EXHIBIT 10.14
THIS JUNIOR SUBORDINATED NOTE IS SUBORDINATED PURSUANT TO THE TERMS OF THAT
CERTAIN SUBORDINATION AGREEMENT DATED THE DATE HEREOF AMONG THE PAYEE, THE
OTHER PURCHASERS WHO ARE PARTIES TO THE AGREEMENT (AS DEFINED BELOW), THE
MAKER, THE SENIOR LENDER, THE SENIOR SUBORDINATED LENDER AND STRATEGIC
INVESTMENTS & HOLDINGS, INC. (ALL AS DEFINED BELOW).
GENERAL MANUFACTURED HOUSING, INC.
JUNIOR SUBORDINATED NOTE DUE JUNE 30, 2003
$145,454.50
December 21, 1995
FOR VALUE RECEIVED, GENERAL MANUFACTURED HOUSING, INC. a Georgia
corporation with its principal office at 0000 Xxxxxxxxxx Xxxxxxxxx,
Xxxxxxxx, Xxxxxxx 00000 (the "Maker"), hereby unconditionally promise(s) to
pay to the order of STERLING COMMERCIAL CAPITAL, INC. (the "Payee"), or
registered assigns at the office of the Payee located at 000 Xxxxx Xxxx
Xxxx, Xxxxx Xxxx, Xxx Xxxx 00000 or at such other office as the holder
hereof may designate, in lawful money of the United States, the principal
sum of One Hundred Forty Five Thousand Four Hundred Fifty Four and 50/100
Dollars ($145,454.50), together with interest thereon as provided for
below.
This Note is one of a duly authorized issue of Junior
Subordinated Notes of the Maker, limited in aggregate principal amount to
Five Million Dollars ($5,000,000.00) (the "Notes"), copies of which are
available for inspection at the Maker's principal office. The Notes have
been sold pursuant to a Securities Purchase Agreement dated as of the date
hereof, among the Maker and the Payees of the Notes (the "Agreement"), a
copy of which is available for inspection at the Maker's principal office.
This Note is subject and entitled to certain terms, conditions, covenants
and agreements contained in the Agreement. Reference to the Agreement and
the Subordination Agreement (as defined below) shall in no way impair the
negotiability hereof or the absolute and unconditional obligation of the
Maker to pay both principal of and interest on this Note as provided
herein.
1. EQUAL RANK. The Notes rank equally and ratably without
priority over one another. No payment, including any prepayment, shall be
made hereunder unless payment, including any prepayment, is made with
respect to the other Notes in an amount which bears the same ratio to the
then unpaid balance on such other Notes as the payment made hereon bears to
the then unpaid balance under this Note.
2. INTEREST. Interest shall accrue on the outstanding principal
balance hereof at a rate per annum equal to thirteen percent (13%) per
annum, payable (in the event and only to the extent that Maker has
accumulated earnings sufficient to pay such accrued interest) quarterly, on
the last day of December, March, June and September in each year and on the
Maturity Date (as defined below), commencing on March 31, 1996. Interest
for the period commencing with the date of this Note through March 31, 1996
shall be payable on March 31, 1996.
If all or a portion of the principal amount of or interest on
this Note shall not be paid when due (whether or not such interest has been
earned as provided above and whether at stated maturity, by acceleration or
otherwise) such overdue amount shall bear interest at a rate per annum
which is 2% above the rate that would otherwise be applicable thereto.
Anything contained in this Note to the contrary notwithstanding,
the Payee does not intend to charge and the Maker shall not be required to
pay interest or other charges in excess of the maximum rate (if any)
permitted by applicable law (if any). Any payments in excess of such
maximum shall be refunded to the Maker or credited against principal.
3. PAYMENT OF PRINCIPAL AND INTEREST. The Maker shall pay the
entire unpaid principal hereof and any accrued and unpaid interest thereon
in one lump payment due on June 30, 2003. The term "Maturity Date" shall
mean June 30, 2003.
4. SUBORDINATION. Anything in this Note to the contrary
notwithstanding, the indebtedness evidenced by this Note shall be
subordinated to the prior payment and satisfaction of all indebtedness of
the Maker to (i) First Source Financial LLP (the "Senior Lender") arising
out of the Secured Credit Agreement dated December 21, 1995 (the "Loan
Agreement") between the Senior Lender and the Maker, including any such
additional indebtedness permitted by the Subordination Agreement, and (ii)
The Equitable Life Assurance Society of the United States (the "Senior
Subordinated Lender") arising out of that certain Note and Warrant Purchase
Agreement dated as of December 21, 1995 (the "Note Agreement"), between the
Maker and the Senior Subordinated Lender (such indebtedness of the Maker to
which this Note is subordinated being hereinafter referred to as "Senior
Indebtedness"), which subordination shall be subject to the terms and
conditions of that certain Subordination Agreement dated as of the date
hereof between the Maker, the Senior Lender, the Senior Subordinated
Lender, Strategic Investments & Holdings, Inc. and the Payees of the Notes.
Senior Indebtedness shall include any replacement or refinancing thereof.
This Note and the other Notes shall be senior in right of payment to all
other borrowed money indebtedness of the Maker, except the Senior
Indebtedness.
5. LIQUIDATION RIGHTS. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Maker, this Note
shall be entitled to a claim in liquidation after the payment in full of
all Senior Indebtedness of the Maker, but before participation by the
holders of any debt subordinate hereto or of any capital stock of the
Maker. The amount of the claim in liquidation shall equal the amount to
which the Payee of this Note would be entitled in the case of payment,
whether or not this Note is eligible for payment at the time of
liquidation. If upon such liquidation, dissolution, or winding up, the
assets available for distribution among the holders of the Notes shall be
insufficient to permit the payment of the full amounts of their claims in
liquidation, then the entire assets of the Maker to be distributed to the
holders of the Notes shall be distributed pro-rata among the holders of the
Notes based upon the amounts of their respective claims in liquidation.
6. PREPAYMENT. OPTIONAL PREPAYMENT. The Maker may prepay the
principal hereof and all interest thereon in whole or in part at any time
without penalty or premium after ten (10) days' prior written notice to the
holders of the Notes; provided that any partial prepayment is in multiples
of $10,000. At the time of prepayment, all interest owing on the amount
prepaid to the date of payment must simultaneously be paid.
7. EXPENSES. The Maker shall pay the Payee, on demand, for all
reasonable costs and expenses, including, but not limited to, reasonable
attorneys' fees, incurred in the collection or enforcement of this Note.
8. DISCLOSURE OF SENIOR INDEBTEDNESS. The Maker shall notify
the Payee of this Note of the existence of any Senior Indebtedness,
incurred from time to time, or any written modification, extension, renewal
or rollover thereof or any default therein within five (5) days of the date
it is incurred or occurs. Such notice shall provide the Payee of this Note
access to all documents executed in connection therewith and all
information with respect thereto.
9. DEFAULT; ACCELERATION. The occurrence of any of the
following shall constitute an "Event of Default":
(a) The breach by the Maker of any of the terms or provisions
contained in this Note or any of the Notes, including without limitation
the failure to pay when due (whether at the date hereof or at a date fixed
for prepayment hereof or by acceleration hereof or otherwise) any
principal, interest, charges or other amounts hereunder or failure to
perform hereunder or under any of the Notes and such breach shall continue
unremedied for five business days; or
(b) If the Maker
(i) shall commence any case or proceeding or other action
relating to it under any bankruptcy, insolvency or other
similar law or seek reorganization, arrangement,
readjustment of its debts, dissolution, liquidation,
winding-up, composition or any other relief under any
bankruptcy, insolvency, reorganization, liquidation,
dissolution, arrangement, composition, readjustment of debt
or any other similar act or law, of any jurisdiction,
domestic or foreign, now or hereafter existing; or
(ii) shall admit the material allegations of any petition or
pleading in connection with any such case or proceeding; or
(iii) makes an application for, or consents or acquiesces to, the
appointment of a receiver, conservator, trustee or similar
officer for the Maker or for all or a substantial part of
the Maker's property; or
(iv) makes a general assignment for the benefit of creditors; or
(v) is unable or admits in writing its inability to pay its
debts as they mature; or
(c) Commencement of any case or proceeding or the taking of any
other action against the Maker in bankruptcy, insolvency, or similar law or
seeking reorganization, arrangement, readjustment of its debts,
liquidation, dissolution, winding-up, composition or for any other relief
under any bankruptcy, insolvency, reorganization, liquidation, dissolution,
arrangement, composition, readjustment of debt or any other similar act of
law of any jurisdiction, domestic or foreign, now or hereafter existing; or
the appointment of a receiver, conservator, trustee or similar officer for
the Maker or for all or a substantial part of the Maker's property; or the
issuance of a warrant of attachment, execution or similar process against
any substantial part of the property of the Maker; and the continuance of
any of such events for sixty (60) days undismissed, unbonded or
undischarged; or
(d) An event of default shall occur under (i) the Senior Loan
Agreement (as defined in the Securities Purchase Agreement) or related
documents, or (ii) any of the Senior Subordinated Note Instruments (as
defined in the Securities Purchase Agreement) or related documents, or
(iii) any other agreements relating to Senior Indebtedness or (iv) any of
the Notes; or
(e) The Maker shall fail to comply with any of its covenants
contained in the Agreement or the Investors Rights Agreement dated as of
the date hereof among the Maker, the Payees of the Notes and certain other
parties, and such failure continues unremedied for a period of thirty (30)
days after the Maker receives written notice from the Payee of such
default; or
(f) Any representation or warranty of the Maker in the Agreement
or in any other document or instrument delivered pursuant to the Agreement
shall prove to have been false in any material respect upon the date when
made; or
(g) Maker shall fail to pay at maturity, or within any
applicable period of grace, any obligation for borrowed money or credit
received or in respect of any indebtedness for borrowed money (other than
the Senior Indebtedness) or fail to observe or perform any material term,
covenant or agreement contained in any agreement by which it is bound,
evidencing or securing borrowed money or credit received or in respect of
any indebtedness for borrowed money (other than the Senior Indebtedness)
for such period of time as would permit (assuming the giving of appropriate
notice if required) the holder or holders thereof or of any obligations
issued thereunder to accelerate the maturity thereof; or
(h) There shall remain in force, undischarged, unsatisfied and
unstayed, for more than thirty days, whether or not consecutive, any final
judgment against Maker that with other outstanding final judgments,
undischarged, against Maker exceeds in the aggregate $250,000; or
(i) The Maker shall be enjoined, restrained or in any way
prevented by the order of any court or any administrative or regulatory
agency from conducting any material part of its business; or
(j) The Agreement or the Investors' Rights Agreement shall
cease, for any reason, to be in full force and effect other than in
accordance with the terms thereof.
Upon the occurrence, and at any time during the continuance, of
an Event of Default, the Payee, at the Payee's option and without the need
for presentment, demand, protest, or other notice of any kind, may declare
all unpaid principal hereof and interest hereunder to be immediately due
and payable and same shall become immediately due and payable upon such
declaration; PROVIDED that in the event of any Event of Default specified
in clauses (b) and (c) above, all such amounts shall become immediately due
and payable automatically and without any requirement of notice from the
Payee.
10. CERTAIN WAIVERS. The Maker and any endorser or guarantor
hereof (collectively, the "Obligors") and each of them (i) waive(s)
presentment, diligence, protest, demand, notice of demand, notice of
acceptance or reliance, notice of non-payment, notice of dishonor, notice
of protest and all other notices to parties in connection with the
delivery, acceptance, performance, default or enforcement of this Note, any
endorsement or guaranty of this Note, or any collateral or other security;
(ii) consent(s) to any and all delays, extensions, renewals or other
modifications of this Note, any related document or the debt(s) or
collateral evidenced hereby or thereby or any waivers of any term hereof or
thereof, any release, surrender, taking of additional, substitution,
exchange, failure to perfect, record, preserve, realize upon, or lawfully
dispose of, or any other impairment of, any collateral or other security,
or any other failure to act by the Payee or any other forbearance or
indulgence shown by the Payee, from time to time and in one or more
instances (without notice to or assent from any of the Obligors) and
agree(s) that none of the foregoing shall release, discharge or otherwise
impair any of their liabilities; (iii) agree(s) that the full or partial
release or discharge of any Obligor(s) shall not release, discharge or
otherwise impair the liabilities of any other Obligor(s); and (iv)
otherwise waive(s) any other defenses based on suretyship or impairment of
collateral.
11. REGISTRATION AND TRANSFER OF THIS NOTE. The Maker shall keep
at its principal executive office a register (herein sometimes referred to
as the "Note Register"), in which, but at its expense (other than transfer
taxes, if any), the Maker shall provide for the registration and transfer
of the Notes. The Payee of this Note, at such Payee's option, may in person
or by duly authorized attorney surrender this Note for exchange at the
principal office of the Maker, to receive in exchange therefor a new Note
or Notes, as may be requested by such Payee, of the same series and in the
same aggregate unpaid principal amount as the aggregate unpaid principal
amount of the Note or Notes so surrendered; provided, however, that any
transfer tax relating to such transaction shall be paid by the Payee
requesting the exchange. Each such new Note shall be dated as of the date
to which interest has been paid on the unpaid principal amount of the Note
or Notes so surrendered and shall be in such principal amount and
registered in such name or names as such Payee may designate in writing.
12. LOST DOCUMENTS. Upon receipt by the Maker of evidence
satisfactory to it of the loss, theft, destruction or mutilation of this
Note or any Notes exchanged for it, and (in case of loss, theft or
destruction ) of indemnity satisfactory to it, and upon reimbursement to
the Maker of all reasonable expenses incidental thereto, and upon surrender
and cancellation of such Note, if mutilated, the Maker will make and
deliver in lieu of such Note a new Note of the same series and of like
tenor and unpaid principal amount and dated as of the date to which
interest has been paid on the unpaid principal amount of the Note in lieu
of which such new Note is made and delivered.
13. COMMERCIAL TRANSACTION; JURY WAIVER. THE MAKER ACKNOWLEDGES
THAT THE TRANSACTION OF WHICH THIS NOTE IS A PART IS A COMMERCIAL
TRANSACTION. THE MAKER HEREBY KNOWINGLY AND VOLUNTARILY WAIVES TRIAL BY
JURY AND THE RIGHT THERETO IN ANY ACTION OR PROCEEDING OF ANY KIND, ARISING
UNDER OR OUT OF, OR OTHERWISE RELATED TO OR OTHERWISE CONNECTED WITH, THIS
NOTE AND/OR ANY RELATED DOCUMENT. THE MAKER FURTHER ACKNOWLEDGES THAT IT
HAS HAD AN OPPORTUNITY TO REVIEW THIS NOTE AND THE OTHER FINANCING
DOCUMENTS WITH ITS COUNSEL AND THAT IT ON ITS OWN HAS MADE THE
DETERMINATION TO EXECUTE THIS NOTE AND ALL OTHER FINANCING DOCUMENTS TO
WHICH IT IS A PARTY AFTER CONSIDERATION OF ALL OF THE TERMS OF THIS NOTE
AND SUCH OTHER DOCUMENTS (INCLUDING THE INTEREST RATE) AND OF ALL OTHER
FACTORS WHICH IT CONSIDERS RELEVANT.
14. BINDING NATURE. This Note shall bind the Maker and the
Maker's successors and permitted assigns and shall inure to the benefit of
the Payee and the Payee's heirs, representatives, successors and permitted
assigns. This Note may only be transferred to a transferee of shares of
capital stock of GMH Holdings, Inc. which have been issued pursuant to the
Agreement. The term "Payee" as used herein shall include, in addition to
the initial Payee, any successors, endorsees, or other permitted assignees
of such Payee and shall also include any other holder of this Note.
15. GOVERNING LAW. This Note shall be governed by and construed
and interpreted in accordance with the laws the State of Delaware, without
regard to its rules pertaining to conflicts of laws thereunder.
16. MISCELLANEOUS. No delay or omission by the Payee in
exercising any right or remedy hereunder shall operate as a waiver of such
right or remedy or any other right or remedy; and a waiver on one occasion
shall not be a bar to or waiver of any right or remedy on any other
occasion. All rights and remedies of the Payee hereunder, any other
applicable document and under applicable law shall be cumulative and not in
the alternative. No provision of this Note may be waived or modified orally
but only by a writing (a) signed by the party against whom enforcement of
such amendment, waiver or other modification is sought and (b) consented to
in writing by holders of Notes representing sixty six and 2/3 percent (66-
2/3%) in principal amount of the Notes.
17. NOTICES. All notices, requests, consents and demands shall
be made in writing and shall be mailed first class postage prepaid, or
delivered by hand or by messenger to the Maker or to the Payee hereof at
their respective addresses set forth at the beginning of this Note or at
such other respective addresses as may be furnished in writing to each
other.
IN WITNESS WHEREOF, the Maker has executed and delivered this
Note as of the day and year first written above.
Maker:
GENERAL MANUFACTURED HOUSING, INC.
By: /s/ Xxxx X. Xxxxx
--------------------------------
Name: Xxxx X. Xxxxx
Title: President
