EXHIBIT 4.3
THE PAYMENT OF THIS NOTE AND THE RIGHTS OF THE HOLDER OF THIS NOTE ARE
SUBORDINATED TO THE PAYMENT OF SUPERIOR INDEBTEDNESS (AS HEREINAFTER DEFINED)
AND THE RIGHTS OF THE HOLDERS OF SUPERIOR INDEBTEDNESS UPON THE TERMS OF
SUBORDINATION SET FORTH IN THIS NOTE.
TRIDEX CORPORATION,
TRIDEX NC, INC.
ULTIMATE TECHNOLOGY CORPORATION
19% Senior Subordinated Note due April __, 2005
No. R-
$____________ April __, 1998
TRIDEX CORPORATION, a Connecticut corporation (the "Holding Company"),
TRIDEX NC, INC., a North Carolina Corporation ("TNC"), and ULTIMATE
TECHNOLOGY CORPORATION, a New York corporation ("UTC" and, together with the
Holding Company and TNC, acting as joint and several obligors, the
"Obligor"), for value received, hereby promises to pay to
_____________________, or registered assigns, the principal amount of
_______________ DOLLARS ($ ________ ) on April __, 2005, with interest
(computed on the basis of a 360-day year of twelve 30-day months) on the
unpaid balance of such principal amount at the rate of 19% per annum until
the Warrant Exchange, and thereafter at the rate of 12% per annum, from the
date hereof, payable quarterly on the ____ day of January, April, July and
October of each year after the date hereof, commencing on
[July , 1998/the first such date next succeeding the date hereof], until the
principal hereof shall have become due and payable (whether at maturity or at
a date fixed for prepayment or by declaration or otherwise), and with
interest on any overdue principal (including any overdue prepayment of
principal) and (to the extent permitted by applicable law) premium, if any,
and (to the extent permitted by applicable law) on any overdue installment of
interest, at the rate of 21% per annum until the Warrant Exchange, and
thereafter at the rate of 14% per annum until paid, payable quarterly as
aforesaid or, at the option of the holder hereof, on demand and, upon
acceleration of this Note, together with the Make Whole Amount or the
Applicable Premium, as applicable, specified in the Securities Purchase
Agreements hereinafter referred to, as liquidated damages and not as a
penalty; provided that in no event shall the amount payable by the Obligor as
interest on this Note exceed the highest lawful rate permissible under any
law applicable hereto. Payments of principal, premium, if any, and interest
hereon shall be made in lawful money of the United States of America by the
method and at the address for such purpose specified in the Securities
Purchase Agreements hereinafter referred to, and such payments shall be
overdue for purposes hereof if not made on the originally scheduled date of
payment therefor, without giving effect to any applicable grace period and
notwithstanding
130
that such payment may be prohibited under the terms of subordination applicable
hereto set forth below.
As further provided in section 2, the Obligor may, at its option, in lieu
of paying cash, pay a portion of the interest due on this Note on any regularly
scheduled interest payment date by adding to the principal amount of this Note
an amount equal to such portion of the interest, and all references herein (or
in any of the other Operative Documents (as defined in the Securities Purchase
Agreements)) to the principal amount of this Note shall, unless the context
clearly requires otherwise, mean the principal amount as so adjusted from time
to time.
This Note is one of the Obligor's 19% Senior Subordinated Notes due April
__, 2005, limited to $11,000,000 aggregate principal amount, issued pursuant to
those certain Securities Purchase Agreements dated April __, 1998 (such
agreements, as amended, modified and supplemented from time to time, the
"Securities Purchase Agreements") between the Issuers and the institutional
investors named therein, and the holder hereof is entitled to the benefits of
the Securities Purchase Agreements and the other Operative Documents referred to
in the Securities Purchase Agreements, including, without limitation, the Note
Guarantees (if any), and may enforce the agreements contained therein and
exercise the remedies provided for thereby or otherwise available in respect
thereof, all in accordance with the terms thereof. This Note is subject to
prepayment as specified in the Securities Purchase Agreements.
Capitalized terms used herein without definition have the meanings
ascribed to them in the Securities Purchase Agreements.
1. Subordination of Senior Subordinated Notes. Payments on this Note, and
the rights of the holder hereof and of all guarantees with respect hereto, are
subordinate and junior in right of payment, to the extent specified in this
section 1, to Superior Indebtedness (as defined below).
1.1. Certain Definitions. As used in this section 1, the following terms
have the following respective meanings:
"Bankruptcy Code" shall mean 11 U.S.C. ss. 101 et seq., as from time
to time hereafter amended, and any successor or similar statute.
"Blockage Period" shall have the meaning specified in section 1.4.
"Covenant Default" shall have the meaning specified in section 1.4.
"Enforcement Notice"shall have the meaning specified in section
1.11.
"Liquidation Payment" shall have the meaning specified in section
1.3.
"Operative Documents" shall mean the Securities Purchase Agreements,
together with all agreements, documents and instruments executed in
connection therewith.
"Payment Default" shall have the meaning specified in section 1.4.
"Permissible Securities" shall mean (a) any debt securities the
payment of which is subordinated, at least to the extent provided in this
section 1 with respect to the
131
Subordinated Indebtedness, to the payment of all Superior Indebtedness at
the time outstanding and all securities issued in exchange therefor and
(b) any Shares of the Obligor.
"Senior Subordinated Notes" shall mean the Obligor's 19% Senior
Subordinated Notes due April __, 2005 (together with any notes issued in
exchange therefor or replacement thereof), of which this Note is one.
"Subordinated Indebtedness" shall mean the principal amount of the
Indebtedness evidenced by the Senior Subordinated Notes, together with any
interest (including any interest accruing after the commencement of any
action or proceeding under any bankruptcy, insolvency or other similar
law, and any interest that would have accrued but for the commencement of
any such proceeding, whether or not any such interest is allowed as an
enforceable claim in such proceeding), and premium and any other amount
(including any fee or expense) due thereon or payable, if any, with
respect thereto, including any such amounts payable by any guarantor
thereof.
"Subordination Notice" shall have the meaning specified in section
1.4.
"Superior Indebtedness" shall mean the principal amount of, interest
(including any interest accruing after the commencement of any action or
proceeding under any bankruptcy, insolvency or other similar law, and any
interest that would have accrued but for the commencement of any such
proceeding, whether or not any such interest is allowed as an enforceable
claim in such proceeding) and premium (if any) or other amount (including
any fee, expense or indemnification payment) due in respect of the Funded
Debt and/or Current Debt specified in and to the extent permitted by
sections 13.5(b), (c) and (d) of the Securities Purchase Agreements (or
any Refinancing Debt thereof permitted under section 13.5(e) of the
Securities Purchase Agreements) and all guarantees with respect thereto,
provided that in no event shall Superior Indebtedness include any amount
due in respect of (a) the Senior Subordinated Notes, (b) any Indebtedness
which is expressly made equal or subordinate in right of payment to the
Senior Subordinated Notes or (c) any Indebtedness for goods, materials or
services purchased in the ordinary course of business.
1.2. Subordinated Indebtedness Subordinated to Superior Indebtedness; No
Amendments.
(a) The Obligor for itself and its successors and assigns, and for
its Subsidiaries and the successors and assigns of such Subsidiaries,
covenants and agrees, and each holder of any Subordinated Indebtedness, by
its acceptance thereof, shall be deemed to have agreed, notwithstanding
anything to the contrary in this Note or any of the other Operative
Documents, that the payment of the Subordinated Indebtedness shall be
subordinated and junior in right of payment to the extent and in the
manner set forth in this section 1, to the prior payment in full in cash
or cash equivalents of all Superior Indebtedness, and that each holder of
Superior Indebtedness, whether now outstanding or hereafter created,
incurred, assumed or guaranteed, shall be deemed to have acquired Superior
Indebtedness in reliance upon the provisions contained in this section 1.
No present or future holder of Superior Indebtedness shall be prejudiced
in the right to enforce the subordination of the Subordinated Indebtedness
effected pursuant to this section 1 by any act or failure to act on the
part of the Obligor.
132
(b) Neither this section 1 nor any of the terms of the Subordinated
Indebtedness relating to the timing or amount of any payment (or
prepayment) of the principal of or premium, if any, or interest on the
Subordinated Indebtedness, shall be amended without the written consent of
the holder or holders of at least 66-2/3% in aggregate principal amount of
the Superior Indebtedness at the time outstanding.
(c) Unless and until the Superior Indebtedness has been paid in full
in cash or cash equivalents, the Obligor shall not grant to the holders of
the Subordinated Indebtedness any Lien in or on any of the assets of the
Obligor to secure the Subordinated Indebtedness without the written
consent of the holder or holders of not less than 66-2/3% in aggregate
principal amount of the Superior Indebtedness at the time outstanding.
1.3. Dissolution, Liquidation, Reorganization, etc. Upon any payment or
distribution of the assets of the Obligor (or any of its Subsidiaries) of any
kind or character, whether in cash, property or securities, to creditors upon
any dissolution, winding-up, total or partial liquidation, reorganization,
composition, arrangement, adjustment or readjustment of the Obligor (or any of
its Subsidiaries) or its (or their) securities, whether voluntary or
involuntary, or in bankruptcy, insolvency, reorganization, liquidation or
receivership proceedings, or upon a general assignment for the benefit of
creditors, or any other marshalling of the assets and liabilities of the Obligor
(or any of its Subsidiaries), or otherwise (hereinafter a "Liquidation
Payment"), then and in any such event:
(a) the holders of the Superior Indebtedness shall be entitled to
receive payment in full in cash or cash equivalents (or to have such
payment duly provided for in cash or cash equivalents in a manner
reasonably satisfactory to the holders of Superior Indebtedness) of all
amounts due or to become due on or in respect of all Superior
Indebtedness, before any Liquidation Payment, whether in cash, property or
securities (other than Permissible Securities), is made on account of or
applied to the Subordinated Indebtedness;
(b) the Subordinated Indebtedness shall forthwith become due and
payable, and any Liquidation Payment, whether in cash, property or
securities (other than Permissible Securities), to which the holders of
the Subordinated Indebtedness would be entitled except for the provisions
of this section 1, shall be paid or delivered by any debtor, custodian,
liquidating trustee, agent or other Person making such Liquidation
Payment, directly to the holders of the Superior Indebtedness, or their
representative or representatives, ratably according to the aggregate
amounts remaining unpaid on account of the Superior Indebtedness, for
application to the payment thereof, to the extent necessary to pay the
Superior Indebtedness in full in cash or cash equivalents after giving
effect to any concurrent payment or distribution, or provision therefor,
to the holders of such Superior Indebtedness;
(c) each holder of the Subordinated Indebtedness at the time
outstanding hereby irrevocably authorizes and empowers each holder of the
Superior Indebtedness or such holder's representative to collect and
receive such holder's ratable share of any Liquidation Payment and to
receipt therefor, and, if any holder of Subordinated Indebtedness fails to
file a claim therefor at least ten (10) calendar days prior to the date
established by rule of law or order of court for such filing, to file and
prove (but not to vote) such claim therefor, provided that such holder of
Superior Indebtedness shall
133
concurrently send written notice thereof to each holder of Subordinated
Indebtedness together with a copy of the proof of claim so filed; and
(d) the holders of the Subordinated Indebtedness shall execute and
deliver to the holders of the Superior Indebtedness or their
representative or representatives all such further instruments confirming
the above authorization and all such powers of attorney, proofs of claim,
assignments of claim and other instruments, and shall take all such other
action, as may be reasonably requested by the holders of the Superior
Indebtedness or such representative or representatives, to enforce such
claims and to carry out the purposes of this section 1.
Upon any payment or distribution of assets referred to in this section 1,
the holders of the Subordinated Indebtedness shall be entitled to rely upon any
order or decree made by any court of competent jurisdiction in which such
bankruptcy, insolvency, reorganization, liquidation, receivership or other
proceeding is pending, or a certificate of the debtor, custodian, liquidating
trustee, agent or other Person making any such payment or distribution to such
holders, for the purpose of ascertaining the Persons entitled to participate
therein, the holders of the Superior Indebtedness, the then outstanding
principal amount of the Superior Indebtedness and any and all amounts payable
thereon, the amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this section 1.
1.4. No Payments With Respect to Subordinated Indebtedness in Certain
Circumstances.
(a) The Obligor will not, and will not permit any of its
Subsidiaries to, directly or indirectly, make or agree to make, and
neither the holder nor any assignee or successor holder of any
Subordinated Indebtedness will accept or receive any payment or
distribution (in cash, property or securities (other than Permissible
Securities) by set-off or otherwise), direct or indirect, of or on account
of the Subordinated Indebtedness if, at the time of such payment or
distribution, such payment or distribution is prohibited by Section 7.1 of
the Fleet Bank Agreement or is made in contravention of the payment rights
in respect of the Superior Indebtedness set forth in Section 2.5 of the
Fleet Bank Agreement or if, at the time of such payment or distribution or
immediately after giving effect thereto:
(i) a default in the payment when due of all or any portion of
the principal of or premium, if any, or interest on any Superior
Indebtedness or of any other amount (including any fee, expense or
indemnification payment) due in respect thereof shall have occurred
(a "Payment Default"); or
(ii) all of the following four conditions shall exist:
(A) a default other than a Payment Default shall have
occurred with respect to any Superior Indebtedness which
permits the holder or holders thereof to immediately
accelerate the maturity thereof (a "Covenant Default"); and
(B) the Obligor and the holder or holders of
Subordinated Indebtedness shall have received written notice
(given as provided in the Securities Purchase Agreements)
(each a "Subordination Notice") of such
134
Covenant Default from the requisite holder or holders of the
Superior Indebtedness, or their representative or
representatives (which notice shall state that it is a
"Subordination Notice" and shall make explicit reference to
the provisions of this section 1.4(a)(ii)); and
(C) such Covenant Default shall not have been cured by
the Obligor pursuant to the provisions of the agreements
governing such Superior Indebtedness or waived in writing by
the requisite holder or holders of the Superior Indebtedness
with respect to which such Covenant Default shall have
occurred; and
(D) less than 180 days shall have elapsed after the date
of receipt by the Obligor and the holders of the Subordinated
Indebtedness of such Subordination Notice (any period during
which the restrictions imposed by this section 1.4(a)(ii) are
in effect being hereinafter referred to as a "Blockage
Period");
provided, however, that, for the purpose of this section 1.4(a)(ii),
(1) Blockage Periods shall not be in effect for more than an
aggregate of 180 days during any period of 365 consecutive days, (2)
Blockage Periods shall not be in effect on more than three occasions
for an aggregate of 180 days during any period of 365 consecutive
days, and (3) no facts or circumstances known to the holders of
Superior Indebtedness giving any Subordination Notice on the date
any Subordination Notice is given may be used or shall be effective
as a basis for any subsequent Subordination Notice.
(b) The restrictions imposed by section 1.4(a) shall cease to apply
and the Obligor may resume payments in respect of the Subordinated
Indebtedness (including any payments which shall not have been made on
account of the provisions of this section 1, but excluding any payments
which may have become due upon any acceleration of the maturity of the
Subordinated Indebtedness) or any judgment with respect thereto upon the
earliest to occur of (i) the cure of the Payment Default or Covenant
Default by the Obligor pursuant to the provisions of the agreements
governing such Superior Indebtedness, (ii) the written waiver thereof by
the requisite holder or holders of the Superior Indebtedness with respect
to which such Payment Default or Covenant Default shall have occurred or
(iii) in the case of a Covenant Default, (A) the expiration of the
applicable Blockage Period or (B) the termination of such Blockage Period
by such requisite holder or holders of such Superior Indebtedness.
(c) In the event of either (i) the failure of the Obligor to pay the
principal of and interest and premium, if any, on any Superior
Indebtedness upon the maturity thereof or any other amount (including any
fee, expense or indemnification payment) due in respect thereof or (ii) an
acceleration of the maturity of the principal of any Superior Indebtedness
in accordance with the terms thereof (which acceleration has not been
rescinded or annulled), such Superior Indebtedness shall first be paid in
full in cash or cash equivalents (or provision for such payment in cash or
cash equivalents shall be made in a manner reasonably satisfactory to the
holder or holders of such Superior Indebtedness) before any payment or
distribution (in cash, properties or securities (other than Permissible
Securities), by set-off or otherwise) is made on account of or applied to
the Subordinated Indebtedness.
135
(d) Nothing herein shall affect or impair the right of any holder of
any Senior Subordinated Notes to apply any amount payable in respect
thereof to the payment of any amount due upon the exercise of any Warrants
at any time.
1.5. Payments and Distributions Received. If any payment or distribution
of any kind or character, whether in cash, property or securities (other than
Permissible Securities), shall be received by any holder of any of the
Subordinated Indebtedness in contravention of this section 1, such payment or
distribution shall be held in trust for the benefit of, and shall be paid over
or delivered and transferred to, the holders of the Superior Indebtedness, or
their representative or representatives, ratably according to the aggregate
amount remaining unpaid on account of such Superior Indebtedness, for
application to the payment of the Superior Indebtedness, to the extent necessary
to pay all such Superior Indebtedness in full in cash or cash equivalents, after
giving effect to any concurrent payment or distribution, or provision therefor,
to the holders of such Superior Indebtedness. In the event of the failure of any
holder of any of the Subordinated Indebtedness to endorse or assign any such
payment or distribution, any holder of the Superior Indebtedness or such
holder's representative is hereby irrevocably authorized to endorse or assign
the same.
1.6. Subrogation. Subject to the payment in full of all Superior
Indebtedness in cash or cash equivalents, in case cash, property or securities
otherwise payable or deliverable to the holders of the Subordinated Indebtedness
shall have been applied pursuant to this section 1 to the payment of Superior
Indebtedness, then and in each such case, the holders of the Subordinated
Indebtedness shall be subrogated to the rights of each holder of Superior
Indebtedness to receive any further payment or distribution in respect of or
applicable to the Superior Indebtedness; and, for the purposes of such
subrogation, no payment or distribution to the holders of Superior Indebtedness
of any cash, property or securities to which any holder of Subordinated
Indebtedness would be entitled except for the provisions of this section 1
shall, and no payment over pursuant to the provisions of this section 1 to the
holders of Superior Indebtedness by the holders of the Subordinated Indebtedness
shall as between the Obligor, its creditors other than the holders of Superior
Indebtedness and the holders of Subordinated Indebtedness, be deemed to be a
payment by the Obligor to or on account of Superior Indebtedness.
1.7. Certain Notices. In the event that (a) any Superior Indebtedness or
Subordinated Indebtedness shall be transferred and/or shall become due and
payable before the expressed maturity thereof as the result of the occurrence of
a default or any event of default or (b) any term or provision of any agreement,
document or instrument related to the Superior Indebtedness or Subordinated
Indebtedness shall be amended, modified or supplemented, or compliance therewith
waived, the Obligor will give immediate written notice in writing of such event
to each holder of Subordinated Indebtedness and Superior Indebtedness (together
with copies of all related agreements, documents and instruments). Each notice
of any transfer of any Superior Indebtedness or Subordinated Indebtedness shall
include the name and address of the applicable transferee for purposes of this
section 1. The holder or holders of Superior Indebtedness shall be obligated to
give a Subordination Notice (as defined in section 1.4) to a holder of
Subordinated Indebtedness other than the initial holders thereof only if the
holder or holders of Superior Indebtedness shall have been furnished written
notice of such other holder's address for purposes of this section 1. No holder
of Subordinated Indebtedness shall be obligated to give any notice under section
1.11 to any holder of Superior Indebtedness unless such holder of Subordinated
Indebtedness shall have been furnished written notice of the address of such
holder of Superior Indebtedness for purposes of this section 1. All notices to
the holders of the Superior
136
Indebtedness arising under the credit facility established by Fleet Bank
Agreement shall be sent to: Fleet National Bank, Xxx Xxxxxxxx Xxxxxx, Xxxxxxxx,
Xxxxxxxxxxx 00000, Attention: Xxxxxxxxx X. Xxxxxxx.
1.8. Subordination Not Affected, etc. The terms of this section 1, the
subordination effected hereby and the rights created hereby of the holders of
the Superior Indebtedness shall not be affected by (a) any amendment or
modification of or supplement to any Superior Indebtedness (or any renewal,
extension, refinancing or refunding thereof) or any agreement, document or
instrument relating thereto to the extent not prohibited by the Securities
Purchase Agreements, (b) any exercise or non-exercise of any right, power or
remedy under or in respect of any Superior Indebtedness (or any security or
collateral therefor) or pursuant to any agreement, document or instrument
relating thereto or (c) any waiver, consent, release, indulgence, delay or other
action, inaction or omission, in respect of any Superior Indebtedness (or any
security or collateral therefor) or pursuant to any agreement, document or
instrument relating thereto, whether or not any holder of any Subordinated
Indebtedness shall have had notice or knowledge of any of the foregoing.
1.9. Obligations Unimpaired. The provisions of this section 1 are solely
for the purpose of defining the relative rights of the holders of Superior
Indebtedness on the one hand and the holders of Subordinated Indebtedness on the
other hand, and (a) subject to the rights, if any, under this section 1 of the
holders of Superior Indebtedness, nothing in this section 1 shall (i) impair as
between the Obligor and the holder of any Subordinated Indebtedness the
obligation of the Obligor, which is unconditional and absolute, to pay to the
holder thereof all amounts due thereon in accordance with the terms thereof or
(ii) except as otherwise provided in section 1.11, prevent the holder of any
Subordinated Indebtedness from exercising all remedies available to such holder,
whether arising under the Operative Documents, applicable law or otherwise, and
(b) no Person is entitled to any third party beneficiary rights or other similar
rights on account of or under this section 1 other than the holders of the
Superior Indebtedness. The failure to make any payment due in respect of the
Subordinated Indebtedness or to comply with any of the terms and conditions of
any of the agreements, documents and instruments related to the Subordinated
Indebtedness by reason of any provision of this section 1 shall not be construed
as preventing the occurrence of any Default or Event of Default with respect to
the Subordinated Indebtedness.
1.10. Holders of Subordinated Indebtedness Entitled to Assume Payments Not
Prohibited in Absence of Notice. No holder of Subordinated Indebtedness shall at
any time be charged with knowledge of the existence of any facts which would
prohibit the making of any payment to it, unless and until such holder shall
have received written notice thereof (given as provided in the Securities
Purchase Agreements) from the Obligor or from any holder of Superior
Indebtedness or any agent or representative thereof. Prior to the receipt of any
such notice, each holder of Subordinated Indebtedness shall be entitled to
assume conclusively that no such facts exist, without, however, limiting any
right of any holder of Superior Indebtedness under this section 1 to recover
from any holder of the Subordinated Indebtedness any payment made in
contravention of this section 1 (including, without limitation, any such payment
made in violation of Section 7.1 of the Fleet Bank Agreement or in contravention
of the payment rights in respect of the Superior Indebtedness set forth in
Section 2.5 of the Fleet Bank Agreement). Each payment on the Subordinated
Indebtedness by the Obligor shall be deemed to constitute a representation of
the Obligor that such payment is permitted to be paid by the Obligor under this
section 1.
137
Each holder of Subordinated Indebtedness shall be entitled to rely on the
delivery to it of a written notice by a Person representing himself to be a
holder of Superior Indebtedness or to be the agent or representative of any
holder of Superior Indebtedness to establish that such notice has been given by
any such Person. In the event that such holder of Subordinated Indebtedness
determines in good faith that further evidence is required with respect to the
right of any such Person to participate in any payment or distribution pursuant
to this section 1, such holder of Subordinated Indebtedness may request such
Person to furnish evidence to the reasonable satisfaction of such holder of
Subordinated Indebtedness as to any fact pertinent to the rights of such Person
under this section 1, and if such evidence is not furnished, such holder of
Subordinated Indebtedness may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment.
1.11. Limitation on Right of Action. Notwithstanding anything to the
contrary contained in this Note or any of the other Operative Documents,
including, without limitation, the rights of the holders of Subordinated
Indebtedness under section 2.2 of this Note and sections 9.4 and 16 of the
Securities Purchase Agreements, the holders of the Subordinated Indebtedness
agree that, if any Superior Indebtedness is outstanding, the holders of the
Subordinated Indebtedness will not accelerate any of the Subordinated
Indebtedness or take any other enforcement action with respect to the
Subordinated Indebtedness, unless:
(a) the holder or holders of any Superior Indebtedness shall have
accelerated the Superior Indebtedness or shall have foreclosed upon any
collateral securing the same;
(b) a proceeding under the Bankruptcy Code or any similar state
statute or law (including any law providing for the appointment of a
receiver or other similar official) shall have been commenced by or
against the Obligor by Persons other than the holders of the Subordinated
Indebtedness; or
(c) not less than 10 days prior to accelerating any of the
Subordinated Indebtedness or taking any other enforcement action with
respect to the Subordinated Indebtedness, the holders of Subordinated
Indebtedness shall have given each holder of Superior Indebtedness written
notice of the same, which notice shall specify in reasonable detail the
default on the basis of which the holders of the Subordinated Indebtedness
shall take any enforcement action and the enforcement action that the
holders of Subordinated Indebtedness then intend to take (each an
"Enforcement Notice");
(d) in the event that a Blockage Period shall have commenced during
the 10-day period subsequent to delivery of an Enforcement Notice, such
Blockage Period shall have expired or been terminated by the requisite
holder or holders of the Superior Indebtedness; or
(e) the Superior Indebtedness shall have been paid in full in cash
or cash equivalents and all commitments of the holder or holders of the
Superior Indebtedness shall have been terminated.
In the event that the holders of the Subordinated Indebtedness shall have
accelerated the Subordinated Indebtedness solely based upon an acceleration of
the Superior Indebtedness and the holder or holders of the Superior Indebtedness
shall thereafter rescind such acceleration, the holders of the Subordinated
Indebtedness shall likewise rescind their acceleration of the Subordinated
Indebtedness.
138
1.12 Notices to Holders of Subordinated Indebtedness. Notwithstanding my
provision to the contrary herein or in any other Operative Documents, any notice
required or permitted hereby to be given by the holder or holders of the
Superior Indebtedness to the holders of the Subordinated Indebtedness which are
members of the MassMutual Group shall be deemed to have been properly given if
given solely to Massachusetts Mutual Life Insurance Company acting on behalf of
all holders of the Subordinated Indebtedness which are members of the MassMutual
Group and in the manner provided in the Securities Purchase Agreements.
2. Provisions Concerning Capitalized Interest.
2.1. Option of the Obligor to Capitalize a Portion of Interest. During the
period commencing on the date of this Note and ending on the earlier to occur of
the Warrant Exchange or April 17, 2003, the Obligor may, at its option (upon
notice as provided in section 2.2), in lieu of paying cash, pay up to 7/19th of
the amount of interest which is due and payable on this Note on any regularly
scheduled interest payment date (the portion of interest that is not so paid in
cash on any regularly scheduled interest payment date being hereinafter referred
to as the "Capitalized Interest") by increasing the principal amount of this
Note, as of such regularly scheduled interest payment date (any such date on and
as of which the principal amount shall be so increased being referred to as an
"Adjustment Date"), by an amount equal to the Capitalized Interest, provided
that (a) the Obligor exercises such option proportionately with respect to all
of the Notes then outstanding and (b) on such regularly scheduled interest
payment date, the Obligor pays in cash in full all interest (other than interest
that is capitalized pursuant to this section 2) which is due and payable on such
date on all of the Notes then outstanding. If the Obligor shall, in accordance
with the terms of this section 2, exercise such option, then, from and after
each Adjustment Date, the outstanding principal amount of each Note shall,
without further action, be increased by an amount equal to the Capitalized
Interest added thereto as of such Adjustment Date.
2.2. Notice from the Obligor. To exercise its option under section 2.1,
the Obligor shall deliver to each holder of any Note not less than 10 or more
than 30 days prior to an Adjustment Date, an Officers' Certificate which shall
specify:
(a) the applicable Adjustment Date;
(b) (i) the portion of the interest which is due and payable on such
Adjustment Date on the Notes to be treated as Capitalized Interest, (ii)
the aggregate amount of Capitalized Interest to be added as of such
Adjustment Date to the principal amount of the Notes then outstanding and
(iii) the amount of Capitalized Interest to be added as of such Adjustment
Date to the principal amount of each Note then held by such holder;
(c) the aggregate amount of interest to be paid in cash on such
Adjustment Date on all of the Notes then outstanding and the amount of
interest to be paid in cash on such Adjustment Date with respect to each
Note then held by such holder;
(d) the aggregate principal amount of the Notes then outstanding and
the principal amount of each Note then held by such holder, in each case
both before and after giving effect to the adjustments to be made as of
such Adjustment Date;
139
(e) the aggregate amount of each interest payment to be made on and
after such Adjustment Date on all of the Notes then outstanding (if paid
entirely in cash) and the amount of each such interest payment on each
Note then held by such holder; and
(f) in reasonable detail, all computations made in determining the
foregoing.
In the absence of manifest error, the computations set forth in such Officers'
Certificate shall be deemed final binding and conclusive upon the Obligor and
the holders of the Notes, unless, in any case, the Required Holders of the Notes
shall notify the Obligor in writing of their objection (in reasonable detail) to
any portion of such Officers' Certificate within 30 days of the date upon which
such Officers' Certificate was furnished to the holders of the Notes. In such
event, the Obligor shall, at its expense, within 15 days following the receipt
of any such notice from the Required Holders of the Notes, deliver to the
holders of the Notes a certificate signed by a firm of independent certified
public accountants of recognized national standing (which may be the regular
auditors of the Obligor), setting forth in reasonable detail any adjustments
which, in the opinion of such accountants, should be made to the amounts set
forth in such Officers' Certificate in order for such amounts to be correct and
consistent with the terms hereof and of the other Operative Documents and, in
reasonable detail, all computations made in determining any such adjustments.
The certificate of any such firm of accountants shall be conclusive evidence of
the correctness of such amounts under this section 2.2.
2.3 Limitations on the Option of the Obligor to Capitalize Interest.
Notwithstanding anything to the contrary contained in this section 2, the
Obligor may not capitalize any interest pursuant to the provisions of this
section 2 on any Adjustment Date if on such Adjustment Date any Default or Event
of Default shall have occurred and be continuing.
3. General.
3.1. Registered Notes, etc. This Note is in registered form and is
transferable only by surrender hereof at the principal executive office of the
Obligor as provided in the Securities Purchase Agreements. The Obligor may treat
the person in whose name this Note is registered on the Note register maintained
at such office pursuant to the Securities Purchase Agreements as the owner
hereof for all purposes, and the Obligor shall not be affected by any notice to
the contrary.
3.2. Events of Default, etc. In case an Event of Default, as defined in
the Securities Purchase Agreements, shall occur and be continuing, the unpaid
balance of the principal of this Note may be declared and become due and payable
in the manner and with the effect provided in the Securities Purchase
Agreements. Reference is hereby made to section 16.1 of the Securities Purchase
Agreements for certain provisions requiring the holder or holders of the Notes
to endeavor to furnish copies to the holder or holders of Superior Indebtedness
of any notice given to the Obligor by the holder or holders of the Notes
pursuant to section 16.1 of the Securities Purchase Agreements.
3.3. Certain Waivers. The parties hereto, including the makers and all
guarantors and endorsers of this Note, hereby waive presentment, demand, notice,
protest and all other demands and notices in connection with the delivery,
acceptance, performance or enforcement of this Note.
140
3.4. Governing Law. This Note shall be construed in accordance with and
governed by the domestic substantive laws of The Commonwealth of Massachusetts
without giving effect to any choice of law or conflicts of law provision or rule
that would cause the application of domestic substantive laws of any other
jurisdiction.
[The remainder of this page is intentionally left blank.]
141
IN WITNESS WHEREOF, the Obligor has executed this Note as an instrument
under seal as of the date first above written.
TRIDEX CORPORATION
By
(Title)
TRIDEX NC, INC.
By
(Title)
ULTIMATE TECHNOLOGY
CORPORATION
By
(Title)
142
FORM OF ASSIGNMENT
[To be signed only upon transfer of Note]
For value received, the undersigned hereby sells, assigns and transfers
unto the within Note, and appoints Attorney to transfer such Note on the books
of TRIDEX CORPORATION, TRIDEX NC, INC. and ULTIMATE TECHNOLOGY CORPORATION with
full power of substitution in the premises.
Date: ,
---------------------------------------------------
(Signature must conform in all respects to name of
Xxxxxx as specified on the face of the Note)
Signed in the presence of
----------------------------
143
