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EXHIBIT 10.2
THIS PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD OR
TRANSFERRED WITHOUT COMPLIANCE WITH THE REGISTRATION OR QUALIFICATION PROVISIONS
OF APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR APPLICABLE EXEMPTIONS
THEREFROM. THIS NOTE IS SUBJECT TO A SUBORDINATION AND INTERCREDITOR AGREEMENT
DATED ON OR ABOUT THE DATE HEREOF BY AND AMONG CAPITAL RESOURCE LENDERS II,
L.P., ALLIED CAPITAL CORPORATION, ALLIED CAPITAL CORPORATION II, THE MARLBOROUGH
CAPITAL INVESTMENT FUND, L.P., CAPITAL TRUST INVESTMENTS, LTD. AND THE
BORROWERS.
SENIOR SUBORDINATED NOTE DUE 2003
$8,000,000.00 June 12, 1996
FOR VALUE RECEIVED, each of the entities listed on the signature pages
hereto (hereinafter, together with their successors in title and assigns, called
the "Borrowers" and each individually a "Borrower"), hereby jointly and
severally promise to pay to Capital Resource Lenders II, L.P. or assigns
(hereinafter referred to as the "Payee"), on or before June 30, 2003, the
principal sum of EIGHT MILLION DOLLARS ($8,000,000.00) or such part thereof as
then remains unpaid, and to pay interest from the date hereof on the whole
amount of said principal sum remaining from time to time unpaid at the rate of
twelve and one-quarter percent (12.25%) per annum, such interest to be payable
quarterly in arrears on the last day of March, June, September and December in
each year, the first such payment to be due and payable on June 30, 1996 until
the whole amount of the principal hereof remaining unpaid shall become due and
payable. Notwithstanding the foregoing, beginning July 1, 1998 this Note shall
bear interest at the rate of twelve and one-half percent (12.50%) per annum.
Under certain circumstances as indicated in Section 2.06 of the Agreement (as
defined), this Note shall bear interest at the rate of thirteen and one-half
percent (13.50%) per annum. Principal, premium, if any, and interest shall be
payable in lawful money of the United States of America, in immediately
available funds, by wire transfer of funds to the account or accounts designated
in writing by the Payee or in such other manner as the Payee may designate from
time to time in writing to the Borrowers. Interest shall be computed on the
basis of a 360-day year for the actual number of days elapsed. Nothing in this
Note shall require the Borrowers to pay interest at a rate in excess of the
maximum rate permitted by applicable law.
If an Event of Default, as defined in the Agreement, has occurred and
is continuing, from and after the date such Event of Default occurred any
outstanding unpaid principal hereof and any unpaid interest thereon shall bear
interest, payable on demand, at the rate of (i) fourteen and one-quarter percent
(14.25%) per annum if such Event of Default exists prior to July 1, 1998, (ii)
fourteen and one-half percent (14.50%) per annum if such Event of Default exists
on or after July 1, 1998, and (iii) fifteen and one-half percent (15.50%) per
annum if such Event of Default exists following a Liquidity IPO (as defined in
the Agreement), if upon the closing of such Liquidity IPO this Note has not been
repaid in full, or such lower rate as then may be the maximum rate permitted by
applicable law; provided, however, that upon the cessation or cure of such Event
of Default, if no other Event of Default is then continuing, this Note shall
again bear interest at the rate of twelve and one-quarter percent (12.25%) per
annum, 12.50% per annum or 13.50% per annum, as applicable, as set forth in the
Agreement.
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This Note is issued pursuant to and is entitled to the benefits of a
certain Senior Subordinated Note and Warrant Purchase Agreement, dated as of the
date hereof, by and among the Borrowers and Capital Resource Lenders II, L.P.,
Allied Capital Corporation, Allied Capital Corporation II, The Marlborough
Capital Investment Fund, L.P., and Capital Trust Investments, Ltd. (as the same
may be amended from time to time, referred to herein as the "Agreement"), and
each holder of this Note, by his acceptance hereof, agrees to be bound by the
provisions of the Agreement. The Borrowers and the Payee further acknowledge and
agree that (i) this Note is subject to prepayment, in whole or in part, and to
certain mandatory redemption payments, as specified in the Agreement, (ii) the
principal of and interest on this Note is subordinated to certain Senior Debt
(as defined in the Agreement) of the Borrowers pursuant to the Subordination
Agreement (as defined in the Agreement) and (iii) in case of an Event of Default
(as defined in the Agreement), the principal of this Note may become or may be
declared due and payable in the manner and with the effect provided in the
Agreement.
As further provided in the Agreement, upon surrender of this Note for
transfer or exchange, a new Note or new Notes of the same tenor dated the date
to which interest has been paid on the surrendered Note and in an aggregate
principal amount equal to the unpaid principal amount of the Note so surrendered
will be issued to the transferee or transferees.
In case any payment herein provided for shall not be paid when due,
each Borrower jointly and severally promises to pay all costs of collection,
including all reasonable attorneys' fees.
This Note shall be governed by, and construed in accordance with, the
laws of the Commonwealth of Massachusetts.
Except as expressly set forth in the Agreement, each Borrower and all
endorsers and guarantors of this Note hereby waive presentment, demand, notice
of nonpayment, protest and all other demands and notices in connection with the
delivery, acceptance, performance or enforcement of this Note.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, each Borrower has executed this Note under seal as
of the date first written above.
Xxxxxxxx'x Inc.
Kirkland's of Carolina, Inc.
Kirkland's of Charlotte, Xxxxxxxx Mall, Inc.
Kirkland's of Tennessee, Inc.
K.C. Corp. Inc.
Kirkland's of Greensboro, Four Seasons Mall, Inc.
Kirkland's of Fayetteville, Cross Creek Mall, Inc.
Kirkland's of Wilmington, Independence Mall, Inc.
Kirkland's III, Jackson-Metro Center, Inc.
Kirkland's of Memphis, Tennessee, Laurelwood
Shopping Center, Inc.
Kirkland's of Ridgeland, Mississippi, Northpark
Mall, Inc.
Kirkland's of Knoxville, East Towne Mall, Inc.
Kirkland's of Huntsville, Madison Square Mall, Inc.
Kirkland's of Valley View Mall, Roanoke, VA, Inc.
Kirkland's of Nashville, Hickory Hollow Mall, Inc.
Kirkland's of Birmingham, Riverchase
Galleria, Inc.
Kirkland's of XxxxxXxxxxx Xxxx, Xxxxxx Xxxxx,
Xxxxx Xxxxxxxx, Inc.
Kirkland's of Pecanland Mall, Monroe, LA, Inc.
Kirkland's of Xxxxx Center at Xxxx,
Atlanta, GA, Inc.
Kirkland's of Xxxxxxxx Xxxxx, Xxxxxxx, XX, Inc.
Kirkland's of Rivergate Mall, Nashville, TN, Inc.
Kirkland's of Peachtree Mall, Columbus, GA, Inc.
Kirkland's of Cumberland Mall, Atlanta, GA, Inc.
Kirkland's of Xxxxxxxx Place Mall,
Chattanooga, TN, Inc.
Kirkland's of Houston Galleria, Houston, TX, Inc.
Kirkland's of Mall of Memphis, Memphis, TN, Inc.
Kirkland's of Woodland Hills Mall, Tulsa, OK, Inc.
Kirkland's of Dayton Mall, Dayton, OH, Inc.
Kirkland's of Oxmoor Center, Louisville, KY, Inc.
Kirkland's of Xxxxx Xxxxxx Xxxx, Xxxxxx, XX, Inc.
Kirkland's of Valley View Center, Dallas, TX, Inc.
Kirkland's of Chesterfield Towne Center,
Richmond, VA, Inc.
Kirkland's of Park Plaza, Little Rock, AR, Inc.
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Kirkland's of Montgomery Mall,
Montgomery, AL, Inc.
Kirkland's of Xxxxxxxxx Xxxx, Xxxxxxx, XX, Inc.
Kirkland's of Southpark Mall, Richmond, VA, Inc.
Kirkland's of Eastland Mall, Evansville, IN, Inc.
Kirkland's of Xxxxxxx Xxxx, Xxxxxxxxx, XX, Inc.
Kirkland's of Hickory Ridge Mall,
Memphis, TN, Inc.
Kirkland's of Regency Square Mall,
Jacksonville, FL, Inc.
Kirkland's of McCain Mall, Little Rock, AR, Inc.
Kirkland's of River Ridge Mall,
Lynchburg, VA, Inc.
Kirkland's of Bel Air Mall, Mobile, AL, Inc.
Kirkland's of The Mall at Xxxxxx Crossing,
Tupelo, MS, Inc.
Kirkland's of Cortana Mall, Baton Rouge, LA, Inc.
Kirkland's of Bellevue Center, Nashville, TN, Inc.
Kirkland's of Tri-County Mall, Cincinnati, OH, Inc.
Kirkland's of Xxx Xxxx xx xxx Xxxxxxx,
Xxxxxxxxxxxx, XX, Inc.
Kirkland's of Xxxxxxxx Mall,
Birmingham, AL, Inc.
Kirkland's of Xxxxxxxx Xxxx, Xxx Xxxxxxx, XX, Inc.
Xxxxxxxx'x xx Xxxxxxxx Xxxxx, Xxxxxxxxx, X.X., Inc.
Kirkland's of Xxxx Xxxxxxx Xxxx, Xxxxxxx, X.X., Inc.
Kirkland's of Cool Springs Galleria,
Nashville, TN, Inc.
Kirkland's of Kenwood Towne Centre,
Cincinnati, OH, Inc.
Kirkland's of St. Louis Galleria, St. Louis, MO, Inc.
Kirkland's of Wiregrass Commons Mall,
Dothan, AL, Inc.
Kirkland's of Regency Mall, Richmond, VA, Inc.
Kirkland's of Florence, Florence, KY, Inc.
Kirkland's of Acadiana Mall, Lafayette, LA, Inc.
Kirkland's of Padre Staples Mall,
Corpus Christi, TX, Inc.
Kirkland's of Xxxxxx Village, Canton, OH, Inc.
Kirkland's of West Oaks Mall, Houston, TX, Inc.
Kirkland's of Charleston Town Center,
Charleston, W. VA, Inc.
Kirkland's of Crestwood Plaza, St. Louis, MO, Inc.
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Kirkland's of White Xxxxx Mall,
Baltimore, MD, Inc.
Kirkland's of Xxxxxx Creek Mall, Dallas, TX, Inc.
Kirkland's of Baybrook Mall, Houston, TX, Inc.
Kirkland's of Governor's Square Mall,
Tallahassee, Fl, Inc.
Kirkland's of Xxxxxx Creek Mall, Austin, TX, Inc.
Kirkland's of Highland Mall, Austin, TX, Inc.
Kirkland's of Battlefield Mall,
Springfield, MO, Inc.
Kirkland's of Penn Square Mall,
Oklahoma City, OK, Inc.
Kirkland's of Oak Park Mall, Kansas City, KS, Inc.
Kirkland's xx Xxxx Xx. Xxxxxxx, Xxxxxxxxxx, XX, Inc.
Kirkland's of Xxxxxx Xxxxx Mall,
Baltimore, MD, Inc.
Kirkland's of Oakwood Center,
New Orleans, LA, Inc.
Kirkland's of Xxx Xxxx xx Xxxxxxx Xxxx,
Xxxxxxx Xxxx, XX, Inc.
Kirkland's of Glenbrook Mall, Ft. Xxxxx, IN, Inc.
Kirkland's of Xxxxx Xxxxxx Xxxx, Xxxxxxx, XX, Inc.
Kirkland's of Northpark Mall, Joplin, MO, Inc.
Kirkland's of Orlando Fashion Square,
Orlando, FL, Inc.
Kirkland's of Xxx Xxxx xx Xxxxxxxxx Xxxxxxx,
Xxxxxx, XX, Inc.
Kirkland's of St. Xxxxxxx Xxxxx Center,
Waldorf, MD Inc.
Kirkland's of Regency Mall, Florence, AL, Inc.
Kirkland's of South Plains Mall, Lubbock, TX, Inc.
Kirkland's of The Parks at Arlington,
Ft. Worth, TX, Inc.
Kirkland's of Xxxxx Xxxx Xxxx,
Xxxxxxxxx, XX, Inc.
Kirkland's of St. Clair Square, St. Louis, MO, Inc.
Kirkland's of Turtle Creek Mall,
Hattiesburg, MS, Inc.
Kirkland's of The Woodlands, Houston, TX, Inc.
Kirkland's of Xxxxxxx Town Center,
Tampa, FL, Inc.
Kirkland's of Memorial City Mall,
Houston, TX, Inc.
Kirkland's of University Mall, Tuscaloosa, AL, Inc.
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Kirkland's of Xxxxx Xxxx Xxxx,
Xxxx Xxxxxx, XX, Inc.
Kirkland's of Panama City Mall
Panama City, FL, Inc.
Kirkland's of Town East Mall, Mesquite, TX, Inc.
Kirkland's of Xxxxxxxx Xxxx Xxxx,
Xxxxxxx, XX, Inc.
Kirkland's of Xxxxxxxx Xxxxxx Xxxx,
Xxxxxxx, X.X., Inc.
Kirkland's of Xxx Xxxxxx Xxxx,
Xxxx Xxxxx, X.X., Inc.
Kirkland's of Xxx Valley Mall, Chicago, IL, Inc.
Kirkland's of Hawthorne Mall, Chicago, IL, Inc.
Kirkland's of Stratford Square, Chicago, IL, Inc.
Kirkland's of Orland Square, Chicago, IL, Inc.
Kirkland's of Coastland Mall, Naples, FL, Inc.
Kirkland's of Edgewater Mall, Biloxi, MS, Inc.
Kirkland's of Town Center Plaza,
Kansas City, KS, Inc.
Kirkland's of Castleton Square,
Indianapolis, IN., Inc.
Kirkland's of Xxxxxxx Mall, Pensacola, FL, Inc.
Kirkland's of University Park, South Bend, IN, Inc.
Kirkland's of Westgate Mall, Amarillo, TX, Inc.
Kirkland's of Westgate Mall, Spartanburg, SC, Inc.
Kirkland's of Meridian Mall, Lansing, MI, Inc.
Kirkland's of Cottonwood Mall,
Albuquerque, NM, Inc.
Kirkland's of University Mall, Tampa, FL, Inc.
By: /s/ Xxxx Xxxxxxxx
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Name:
Title:
ATTEST:
By: /s/ Xxxxxx X. Xxxxxxxx
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Name:
Title: Vice President & Secretary