EXHIBIT 4.12
THE INDEBTEDNESS EVIDENCED BY THIS NOTE AND ANY RIGHTS OR REMEDIES HEREUNDER
SHALL BE SUBORDINATE AND JUNIOR TO SUMMIT BANK AND ITS SUCCESSORS AND ASSIGNS TO
THE EXTENT AND IN THE MANNER SET FORTH IN A SUBORDINATION AGREEMENT DATED AS OF
JUNE 30, 1998.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
OR APPLICABLE STATE SECURITIES LAWS. THIS NOTE MAY NOT BE OFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT OF THE NOTE UNDER SUCH ACT AND
UNDER ANY APPLICABLE STATE SECURITIES LAWS, OR UPON SATISFACTION BY THE ISSUER
HEREOF THAT SUCH REGISTRATION IS NOT REQUIRED AS TO SUCH SALE OR OFFER.
NOBEL EDUCATION DYNAMICS, INC.
SENIOR SUBORDINATED NOTE
$10,000,000 Dated as of June 30, 1998
FOR VALUE RECEIVED, the undersigned, (i) NOBEL EDUCATION DYNAMICS, INC., a
Delaware corporation having an address at Rosetree Corporate Center II, ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ("Nobel"), and (ii) Imagine
Educational Products, Inc., a Delaware corporation, Merryhill Schools, Inc. a
California corporation, Merryhill Schools Nevada, Inc., a Nevada corporation,
NEDI, Inc., a California corporation and Lake Forest Park Montessori School,
Inc., a Washington corporation (collectively, the entities listed in this clause
(ii) shall be referred to as the "Subsidiaries") (collectively, Nobel and the
Subsidiaries shall be referred to as the "Borrower"), hereby jointly, severally,
and unconditionally promise to pay to the order of ALLIED CAPITAL CORPORATION or
its registered assigns (the "Holder"), at its offices located at ▇▇▇▇ ▇ ▇▇▇▇▇▇,
▇.▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇, or such other places the Holder shall
from time to time have designated to the Company in writing, the principal
amount of TEN MILLION AND 00/100 DOLLARS ($10,000,000), together with interest
thereon, at the times and in the manner hereinafter provided.
1. Investment Agreement. This Note is subject to the terms of the
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Investment Agreement, dated as of June 30, 1998, by and among the Borrower and
the Holder referenced above (the "Investment Agreement"), a copy of which may be
examined during normal business hours at the Company's offices. Capitalized
terms used herein and not otherwise defined herein shall have the meanings given
to them in the Investment Agreement.
2. Interest. From the date hereof and thereafter until repayment of this
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Note, interest shall accrue hereunder at the rate of ten percent (10%) per
annum, compounded quarterly.
Interest shall be calculated on the basis of a 360-day year and shall be
computed for each monthly payment period on the basis of 30 days having elapsed.
3. Payments.
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3.1 Payment of Interest. Commencing on October 1, 1998 and
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continuing on January 1, April 1, July 1, and October 1 thereafter until the
Maturity Date (as defined below), the Borrower shall pay to Holder an amount
equal to all interest accruing on the principal balance of this Note from time
to time outstanding.
3.2 Principal Payments and Payment at Maturity. The Borrower shall
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pay to Holder on or before July 1, 2004 the sum of Five Million and 00/100
Dollars ($5,000,000) (i.e., an amount equal to 50% of the original principal
amount). On or before July 1, 2005 (the "Maturity Date") or upon the
acceleration of this Note, the Borrower will pay to Holder the entire principal
amount of this Debenture then outstanding together with all accrued and unpaid
interest thereon.
3.3 Other Payment Provisions. All payments of principal and interest
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hereunder shall be payable to the Holder in lawful money of the United States of
America not later than 2 p.m. on the date when due, without any offset or
deduction whatsoever. Any payment coming due on a day which is not a business
day within the District of Columbia shall be made on the next succeeding such
business day, and any such extension of the time of payment shall be included in
the computation of interest hereunder.
3.4 Penalty. If any payment of principal or interest due under this
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Note shall be overdue, such overdue amount shall bear interest from and after
the date due, to and including the date when paid in full, at a rate equal to
the lesser of (i) the maximum rate allowed by law and (ii) thirteen percent
(13%) per annum.
3.5 Prepayments. The unpaid principal amount of this Note and any
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accrued and unpaid interest thereon may be prepaid, in whole or in part, at any
time upon 10 days prior written notice to Holder, without penalty or premium.
Such prepayments shall be credited against principal in inverse order of
maturity. Prepayments made without the required notice will not be credited
against principal until 10 days after receipt.
3.6 Due on Sale. Notwithstanding anything herein or in the
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Investment Agreement to the contrary, the entire indebtedness hereunder shall
become due and payable upon the earlier of the Maturity Date or a Transfer of
the Company's Business, as defined in Section 1.01 of the Investment Agreement.
4. Subordination. The indebtedness represented by this Note is
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subordinate to the Senior Debt of the Borrower in accordance with the terms of
the Investment Agreement, and the Subordination Agreement among the Borrower,
the Holder, and Summit Bank.
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5. No Assignment by Borrower. The Borrower shall not assign any of its
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rights under this Note nor delegate any of its duties under this Note without
the prior written consent of Holder. Holder may freely assign its rights
hereunder.
6. Covenants and Agreements. The Borrower covenants and agrees that, so
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long as any indebtedness is outstanding hereunder, it will, unless the Holder
shall otherwise consent prior thereto in writing, comply with and perform each
of the covenants and agreements set forth in the Investment Agreement, which
provisions are incorporated herein by this reference as if set forth at length
herein.
7. Default and Acceleration.
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7.1 Events of Default. Upon the occurrence of any Event of Default
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described in Article VIII of the Investment Agreement, then a default may be
declared hereunder at the option of the Holder, without presentment, demand,
protest or further notice of any kind (all of which are hereby expressly
waived). In such event, the Holder shall be entitled to exercise any or all of
the rights and remedies described in Article IX of the Investment Agreement, at
its option, in addition to such other rights and remedies as may be available at
law or in equity. At any time after a declaration of default hereunder, but
before a judgment or decree for the payment of money has been obtained, the
Holder may, by written notice, rescind the declared default if the Borrower has
paid a sum sufficient to pay all overdue interest and overdue principal amounts,
all interest on the overdue installments of interest and/or principal at the
penalty rate, and the Holder's reasonable costs of enforcing its rights
hereunder (including attorneys' fees and disbursements).
7.2 No Waiver. No course of dealing between the Holder and any other
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party hereto or any failure or delay on the part of the Holder in exercising any
rights or remedies hereunder shall operate as a waiver of any rights or remedies
of the Holder under this or any other applicable instrument. No single or
partial exercise of any rights or remedies hereunder shall operate as a waiver
or preclude the exercise of any other rights or remedies hereunder.
8. Definitions. The term "indebtedness" as used herein shall mean the
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indebtedness evidenced by this Note, including principal, interest and expenses
whether contingent, now due or hereafter to become due, and whether heretofore
or contemporaneously herewith or hereafter contracted.
9. Confession of Judgment. If payment of the indebtedness evidenced by
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this Note, or any part thereof, shall not be made when due and at maturity, by
acceleration or otherwise, the Borrower hereby authorizes and empowers any
attorney of any court of record in the United States to appear for all of the
undersigned in court, or before any clerk thereof, and confess judgment against
the undersigned in favor of the Holder of this Note for the amount due thereon
with interest and costs.
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10. Waiver of Trial by Jury. The Borrower agrees that any suit, action or
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proceeding, whether claim or counterclaim, brought or instituted by the Holder
on or with respect to this Note or any event, transaction or occurrence arising
out of or in any way connected with the Investment Agreement or the dealing of
the parties with respect thereto, shall be tried only by a court and not by a
jury. THE BORROWER HEREBY EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY
SUCH SUIT, ACTION OR PROCEEDING. The Borrower acknowledges and agrees that the
Holder would not extend credit under the Investment Agreement to the Borrower
and would not purchase this Note if this waiver of jury trial were not part of
the Investment Agreement and this Note.
11. Venue; Service of Process. Venue for any adjudication hereof shall be
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only in the courts of the State of Maryland or the Federal courts in the State
of Maryland, the jurisdiction of which courts all parties hereby consent to as
the agreement of the parties, as not inconvenient and as not subject to review
by any court other than such courts in Maryland. The Company intends that the
courts of the jurisdiction(s) in which the Company is incorporated and conducts
business should afford full faith and credit to any judgment rendered by a court
of the State of Maryland against the Company hereunder, and should hold that the
Maryland courts have jurisdiction to enter a valid, in personam judgment against
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the Company hereunder. The Company agrees that service of any summons or
complaint, and other process which may be served in any action, may be made by
mailing via registered mail or delivering a copy of such process to the Company,
and the Company hereby agrees that this submission to jurisdiction and consent
to service of process are reasonable and made for the express benefit of Holder.
12. Controlling Law. This Note and all matters related hereto shall be
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governed in accordance with the laws of the State of Maryland, without regard to
its principles of conflicts of law.
IN WITNESS WHEREOF, the undersigned have duly caused this instrument
to be executed and delivered as of the date first above written.
WITNESS/ATTEST: "COMPANY":
NOBEL EDUCATION DYNAMICS, INC.
a Delaware corporation
By: ___________________________ By:___________________________(SEAL)
{Signatures continued on next page.}
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IMAGINE EDUCATIONAL PRODUCTS, INC.
a Delaware corporation
By: ____________________________ By:___________________________(SEAL)
MERRYHILL SCHOOLS, INC.
a California corporation
By: ____________________________ By:___________________________(SEAL)
MERRYHILL SCHOOLS NEVADA, INC.
a Nevada corporation
By: ____________________________ By:___________________________(SEAL)
NEDI, INC.
a California corporation
By: ____________________________ By:___________________________(SEAL)
{Signatures continued on next page.}
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▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ MONTESSORI SCHOOL, INC.
a Washington corporation
By:______________________________ By:___________________________(SEAL)
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