Exhibit 10(r)
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.
ROLITE HOLDINGS, INC.
NON-NEGOTIABLE SUBORDINATED NOTE
DUE 2002
$900,000 Tuscawaras County, Ohio
February 27, 1998
FOR VALUE RECEIVED, the undersigned, ROLITE HOLDINGS INC., a
Delaware corporation (together with its successors, the "Corporation"),
hereby promises to pay to ROLITE PLASTICS, INC., an Ohio corporation
(together with its successors and permitted assigns, the "Holder"), at the
Holder's office at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇-▇▇▇▇, the aggregate
principal amount of Nine Hundred Thousand Dollars ($900,000) on the date
stated in Section 1.2 hereof. Certain capitalized terms are used in this
Note as defined in Section 6.
Section I. Payment
1.1. Interest. Subject to Section 3, the outstanding principal 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 eight and one-half percent
(8.5%) 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 90th day following the end of such
Corporation's fiscal year (or portion thereof) ("Interest Payment Dates"),
commencing with the period ending December 31, 1998, and (ii) on the
Maturity Date.
1.2. Principal. Subject to Section 3, the Corporation shall pay,
within 90 days of December 31, 2001, the principal amount then
outstanding on this Note.
Business Days. Whenever payment of principal of, or 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
2.1. Optional Prepayment. The Corporation shall have the right 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 in the order of maturity of such
payment obligations; provided, however, that so long as any Senior
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 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 Noncompetition
Agreements which have been mutually agreed upon between the parties or
finally arbitrated pursuant to Section 7.7 hereof. 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
3.1. Payment Limitation. Notwithstanding any other provision 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 one
year, 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
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 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
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.
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3.4. Allocation. If the Corporation's Free Cash Flow for any 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. Defaults
4.1. Events of Default. If one or more of the 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 30 days after written notice thereof has been given by the
Holder to the Corporation;
(b) 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
(c) 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 5,
the Holder may, by notice to the Corporation and to the holders of Senior
Indebtedness of which the Seller has knowledge, 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 such 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 paragraph (a) 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 payable without presentment, demand, protest or
notice of any kind, all of which are hereby waived by the Corporation.
Section V. Subordination
5.1. Loans Subordinated to Senior Indebtedness. Notwithstanding 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
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forth in this Section 5 to the prior payment in full, in cash or cash
equivalents satisfactory to the holders of Senior Indebtedness, of all
Senior Indebtedness. This Section 5 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 5 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.
5.2. Priority and Payment Over of Proceeds in Certain Events.
(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
marshalling 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 5, 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 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
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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 5, 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 5.
(e) Upon any payment or distribution of assets referred to in
Section 5.2(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, or
liquidating trustee 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 amount
or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Section 5.
5.3. Rights of Holders of Senior Indebtedness Not To Be Impaired, etc.
(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 5 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.
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5.4. Subrogation. Subject to and upon the payment in full of 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 5, 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 5, and no payment
over pursuant to the provisions of this Section 5 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 5 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.
5.5. Obligations of the Corporation Unconditional. Nothing 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 5.2(b).
5.6. Section 5 Not To Prevent Events of Default. The failure to make a
payment of any Amounts Payable by reason of any provision of this Section 5
shall not be construed as preventing the occurrence of an Event of Default
under Section 5.1 hereof, except as provided in Section 5.2(b).
5.7. Additional Rights of Holders of Senior Indebtedness. If 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.
5.8. Senior Indebtedness Changes. By virtue of accepting this 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
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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.
5.9. Waivers. In the event the holders of Senior Indebtedness elect to
exercise heir 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 VI. Definitions. For purposes of this Note, the following
terms have the meanings set forth below.
"Affiliate" means Jordan Industries, Inc. and its respective direct
and indirect Subsidiaries, and any other person that directly, or
indirectly through one or more intermediaries, controls or is controlled by
or is under common control with them.
"Amounts Payable" means all principal of, interest on, premium, 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 days
on which commercial banks in New York City are required or authorized by
law to close.
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"Capital Expenditures" means the capital expenditures of the
Corporation, determined in accordance with generally accepted accounting
principles, consistently applied, provided, however, any capital
expenditures which in the aggregate exceed the Capital Expenditure Maximum
Amount (the "Excess Capital Expenditures"), shall be deemed to be incurred
for the purposes of this Note over a period of three consecutive calendar
years with one-third of the total cost of said Excess Capital Expenditures
incurred in each of said calendar years, commencing as of the calendar year
said Excess Capital Expenditures are actually incurred.
"Capital Expenditure Maximum Amount" means, for any calendar year, an
amount equal to (i) the amount of depreciation and amortization of the
Corporation (excluding increased depreciation or amortization and increased
inventory values resulting from purchase accounting in connection with
acquisitions and business combinations) charged, accrued or otherwise
allocated against net income during such calendar year (the "Depreciation
Amount") plus (ii) 20% of the Depreciation Amount.
"Closing Date" means the date on which the transactions contemplated
by the Purchase Agreement are consummated.
"Default" means any condition or event that constitutes an 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
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) 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 amortization charged, accrued or otherwise
allocated against such net income; plus (iv) expenses for depreciation
(including increased depreciation and increased inventory values resulting
from purchase accounting in connection with acquisitions and business
combinations) charged, accrued or otherwise allocated against such net
income; plus (v) any reductions in Working Capital from the beginning to
the end of such period; minus (vi) payments of interest and 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, for purposes of the calculation
of Free Cash Flow, (A) the interest rate on the Senior Indebtedness shall
not exceed the interest rate set forth on Exhibit A and (B) the aggregate
amount of the principal payments on the Senior Indebtedness shall not
exceed (1) the amount set forth on Exhibit A for the period in question
plus (2) the amount of any unpaid principal payments on Senior Indebtedness
for prior periods, whether or not paid during such period and whether or
not such payments are greater or less than such amounts set forth on
Exhibit A; minus (vii) any increases in Working Capital from the beginning
to the end of such period; minus (viii) 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. For purposes of calculating
"Free Cash Flow," the aggregate amount of such fees and expenses allocated
to the Corporation (whether or not pursuant to a management consulting
agreement) for any fiscal year of the Corporation shall not exceed one
percent (1%) of the Corporation's gross sales for said fiscal year. Free
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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 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
Jordan Industries, Inc. or TJC Management Corporation. Indebtedness owed to
Affiliates will be Indebtedness for purposes of this Note.
"Maturity Date" means a date within 90 days from December 31, 2001,
subject to extension to a later date as provided by the terms of this Note,
but in no event shall it mean a date later than 90 days from December 31,
2002.
"Noncompetition Agreements" means, collectively, the Noncompetition
Agreement, dated as of the Closing Date, by and between the Corporation and
the Holder, the Noncompetition Agreement, dated as of the Closing Date, by
and between the Corporation and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and the Noncompetition
Agreement, dated as of the Closing Date, by and between the Corporation and
▇▇▇▇ ▇▇▇▇▇▇.
"Note" means this Non-Negotiable Subordinated Note due on a date
within 120 days of December 31, 2001.
"Purchase Agreement" means the Agreement for Purchase and Sale of
Assets, dated as of February 6, 1998, by and among the Corporation, the
Holder, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇, as
the same has been or may be amended from time to time.
"Senior Indebtedness" shall mean the principal, interest (including
any interest accruing subsequent to an event specified in Sections 5.1(c)
and 5.1(d)), premium, if any, fees (including, without limitation, any
commitment, agency, facility, structuring, restructuring or other fee),
costs, expenses, indemnities, and other amounts due on or in connection
with any Indebtedness of the Corporation (including, without limitation,
the intercompany Indebtedness owed to JII, Inc., a Delaware corporation,
and any other 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), unless the terms of such Indebtedness
expressly provide that such Indebtedness is not Senior Indebtedness with
respect to this Note. 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
9
include any payables, accrued expenses, fees or other amounts due to Jordan
Industries, Inc., TJC Management Corporation or any affiliate of such
entities. 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 VII. Miscellaneous
7.1. 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:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
Rolite Holdings, Inc.
c/o Jordan Industries, Inc.
ArborLake Centre, Suite ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
▇▇▇▇▇ ▇. ▇▇▇▇▇ 111, Esq.
▇▇▇▇▇ ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
If to the Holder, to:
Rolite Plastics, Inc.
c/o ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
10
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-0408
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇. ▇▇▇▇▇ ▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & Deeds
West Third and Walnut
P.O. Box 2330
Dover, Ohio 44622-1200
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
c/o Miller and ▇▇▇▇▇▇ Accountants, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
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.
7.2. 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.
7.3. 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.
7.4. 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.
11
7.5. 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.
7.6. 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.
7.7. Governing Law; Arbitration. This Note shall be governed by the
laws of the state of Ohio (regardless of the laws that might otherwise
govern under applicable principles of conflicts of law of the state of
Ohio) as to all matters including, but not limited to, matters of validity,
construction, effect, performance and remedies. THE PARTIES HERETO AGREE
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 FIRST
BE ADDRESSED BY THE PARTIES THEMSELVES IN GOOD FAITH, AND FOR A PERIOD OF
NOT MORE THAN 20 DAYS TO MUTUALLY RESOLVE SUCH DISPUTE AND IF NO SUCH
RESOLUTION IS REACHED, SUCH DISPUTE 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 CLEVELAND, OHIO, AND SHALL BE SUBJECT TO THE
SUBSTANTIVE LAW OF THE STATE OF OHIO AND THE PARTIES HERETO AND THE
ARBITRATOR SHALL USE THEIR BEST EFFORTS TO RESOLVE SUCH DISPUTE WITHIN 30
DAYS AFTER THE INITIATION OF THE ARBITRATION PROCEEDINGS. 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
COURT OF COMPETENT JURISDICTION TO ENFORCE THE DECISION PURSUANT TO SUCH
ARBITRATION. THE PARTIES HERETO HEREBY IRREVOCABLY WAIVE AND SHALL NOT SEEK
JURY TRIAL IN ANY LAWSUIT, PROCEEDING, CLAIM, COUNTERCLAIM, DEFENSE OR
OTHER LITIGATION OR DISPUTE UNDER OR IN RESPECT OF THIS AGREEMENT.
7.8. Authorization. This Note and the execution and issuance hereof
has been duly authorized by Holdings' Board of Directors. A certified copy of
such authorization is attached to the Purchase Agreement in the form of
Exhibit 3.3.
ROLITE HOLDINGS, INC.
By:
-----------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇, Vice President
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Exhibit A
Interest Rate on Senior Indebtedness - 10.75%
Senior Indebtedness Principal Amortization Schedule
Year Amount
1998 $400,000
1999 $500,000
2000 $700,000
2001 $700,000
2002 $700,000
