx is hereinafter referred to
as the "Disbursing Agent").
F. As security for the obligations of Xxxxxx hereunder, Xxxxxx is
executing and delivering to RKMI, on behalf of and for the ratable benefit of
the Creditors, a trust deed in the form attached hereto as Exhibit B (the "Trust
Deed"), and the Petitioning Creditors wish to designate RKMI as their collateral
agent for purposes of enforcing the Creditors' rights under the provisions of
the Trust Deed, in accordance with and subject to the terms and conditions
specified in the Trust Deed and this Agreement. (RKMI acting in its capacity as
collateral agent for the Petitioning Creditors is hereinafter referred to as the
"Collateral Agent").
G. RKMI is willing to act as Disbursing Agent and as Collateral
Agent, in accordance with and subject to the terms and conditions specified in
this Agreement.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, receipt of which is hereby acknowledged, the parties
hereto agree as follows:
AGREEMENT:
1. DEFINED TERMS. As used herein, the terms defined in, or by
reference in, the Preamble and Recitals hereof shall have the meanings therein
indicated, and the following terms shall have the following meanings:
"Collateral" shall mean the real property specified in the
Trust Deed.
"Business Day" shall mean a day other than a Saturday, Sunday
or other day on which commercial banks in Salem, Oregon are authorized or
required by law to close.
2. PAYMENTS BY XXXXXX.
(a) Xxxxxx shall make the following payments to the
Disbursing Agent for disbursement to the Creditors as set forth in this
Agreement:
(i) $250,000 on or before August 27, 1999;
(ii) $200,000 on the first Business Day which is
no more than ninety (90) days after the first payment is made and on the first
Business Day after each ninety (90) day period thereafter; and
(iii) The remaining unpaid balance of the Claims,
exclusive of interest accrued thereon since April 1, 1999, all due and payable
on the earlier of (i) closing of the sale or refinance of the Collateral (other
than a refinance of Permissible Senior Indebtedness), or (ii) June 28, 2000
(provided that upon default by Xxxxxx, all interest that accrues on the Claims
on or after April 1, 1999, as well as the underlying Claims, will become
immediately due and payable).
(b) Alternatively, at Xxxxxx'x option, Xxxxxx shall pay
to the Disbursing Agent, for disbursement to the Creditors as set forth in this
Agreement, a single payment equal to eighty-five percent (85%) of the aggregate
amount of the Claims on or before August 27, 1999.
(c) Subject to Xxxxxx'x performance of its other obligations
under this Agreement and the Trust Deed, Xxxxxx'x timely payment (subject to any
applicable notice and cure periods) of all amounts required to be paid under
either alternative (a) or (b) of this Paragraph 2 shall fully and completely
satisfy all obligations of Xxxxxx in respect of the Claims.
(d) So long as Xxxxxx is not in default under this
Agreement or the Trust Deed, and subject to the provisions of Paragraphs 8 and
9, all payments received by the Disbursing Agent under this Paragraph 2 shall be
distributed by the Disbursing Agent to Creditors, ratably according to the
Claims of such Creditors.
3. PAYMENT OF PETITIONING CREDITORS' ATTORNEYS' FEES.
Concurrently with its execution of this Agreement, Xxxxxx shall deposit with
Xxxxxx & Xxxxxxx, P.C. the amount of $25,000, from which it shall be paid its
reasonable attorneys fees, costs and expenses for representing the Petitioning
Creditors in negotiating and implementing the terms of this Agreement, and in
connection with filing and obtaining the dismissal of the Involuntary Petition.
Xxxxxx hereby grants to Xxxxxx & Xxxxxxx, P.C. a security interest in such
deposit to secure such fees, costs and expenses. Following payment in full of
such fees, costs and expenses, Xxxxxx & Xxxxxxx, P.C. shall promptly refund
to Xxxxxx the unapplied balance of such deposit.
4. TRUST DEED. Concurrently with its execution of this
Agreement, Xxxxxx shall execute and deliver the Trust Deed to the Collateral
Agent, to secure Xxxxxx'x payment obligations and other obligations under
this Agreement and under the Trust Deed. The Trust Deed shall be subordinate
to one or more senior liens to secure financing for Xxxxxx, up to a maximum
amount of $500,000, which maximum amount may be increased to $750,000 after
the $250,000 initial payment required under payment alternative (a) described
in Paragraph 2 above has been made by Xxxxxx ("Permissible Senior
Indebtedness").
5. DISBURSING AGENT APPOINTMENT.
(a) Xxxxxx hereby designates and appoints RKMI as the
Disbursing Agent of Xxxxxx hereunder, and Xxxxxx hereby authorizes RKMI, as the
Disbursing Agent for Xxxxxx, to take such actions on its behalf under the
provisions of this Agreement and to exercise such powers and perform such duties
as are expressly delegated to the Disbursing Agent by the terms of this
Agreement, together with such powers as are reasonably incidental thereto.
(b) The Disbursing Agent shall not commingle any funds
received from Xxxxxx under Paragraph 2 above with any other funds and shall be
responsible for, and have control over the distribution of, all such funds. The
Disbursing Agent shall, as soon as practicable, post bond in favor of Xxxxxx in
respect to the execution and performance of its duties as Disbursing Agent and
at all times maintain a bond in an amount at least equal to all cash on hand.
The cost of the bond shall be borne by Xxxxxx.
(c) The Disbursing Agent may hire such employees, agents
and professionals as the Disbursing Agent deems appropriate.
(d) The Disbursing Agent shall exercise the rights and
powers granted to it as Disbursing Agent in the same manner, and use the same
degree of care and skill in their exercise, as a prudent person would exercise
and use under the circumstances in the conduct of his own affairs having due
regard for the purposes set forth herein.
(e) The Disbursing Agent shall not be liable for any
action lawfully taken or omitted to be taken by it under or in connection with
this Agreementexcept for gross negligence or willful misconduct.
(f) The Disbursing Agent may resign as Disbursing Agent
upon thirty (30) days notice to Xxxxxx. If the Disbursing Agent shall resign as
Disbursing Agent under this Agreement, then the Petitioning Creditors shall
appoint a successor agent for Xxxxxx, whereupon such successor agent shall
succeed to the rights, powers and duties of the Disbursing Agent, and the term
"Disbursing Agent" shall mean such successor agent effective upon its
appointment, and the former Disbursing Agent's rights, powers and duties as
Disbursing Agent shall be terminated, without any other or further act or deed
on the part of such former Disbursing Agent or any of the parties to this
Agreement. After any retiring Disbursement Agent's resignation hereunder as
Disbursing Agent, the provisions of this Agreement shall inure to its benefit as
to any actions taken or omitted to be taken while it was Disbursing Agent under
this Agreement and the provisions of Paragraphs 5, 8, 9, 13, 14, 15, 16, 17, 18
and 19 of this Agreement shall survive the termination of the retiring
Disbursing Agent's resignation.
6. COLLATERAL AGENT APPOINTMENT.
(a) Each Petitioning Creditor hereby designates and
appoints RKMI as the Collateral Agent of such Petitioning Creditor under the
Trust Deed and hereunder, and each such Petitioning Creditor hereby authorizes
RKMI, as the Collateral Agent for such Petitioning Creditor, to take such action
on its behalf under the provisions of the Trust Deed and this Agreement and to
exercise such powers and perform such duties as are expressly delegated to the
Collateral Agent by the terms of the Trust Deed and this Agreement, together
with such other powers as are reasonably incidental thereto.
(b) The Collateral Agent, in its sole discretion, shall
be entitled to take any action or refrain from taking any action under this
Agreement or the Trust Deed (including, without limitation, the exercise of
remedies under the Trust Deed).
(c) The Collateral Agent may hire such employees, agents
and professionals as the Collateral Agent deems appropriate.
(d) The Collateral Agent shall exercise the rights and
powers granted to it as Collateral Agent in the same manner, and use the same
degree of care and skill in their exercise, as a prudent person would exercise
and use under the circumstances in
the conduct of his own affairs having due regard for the purposes set forth
herein.
(e) The Collateral Agent shall not be liable for any
action lawfully taken or omitted to be taken by it under or in connection with
the Trust Deed or this Agreement except for gross negligence or willful
misconduct. Without limiting the foregoing, no Petitioning Creditor or
Participating Creditor shall have any right of action whatsoever against the
Collateral Agent as a result of the Collateral Agent acting or refraining from
acting hereunder or under the Trust Deed unless such act or failure to act
resulted from the Collateral Agent's gross negligence or willful misconduct.
(f) The Collateral Agent may resign as Collateral Agent
upon thirty (30) days notice to the Petitioning Creditors. If the Collateral
Agent shall resign as Collateral Agent under this Agreement and the Trust Deed,
then the Petitioning Creditors shall appoint a successor agent for the
Petitioning Creditors, whereupon such successor agent shall succeed to the
rights, powers and duties of the Collateral Agent, and the term "Collateral
Agent" shall mean such successor agent effective upon its appointment, and the
former Collateral Agent's rights, powers, and duties as Collateral Agent shall
be terminated, without any other or further act or deed on the part of such
former Collateral Agent or any of the parties to this Agreement or to the Trust
Deed. After any retiring Collateral Agent's resignation hereunder as Collateral
Agent, the provisions of this Agreement shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Collateral Agent under
this Agreement and the Trust Deed and the provisions of Paragraphs 5, 8, 9, 13,
14, 15, 16, 17, 18 and 19 of this Agreement shall survive the termination of the
retiring Collateral Agent's resignation.
7. DEFAULT.
(a) If Xxxxxx (i) fails to make any payment required by
Paragraphs 2(a)(i) or 2(a)(iii) of this Agreement when due, or (ii) fails to
make any payment required by Paragraph (2)(a)(ii) of this Agreement when due and
does not cure such payment defaultwithin ten (10) days after written notice is
given to Xxxxxx by the Collateral Agent or (iii) a default under the Trust Deed
occurs which is not cured by Xxxxxx within ten (10) days after written notice is
given to Xxxxxx by the Collateral Agent, then the Collateral Agent may at any
time, at its election, declare that all Claims and all interest that accrues on
the Claims on or after April 1, 1999 are immediately due and payable. Upon
default by Xxxxxx,the Collateral Agent may exercise any and all of its remedies
with respect to the Collateral.
(b) If Xxxxxx (i) fails to make any payment required by
Paragraphs 2(a)(i) or 2(a)(iii) of this Agreement when due or (ii) fails to make
any payment required by Paragraph 2(a)(ii) of
this Agreement when due and does not cure such payment default within ten
(10) days after written notice is given to Xxxxxx by the Collateral Agent or
by a Creditor, then each of the Creditors may at any time, at such Creditor's
election, declare that such Creditor's Claim and all interest that accrues on
the Claim on or after April 1, 1999 are immediately due and payable. Upon
default by Xxxxxx, each such Creditor may exercise all rights and remedies
available at law or in equity independently of, and without limiting in any
way the rights of, the Collateral Agent.
8. APPLICATION OF PAYMENTS AND PROCEEDS OF COLLATERAL UPON
DEFAULT. Upon and after default by Xxxxxx under this Agreement, all cash held or
received by the Disbursing Agent under this Agreement and all cash held or
realized by the Collateral Agent on behalf of the Creditors under or in
connection with the exercise of remedies under the Trust Deed shall be applied
as follows:
(a) To the payment of any and all unpaid expenses and
fees (including reasonable attorneys' fees) incurred by the Disbursing Agent in
performing its duties hereunder and the Collateral Agent in obtaining, taking
possession of, removing, insuring, repairing, storing, and disposing of the
Collateral and any and all amounts incurred by the Collateral Agent in
connection therewith;
(b) Next, any surplus then remaining to the ratable
payment of so much of the Claims as constitutes unpaid interest that accrued on
or after April 1, 1999, ratably according to such amounts owing to the
respective Creditors.
(c) Next, any surplus then remaining to the ratable
payment of the Claims,ratably according to such amounts owing to the respective
Creditors as of April 1, 1999; and
(d) If no Claims are outstanding, any surplus then
remaining shall be paid to Xxxxxx, it being understood that Xxxxxx shall remain
liable to the Creditors if and to the extent the Claims, and any interest
thereon, are not paid in full.
9. COMPENSATION TO DISBURSING AGENT AND COLLATERAL AGENT;
INDEMNITY.
(a) In lieu of any commission or fee which may be fixed
by applicable law for trustees or fiduciaries, the Disbursing Agent and
Collateral Agent shall be entitled to
reasonable compensation, to be paid by Xxxxxx, based upon the following
hourly rates:
Principals $200
Assistants $ 80
In addition, the Disbursing Agent and Collateral Agent shall be entitled to
reimbursement from Xxxxxx for all reasonable and necessary out-of-pocket costs,
expenses and advances incurred or made by them as Disbursing Agent or Collateral
Agent. Such compensation, costs and expenses shall be paid by Xxxxxx within
thirty (30) days after a detailed billing statement therefor is delivered to
Xxxxxx. To the extent such compensation and reimbursement is not paid by Xxxxxx,
such compensation and reimbursement may be paid from the Collateral and/or
payments made by Xxxxxx under Paragraph 2 below.
(b) Concurrently with its execution of this Agreement,
Xxxxxx shall deposit with RKMI the amount of $7,500. Xxxxxx hereby grants to
RKMI a security interest in such deposit to secure Xxxxxx'x obligations to RKMI
under this Agreement and the Trust Deed.
(c) The Disbursing Agent and the Collateral Agent shall
be indemnified by and receive reimbursement from Xxxxxx (or to the extent not
reimbursed by Xxxxxx, from all cash held, received or realized by the Disbursing
Agent or the Collateral Agent on behalf of the Creditors) from and against any
and all loss, liability, cost, damage or expense (including legal or other
professional expenses incident thereto) which it may incur or sustain in the
exercise and performance of any of their rights, powers or duties under this
Agreement or the Trust Deed, as applicable, or which they may incur or sustain
by virtue of serving or having served as the Disbursing Agent or Collateral
Agent under this Agreement; PROVIDED that Xxxxxx shall not be liable for the
payment of, nor shall any of the cash held, received or realized by the
Disbursing Agent or the Collateral Agent be chargeable for, any portion of such
loss, liability, cost, damage or expense resulting solely from the gross
negligence or willful misconduct of the Disbursing Agent or the Collateral
Agent.
(d) The rights and obligations under this Paragraph 9 (as
well as under Paragraphs 13 through 19 hereof) shall survive the payment or
satisfaction of the Claims. The Disbursing Agent and the Collateral Agent shall
have a continuing security interest in all cash and other property held by them,
in their capacities as such, in order to secure their respective rights to
payment and indemnification under this Agreement and the Trust Deed, as
applicable.
10. THIRD PARTY BENEFICIARIES. Each Participating Creditor is an
intended third party beneficiary of the rights conferred upon the Creditors by
this Agreement.
11. TERMINATION. This Agreement shall terminate at such time as
all of the following events have occurred: (a) all payments to the Creditors
required by this Agreement shall have been made; (b) to the extent that the
Collateral Agent is required to dispose of the Collateral, all proceeds of
the Collateral shall have been disbursed as required by this Agreement; (c)
the Disbursing Agent and the Collateral Agent shall have paid or discharged
all expenses and obligations incurred by them pursuant to this Agreement; and
(d) Xxxxxx, the Disbursing Agent and the Collateral Agent shall have
otherwise fully discharged their respective duties under this Agreement.
12. NOTICES. All notices, requests, demands and other
communications given under or relating to this Agreement shall be in writing and
deemed to have been given only when received and shall be delivered personally,
by private messenger or courier service or by means of facsimile transmission to
the following persons or their assigns at the following addresses or facsimile
numbers unless changed by written notice to the other person:
If to Xxxxxx:
Xxxx X. Xxxxxxx
Ball Xxxxx LLP
000 XX Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
If to the Petitioning
Creditors:
Xxxxx X. Xxxxxxx
Xxxxxx & Xxxxxxx, P.C.
0000 XX Xxxxx Xxxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
If to the Collateral Agent or the
Disbursing Agent:
Xxxxxx X. Xxxxxx, Inc.
0000 XX Xxxxx Xxxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
13. ATTORNEYS' FEES. If any party commences a suit or action to
enforce any provision of this Agreement or rights of the Collateral Agent, the
prevailing party shall be entitled to recovery its attorneys' fees and legal
expenses at trial or on appeal, in addition to all other sums provided by law.
14. SEVERABILITY. Any provision of this Agreement that is deemed
invalid or unenforceable shall be ineffective only to the extent of such
invalidity or unenforceability, without rendering invalid or unenforceable the
remainder of this Agreement.
15. INTEGRATION. This Agreement constitutes the complete and
exclusive statement of the subject matter hereof and supersedes all prior or
contemporaneous agreements related to such subject matter.
16. CONSTRUCTION. All headings and captions have been inserted for
convenience only and shall not affect the interpretation of this Agreement.
17. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Oregon, without regard to
choice of law rules.
18. COUNTERPARTS. This Agreement may be executed in multiple
counterpart copies, each of which shall be deemed an original and all of which
taken together shall constitute one and the same document.
19. AMENDMENT OR WAIVER. No amendment or waiver of any provision
of this Agreement shall be effective unless such amendment or waiver is
evidenced by a writing signed by the party against whom enforcement is sought.
Dated: ____________________ XXXXXX SNOWBOARDS, INC.
By:/s/ Xxxxx Xxxxxx
Its: President
Dated: ____________________ CRB MANUFACTURING, INC.
By:__________________________
Its:_________________________
Dated: ____________________ XXXXX & XXXXXX
By:__________________________
Its:_________________________
Dated: ____________________ TRIAX METAL PRODUCTS, INC.
By:__________________________
Its:_________________________
Dated: ____________________ AMERI-TOOL INDUSTRIES, INC.
By:__________________________
Its:_________________________
Dated: ____________________ EDGE TECH, INC.
By:__________________________
Its:_________________________
Dated: ____________________ CLASSIC PRINT PRODUCTS, INC.
By:__________________________
Its:_________________________
Dated: ____________________ XXXXXX X. XXXXXX, INC.
By:__________________________
Its:_________________________
