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Exhibit (b)(2)
II ACQUISITION CORP.
SUBORDINATED NOTE
No. R-1 July 23, 1997
$37,500,000
FOR VALUE RECEIVED, the undersigned, II ACQUISITION CORP. (herein
called the "Borrower"), a corporation organized and existing under the laws of
the State of Delaware, hereby promises to pay to XXXXXXXX X. XXXXX, or
registered assigns, the principal sum of THIRTY SEVEN MILLION, FIVE HUNDRED
THOUSAND DOLLARS ($37,500,000), as such principal sum may be adjusted in respect
of interest accruing on the principal amount hereof as provided below, on May
15, 2007, with interest (computed on the basis of a 360-day year consisting of
twelve 30-day months) on the unpaid balance thereof at a variable rate per annum
equal to the sum of (a) the rate published from time to time in the Wall Street
Journal as the "prime" rate, determined with respect to the date that is two
business days prior to the applicable interest payment date, and (b) 0.375%,
from the date hereof, payable semiannually in arrears on the fifteenth day of
November and May in each year, with the first interest payment being due on
November 15, 1997; provided that, at the option of the Borrower exercised by
written notice to the registered holder hereof, the interest becoming due on any
interest payment date up to and including May 15, 2002 may be paid by adding to
the principal amount hereof on any such date an aggregate amount equal to the
amount of interest then due and payable. The increase of the principal amount
hereof as described in the previous sentence shall constitute full payment of
such interest. Beginning on November 15, 2002, interest will be payable solely
in cash.
Payments of principal of and interest on this Note are to be made at
the main office of the holder, or at such other place as the holder shall
designate to the Borrower hereof in writing, in lawful money of the United
States of America.
All repayments of interest or principal, and all interest being
added to the principal amount, shall be recorded by the registered holder hereof
and appropriate notations to evidence the foregoing information with respect to
the principal amount then outstanding shall be endorsed by such registered
holder on the schedule attached hereto, or on a continuation of such schedule
attached to and made a part hereof; provided that the failure of such registered
holder to make any such recordation or endorsement shall not affect the
obligations of the Borrower hereunder.
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1. Prepayment. The Borrower may at any time and from time to time,
upon notice to the holder of this Note, prepay all or any portion of the
indebtedness represented by this Note, with interest accrued to the date fixed
for prepayment subject to the subordination provisions set forth below.
2. Subordination. The Borrower agrees, and the registered holder by
accepting this Note agrees, that all indebtedness evidenced by this Note is
subordinated in right of payment, to the extent and in the manner provided
herein, to the prior indefeasible payment in full, for a period of time in
excess of all applicable preference or other similar periods under applicable
bankruptcy, insolvency or creditors' rights law, to the Note, issued by the
Borrower to Janelia Farm Corp. dated July 23, 1997 and any refinancing or
extension thereof and any indebtedness for money borrowed issued after the date
hereof, except indebtedness that is designated as being pari passu or
subordinated in right of payment to this Note (the "Senior Debt"), and that the
subordination is for the benefit of, and shall be enforceable by, the holder of
the Senior Debt.
(a) Liquidation; Dissolution; Bankruptcy. Upon any distribution or
payment to creditors of the Borrower in a liquidation, dissolution, winding up
or reorganization of the Borrower of any kind or character and whether voluntary
or involuntary or in a bankruptcy, reorganization, insolvency, receivership or
similar proceeding relating to the Borrower, its property or to its creditors as
such or in an assignment for the benefit of creditors or any marshaling of the
assets and liabilities of the Borrower:
(i) the holder of the Senior Debt shall be entitled to receive
indefeasible payment in full of all amounts owing with respect to the
Senior Debt (including, without limitation, interest and expenses accrued
after the occurrence of any such event or the commencement of any such
proceeding at the rate specified in the Senior Debt regardless of whether
or not such interest is allowable as a bankruptcy claim in such
proceeding) before the registered holder shall be entitled to receive,
directly or indirectly, any payment of or distribution with respect to
principal, premium, if any, or interest on this Note; and
(ii) until the Senior Debt is paid in full, any payment or
distribution to which the registered holder would be entitled but for
these subordination provisions shall be made to the holder of the Senior
Debt, as its interest may appear, except that the registered holder may
receive securities that are subordinated to at least the same extent as
this Note to the Senior Debt.
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(b) Default on Senior Debt. The Borrower may not pay principal of,
premium, if any, or interest on this Note and may not repurchase, redeem or
otherwise retire this Note (collectively, "pay this Note"), and the registered
holder agrees that it shall not ask, demand or sue for, or take or receive from
Borrower, directly or indirectly, in cash, securities or other property or by
way of set-off, any payment of this Note; provided, however, that so long as no
default on the Senior Debt occurs and is continuing, following any applicable
grace periods, that then permits the holder of such Senior Debt to accelerate
its maturity in accordance with its terms and that no such default would be
caused by such payment, the Borrower may pay this Note in an amount not to
exceed the accrued interest thereon.
(c) When Distribution Must Be Paid Over. In the event that a payment
or distribution is made to the registered holder at a time when such payment or
distribution is prohibited by paragraphs (a) and (b) hereof, the registered
holder who receives the payment or distribution shall hold it in trust for the
benefit of, and promptly pay it over (in the same form as received but with any
necessary endorsements) to, the holder of the Senior Debt as its interest may
appear, or its agent or representative or the trustee under the indenture or
other agreement (if any) pursuant to which the Senior Debt may have been issued,
as their respective interests may appear, for application to the payment of all
obligations with respect to the Senior Debt remaining unpaid to the extent
necessary to pay such obligations in full in accordance with their terms, after
giving effect to any concurrent payment or distribution to or for the holder of
the Senior Debt.
(d) Notice by the Borrower. The Borrower shall promptly notify the
registered holder in writing of any facts known to the Borrower that would cause
a payment of any amounts with respect to this Note to violate the provisions
hereof, but failure to give such notice shall not affect the subordination of
this Note to the Senior Debt.
(e) Subrogation. After all Senior Debt is indefeasibly paid in full
for a period of time in excess of all applicable preference or similar periods
under applicable bankruptcy, insolvency or creditors' rights laws, and until
this Note is paid in full, the registered holder shall be subrogated (equally
and ratably with all other debt that is pari passu with this Note) to the rights
of the holder of the Senior Debt to receive distributions applicable to the
Senior Debt to the extent that distributions otherwise payable to the registered
holder have been applied to the payment of Senior Debt. A distribution made
under the subordination provisions of this Note to the holder of the Senior Debt
which otherwise would have been made to the registered
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holder is not, as between the Borrower and the registered holder, a payment by
the Borrower on this Note.
(f) Relative Rights. This Note defines the relative rights of the
registered holder and the holder of the Senior Debt. Nothing in this Note shall:
(i) impair, as between the Borrower and the registered holder, the
obligation of the Borrower, which is absolute and unconditional, to pay
principal of and interest on this Note in accordance with its terms;
(ii) affect the relative rights of the registered holder and
creditors of the Borrower other than their rights in relation to the
holder of the Senior Debt; or
(iii) prevent the registered holder from exercising any available
remedies, subject to the rights of the holder of the Senior Debt to
receive distributions and payments otherwise payable to the registered
holder.
(g) Subordination May Not Be Impaired. No right of any present or
future holder of Senior Debt to enforce the subordination of the obligations
with respect to this Note shall be prejudiced or impaired by any act or failure
to act by the Borrower or by any act or failure to act or waiver of any terms of
this Note, by any such holder, or by any noncompliance by the Borrower with the
terms of the subordination provisions of this Note, regardless of any knowledge
thereof which any such holder may have or be otherwise charged with. The holder
of the Senior Debt may extend, renew, modify or amend the terms of the Senior
Debt or any security therefor and release, sell or exchange such security and
otherwise deal freely with the Borrower, all without the consent of or notice
to, and without affecting the liabilities and obligations of, the Borrower or
the registered holder. No provision in any supplemental agreement or document
which modifies the subordination provisions of this Note or otherwise affects
the superior position of the holder of the Senior Debt shall be effective
against the holder of the Senior Debt if such holder has not consented thereto
in accordance with the provisions of the document governing such Senior Debt.
(h) The Registered Holder Entitled to Rely. Upon any payment or
distribution pursuant to these subordination provisions, the registered holder
shall be entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in paragraph (a)
above are pending, (ii) upon a certificate of the liquidating trustee or agent
or other person making such payment or distribution to the registered holder or
(iii) upon the representatives for the
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holder of the Senior Debt for the purpose of ascertaining the persons entitled
to participate in such payment or distribution, the holder of the Senior Debt
and other indebtedness of the Borrower, the amount thereof or payable thereon,
the amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to the subordination provisions of this Note.
(i) Reliance by the Holder of the Senior Debt on Subordination
Provisions. The registered holder, by accepting this Note, acknowledges and
agrees that the foregoing subordination provisions are, and are intended to be,
an inducement and a consideration to the holder of the Senior Debt, whether such
Senior Debt was created or acquired before or after the issuance of this Note,
to acquire and continue to hold, or to continue to hold, such Senior Debt, and
such holder of Senior Debt shall be deemed conclusively to have relied on such
subordination provisions in acquiring and continuing to hold, or in continuing
to hold, such Senior Debt. These subordination provisions are intended to be for
the benefit of, and shall be enforceable directly by, the holder of the Senior
Debt. The registered holder hereby waives to the fullest extent permitted by law
any right to compel marshaling or to otherwise seek to compel the holder of the
Senior Debt to follow any particular order of realization upon any collateral
for or any particular order or manner of enforcement of remedies with respect to
the Senior Debt.
THIS SUBORDINATED NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL (I) THIS
SUBORDINATED NOTE HAS BEEN REGISTERED UNDER THE SECURITIES ACT, OR (II) THE
HOLDER HEREOF PROVIDES THE BORROWER WITH (A) A WRITTEN OPINION OF LEGAL COUNSEL,
WHICH COUNSEL AND OPINION (IN FORM AND SUBSTANCE) SHALL BE REASONABLY
SATISFACTORY TO THE BORROWER, TO THE EFFECT THAT THE PROPOSED TRANSFER OF THIS
SUBORDINATED NOTE MAY BE EFFECTED WITHOUT REGISTRATION UNDER THE SECURITIES ACT,
OR (B) A "NO ACTION" LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION (THE
"COMMISSION") REASONABLY SATISFACTORY TO THE BORROWER TO THE EFFECT THAT UNDER
THE SECURITIES ACT THE PROPOSED TRANSFER OF THIS SUBORDINATED NOTE WITHOUT
REGISTRATION WILL NOT RESULT IN A RECOMMENDATION BY THE STAFF OF THE COMMISSION
THAT ACTION BE TAKEN WITH RESPECT THERETO, OR (C) SUCH OTHER EVIDENCE AS MAY BE
REASONABLY SATISFACTORY TO THE BORROWER THAT THE PROPOSED TRANSFER
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OF THIS SUBORDINATED NOTE MAY BE EFFECTED WITHOUT REGISTRATION UNDER THE
SECURITIES ACT.
This Subordinated Note shall be governed by and construed and
enforced in accordance with the law of the State of Delaware.
II ACQUISITION CORP.
By: /s/ XXXXXX X. XXXXXXX, III
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Name: Xxxxxx X. Xxxxxxx, III
Title: Vice President and Treasurer
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