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EXHIBIT 10.21
UNSECURED SUBORDINATED INSTALLMENT NOTE
$1,919,000 October 1, 1996
Murrieta, California
FOR VALUE RECEIVED, the undersigned, Exotic Materials, Inc., a California
corporation (the "Borrower"), promises to pay to the order of Vitec Group US
Holdings, Inc., a Delaware corporation (the "Creditor"), the principal amount of
One Million Nine Hundred Nineteen Thousand Dollars ($1,919,000), or such lesser
amount as may be outstanding on April 30, 2005, together with interest on the
principal amount outstanding, from the date hereof until the principal amount of
this Note is paid in full, at a rate equal to nine percent (9%) per annum,
calculated on the basis of a year of 365 or 366 days, as the case may be, and
paid for the actual number of days elapsed (including the first day of the
relevant period but excluding the last day). Any overdue principal of this Note
shall bear interest, payable on demand, for each day until paid at a rate equal
to ten (10%) per annum, but in no event shall such penalty interest exceed the
maximum amount of interest permitted by applicable law.
1. Installment payments. On April 30, 1997, and each April 30 thereafter
during the term of this Note, the Borrower shall pay to the Creditor the amount
set forth below. Such payments shall be applied first against any accrued but
unpaid interest then the balance of any such payment against the principal then
outstanding under the Note. Exhibit A attached hereto, allocates each of the
following installment payments between interest and principal.
April 30, 1997 .................... $128,300
April 30, 1998 .................... 190,000
April 30, 1999 .................... 230,000
April 30, 2000 .................... 270,000
April 30, 2001 .................... 310,000
April 30, 2002 .................... 350,000
April 30, 2003 .................... 390,000
April 30, 2004 .................... 430,000
April 30, 2005 .................... 795,624
2. Subordination. The Borrower's payment obligations hereunder are
subordinated in right of payment to any indebtedness of the Borrower incurred
for working capital purposes not exceeding $1,000,000 in principal amount
outstanding at any time (the "Working Capital Facility"), provided, that so long
as no default shall have occurred and be continuing under the Working Capital
Facility, the Borrower's payment obligations under this Note shall not be
impaired. If a default shall have occurred and be continuing under the Working
Capital Facility, the Borrower shall not make any further payments to the
Creditor, and the Creditor shall hold any amounts thereafter received from the
Borrower in trust for the holders of the Working Capital Facility and pay over
such amounts to such holders to be applied as required under the Working Capital
Facility.
3. Payment. Payments under this Note shall be made at the offices of the
Creditor, at c/o X. Xxxxxxx, Abberley Koolman, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000-0000, or at such other place or places within the United States as
may be specified by the Creditor in a written notice to the Borrower.
4. Covenants. Until the principal of and accrued interest on all
indebtedness evidenced by this Note has been paid in full, the Borrower agrees
that it shall not:
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(a) Liens. Create, incur, assume or suffer to exist any mortgage, pledge,
encumbrance, security interest, lien or charge of any kind upon any of its
properties or assets (including the right to receive income) whether now owned
or hereafter acquired, except (i) liens for taxes not delinquent, or being
contested in good faith and the payment of which is secured in a manner
satisfactory to the Creditor, (ii) liens not delinquent created by statute in
connection with worker's compensation, unemployment insurance, social security
and similar statutory obligations, (iii) purchase money security interests in
machinery, equipment, fixtures, or other personal property, not including
inventory or supplies, purchased by the Borrower and given to secure the
deferred purchase price, provided that no such purchase money security interest
shall extend to or cover any assets of the Borrower other than the asset being
purchased and that the security interest in the asset being purchased shall
secure only the purchase price thereof, and (iv) liens securing the Working
Capital Facility.
(b) Merger. Merge or consolidate or amalgamate with any other person or
take any other action having a similar effect; provided, however, that this
Section shall not prohibit any merger or acquisition of or by the Borrower if
the Borrower shall be the surviving or continuing corporation thereof and,
immediately after such merger or acquisition, no default hereunder ("Default")
or event which with notice or the passage of time would constitute a default
("Event of Default") shall exist or shall have occurred and be continuing.
(c) Disposition of Assets; Etc. Sell, lease, license, transfer, assign or
otherwise dispose of any portion of its business, assets, rights, revenues or
property, real, personal or mixed, tangible or intangible, whether in one or a
series of transactions (other than inventory sold in the ordinary course of
business upon customary credit terms and sales of scrap or obsolete material or
equipment), without first offering to the Creditor in writing the opportunity to
enter into such transaction on the same terms as have been presented to the
Borrower, which offer shall expire 30 days after the date on which the Creditor
receives such offer, provided, however, that this section shall not prohibit any
such sale, lease, license, transfer, assignment or other disposition if the
aggregate book value (disregarding any write-downs of such book value other than
ordinary depreciation and amortization) of all the business, assets, rights,
revenues and property involved in the transaction or series of transactions,
together with such aggregate book value of all other business, assets, rights,
revenues and property sold, leased, licensed, transferred or otherwise disposed
of by the Borrower and its subsidiaries in the same fiscal year constitutes less
than 10% of the aggregate book value of the consolidated total tangible assets
of the Borrower and its subsidiaries as of the end of the preceding fiscal year
of the Borrower and, together with the aggregate book value of all other
business, assets, rights, revenues and property sold, leased, licensed,
transferred or otherwise disposed of by the Borrower and its subsidiaries during
the entire period subsequent to the date of this Note constitutes less than 25%
of the aggregate book value of consolidated total tangible assets of the
Borrower and its subsidiaries as of the date of this Note, and if, immediately
after such transaction, no Default or Event of Default shall exist or shall have
occurred and be continuing.
(d) Sale of Stock. Sell or otherwise dispose of any shares of the
Borrower's capital stock without first offering to the Creditor in writing the
opportunity to enter into such transaction on the same terms as have been
presented to the Borrower, which offer shall expire 30 days after the date on
which the Creditor receives such offer, provided, however, that this section
shall not prohibit any sale, distribution, or other disposition by the Borrower
of shares of its common stock to persons who are officers, directors, employees,
or agents of the Borrower at the time of such disposition.
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(e) Dividends. Declare any dividends (other than dividends payable in
the Borrower's capital stock) on any shares of its capital stock.
5. Financial Reports. Until the principal of and accrued interest on all
indebtedness evidenced by this Note has been paid in full, the Borrower agrees
to furnish to the Creditor(a) on or before April 30 of each year, the
consolidated and consolidating balance sheet of the Borrower and its
subsidiaries as of such date and related statements of income for the fiscal
year then ended, all in reasonable detail, reviewed by a firm of certified
public accountants acceptable to the Creditor, and (b) as soon as available
after the end of each fiscal quarter of the Borrower, the consolidated and
consolidating balance sheet of the Borrower and its subsidiaries as of such
date and related statements of income for the year-to-date portion then ended,
all in reasonable detail, unaudited and subject to normal year-end adjustments.
6. Defaults. It shall be a default under this Note if any of the
following shall occur:
(a) Any amount due hereunder is not paid to the Creditor within three
business days after the due date; or
(b) Any default occurs in the performance or observance of any other
term, covenant, condition or agreement contained in this Note and the same
continues for a period of five business days after the Borrower receives
notice from the Creditor of such default; or
(c) The Borrower shall be dissolved or liquidated (or any judgment,
order, or decree therefor shall be entered), or shall generally not pay
its debts when due, or shall admit in writing its inability to pay its
debts generally, or shall make a general assignment for the benefit of its
creditors, or shall institute, or there shall be instituted against it,
any proceeding seeking to adjudicate it a bankrupt or insolvent or seeking
liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief or protection of debtors or seeking the entry of an
order for relief, or the appointment of a receiver, trustee, custodian, or
other similar official for its or any substantial part of its assets,
rights, revenues, or property, and, if such proceeding is instituted
against and is being contested by the Borrower in good faith by
appropriate proceedings, such proceedings shall remain undismissed or
unstayed for a period of 60 days, or the Borrower shall take any action to
authorize or further any of the actions described above.
7. Remedies. Upon the occurrence of any Default, the Creditor may by
notice to the Borrower declare the outstanding principal of and
accrued interest on all indebtedness to the Creditor provided for in this Note
to be immediately due and payable, provided, that upon any event described in
paragraph 6(c) occurring, all such amounts shall automatically become
immediately due and payable without notice.
8. Integration. This Note embodies the entire agreement and
understanding between the parties, and supersedes all prior agreements and
understandings, relating to the subject matter hereof. In case any one or more
obligations under this Note shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
obligations shall not be affected or impaired thereby, and such invalidity,
illegality or unenforceability in one jurisdiction shall not affect the
validity, legality or enforceability of this Note in any other jurisdiction.
9. Suits for Enforcement and Remedies. No right or remedy herein or in
any other agreement or instrument conferred upon the holder of this Note is
intended to be exclusive of any other right or remedy, and each and every such
right and remedy shall be cumulative and shall be in addition to every other
right and remedy given hereunder or now or hereafter existing at law or in
equity or by statute or otherwise.
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10. Waivers. No forbearance, indulgence, delay or failure to exercise any
right or remedy with respect to this Note shall operate as a waiver, nor as an
acquiescence in any Default. No single or partial exercise of any right or
remedy shall preclude any other or further exercise thereof or the exercise of
any other right or remedy.
11. Successors and Assigns. This Note shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns,
provided, that the Creditor may not transfer or assign its rights or
obligations hereunder without the prior written consent of the Borrower.
12. Miscellaneous.
(a) This Note may not be modified or discharged orally, but only in
writing duly executed by the holder hereof.
(b) The Borrower and each endorser or guarantor hereof hereby waives
demand, presentment for payment, notice of dishonor, protest and notice of
protest and other notices of every kind, and all rights to plead any statute of
limitations as a defense to any action hereunder.
(c) The headings of the various Sections of this Note are for
convenience of reference only and shall in no way modify any of the terms or
provisions of this Note.
(d) This Note and the obligations of the Borrower and the rights of
the Creditor shall be governed by, and for all purposes construed in accordance
with, the laws of the State of California applicable to instruments made and
to be performed entirely within such state.
IN WITNESS WHEREOF, the Borrower has executed this Note as of the day and
year first above written.
EXOTIC MATERIALS, INC.
By: /s/ XXXXXX X. XXXXXXX
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Xxxxxx X. Xxxxxxx
Title: Vice President & Chief Financial
Officer
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EXHIBIT A
Allocation of Payment
Payment --------------------------------------
Date Interest Principal Total
-------------- -------- --------- --------
April 30, 1997 $ 99,841 $ 28,459 $128,300
April 30, 1998 170,149 19,851 190,000
April 30, 1999 168,362 61,638 230,000
April 30, 2000 162,815 107,185 270,000
April 30, 2001 153,168 156,832 310,000
April 30, 2002 139,053 210,947 350,000
April 30, 2003 120,068 289,932 390,000
April 30, 2004 95,774 334,226 430,000
April 30, 2005 65,694 729,930 795,624
