EXHIBIT 10.15
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE
SECURITIES LAWS AND ACCORDINGLY MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT OR
LAWS OR PURSUANT TO AN EXEMPTION THEREFROM. THE
PRINCIPAL AMOUNT OF THIS NOTE, AND INTEREST IN RESPECT
THEREOF, IS SUBORDINATED TO THE PAYMENT IN FULL OF ALL
SENIOR INDEBTEDNESS AND IS SUBJECT TO SET-OFF, AS
DESCRIBED IN THIS NOTE.
ELECTRICAL DESIGN AND CONTROL COMPANY
NON-NEGOTIABLE SUBORDINATED NOTE
DUE DECEMBER 31, 2002
$1,333,334 Deerfield, Illinois
October 27, 1997
FOR VALUE RECEIVED, the undersigned, ELECTRICAL DESIGN AND
CONTROL COMPANY, a Delaware corporation (together with its successors, the
"Corporation"), hereby promises to pay to ▇▇▇▇ ▇▇▇▇▇▇, an individual (together
with his successors and permitted assigns, the "Holder"), at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, the aggregate principal amount of ONE MILLION THREE
HUNDRED THIRTY-THREE THOUSAND THREE HUNDRED THIRTY-FOUR ($1,333,334) on the date
stated in Section 1.2 hereof. Certain capitalized terms are used in this Note as
defined in Section 7.
Section I Payment.
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1.1 Interest. Subject to Section 3, the outstanding principal
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amount of this Note shall bear interest (computed on the basis of a 365 or 366
day year, as the case may be) at a rate equal to nine percent (9%) per annum
from (but excluding) the date hereof to (and including) the Maturity Date.
Subject to Section 3, such interest shall be payable (i) annually in arrears,
with respect to each fiscal year of the Corporation (or portion thereof) on the
120th day following the end of such Corporation's fiscal year (or portion
thereof) ("Interest Payment Dates"), commencing with the period ending December
31,1997, and (ii) on the Maturity Date.
1.2 Principal. Subject to Section 3, the Corporation shall
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pay, on December 31, 2002, the entire then outstanding principal amount of this
Note.
1.3 Business Days. Whenever payment of principal of, or
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interest on, this Note shall be due on a date that is not a Business Day, the
date for payment thereof shall be the next succeeding Business Day and interest
due on the unpaid principal and any other Amounts Payable hereunder shall accrue
during such extension and shall be payable on such succeeding Business Day.
Section II Prepayments; Set-off
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2.1 Optional Prepayment. The Corporation shall have the right
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to prepay the principal amount of this Note in whole or in part at any time, or
from time to time, without payment of any premium or penalty whatsoever,
together with interest thereon accrued to the date of prepayment, and any such
prepayment shall be applied to reduce the Corporation's principal payment
obligations under Section 1.2; provided, however, that so long as any Senior
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Indebtedness remains outstanding and unpaid, any commitment to provide Senior
Indebtedness is outstanding, or any other amount is owing to the holders of
Senior Indebtedness, this Note may not be prepaid in whole or in part, without
the written consent of the holders of Senior Indebtedness.
2.2 Set-off. The Corporation shall be entitled to set-off and
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reduce any Amounts Payable hereunder for any obligations or liabilities of the
Holder to the Corporation or any claims by the Corporation against the Holder or
any party agreeing not to compete under the Purchase Agreement or the
Noncompetition Agreements. The Holder, by accepting this Note, hereby
acknowledges and agrees to the foregoing provisions and any subsequent
transferee or successor shall by becoming such transferee or successor be bound
by the foregoing.
Section III Free Cash Flow
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3.1 Payment Limitation. Notwithstanding any other provision
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of this Note, the Corporation shall only be required to pay interest, principal
or any other Amounts Payable in respect of this Note if and to the extent the
Corporation's Free Cash Flow for the Corporation's fiscal year immediately
preceding the required payment date is sufficient and available to make such
payment. If the Corporation's Free Cash Flow for such fiscal year is not
sufficient to make such payments, then such payments will not be made nor be
required to be made under this Note, and the Corporation's payment obligation
under this Note will be deferred until the Corporation's Free Cash Flow would
permit payment under this Section 3, and such deferral of payment will not be an
Event of Default under this Note, provided that the Maturity Date will not be
deferred under this Section 3 for more than two years, at which time, all
principal of, interest on and other Amounts Payable in respect of this Note will
be due and payable.
3.2 Interest Limitation. If, as a result of Section 3.1, the
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Corporation does not pay interest on an Interest Payment Date, then such
interest will be deferred (and not bear interest) and be paid at the Maturity
Date; provided, that the amount of such deferred interest in
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the aggregate will not exceed an amount equal to the interest that would accrue
on the initial principal amount of this Note for two years ("Maximum Interest").
Any deferred interest that exceeds the Maximum Interest will not accrue or be
payable under this Note and will be automatically eliminated.
3.3 Principal and Amounts Payable Deferral. If, as a result of
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Section 3.1, the Corporation does not pay principal or any other Amounts Payable
(other than interest) on any required payment date, then such principal and
Amounts Payable will be deferred (and not bear interest) and be paid at the
Maturity Date.
3.4 Allocation. If the Corporation's Free Cash Flow for any
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fiscal year is available to pay some, but not all, of the required payments,
then such available Free Cash Flow will be allocated first to required principal
payments, second to required interest payments, and then to required payments of
any other Amounts Payable.
Section IV Change of Control and Covenants.
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4.1 Subject to the subordination provisions of this Note set
forth below,the principal of and accrued and unpaid interest under this Note
shall be due and payable immediately upon either (i) any change in ownership of
the Corporation's issued and outstanding capital stock after the effective date
hereof involving more than 50% of the combined voting power of the Corporation,
or (ii) the sale by the Corporation of all or substantially all of its assets
after the effective date hereof. Notwithstanding anything herein to the
contrary, a change of control of the Corporation's capital stock and a sale of
Corporation assets shall not be deemed to have occurred if the transferee
thereof is an Affiliate (defined below).
4.2
(a) As long as any Amounts Payable are outstanding, the
Corporation shall not make payments to Affiliates other than (i) payments
of Senior Indebtedness (if owed to Affiliates) in accordance with Schedule
A attached, subject to Section 4.2(b) below, (ii) payments of management
and/or consulting fees not to exceed annually one percent of the
Corporation's annual sales and reasonable investment banking fees for any
future acquisitions or financings, and (iii) payments made in the ordinary
course of business for goods or services provided to the Corporation.
(b) As long as any Amounts Payable are outstanding, the
Corporation may make payments on Senior Indebtedness in excess of the
scheduled Senior Indebtedness principal and interest payments described in
Schedule A attached hereto only if all Amounts Payable hereunder which are
then due have been paid in full.
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Section V Defaults
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5.1 Events of Default. If one or more of the
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following events ("Events of Default") shall have occurred and be continuing:
(a) the Corporation shall fail to pay within ten Business
Days of the due date thereof any principal of this Note or shall fail to
pay within ten Business Days of the due date thereof any interest or any
other Amounts Payable hereunder and the same shall not have been cured
within 45 days after written notice thereof has been given by the Holder to
the Corporation;
(b) the Corporation shall fail to observe or perform any
covenant or agreement contained in this Note (other than those covered by
clause (a) above) and the same shall not have been cured within 90 days
after written notice thereof has been given by the Holder to the
Corporation, provided, however, an Event of Default shall not have occurred
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or be continuing if efforts to cure have commenced within such 90 days and
if such efforts to cure continue to be diligently pursued after expiration
of such 90 day period;
(c) the Corporation shall commence a voluntary case or
other proceeding seeking liquidation, reorganization or other relief with
respect to itself or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official, or
shall consent to any such relief or to the appointment of or taking
possession by any such official in an involuntary case or other proceeding
commenced against it, or shall make a general assignment for the benefit of
creditors; or
(d) an involuntary case or other proceeding shall be
commenced against the Corporation seeking liquidation, reorganization or
other relief with respect to it or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or other similar
official, and such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of 90 days; or an order for relief
shall be entered against the Corporation under the Federal bankruptcy laws
as now or hereafter in effect;
then, and in every such event, subject to the provisions of Section 6, the
Holder may, by notice to the Corporation and to the holders of Senior
Indebtedness, declare the principal amount of this Note together with accrued
interest thereon, to be, and such portions of the principal amount of this Note
(and accrued interest thereon) shall thereupon become, due and payable on the
tenth Business Day following delivery of such notice to the Corporation and to
the holders of Senior Indebtedness without presentment, demand, protest or
further notice of any kind, all of which are hereby waived by the Corporation;
provided, that (x) the Events of Defaults specified in paragraphs (a) and (b)
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will be subject to Section 3, and (y) in the case of any of the Events of
Default specified in paragraph (c) or (d), such portions of the principal amount
of this Note (together with accrued interest thereon) shall immediately (and
without notice) become due and
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payable without presentment, demand, protest or notice of any kind, all of which
are hereby waived by the Corporation.
Section VI Subordination.
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6.1 Loans Subordinated to Senior Indebtedness. Notwithstanding
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any provision of this Note to the contrary, the Corporation covenants and
agrees, and the Holder by acceptance of this Note likewise covenants and agrees,
that all Amounts Payable shall be subordinated to the extent set forth in this
Section 6 to the prior payment in full, in cash or cash equivalents satisfactory
to the holders of Senior Indebtedness, of all Senior Indebtedness. This Section
6 shall constitute a continuing offer to and covenant with all persons who
become holders of, or continue to hold, Senior Indebtedness (irrespective of
whether such Senior Indebtedness was created or acquired before or after the
issuance of this Note). The provisions of this Section 6 are made for the
benefit of all present and future holders of Senior Indebtedness (and their
successors and assigns), and shall be enforceable by them directly against the
Holder.
6.2 Priority and Payment Over of Proceeds in Certain Events.
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(a) Upon any payment or distribution of assets of the
Corporation, whether in cash, property, securities or otherwise, in the
event of any dissolution, winding up or total or partial liquidation,
reorganization, arrangement, adjustment, protection, relief or composition,
or assignment for the benefit of creditors of the Corporation, whether
voluntary or involuntary or in bankruptcy, insolvency, receivership,
reorganization, relief or other proceedings or upon an assignment for the
benefit of creditors or any other marshaling of all or part of the assets
and liabilities of the Corporation (the foregoing events herein
collectively referred to as an "Insolvency Event"), all Senior Indebtedness
shall first be paid in full, in cash, or payment provided for in cash
equivalents in a manner satisfactory to the holders of Senior Indebtedness,
before the Holder shall be entitled to receive any payment or distribution
of assets of the Corporation relating to any Amounts Payable. Upon any
Insolvency Event, any payment or distribution of assets of the Corporation,
whether in cash, property, securities or otherwise, to which the Holder
would be entitled relating to any Amounts Payable, except for the
provisions of this Section 6, shall be made by the Corporation or by any
receiver, trustee in bankruptcy, liquidating trustee, agent or other person
making such payment or distribution, directly to the holders of the Senior
Indebtedness or their representatives for application to the payment or
prepayment of all such Senior Indebtedness in full after giving effect to
any concurrent payment or distribution to the holders of such Senior
Indebtedness.
(b) If (x) there has occurred and is continuing a default
in the payment of all or any portion of any Senior Indebtedness, unless and
until such default shall have been cured or waived, the Corporation shall
not make any payment on or with respect to any Amounts Payable or acquire
this Note (or any portion thereof) for cash, property, securities or
otherwise; or (y) an event (not involving the non-payment of any Senior
Indebtedness) shall have occurred or, with the giving of notice, or passage
of time, or
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both, would occur, that would allow holders of any Senior Indebtedness to
accelerate or otherwise demand the payment thereof, and the holders of the
Senior Indebtedness give notice of such event to the Corporation (the date
that such notice is received by the Corporation is the "Notice Date"), the
Corporation shall not make any payment on or with respect to any Amounts
Payable or acquire this Note (or any portion hereof) for cash, property,
securities or otherwise during the period (the "Blockage Period")
commencing on the Notice Date and ending on the earlier of (1) two years
after the Notice Date if at the end of such two year period such event is
not the subject of judicial proceedings and such Senior Indebtedness shall
not have been accelerated, (2) the date such event is cured or waived to
the satisfaction of the holders of the Senior Indebtedness, or (3) the date
the holders of such Senior Indebtedness shall have given notice to the
Corporation of the voluntary termination of the Blockage Period. By virtue
of accepting this Note and the benefits hereof, during any time period
during which payment of any part of Amounts Payable due under this Note is
prohibited by any of the terms of this Note, the Holder shall not be
entitled, and will not take any action, including any judicial process, to
accelerate, demand payment or enforce any Indebtedness in respect of this
Note or any other claim with regard to any Amounts Payable.
(c) If, notwithstanding the foregoing provisions
prohibiting payments or distributions, the Holder shall have received any
payment of, or on account of, any Amounts Payable that was prohibited by
this Section 6, before all Senior Indebtedness shall have been paid in
full, then and in such event such payments or distributions shall be
received and held in trust for the holders of the Senior Indebtedness and
promptly paid over or delivered to the holders of the Senior Indebtedness
remaining unpaid thereof to the extent necessary to pay in full, in cash or
cash equivalents satisfactory to the holders of the Senior Indebtedness,
such Senior Indebtedness in accordance with its terms after giving effect
to any concurrent payment or distribution to the holder of such Senior
Indebtedness; provided, that any such payment which is, for any reason, not
so paid over or delivered shall be held in trust by the Holder for the
holders of Senior Indebtedness.
(d) So long as any Senior Indebtedness remains outstanding,
or the commitment to make credit extensions of said Senior Indebtedness
shall not have been terminated, the Holder will not be entitled to take,
demand, or receive, directly or indirectly, by setoff, redemption, purchase
or in any manner, any voluntary prepayment or other payment of any Amounts
Payable in amounts or in a manner which are in violation of the provisions
of this Section 6.
(e) Upon any payment or distribution of assets referred to
in Section 6.2(a), the Holder shall be entitled to rely upon any order or
decree of a court of competent jurisdiction in which such dissolution,
winding up, liquidation or reorganization proceedings are pending, and upon
a certificate of the receiver, trustee in bankruptcy, liquidating trustee,
agent or other person making any such payment or distribution of assets,
delivered to the Holder for the purpose of ascertaining the persons
entitled to participate in such distribution of assets, the holders of
Senior Indebtedness and other Indebtedness of the Corporation, the amount
thereof or payable thereon, the
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amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Section 6.
6.3 Rights of Holders of Senior Indebtedness Not To Be
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Impaired, etc.
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(a) No right of any present or future holder of any Senior
Indebtedness to enforce the subordination and other terms and conditions
provided herein shall at any time in any way be prejudiced or impaired by
any act or failure to act by any such holder, or by any noncompliance by
the Corporation, with the terms and provisions and covenants herein
regardless of any knowledge thereof that any such holder may have or
otherwise be charged with.
(b) This Section 6 may not be amended without the written
consent of each holder of the Senior Indebtedness and of the Holder, and
any purported amendment without such consent shall be void. No holder of
Senior Indebtedness shall be prejudiced in such holder's right to enforce
the subordination and other terms and conditions of this Note by any act or
failure to act by the Corporation or anyone in custody of its assets or
property.
6.4 Subrogation. Subject to and upon the payment in full of
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all Senior Indebtedness, the Holder shall be subrogated, to the extent of
payments or distributions made to the holders of Senior Indebtedness pursuant to
or by reason of this Section 6, to the rights of the holders of such Senior
Indebtedness to receive payments or distributions of assets of the Corporation
made on such Senior Indebtedness until all amounts due under this Note shall be
paid in full; and for the purposes of such subrogation, no payments or
distributions to holders of such Senior Indebtedness of any cash, property or
securities to which the Holder would be entitled except for the provisions of
this Section 6, and no payment over pursuant to the provisions of this Section 6
to holders of such Senior Indebtedness by the Holder, shall, as among the
Corporation, its creditors (other than holders of such Senior Indebtedness) and
the Holder be deemed to be a payment by the Corporation to or on account of such
Senior Indebtedness, it being understood that the provisions of this Section 6
are solely for the purpose of defining the relative rights of the holders of
such Senior Indebtedness, on the one hand, and the Holder, on the other hand.
6.5 Obligations of the Corporation Unconditional. Nothing
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contained in this Note is intended to or shall impair, as between the
Corporation and the Holder, the obligation of the Corporation, which is absolute
and unconditional, to pay to the Holder all Amounts Payable, as and when the
same shall become due and payable in accordance with their terms, or to affect
the relative rights of the Holder and other creditors of the Corporation (other
than the holders of Senior Indebtedness), except as provided in Section 6.2(b).
6.6 Section 6 Not To Prevent Events of Default. The failure
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to make a payment of any Amounts Payable by reason of any provision of this
Section 6 shall not be construed as preventing the occurrence of an Event of
Default under Section 5.1 hereof, except as provided in Section 6.2(b).
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6.7 Additional Rights of Holders of Senior Indebtedness. If
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the Senior Indebtedness has not been paid in full, in cash or cash equivalents
satisfactory to the holders of Senior Indebtedness, at a time in which the
Corporation is subject to an Insolvency Event, (a) the holders of the Senior
Indebtedness are hereby irrevocably authorized, but shall have no obligation, to
demand, sue for, collect and receive every payment or distribution received in
respect of any such Insolvency Proceeding and give acquittance therefor and to
file claims and proofs of claim, as their interests may appear, and (b) the
Holder shall duly and promptly take, for the account of the holders of the
Senior Indebtedness, as their interests may appear, such actions as the holders
of the Senior Indebtedness may request to collect and receive all Amounts
Payable by the Corporation in respect of this Note and to file appropriate
claims or proofs of claim in respect of this Note. Upon request by the
Corporation, the Holder of this Note shall deliver to the holders of Senior
Indebtedness or parties contemplating becoming holders of Senior Indebtedness a
written statement confirming that (i) the provisions (including the
subordination provisions) of this Note are in full force and effect; and (ii)
that such party is or will be entitled to rely upon and enjoy the benefits of
the provisions (including the subordination provisions) of this Note as a holder
of Senior Indebtedness.
6.8 Senior Indebtedness Changes. By virtue of accepting this
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Note and the benefits hereof, the Holder hereby waives any and all notice of
renewal, extension or accrual of any of the Senior Indebtedness, present or
future, and agrees and consents that without notice to or consent of the Holder:
(a) the obligations and liabilities of the Corporation or any other party or
parties under the Senior Indebtedness may, from time to time, in whole or in
part, be renewed, refinanced, replaced, extended, refunded, modified, amended,
accelerated, compromised, supplemented, terminated, increased, decreased, sold,
exchanged, waived or released; (b) the holders of Senior Indebtedness and their
representatives may exercise or refrain from exercising any right, remedy or
power granted by any document creating, evidencing or otherwise related to the
Senior Indebtedness or at law, in equity, or otherwise, with respect to the
Senior Indebtedness or in connection with any collateral security or lien (legal
or equitable) held, given or intended to be given therefor (including, without
limitation, the right to perfect any lien or security interest created in
connection therewith); (c) any and all collateral security and/or liens (legal
or equitable) at any time, present or future, held, given or intended to be
given for the Senior Indebtedness, and any rights or remedies of the holders of
Senior Indebtedness and their representatives in respect thereof, may, from time
to time, in whole or in part, be exchanged, sold, surrendered, released,
modified, perfected, unperfected, waived or extended by the Holders and their
representatives; (d) any balance or balances of funds with any holder of Senior
Indebtedness at any time standing to the credit of the Corporation or any
guarantor of any of the Senior Indebtedness may, from time to time, in whole or
in part, be surrendered or released; all as the holders of Senior Indebtedness,
their representatives or any of them may deem advisable and all without
impairing, abridging, diminishing, releasing or affecting the subordination to
the Senior Indebtedness provided for herein; and (e) the Corporation may incur
any amount or type of Senior Indebtedness (including Senior Indebtedness owed to
Affiliates), or modify, restate, refinance, replace or amend any Senior
Indebtedness from time to time, on terms and conditions acceptable to the
Corporation, without notice to or approval by the Holder.
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6.9 Waivers. In the event the holders of Senior Indebtedness
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elect to exercise their remedies to liquidate any collateral given to secure the
Senior Indebtedness, the Holder hereby waives any right it may have to contest
the validity of or the value obtained as a result of the exercise of remedies by
the holders of Senior Indebtedness, including, but not limited to, a
foreclosure, a sale pursuant to the Uniform Commercial Code or the acceptance by
the holders of Senior Indebtedness in lieu of foreclosure. The Holder further
waives any right it may have either in or out of any bankruptcy or similar
proceeding to challenge any action taken by the holders of Senior Indebtedness
as either a preference or fraudulent conveyance and further agrees not to take
any active role in such a proceeding other than the filing of claim in any such
proceeding, which claim shall be subordinate (to the extent set forth above) to
the claims of the holders of Senior Indebtedness.
Section VII Definitions. For purposes of this Note, the following terms have
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the meanings set forth below.
"Affiliate" means Jordan Industries, Inc. and its direct and
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indirect Subsidiaries ("JII Group"), and any other person or entity that
directly, or indirectly through one or more intermediaries, controls or is
controlled by or is under common control with the JII Group or any persons or
entities which control, directly or indirectly, the JII Group.
"Amounts Payable" means all principal of, interest on, premium,
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if any, fees, costs, expenses, indemnities or any other amounts due from the
Corporation under this Note, and all claims against or liabilities of the
Corporation in respect of this Note.
"Business Day" means any day except a Saturday, Sunday or other
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days on which commercial banks in New York City are required or authorized by
law to close.
"Capital Expenditures" means the capital expenditures of the
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Corporation, determined in accordance with generally accepted accounting
principles, consistently applied.
"Closing Date" means the date on which the transactions
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contemplated by the Purchase Agreement are consummated.
"Default" means any condition or event that constitutes an
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Event of Default or that with notice or lapse of time or both would, unless
cured or waived, become an Event of Default.
"Free Cash Flow" means, for any period, (i) the consolidated net
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income (or net deficit) of the Corporation and its subsidiaries (excluding,
however, (A) all extraordinary and other non-recurring items of income, but not
loss, and (B) all interest income as reflected in the Corporation's financial
statements); plus (ii) interest (including deferred financing fees and expense)
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and other expense in respect of the Corporation's Indebtedness (including
intercompany Indebtedness or Indebtedness owed to Affiliates) charged, accrued
or otherwise allocated against such net income; plus (iii) expenses for
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amortization charged, accrued or otherwise allocated against such net income;
plus (iv) expenses for depreciation (including increased depreciation and
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increased inventory values resulting from purchase accounting in connection with
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acquisitions and business combinations) charged, accrued or otherwise allocated
against such net income; plus (v) any reductions in Working Capital from the
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beginning to the end of such period; minus (vi) payments of interest and
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principal on Indebtedness (other than required interest and principal payments
on this Note) paid or accrued during such period or otherwise payable on the
applicable payment date; provided, however, the aggregate amount of the
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principal payments on the Senior Indebtedness included in this calculation of
Free Cash Flow shall equal the amount set forth in Exhibit A for the period in
question, whether or not paid during such period; minus (vii) any increases in
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Working Capital from the beginning to the end of such period; minus (viii)
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Capital Expenditures during such period. Free Cash Flow will reflect selling,
general and administrative expense, management, consulting and service fees,
general and overhead, allocated to the Corporation by its Affiliates. Free Cash
Flow will be determined by the Corporation's Board of Directors by reference to
the Corporation's financial statements, prepared in accordance with generally
accepted accounting principles, consistently applied, whose determination will
be final binding, conclusive and non-appealable.
"Indebtedness" means any indebtedness (including, without
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limitation, Senior Indebtedness), whether or not contingent, in respect of
borrowed money or evidenced by bonds, notes, debentures or similar instruments
or letters of credit (or reimbursement agreements in respect thereof) or
representing the deferred and unpaid balance of the purchase price of any
property (including pursuant to capital leases), and any financial hedging
obligations, if and to the extent such indebtedness (other than a financial
hedging obligation) would appear as a liability upon a balance sheet of such
person prepared on a consolidated basis in accordance with generally accepted
accounting principles, other than a trade payable or accrued expense, and also
includes, to the extent not otherwise included, the guarantee of items that
would be included within this definition. Notwithstanding anything herein to the
contrary, Senior Indebtedness shall include any trade payables, accrued
expenses, fees or other amounts due to an Affiliate of the Corporation.
Indebtedness owed to Affiliates will be Indebtedness for purposes of this Note.
"Maturity Date" means December 31, 2002, subject to extension
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to a later date as provided by the terms of this Note, but in no event shall it
mean a date later than December 31, 2004.
"Noncompetition Agreements" means the Noncompetition Agreements
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by and between Electrical Design and Control Company, a Delaware company, and
▇▇▇▇ ▇▇▇▇▇▇, an individual; ▇▇▇▇ ▇▇▇▇▇▇, an individual; and ▇▇▇▇▇ ▇▇▇▇▇▇, as
Beneficiary of the ▇▇▇▇▇ ▇▇▇▇▇▇ Voting Trust, each dated October 27, 1997.
"Note" means this Non-Negotiable Subordinated Note due December
----
31, 2002.
"Purchase Agreement" means the Agreement for Purchase and Sale of
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Stock dated as of October 17, 1997, among the Corporation, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ (as Beneficiary of the ▇▇▇▇▇ ▇▇▇▇▇▇ Voting Trust), and
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (as Trustee of the ▇▇▇▇▇ ▇▇▇▇▇▇ Voting Trust), as the same
has been or may be amended from time to time.
"Senior Indebtedness" shall mean the principal, interest
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(including any interest accruing subsequent to an event specified in Sections
5.1(c) and 5.1(d)), premium, if any, fees
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(including, without limitation, any commitment, agency, facility, structuring,
restructuring or other fee), costs, expenses, indemnities, and other amounts due
on or in connection with the Indebtedness of the Corporation described in the
attached Schedule A (including, without limitation, any intercompany
Indebtedness), now or herewith incurred, or any documents executed under or in
connection therewith, and any amendments, modifications, deferrals, renewals or
extensions of such Indebtedness, and any amounts owed in respect of any
Indebtedness incurred in refinancing, replacing or refunding the foregoing
(including any refinancing, replacing or refunding with new lenders). Nothing in
this Note shall restrict an affiliate of the Corporation from being a holder of
Senior Indebtedness. Indebtedness owed to Affiliates will be Senior Indebtedness
for purposes of this Note. Notwithstanding anything herein to the contrary,
Senior Indebtedness shall include any payables, accrued expenses, fees or other
amounts due to an Affiliate of the Corporation. Notwithstanding anything herein
to the contrary, none of the obligations or liabilities of the Corporation to
Holder shall be included in Senior Indebtedness.
"Subsidiary" of a person means any corporation or other entity of
----------
which securities or other ownership interests having ordinary voting power to
elect a majority of the Board of Directors or other persons performing similar
functions are at the time directly or indirectly owned by such person.
"Working Capital" means the difference of (a) the sum of
---------------
Corporation's net account receivables, inventories (net of reserves), and
prepaid expenses, minus (b) the sum of accounts payable and accrued expenses,
-----
determined in accordance with generally accepted accounting principles,
consistently applied.
Section VIII Miscellaneous.
--------------
8.1 Notices. All notices, requests and other communications
-------
to any party hereunder shall be in writing and shall be delivered personally,
sent by facsimile transmission or sent by certified, registered or express mail,
postage prepaid, and shall be deemed given when so delivered personally, or sent
by facsimile transmission, or if mailed or sent by overnight courier, upon
receipt thereof, as follows:
If to the Corporation to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
c/o Electrical Design and Control Company
ArborLake Centre, Suite ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
11
with a copy to:
▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
▇▇▇▇▇ ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
If to the Holder, to:
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Butzel Long
Suite ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Each party may, by notice given in accordance with this Section to the other
party, designate another address or person for receipt of notices hereunder.
8.2 No Waivers. No failure or delay by the Holder in
----------
exercising any right, power or privilege hereunder or under this Note shall
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies provided by law. No
notice to or demand on the Corporation in any case shall entitle the Corporation
to any other or further notice or demand in related or similar circumstances
requiring such notice.
8.3 Amendments and Waivers. Any provision of this Note may be
----------------------
amended or waived if, but only if, such amendment or waiver is in writing,
signed by the Corporation and the Holder.
12
8.4 Successors and Assigns. The provisions of this Note shall
----------------------
be binding upon and inure to the benefit of the Holder and its respective
successors and permitted assigns. Without the prior written consent of the
Corporation and the holders of Senior Indebtedness, the Holder of this Note
agrees that it will not (a) sell, assign, pledge or otherwise transfer, in whole
or in part, directly or indirectly, by operation of law or otherwise, this Note
or any interest therein or (b) create, incur or suffer to exist any security
interest, lien, charge or other encumbrance whatsoever upon this Note. If
requested by a holder of Senior Indebtedness as part of any consent, the
assignee or transferee of the Holder shall agree in writing to be bound by all
of the terms of this Note. The holder hereof hereby waives proof of reliance
hereon by the holders of Senior Indebtedness.
8.5 Replacement Note. Upon receipt of evidence reasonably
----------------
satisfactory to the Corporation of the loss, theft, destruction or mutilation of
this Note and of a letter of indemnity reasonably satisfactory to the
Corporation from the Holder and upon reimbursement to the Corporation of all
reasonable expenses incident thereto, and upon surrender or cancellation of this
Note, if mutilated, the Corporation will make and deliver a new Note of like
tenor in lieu of such lost, stolen, destroyed or mutilated Note.
8.6 Corporation's Obligations. The Holder agrees and
-------------------------
acknowledges that this Note and the Corporation's obligations hereunder and for
all Amounts Payable are solely obligations and liabilities of the Corporation.
None of the Corporation's directors, officers, employees, stockholders,
advisors, consultants and affiliates or any other persons shall be obligated or
liable in respect of this Note or any Amounts Payable, and Holder hereby
releases them from any such obligation of liability.
8.7 LITIGATION. THIS NOTE SHALL BE GOVERNED BY, CONSTRUED,
----------
APPLIED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
MICHIGAN, AND NO DOCTRINE OF CHOICE OF LAW SHALL BE USED TO APPLY ANY LAW OTHER
THAN THAT OF MICHIGAN, AND NO DEFENSE, COUNTERCLAIM OR RIGHT OF SET-OFF GIVEN OR
ALLOWED BY THE LAWS OF ANY OTHER STATE OR JURISDICTION, OR ARISING OUT OF THE
ENACTMENT, MODIFICATION OR REPEAL OF ANY LAW, REGULATION, ORDINANCE OR DECREE OF
ANY FOREIGN JURISDICTION, BE INTERPOSED IN ANY ACTION HEREON. SUBJECT TO SECTION
8.8, THE PARTIES AGREE THAT ANY ACTION OR PROCEEDING TO ENFORCE OR ARISING OUT
OF THIS NOTE MAY BE COMMENCED IN THE STATE COURTS, OR IN THE UNITED STATES
DISTRICT COURTS IN CHICAGO, ILLINOIS. THE PARTIES CONSENT TO SUCH JURISDICTION,
AGREE THAT VENUE WILL BE PROPER IN SUCH COURTS AND WAIVE ANY OBJECTIONS BASED
UPON FORUM NON CONVENIENS. THE CHOICE OF FORUM SET FORTH IN THIS SECTION 8.7
----- --- ----------
SHALL NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT OF ANY ACTION UNDER THIS
AGREEMENT IN ANY OTHER JURISDICTION.
8.8 ARBITRATION. THE HOLDER HEREBY WAIVES AND SHALL NOT SEEK
-----------
JURY TRIAL IN ANY LAWSUIT, PROCEEDING, CLAIM,
13
COUNTERCLAIM, DEFENSE OR OTHER LITIGATION OR DISPUTE UNDER OR IN RESPECT OF THIS
NOTE. THE HOLDER AGREES THAT ANY SUCH DISPUTE RELATING TO OR IN RESPECT OF THIS
NOTE, ITS NEGOTIATION, EXECUTION, PERFORMANCE, SUBJECT MATTER, OR ANY COURSE OF
CONDUCT OR DEALING OR ACTIONS UNDER OR IN RESPECT OF THIS NOTE, SHALL BE
SUBMITTED TO, AND RESOLVED EXCLUSIVELY PURSUANT TO ARBITRATION IN ACCORDANCE
WITH THE COMMERCIAL ARBITRATION RULES OF THE AMERICAN ARBITRATION ASSOCIATION.
SUCH ARBITRATION SHALL TAKE PLACE IN MICHIGAN, AND SHALL BE SUBJECT TO THE
SUBSTANTIVE LAW OF THE STATE OF MICHIGAN. DECISIONS PURSUANT TO SUCH ARBITRATION
SHALL BE FINAL, CONCLUSIVE AND BINDING ON THE PARTIES. UPON THE CONCLUSION OF
ARBITRATION, THE PARTIES MAY APPLY TO ANY APPROPRIATE COURT OF THE TYPE
DESCRIBED IN SECTION 8.7 TO ENFORCE THE DECISION PURSUANT TO SUCH ARBITRATION.
ELECTRICAL DESIGN AND CONTROL COMPANY
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------
Title: Vice President
-------------------------
14
SCHEDULE A
----------
Senior Indebtedness: $16,000,000 plus an additional $5,000,000 for working
-------------------
capital, capital expenditures, acquisitions or other purposes.
Scheduled Senior Indebtedness Principal Payments
------------------------------------------------
Year Principal
---- ---------
1998 800,000
1999 1,300,000
2000 1,300,000
2001 1,300,000
2002 1,300,000
2003 1,300,000
2004 1,300,000
Senior Interest: Interest shall be paid on outstanding Senior Indebtedness
---------------
principal at the rate of 10.75%.
15
