THE ISSUANCE OF THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE SECURITIES LAW OF ANY STATE. THIS NOTE IS NOT
ASSIGNABLE OR TRANSFERRABLE AND MAY NOT BE SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF WITHOUT THE PRIOR WRITTEN CONSENT OF
MAKER, AND WITHOUT THE PRESENTATION TO MAKER OF AN OPINION OF COUNSEL OR OTHER
EVIDENCE SATISFACTORY TO MAKER OF EVIDENCE THAT SUCH DISPOSITION IS EXEMPT FROM
REGISTRATION UNDER SUCH ACT AND LAWS.
PURSUANT TO THAT CERTAIN SUBORDINATION AGREEMENT DATED AS OF AUGUST 31, 2000 (AS
AMENDED, RESTATED OR MODIFIED FROM TIME TO TIME, THE "SUBORDINATION AGREEMENT")
AMONG GMAC BUSINESS CREDIT, LLC, FOR ITSELF AND AS AGENT FOR THE "LENDERS", AS
DEFINED IN THE SUBORDINATION AGREEMENT (THE "SENIOR LENDERS"); THE WILMINGTON
TRUST COMPANY AND XXXXXX XXXX XXXXXX U/A DATED NOVEMBER 25, 1970 WITH XXXXXX X.
XXXXXX FBO XXXX XXXXX XXXXXX, OR ITS ASSIGNS AS INITIAL HOLDER HEREOF; ONKYO
ACQUISITION CORPORATION; AND ONKYO AMERICA, INC., THE INDEBTEDNESS, OBLIGATIONS
AND OTHER LIABILITIES EVIDENCED HEREBY ARE SUBORDINATE IN THE MANNER AND TO THE
EXTENT SET FORTH IN THE SUBORDINATION AGREEMENT TO THE PRIOR INDEFEASIBLE
PAYMENT, THE PERFORMANCE AND OBSERVANCE OF ALL SENIOR DEBT (AS DEFINED IN THE
SUBORDINATION AGREEMENT); AND EACH HOLDER HEREOF, BY ITS ACCEPTANCE HEREOF,
AGREES TO BE BOUND BY THE PROVISIONS OF THE SUBORDINATION AGREEMENT.
SENIOR SUBORDINATED PROMISSORY NOTE
Chicago, Illinois
$7,000,000 August 31, 2000
FOR VALUE RECEIVED, Onkyo Acquisition Corporation, an Indiana
corporation (the "Borrower"), hereby covenants and promises to pay to the order
of Wilmington Trust Company and Xxxxxx Xxxx Xxxxxx u/a dated November 25, 1970
with Xxxxxx X. Xxxxxx FBO Xxxx Xxxxx Xxxxxx, or its assigns (the "Holder"),
SEVEN MILLION and 00/100 DOLLARS ($7,000,000), together with interest thereon as
described below. This Senior Subordinated Promissory Note ("Note") is also
subject to a Subordinated Loan and Security Agreement of even date between the
Borrower and the Holder.
All principal, accrued interest and other costs, if any, hereunder
shall be due and payable to the Holder of this Note on August 31, 2008 (the "Due
Date"), with payments of interest to be made as provided in the next sentence.
The Borrower shall pay interest in arrears (computed on the basis of a 360-day
year) equal to 15% per annum, of which a total of 12-1/2% per annum shall be
paid in equal installments on the first day of each month beginning October 1,
2000, and 2-1/2 % per annum shall accrue on the outstanding principal balance
only and be paid on the Due Date.
If any amount payable to the Holder under this Note is not received by
the Holder on or before the date when such payment is due, then such amount
shall bear interest from and after the due date of such payment until paid at an
annual rate of interest equal to 18 %.
This Note shall be secured by a second lien on all of the assets of the
Borrower, which lien is junior and subordinate to the liens of the Agent and the
Lenders (as defined in the Subordination Agreement) as set forth in the
Subordination Agreement. Upon the merger of the Borrower into Onkyo America,
Inc. ("OAI"), as a condition of the merger, OAI shall assume the liability to
pay this Note and OAI shall grant the Holder a junior lien on all of the assets
(except real property for which no lien shall be granted to the Holder) of OAI,
present and future, which lien shall be senior to all other liens granted by OAI
except for liens granted to the Agent and Lenders, their successors, assigns,
and any future lenders which refinance the indebtedness held by the Agent and
Lenders, as set forth in the Subordination Agreement.
Except as otherwise provided in this Note, the entire unpaid principal
amount of this Note, together with all accrued but unpaid interest thereon and
other unpaid charges hereunder, shall become immediately all due and payable
without further notice at the option of the Holder upon any of the following (a
"Default"): (i) the Borrower fails to make any payment hereunder when such
payment becomes first due and such failure continues for a period of 10 days
after written notice from the Holder to the Borrower; and (ii) the occurrence of
an "Event of Default" or default under any loan or credit agreement relating to
indebtedness of Borrower in excess of $10,000,000 including any promissory notes
entered into by the Borrower and (a) such Event of Default or default continues
unremedied for a period of 30 days (or such shorter period as provided in any
loan or credit agreement or promissory note) after written notice to the
Borrower by any other party to such agreement, and (b) such other party shall
have accelerated all indebtedness of the Borrower to such other party.
This Note is issued pursuant to a Loan and Security Agreement between
the Borrower and the Holder of even date. Subject to the Subordination
Agreement, this Note may be prepaid in whole or in part, at any time without
penalty. Any prepayment must include all interest to the date of prepayment. Any
payment (whether voluntary or involuntary) shall be applied first to any accrued
and unpaid interest due hereunder up to the date of such prepayment, and then to
the principal sum outstanding hereunder, and the acceptance of any such
prepayment when there is a default under this Note shall not constitute a
waiver, release or accord and satisfaction thereof or any rights held by the
Holder, vis-a-vis Borrower.
All rights, remedies, and undertakings, obligations, options,
covenants, conditions and agreements contained in this Note are cumulative and
no one of them will be exclusive of any other.
The Borrower for itself and its legal representatives, successors and
assigns, expressly waives presentment, protest, demand, notice of dishonor,
notice of nonpayment, notice of maturity, notice of protest, presentment for the
purpose of accelerating maturity, and diligence in collection, and consents that
the Holder may extend the time for payment or otherwise modify the terms of the
payment or any part or the whole of the debt evidenced hereby. To the fullest
extent permitted by law, the Borrower waives the statute of limitations in any
action brought by the Holder in connection with this Note and the right to a
trial by jury.
In the event the Holder brings an action in a court of competent
jurisdiction against the Borrower to enforce collection of any principal or
interest due under this Note, the Holder shall also be entitled to collect its
cost of collection, including reasonable attorney's fees and expenses.
This Note shall be interpreted in accordance with Illinois law,
including all matters of construction, validity, performance and enforcement,
without giving effect to any principles of conflict of laws. The holding of any
provision of this Note to be invalid or unenforceable by a court of competent
jurisdiction shall not affect any other provisions and the other provisions of
this Note shall remain in full force and effect.
This Note may not be changed, modified, amended or terminated orally.
ONKYO ACQUISITION CORPORATION
By:
Xxxxx Xxxxx, President
