THE SECURITY FOR THE PAYMENT OF THIS INSTRUMENT, BOTH PRINCIPAL AND
INTEREST, AND ALL OTHER INDEBTEDNESS EVIDENCED HEREBY, IS SUBJECT TO
THE PRIOR RIGHTS OF THE CIT GROUP/COMMERCIAL FINANCE, INC., ITS
SUCCESSORS AND ASSIGNS, IN THE MANNER AND TO THE EXTENT SET FORTH IN A
CERTAIN INTERCREDITOR AND SUBORDINATION AGREEMENT DATED DECEMBER 31,
1995, WHICH AGREEMENT IS INCORPORATED HEREIN BY REFERENCE.
JUNIOR SUBORDINATED SECURED
PROMISSORY NOTE
---------------
$1,000,000.00 December 31, ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
FOR VALUE RECEIVED, ▇▇▇▇▇▇ MANUFACTURING, INC., a corporation organized
under the laws of the State of Minnesota ("Borrower"), promises to pay to the
order of SANWA BUSINESS CREDIT CORPORATION, its successors, designees or assigns
("Lender"), at its offices at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, or at
such other place or places as Lender may from time to time designate in writing,
the principal sum of One Million Dollars ($1,000,000.00) with interest payable
on the principal balance from time to time remaining unpaid. Principal and
interest due hereunder shall be payable quarterly, and shall be payable on a
mandatory basis out of Borrower's Excess Cash (defined herein). For purposes of
this Junior Subordinated Secured Promissory Note, "Excess Cash" shall mean the
mathematical result from the equation set forth on Exhibit A attached hereto and
made a part hereof. Excess Cash shall be: (i) reported to Lender on the form
attached hereto as Exhibit A and (ii) computed and paid to Lender quarterly,
within 30 days of the end of each calendar quarter, commencing on April 30,
1996. Payments of Excess Cash made pursuant to the preceding provision shall be
subject to a final adjustment which shall occur annually, which adjustment
calculation and payment to Lender (if any) shall be made within 30 days of
Borrower's receipt of its annual audited financial statement. In the event that
the final annual adjustment results in amounts due Borrower from Lender, Lender
shall address said amount by crediting said amount against Borrower's next
quarterly payments due hereunder. Payments of Excess Cash shall be applied in
the following order: (i) Lender's fees and costs hereunder; (ii) accrued and
unpaid interest and (iii) principal. Notwithstanding the foregoing, all
outstanding principal, interest, costs and expenses due hereunder shall be paid
to Lender upon the first to occur of: (i) termination of any loan agreement
between Borrower and Lender; or (ii) December 31, 1999.
This Note is referred to in and was executed and delivered pursuant to that
certain Loan and Security Agreement of even date herewith between Borrower and
Lender (as amended, restated supplemented or modified from time to time, the
"Loan Agreement"), to which reference is hereby made for a statement of the
terms and conditions under which the loans evidenced
hereby are to be repaid and for a statement of remedies upon the occurrence of
an "Event of Default" as defined therein. The Loan Agreement is incorporated
herein by reference in its entirety. All terms which are capitalized and used
herein (which are not otherwise specifically defined herein) and which are
defined in the Loan Agreement shall be used in this Note as defined in the Loan
Agreement.
Borrower further promises to pay to Lender interest on the outstanding
unpaid principal amount hereof at the rate of 8% per annum, payable at the time
and in the manner set forth above from the date hereof until payment in full
hereof as determined in accordance with the Loan Agreement; provided, however,
that, upon the occurrence and during the continuance of an Event of Default,
Borrower promises to pay to Lender interest on the unpaid principal amount
hereof at to the Default Rate applicable to the Liabilities evidenced by this
Note as determined in accordance with the Loan Agreement. Interest shall be
computed on the basis of a 360-day year for the actual number of days elapsed.
In no contingency or event whatsoever shall the rate of interest paid by
Borrower under this Note exceed the maximum amount permissible under any law
which a court of competent jurisdiction shall, in a final determination, deem
applicable hereto. In the event that such a court determines that Lender has
received interest hereunder in excess of the maximum amount permitted by such
law, (i) Lender shall apply such excess to any unpaid principal owed by Borrower
to Lender or, if the amount of such excess exceeds the unpaid balance of such
principal, Lender shall promptly refund such excess interest to Borrower and
(ii) the provisions hereof shall be deemed amended to provide for such
permissible rate.
Borrower shall have the right to prepay this Note without penalty upon not
less than five (5) days' advance written notice to Lender.
This Note is secured by (a) the Loan Agreement and certain Ancillary
Agreements and Security Documents (as such terms are defined in the Loan
Agreement), and (b) all security interests, liens and encumbrances heretofore,
now or hereafter granted to Lender by Borrower.
Except as otherwise provided in the Loan Agreement, Borrower waives
presentment, demand and protest, notice of protest, notice of presentment and
all other notices and demands in connection with the enforcement of Lender's
rights hereunder, except as specifically provided and called for by this Note or
the Loan Agreement, and hereby consents to, and waives notice of the release,
addition, or substitution, with or without consideration, of any collateral or
of any person liable for payment of this Note. Any failure of Lender to
exercise any right available hereunder or otherwise shall not be construed as a
waiver of the right to exercise the same or as a waiver of any other right at
any other time.
Whenever in this Note reference is made to Lender or Borrower, such
reference shall be deemed to include, as applicable, a reference to their
respective successors and assigns and, in the case of Lender, any Participants
to which it has sold or assigned any interest. The provisions of this Note
shall be binding upon and shall inure to the benefit of such successors, assigns
and Participants. Borrower's successors and assigns shall include without
limitation, a receiver, trustee or debtor in possession of or for Borrower.
-2-
THE LOAN EVIDENCED HEREBY HAS BEEN MADE, AND THIS NOTE HAS BEEN DELIVERED,
AT CHICAGO, ILLINOIS AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAWS PROVISIONS) OF THE STATE
OF ILLINOIS. BORROWER HEREBY (I) WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY
ACTION TO ENFORCE OR DEFEND ANY MATTER ARISING FROM OR RELATED TO THIS NOTE;
(II) IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY FEDERAL OR STATE COURT
LOCATED IN ▇▇▇▇ COUNTY, ILLINOIS, OVER ANY ACTION OR PROCEEDING TO ENFORCE OR
DEFEND ANY MATTER ARISING FROM OR RELATING TO THIS NOTE, THE LOAN AGREEMENT, THE
ANCILLARY AGREEMENTS OR THE SECURITY DOCUMENTS; (III) IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT BORROWER MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT
FORUM TO THE MAINTENANCE OF ANY SUCH ACTION OR PROCEEDING; (IV) AGREES THAT A
FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN ANY OTHER JURISDICTION BY SUIT ON THE JUDGMENT OR IN ANY OTHER
MANNER PROVIDED BY LAW; AND (V) AGREES NOT TO INSTITUTE ANY LEGAL ACTION OR
PROCEEDING AGAINST LENDER OR ANY OF LENDER'S DIRECTORS, OFFICERS, EMPLOYEES,
AGENTS OR PROPERTY, CONCERNING ANY MATTER ARISING OUT OF OR RELATING TO THIS
NOTE, THE LOAN AGREEMENT, THE ANCILLARY AGREEMENTS OR THE SECURITY DOCUMENTS IN
ANY COURT OTHER THAN ONE LOCATED IN ▇▇▇▇ COUNTY, ILLINOIS. NOTHING IN THIS
PARAGRAPH SHALL AFFECT OR IMPAIR LENDER'S RIGHT TO SERVE LEGAL PROCESS IN ANY
MANNER PERMITTED BY LAW OR LENDER'S RIGHT TO BRING ANY ACTION OR PROCEEDING
AGAINST BORROWER OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION.
Wherever possible each provision of this Note shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Note shall be prohibited by or invalid under such law, such provision
shall be ineffective to the extent of such prohibition or provision invalidity,
without invalidating the remainder of or the remaining such provisions of this
Note.
▇▇▇▇▇▇ MANUFACTURING, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
Its: President
----------------------------
-3-
Exhibit A
to that certain Junior Subordinated Secured
Promissory Note dated December 31, 1995
delivered by ▇▇▇▇▇▇ Manufacturing, Inc.
to Sanwa Business Credit Corporation
Income Before Taxes (A) -
--------------------------
minus non-cash gains
----- --------------------------
plus non-cash losses
---- --------------------------
plus depreciation/amortization
---- --------------------------
minus scheduled CIT (Term Loan) Principal Payments (B)
----- --------------------------
minus scheduled CIT (R/E Loan) Principal Payments (B)
----- --------------------------
minus scheduled CIT Accommodation Fees (B)
----- --------------------------
minus scheduled Senior Subordinated Interest Payments (B)
----- --------------------------
minus scheduled Senior Subordinated Principal Payments (B)
----- --------------------------
minus Income Payments (B)
----- --------------------------
minus Capital Expenditures (C)
----- --------------------------
minus Capital Equipment Principal Payments (C)
----- --------------------------
minus Permitted ▇▇▇▇▇▇▇ Principal Payments (C)
----- --------------------------
minus Retiree payments (C)
----- --------------------------
TOTAL: EXCESS CASH
---------------------------
(A) GAAP DEFINED, INCLUDING ALL CASH GAINS AND LOSSES (INCLUDING THOSE GAINS OR
LOSSES ASSOCIATED WITH ASSET SALES). THE PARTIES HERETO AGREE THAT IN
CALCULATING INCOME BEFORE TAXES, INCOME SHALL NOT BE REDUCED BY ANY OF THE ITEMS
DESIGNATED BY FOOTNOTE (B) IN THIS FORMULA.
(B) ACTUALLY PAID.
(C) THE LESSER OF (I) ACTUAL OR (II) MAXIMUM DOLLAR AMOUNTS SET FORTH ON
SCHEDULE A ATTACHED HERETO.
NOTE: ALL TERMS WHICH ARE CAPITALIZED AND USED IN THIS FORMULA AND WHICH ARE
DEFINED IN THE LOAN AGREEMENT SHALL BE USED IN THE FORMULA AS DEFINED IN THE
LOAN AGREEMENT.
I certify that the above is correct to the best of my knowledge and belief:
▇▇▇▇▇▇ MANUFACTURING, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Its: President
-------------------------------
-4-
