Document:

exv10w26

 

Exhibit 10.26

PROMISSORY NOTE

	 	 	 	 	 
	Borrower:
	 	Valentec Systems, Inc.
	 
	 	 	 	 
	 
	 	2618 York Ave; Minden, LA 71055
	 
	 	 	 	 
	Lender:
	 	Robert Zummo
	 
	 	 	 	 
	Principal Amount:
	 	$400,000.00

	 	1.	 	FOR VALUE RECEIVED, Valentec Systems, Inc. promises to pay to Robert Zummo at 9475
High Meadows Ranch, Durango, CO 81301, or at such address as may later be provided in
writing to Valentec Systems, Inc., the principal sum of four hundred thousand ($400,000.00) USD, without interest payable on the unpaid principal.
	 
	 	2.	 	This Note is repayable in full within 30 days of Robert Zummo providing Valentec
Systems, Inc. with written notice of demand.
	 
	 	3.	 	This Note will be construed in accordance with and governed by the laws of the State
of Louisiana.
	 
	 	4.	 	All costs, expenses and expenditures including, and without limitation, the complete
legal costs incurred by Robert Zummo in enforcing this Note as a result of any default by
Valentec Systems, Inc., will be added to the principal then outstanding and will
immediately be paid by Valentec Systems, Inc..
	 
	 	5.	 	This Note will ensure to the benefit of and be binding upon the respective heirs,
executors, administrators, successors and assigns of Valentec Systems, Inc. and Robert
Zummo. Valentec Systems, Inc. waives presentment for payment, notice of non-payment,
protest and notice of protest.

IN WITNESS WHEREOF Valentec Systems, Inc. has duly affixed its signature by a duly authorized
officer under seal on this 8th day of October, 2001.

	 	 	 	 	 	 	 
	SIGNED, SEALED AND DELIVERED
	 	  
	 	 	 	 
	this ______ day of _________________, ______
	 	  
	 	 	 	 
	in the presence of:
	 	  
	 	 	 	 
	 
	 	  
	 	 	 	 
	 
	 	  
	 	  /s/ Steve Shows	 	(SEAL)
	 
	 	  
	 	 	 	 
	 
	 	  
	 	Valentec Systems, Inc.	 	 
	 	 	  
	 	 
	WITNESS:exv10w27

 

EXHIBIT 10.27

[LOGO]

Leumi

BANK LEUMI USA

MEMBER FDIC

PROMISSORY NOTE

			
	 	 	 
	New York, N.Y. November 17, 2003
	 	$1,000,000

     For value Received, VALENTEC SYSTEMS, INC. promise(s) to pay to the order of BANK LEUMI USA
(the “Bank”), at its offices at 564 Fifth Avenue, New York, New York 10036, the principal sum of
ONE MILLION Dollars (“Maximum Principal Amount”) or, if less, the aggregate unpaid principal sum of
all loans made by the Bank, in its sole discretion, to the matter of this Note from time to time.
The principal sum of each such loan shall be payable May 3, 2004.

     Within the limits of the Maximum Principal Amount, the maker may borrow, prepay, and reborrow
in the manner provided herein.

     Each loan granted hereunder shall be secured by a standby letter of credit in the amount of
such loan issued by Bank Leumi le-Israel B.M., an Israeli banking institution.

     The maker shall pay to the Bank, on a quarterly basis, in arrears, an unused facility fee for
the quarter just ended of 0.25% per annum on the amount equal to the excess of the Maximum
Principal Amount over the average daily outstanding principal balance of this note during such
quarter.

     Each loan shall bear interest (from the date of such loan) at a rate per annum which shall be
equal to 2% per annum above the Libor Rate (Reserve Adjusted)(*) for a three month term, but in no
event in excess of

 

			
	*	 	“Libor Rate” means, relative to any Interest Period (hereinafter defined) for loans made
pursuant to this Note and which bear interest at the “Libor Rate (Reserve Adjusted)” (i) the
rate quoted by the British Bankers Association in London as its “LIBOR” rate for U.S. dollar
deposits at or about 11:00 am, London time, on the second Business Day prior to the
commencement of the Interest Period; provided, however, that if the Bank adopts generally in
its business a different rate quoting system or service for obtaining the rate of interest
commonly known as “LIBOR’ for U.S. dollar deposits, then upon giving prompt notice to the
Borrower such alternative rate quoting system or service shall be utilized for determining
“LIBOR” in lieu of the rate quoted by the British Bankers Association, and (ii) if the rate
may not be determined by the Bank, as provided in the preceding clause (i) for any reason, as
determined by the Bank in its reasonable judgment, then the rate equal to the rate of Interest
per annum determined by the Bank to be the arithmetic mean (rounded upward to the next
1/16th of 1%) of the rates of interest per annum at which U.S. dollar deposits in
the approximate amount of the amount of the loan to be made or continued hereunder by the Bank
and having a maturity comparable to such Interest Period would be offered to the Bank in the
London Interbank market at its request at approximately 11:00 a.m. (London time) two Business
Days prior to the commencement of such Interest Period.
	 
	 	 	“Libor Reserve Percentage” means, relative to any Interest Period for loans hereunder; the
percentage (expressed as a decimal), rounded upward to the next 1/100th of 1%) in effect on
such day (whether or not applicable to the Bank) under regulations issued from time to time
by the Federal Reserve System Board for determining the maximum reserve requirement
(including any emergency, supplemental or other marginal reserve requirement) with respect
to Eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D
of the Federal Reserve System Board).
	 
	 	 	“Libor Rate (Reserve Adjusted)” means, relative to any loan to be made or continued
hereunder for any Interest Period, the rate of interest per annum (rounded upwards to the
next 1/16th of 1%) determined by the Bank as follows:

	 	 	 	 	 	 	 
	 

	 	Libor Rate
	 	 	 	Libor Rate
	 

	 	 	 	 
	 	 
	 
	 

	 	(Reserve Adjusted)
	 	=
	 	1.00 — Libor Reserve Percentage

the maximum rate permitted by applicable law; provided, that in the event the Bank shall have
determined that by reason of circumstances affecting the Libor Rate (Reserve Adjusted) adequate and
reasonable means do not exist for

 

 

ascertaining the Libor Rate (Reserve Adjusted) for any Interest Period, or the time remaining to
the stated maturity date of this Note is less than the Interest Period, then the applicable rate of
interest during such Interest Period shall be equal to the rate of interest designated by the Bank,
and in effect from time to time, as its “Reference Rate” plus 1 % per annum adjusted when said
Reference Rate changes, but in no event in excess of the maximum rate permitted by law (the maker
acknowledges that the Reference Rate may not necessarily represent the lowest rate of interest
charged by the Bank to customers); provided further that no Libor Rate (Reserve Adjusted)-based
loan shall be made less than one month before the stated maturity date of this Note or after the
occurrence and continuance of an Event of Default or an event which, upon notice, passage of time
or both would constitute an Event of Default. Interest hereunder shall be payable on the last day
of each Interest Period and at maturity (whether by acceleration or otherwise). The term “Interest
Period” as used in this Note shall mean a period of three month(s). No Interest Period shall
extend beyond the stated maturity date of this Note. The initial Interest Period for this Note
shall begin on the day of the initial draw down under the Note, and each subsequent Interest Period
shall begin on the last day of the immediately preceding Interest Period. If an Interest Period
would otherwise end on a day that is not a Business Day, such Interest Period shall end on the next
succeeding Business Day; provided, however, that, if any Interest Period would otherwise end on a
day that is not a Business Day but is a day of the month after which no further Business Day occurs
in such month, such Interest Period shall end on the next preceding Business Day and further
provided that if any Interest Period commences on the last Business Day in a calendar month or if
there is no corresponding day in the calendar month in which it is to end, then it shall end on the
last Business Day in a calendar month. The Bank shall give notice to the maker of the interest rate
determined for each Interest Period as provided herein and such notice shall be conclusive and
binding upon the maker for all purposes absent manifest error. The maker shall pay to the Bank to
compensate it for any loss, cost or expense that the Bank determines is attributable to any
prepayment of a loan made by the Bank to the maker using the Libor Rate (Reserve Adjusted). Such
compensation shall be an amount equal to the excess (if any) of (i) the amount of interest that
otherwise would have accrued on the principal amount so prepaid for the period from the date of
such prepayment to the last day of the then current Interest Period for such loan at the applicable
rate of interest for such loan provided for herein less (ii) the amount of interest that otherwise
would have accrued on such principal amount from the date of such prepayment until the end of the
then current Interest Period at a rate per annum equal to the interest component of the amount the
Bank would have bid in The London Interbank market for dollar deposits of leading banks in amounts
comparable to such principal amount and with maturities comparable to such period (as reasonably
determined by the Bank). The term “Business Day” shall mean any day of the year on which the Bank
is open for business (as required or permitted by law or otherwise) and on which dealings in U.S.
dollar deposits are carried on in London, England.

     If any law, treaty, rule, regulation or determination of a court or governmental authority or
any change therein or in the interpretation or application thereof (each, a “Change in Law”) shall
make it unlawful for the Bank to make Libor Rate (Reserve Adjusted)-based loans, or to maintain
interest rates based on Libor, then in the former event, any obligation of the Bank contained
herein or in any agreement of the Bank to make available such unlawful Libor Rate (Reserve
Adjusted)-based loans shall immediately be cancelled, and in the latter event, any such unlawful
Libor Rate (Reserve Adjusted)-based loans then outstanding shall be converted, at the Bank’s
option, so that interest on the outstanding principal balance subject hereto is determined in
relation to the Reference Rate as hereinabove provided; provided however, that if any such Change
in Law shall permit any Libor Rate (Reserve Adjusted)-based loans to remain in effect until the
expiration of the Interest Period applicable thereto, then such permitted Libor Rate (Reserve
Adjusted)-based loans shall continue in effect until the expiration of such Interest Period. Upon
the occurrence of any of the foregoing events, maker shall pay to the Bank immediately upon demand
such amounts as maybe necessary to compensate the Bank for any fines, fees, charges, penalties or
other costs incurred or payable by the Bank as a result thereof and which are attributable to any
Libor Rate (Reserve Adjusted) options made available to maker hereunder, and any reasonable
allocation made by the Bank among its operations shall be conclusive and binding upon maker.

     If any Change in Law or compliance by the Bank with any request or directive (whether or not
having the force of law) from any central bank or other governmental authority shall:

     (A) subject the Bank to any tax, duty or other charge with respect to any Labor Rate (Reserve
Adjusted) options, or change the basis of taxation of payments to the Bank of principal, interest,
fees or any other amount payable hereunder (except for changes in the rate of tax on the overall
net income of the Bank); or

 

 

     (B) impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar
requirement against assets held by, deposits or other liabilities in or for the account of,
advances or loans by, or any other acquisition of funds by any office of the Bank; or

     (C) impose on the Bank any other condition;

     and the result of any of the foregoing is to increase the cost to the Bank of making, renewing or
maintaining any Libor Rate (Reserve Adjusted)-based loan hereunder and/or to reduce any amount
receivable by the Bank in connection therewith, then in any such case, maker shall pay to the Bank
immediately upon demand such amounts as may be necessary to compensate the Bank for any additional
costs incurred by the Bank and/or reductions in amounts received by the Bank which are attributable
to such Libor Rate (Reserve Adjusted)-based loan. In determining which costs incurred by the Bank
and/or reductions in amounts received by the Bank are attributable to any Libor Rate (Reserve
Adjusted)-based loan made to maker hereunder, any reasonable allocation made by the Bank among its
operations shall be conclusive and binding upon maker.

     The Bank is hereby authorized to enter on the schedule attached hereto the amount of each loan
and, each payment of principal thereon, without any further authorization on the part of the maker
or any guarantor of this Note, but the Bank’s failure to make such entry shall not limit or
otherwise affect the obligations of the maker or any guarantor of this Note. lathe event that any
other Liabilities (as hereinafter defined) of maker to the Bank are due at anytime that the Bank
receives a payment from maker on account of this Note or any such other Liabilities of maker, the
Bank may apply such payments to amounts due under this Note or any such other Liabilities in such
manner as the Bank, in its discretion, elects, regardless of any instructions from maker to the
contrary.

     The maker and each guarantor of this Note acknowledge and agree that the use of this form of
note is for their convenience, and there is no obligation on the part of the Bank to make loans to
the maker whatsoever.

     Interest shall be computed on the basis of a 360-day year.

     Each maker authorizes (but shall not require) the Bank to debit any account maintained by the
maker with the Bank, at any date on which the payment of principal or of interest on any of the
Liabilities is due, in an amount equal to any unpaid portion of such payment. If the time for
payment of principal of or interest on any of the Liabilities or any other money payable hereunder
or with respect to any of the Liabilities becomes due on a day on which the Bank’s offices are
closed (as required or permitted by law or otherwise), such payment shall be made on the next
succeeding Business Day, and such extension shall be included in computing interest in connection
with such payment. All payments by any maker of this Note on account of principal, interest or
fees hereunder shall be made in lawful money of the United States of America, in immediately
available funds.

     All Property (as hereinafter defined) held by the Bank shall be subject to a security interest
in favor of the Bank or holder hereof as security for any and all Liabilities. The term “Property”
shall mean the balance of every deposit account of the maker with the Bank or any of the Bank’s
nominees or agents and all other obligations of the Bank or any of its nominees or agents to the
maker, whether now existing or hereafter arising, and all other personal property of the maker
(including without limitation all money, accounts, general intangibles, goods, instruments,
documents and chattel paper) which, or evidence of which, are now or at any time in the future
shall come into the possession or under the control of or be in transit to the Bank or any of its
nominees or agents for any purpose, whether or not accepted for the purposes for which it was
delivered. The term “Liabilities” shall mean the indebtedness evidenced by this Note and all other
indebtedness, liabilities and obligations of any kind of the maker (or any partnership or other
group of which the maker is a member) to (a) the Bank, (b) any group of which the Bank is a member,
or (c) any other person if the Bank has a participation or other interest in such indebtedness,
liabilities or obligations, whether (i) for the Bank’s own account or as agent for others, (ii)
acquired directly or indirectly by the Bank from the maker or others, (iii) absolute or contingent,
joint or several, secured or unsecured, liquidated or unliquidated, due or not due, contractual or
tortious, now existing or hereafter arising, or (iv) incurred by the maker as principal, surety,
endorser, guarantor or otherwise, and including without limitation all expenses, including
attorneys’ fees, incurred by the Bank in connection with any such indebtedness, liabilities or
obligations or any of the Property (including any sale or other disposition of the Property).

 

 

     Upon the happening, with respect to any maker or guarantor of this Note or any assets of any
such maker or guarantor, of any of the following events: death of the maker or guarantor or any
member of the maker or guarantor (if a partnership); the failure to furnish the Bank with any
requested information or failing to permit inspection of books or records by the Bank or any of its
agents; the making of any misrepresentation to the Bank in obtaining credit for any of them;
dissolution (if a corporation or partnership); the making of a mortgage or pledge; the commencement
of a foreclosure proceeding; default in the payment of principal or interest on this Note or in the
payment of any other obligation of any said maker or guarantor held by the Bank or holder thereof
or in the performance or observance of any covenant or agreement contained in the instrument
evidencing such obligation; default in the payment of principal of or interest on any indebtedness
for borrowed money owed to any other person or entity (including any such indebtedness in the
nature of a lease) or default in the performance or observance of the terms of any instrument
pursuant to which such indebtedness was created or is secured, the effect of which default is to
cause or permit any holder of any such indebtedness to cause the same to become due prior to its
stated maturity (and whether or not such default is waived by the holder thereof); a change in the
financial condition or affairs of any of them which in the opinion of the Bank or subsequent holder
hereof materially reduces his, their or its ability to pay all of his, their or its obligations;
the suspension of business; the making of an assignment for the benefit of creditors, or the
appointment of a trustee, receiver or liquidator for the maker or guarantor or for any of his, its
or their property, or the commencement of any proceedings by the maker or guarantor under any
bankruptcy, reorganization, arrangement of debt, insolvency, readjustment of debt, receivership,
liquidation or dissolution law or statute (including, if the maker or guarantor is a partnership,
its dissolution pursuant to any agreement or statute), or the commencement of any such proceedings
without the consent of the maker or guarantor, as the case may be, and such proceedings shall
continue undischarged for a period of 30 days; the sending of notice of an intended bulk sale; the
entry of judgments or any attachment, levy or execution against any of his, their or its properties
shall not be released, discharged, dismissed, stayed or fully bonded for a period of 30 days or
more after its entry, issue or levy, as the case may be; or the issuance of a warrant of distraint
or assertion of a lien for unpaid taxes, this Note, if not then due or payable on demand, shall
become due and payable immediately without demand or notice and all other debts or obligations of
the makers hereof to the Bank or holder hereof, whether due or not due and whether direct or
contingent and howsoever evidenced, shall, at the option of the Bank or holder hereof, also become
due and payable immediately without demand or notice. After this Note becomes due, at stated
maturity or on acceleration, any unpaid balance hereof shall bear interest from the date it becomes
due until paid at a rate per annum 3% above the rate borne by this Note when it becomes due or, if
such rate shall not be lawful with respect to the undersigned, then at the highest lawful rate. The
liability of any party to commercial paper held by the Bank: or holder hereof, other than the
makers hereof, shall remain unaffected hereby and such parties shall remain liable thereon in
accordance with the original tenor thereof. Each maker agrees that if an attorney is retained to
enforce or collect this Note or any other obligations by reason of non-payment of this Note when
due or made due hereunder, a reasonable attorneys’ fee shall be paid in addition, which fees shall
be computed as follows: 15% of the principal, interest and all other sums due and owing to the Bank
or holder or the reasonable value of the attorneys’ services, whichever is greater.

     This Note shall be governed by the laws of the State of New York and shall be binding upon the
maker and the maker’s heirs, administrators, successors and assigns. The maker hereby irrevocably
consents to the jurisdiction of any New York State or Federal court located in New York City over
any action or proceeding arising out of any dispute between the maker and the Bank, and the maker
further irrevocably consents to the service of process in any such action or proceeding by the
mailing of a copy of such process to the maker at the address set forth below. In the event of
litigation between the Bank and the maker over any matter connected with this Note or resulting
from transactions hereunder, the right to a trial by jury is hereby waived by the Bank and the
maker. The maker also waives the right to interpose any set-off or counterclaim of any nature.
The Bank or any holder may accept late payments, or partial payments, even though marked “payment
in full” or containing words of similar import or other conditions, without waiving any of its
rights. No amendment, modification or waiver of any provision of this Note nor consent to any
departure by maker therefrom shall be effective, irrespective of any course of dealing, unless the
same shall be in writing and signed by the Bank, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.

     The rights and remedies of the Bank provided for hereunder (including but not limited to the
right to accelerate Liabilities of maker and to realize on any security for say such Liabilities)
are cumulative with the rights and remedies of the Bank available under any other instrument or
agreement or under applicable law.

 

 

     The undersigned, if more than one, shall be jointly and severally liable hereunder.

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 	 	VALENTEC SYSTEMS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Robert A. Zummo	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Illegible Signature	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	2618 York Avenue	 	 
	 	 	 	 	 
	 	 	Minden, LA 71055	 	 
	 	 	 	 	 

 

 

[Valentec Systems, Inc.]

As of December 19, 2005

Bank Leumi USA

564 Fifth Avenue

New York, New York 10036

Re:       Request for Extension of Maturity Date of Note

Dear Sir or Madam:

     The undersigned requests that you extend the maturity date of our note dated November 17, 2003
in the original principal amount of $1,000,000 form the present maturity date of March
15, 2006 to a new maturity date of June 15, 2006. The undersigned agrees that all
other provisions of the note shall remain unchanged.

     Please indicate your acceptance by singing and returning a copy of this letter to the
undersigned.

	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 	 	 	 	Very truly yours,	 	 
	 
	 	 	 	 	 	 	 	 
	(Individuals sign below)	 	 	 	(Corporation or Partnership sign below)	 	 
	 
	 	 	 	 	 	 	 	 
	X /s/ Stephen Shows	 	 	 	Valentec Systems, Inc.	 	 
	 	 	 	 	 	 	 	 	 
	(Print name)
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	X /s/ Zvika Kresiman

	 	 	 	By:
	 	     /s/ [Illegible Signature,] V.P. Operations	 	 
	 	 	 	 	 	 	 	 	 
	(Print name)	 	 	 	(Title)	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	     /s/ Kreisman [Illegible] Director	 	 
	 

	 	 	 	 	 	 	 	 
	 	 	 	 	(Title)	 	 

	 	 	 	 	 
	 

	 	 	 	 
	Accepted by:	 	 
	 
	 	 	 	 
	BANK LEUMI USA	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	Name:	 	 
	Title:	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	Name:	 	 
	Title:

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