[LOGO]
BANK OF AMERICA
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PROMISSORY NOTE - (LIBOR)
$22,780,000.00 Loan No. 3029857
August 7, 1997 Orange, California
1. XXXXXXXX'S PROMISE TO PAY.
For value received, OAKLEY, INC., a Washington corporation ("Borrower")
promises to pay TWENTY TWO MILLION SEVEN HUNDRED EIGHTY THOUSAND AND NO/100
DOLLARS ($22,780,000.00), or so much of that sum as may be advanced under this
promissory note (the "Note") plus interest, to the order of Bank of America
National Trust and Savings Association ("Bank") at P.O. Box 7112, Pasadena,
California, or at such other place as the holder of this Note may from time to
time require.
This Note evidences a loan (the "Loan") from Bank to Borrower made pursuant
to a Standing Loan Agreement (the "Loan Agreement") between Bank and Borrower of
even date herewith. This Note is secured by a Deed of Trust With Assignment of
Rents, Security Agreement and Fixture Filing (the "Deed of Trust") covering
certain real property and other collateral as described therein.
2. INTEREST RATE AND PAYMENT TERMS.
A. THE INTEREST RATE. Interest on unpaid principal shall accrue at a
rate equal to the LIBOR Rate, as defined below, plus one and 15/100ths percent
(1.15%) (the "Spread") per year. The LIBOR Rate shall be adjusted every three
(3) months on each December 1, March 1, June 1, and September 1, or if such
date is not a Banking Day, the next succeeding Banking Day ("Reset Date"). The
"LIBOR Rate" means the interest rate determined by the following formula. (All
amounts in the calculation will be determined by Bank as of the Reset Date.)
LONDON INTER-BANK OFFERED RATE
LIBOR Rate = -------------------------------
(1.00 - Reserve Percentage)
Where,
(1) "London Inter-Bank Offered Rate" is the average per annum rate of
interest, at which United States dollar deposits in the amount of the Loan
would be offered for three (3) month periods by major banks in the London
U.S. dollar inter-bank market, as shown on Telerate Page 3750 (or such
other page as may replace it) as of 11:00 a.m. (London time) on the day
that is two (2) London Banking Days preceding the Reset Date. If such rate
does not appear on the Telerate Page 3750 (or such other page that may
replace it), the rate for that three (3) month period will be determined by
such alternate method as reasonably selected by Bank.
(2) "Reserve Percentage" means the total of the maximum reserve
percentages as prescribed by the Board of Governors of the Federal Reserve
System for determining the reserves to be maintained by member banks of the
Federal Reserve System for Eurocurrency Liabilities as defined in Federal
Reserve Board Regulation D, rounded upward to the nearest 1/100 of one
percent. The percentage will be expressed as a decimal, and will include,
but not be limited to, marginal, emergency, supplemental, special, and
other reserve percentages.
(3) "Banking Day" shall mean a day other than a Saturday or a Sunday
on which Bank is open for business in California, New York and London and
dealing in offshore dollars. "London Banking Day" shall mean a day on
which Bank's London Branch is open for business and dealing in offshore
dollars.
Initially, interest will accrue at the rate of six and eighty four one
hundredths percent (6.84%) per year (the "Note Rate"). This initial interest
rate is based on the LIBOR Rate as defined above, even if the number of days
between the date the Loan is advanced and the first Reset Date is greater than
or less than three (3) months. The interest rate will change every three (3)
months with changes in the LIBOR Rate.
B. MONTHLY INTEREST PAYMENTS. Interest shall be payable on the first day
of each month in arrears (the "Interest Payment").
C. PRINCIPAL PAYMENTS. Principal shall be due and payable in
installments of $379,667.00 on each Reset Date, commencing with December 1,
1997. Borrower shall make a final payment of all remaining unpaid principal,
accrued interest and other sums due under this Note, due and payable on
September 1, 2002 (the "Maturity Date").
D. INTEREST APPORTIONMENT AND PAYMENT ALLOCATION. The amount of each
year's interest on the Note will be calculated on the basis of a 360-day year
and actual days elapsed, which results in more interest than if a 365-day year
were used. The payments will be applied first to accrued but unpaid interest
and then to principal.
E. NO LIMIT ON AMOUNT OF INTEREST OR PAYMENT CHANGES. There is no limit
on the amount that the interest rate or interest payments on this Note may
increase or decrease on any single Reset Date, or in the aggregate on all Reset
Dates throughout the life of the Loan.
F. NOTICE OF CHANGES. Bank will deliver to Borrower notice of any
changes in the interest rate, but the effectiveness and date of such changes
shall not be affected by such notice or the lack thereof.
G. SPECIAL CIRCUMSTANCES. From time to time, Bank may determine that:
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(1) dollar deposits in the principal amount of the Loan, and for the
period between Reset Dates, are not available in the London inter-bank
market; or
(2) it is illegal for Bank to fund the Loan using dollar deposits in
the London inter-bank market; or
(3) the LIBOR Rate does not accurately reflect the cost of funding
the Loan.
If Bank determines in its sole discretion that any such event has occurred
("Special Circumstances"), then at Bank's option the following provisions shall
apply:
(4) if Bank in its sole discretion determines that a Special
Circumstance would not exist if the interest rate were determined based on
an inter-bank market for U.S. dollars located outside the United States
other than the London inter-bank market, then such alternative market,
selected by Bank, shall be used.
(5) If subparagraph (4) does not apply, then the Loan shall bear
interest at a rate per annum equal to Bank's Reference Rate plus one
quarter (.25%) percentage points. The Reference Rate is the rate of
interest publicly announced from time to time by Bank in San Francisco,
California, as its Reference Rate. The Reference Rate is set by Bank based
on various factors, including Bank's costs and desired return, general
economic conditions and other factors, and is used as a reference point for
pricing some loans. Bank may price loans to its customers at, above, or
below the Reference Rate. Any change in the Reference Rate shall take
effect at the opening of business on the day specified in the public
announcement of a change in Bank's Reference Rate
3. PRINCIPAL PREPAYMENTS.
A. Subject to the terms and conditions of this Section 3, Borrower has
the right to prepay principal in whole or in part on any Banking Day before the
Maturity Date in minimum amounts equal to or greater than twenty percent (20%)
of the face amount of this Note. All prepayments of principal on the Note shall
be applied to the most remote principal installment or installments then unpaid.
B. Borrower shall give Bank irrevocable written notice of Xxxxxxxx's
intention to make the prepayment, which notice shall specify the date and amount
of the prepayment. The notice must be received by Bank at least five (5)
Banking Days in advance of the prepayment.
C. Each prepayment of the Loan, whether voluntary, by reason of
acceleration or otherwise, shall be accompanied by the amount of all accrued
interest on the amount prepaid; and, if the prepayment is on a date other than a
Reset Date, a prepayment fee ("Prepayment Fee") equal to the amount (if any) by
which
(1) the additional interest which would have been payable on the
amount prepaid had it not been paid until the next Reset Date, exceeds
(2) the interest which would have been recoverable by Bank by placing
the amount prepaid on deposit in the domestic certificate of deposit
market, the eurodollar deposit market, or other appropriate money market
selected by the Bank, for a period starting on the date on which it was
prepaid and ending on the next Reset Date.
4. XXXXXXXX'S WAIVER OF PREPAYMENT RIGHT.
By its signature below, Borrower waives any right under California Civil
Code Section 2954.10 or otherwise to prepay the Loan, in whole or in part,
without a Prepayment Fee as described above. Borrower acknowledges that
prepayment of the Loan may result in Bank's incurring additional losses, costs,
expenses and liabilities, including, but not limited to, lost revenue and lost
profits. Xxxxxxxx therefore agrees to pay the Prepayment Fee if any principal
amount is prepaid, whether voluntarily or by reason of acceleration, including,
but not limited to, acceleration upon any transfer or conveyance of any right,
title or interest in the Property giving Bank the right to accelerate the
maturity of this Note as provided in the Deed of Trust. Xxxxxxxx agrees that
Xxxx's willingness to offer the interest rate described above to Borrower is
sufficient and independent consideration, given individual weight by Bank, for
this waiver. Borrower understands that Bank would not offer such an interest
rate to Borrower absent this waiver.
OAKLEY, INC.,
a Washington corporation
By:
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Name:
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Its:
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By:
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Name:
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Its:
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5. LATE PAYMENTS.
A. LATE CHARGE FOR OVERDUE PAYMENTS. If Bank has not received the full
amount of any monthly payment by the end of ten (10) calendar days after the
date it is due, Borrower will pay a late charge to Bank in the amount of three
percent (3%) of the overdue payment. Borrower will pay this late charge only
once on any late payment.
B. DEFAULT RATE. From and after the Maturity Date, or such earlier date
as all sums owing on this Note become due and payable by acceleration or
otherwise, all sums owing on this Note (including interest), at the option of
Bank, shall bear interest from the date the payment becomes due until Borrower
pays in full, at three percentage (3%) points above the rate at which interest
would otherwise accrue under this Note. This may result in compounding of
interest.
6. MISCELLANEOUS.
A. PAYMENTS. All amounts payable under this Note are payable in lawful
money of the United States. Checks constitute payment only when collected.
B. JOINT AND SEVERAL. If more than one person or entity are signing this
Note as Borrower, their obligations under this Note will be joint and several.
C. LOAN AGREEMENT. This Note is subject to the terms and conditions of
the Loan Agreement, which, among other things, contains provisions for
acceleration of the maturity of this Note.
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D. GOVERNING LAW. This Note is governed by the laws of the State of
California. This Note may be executed in one or more counterparts, each of
which is, for all purposes deemed an original and all such counterparts taken
together, constitute one and the same instrument.
X. XXXXXXX. If Bank delays in exercising or fails to exercise any of its
rights under this Note, that delay or failure shall not constitute a waiver of
any of Bank's rights, or of any breach, default or failure of condition of or
under this Note. No waiver by Bank of any of its rights, or of any such breach,
default or failure of condition shall be effective, unless the waiver is
expressly stated in a writing signed by Bank.
F. ASSIGNMENT. This Note inures to and binds the heirs, legal
representatives, successors and assigns of Borrower and Bank; provided, however,
that Borrower may not assign this Note or any Loan funds, or assign or delegate
any of its rights or obligations, without the prior written consent of Bank in
each instance. Bank, in its sole discretion, may transfer this Note, and may
sell or assign participations or other interests in all or part of the Loan, on
the terms and subject to the conditions of the loan documents, all without
notice to or the consent of Borrower.
G. CUMULATIVE REMEDIES. All of Bank's remedies in connection with this
Note or under applicable law shall be cumulative, and Bank's exercise of any one
or more of those remedies shall not constitute an election of remedies.
IN WITNESS WHEREOF, Xxxxxxxx has duly executed and delivered this Note to
Bank as of the date first above written.
Borrower:
OAKLEY, INC.,
a Washington corporation
By:
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Name:
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Its:
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By:
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Name:
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Its:
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