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EXHIBIT 10.3
SUBORDINATED DEBENTURE
$5,000,000 ,1996
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Shelby, North Carolina
CA Short Company, a Delaware corporation (herein called the "Company"),
for value received, hereby promises to pay to Pages, Inc., a Delaware
corporation, 000 00xx Xxxxxx Xxxxx, Xx. Xxxxxxxxxx, Xxxxxxx 00000 or permitted
assigns, ("Payee"), the principal sum of Five Million Dollars ($5,000,000.00) as
set forth in Schedule "A" hereto, and to pay interest on the unpaid principal
balance hereof at a rate of seven percent (7%) per annum from the date hereof or
from the most recent interest payment date to which interest has been paid, on
each January 1, April 1, July 1, and October 1 commencing January 1, 1997 (each
an "Interest Payment Date") until the principal hereof is paid in full. Payment
of the principal of and interest on this Debenture will be made to Payee by
check mailed to the address of Payee set forth above or at such other address as
Payee designates by written notice received by Company not less than fifteen
days prior to a payment date.
This Debenture is secured by a Security Agreement of even date herewith
which provides, among other things, that such Security Agreement (but not this
Debenture) terminates and is null and void in the event of (i) a change in
control of Pages, a Delaware corporation, or (ii) the assignment by Payee of
this Debenture.
The following is a statement of the rights of the holder of this
Debenture and the conditions to which this Debenture is subject, to which the
holder hereof, by the acceptance of this Debenture, assents:
1. SUBORDINATION.
(a) The indebtedness evidenced by this Debenture is and shall
remain subordinate and subject in right of payment, to the extent and in the
manner hereinafter set forth, to the prior payment in full of all of the Senior
Indebtedness. "Senior Indebtedness" means the principal of (and premium, if any)
and unpaid interest on (i) indebtedness of the Company or with respect to which
the Company is a guarantor, whether outstanding on the date hereof or hereafter
created, to banks, insurance companies or other lending institutions regularly
engaged in the business of lending money, which is for money borrowed by the
Company or a subsidiary of the Company, whether or not secured, including but
not limited to that certain ___________________ dated ____________, 19___,
between the Company and The Huntington National Bank, and (ii) any deferrals,
renewals or extensions of any such indebtedness or any debentures, Debentures or
other evidence of indebtedness issued in exchange for such Senior Indebtedness.
As used herein, the term "subsidiary" means a corporation at least fifty percent
(50%) of the voting securities, having ordinary voting power not dependent on a
default, of which is owned
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directly or indirectly by the Company or by one of its other subsidiaries or by
the Company in conjunction with one or more of its subsidiaries.
(b) Upon any payment or distribution of the assets of the
Company upon any dissolution or winding up or total liquidation or
reorganization of the Company (whether in bankruptcy, insolvency, reorganization
or receivership proceedings, or upon an assignment for the benefit or creditors,
or any other marshaling of the assets and liabilities of the Company, or
otherwise):
(i) all Senior Indebtedness shall first be paid in
full in cash, or provision made for such payment, before any holder of this
Debenture shall be entitled to receive any payments or distributions from or by
the Company on account of the principal of and premium, if any, or interest on
the indebtedness evidenced by this Debenture;
(ii) any payments or distribution of assets of the
Company of any kind or character, whether in cash, property or securities, to
which any holder of this Debenture would be entitled except for the provisions
of this subparagraph (b) shall be paid or delivered by the Company or by any
trustee in bankruptcy, receiver, assignee for benefit of creditors, or other
liquidating agent making such payment or distribution, directly to the holders
of Senior Indebtedness or their representative or representatives, or to such
trustee or trustees under any indenture pursuant to which any instruments
evidencing any of such Senior Indebtedness may have been issued, ratably
according to the aggregate amounts remaining unpaid on account of the Senior
Indebtedness held or represented by each, to the extent necessary to pay all
Senior Indebtedness in full after giving effect to any concurrent payment or
distribution, or provision therefor, to the holders of such Senior
Indebtedness; and
(iii) in the event that, notwithstanding the
foregoing, any payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities, shall be received by any
holder of this Debenture before all Senior Indebtedness is paid in full, or
provision made for its payment, such payment or distribution shall be held in
trust for the benefit of, and shall be paid over or delivered to, the holders
of such Senior Indebtedness or their representative or representatives, or to
the trustee or trustees under any indenture pursuant to which any amendments
evidencing any of such Senior Indebtedness may have been issued ratably as
aforesaid, for application to the payment of all Senior Indebtedness remaining
unpaid to the extent necessary to pay all such Senior Indebtedness after giving
effect to any concurrent payment or distribution, or provision therefor, to the
holders of such Senior Indebtedness.
For purposes of this Debenture the words "cash, property or securities"
shall not be deemed to include shares of stock of the Company as reorganized or
securities of the Company or any other corporation provided for by a plan of
reorganization or readjustment, the payment of which is subordinated at least to
the extent provided in this paragraph 2 with respect the payment of all Senior
Indebtedness which may at the time be outstanding, provided that (x) the Senior
Indebtedness is assumed by the new corporation, if any, resulting from any such
reorganization or readjustment, and (y) the rights of the holders of the Company
Senior Indebtedness are not, without the consent of such holders, altered by
such reorganization or readjustment.
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2. NON-IMPAIRMENT.
(a) Nothing contained in this Debenture is intended to or
shall impair, as between the Company, the Company's creditors other than the
holders of Senior Indebtedness, and any holder of Senior Indebtedness, and any
holder of this Debenture, the obligation of the Company, which is absolute and
unconditional, to pay to the holder of this Debenture the principal of, premium,
if any, and interest on this Debenture, as and when the same shall become due
and payable in accordance with the terms, and which subject to the rights under
this paragraph 2 of the holders of Senior Indebtedness, is intended to rank
equally with all other general obligations of the Company, or is intended to or
shall affect the relative rights of the holder of this Debenture and creditors
of the Company other than the holders of Senior Indebtedness, nor shall anything
herein or therein prevent the holder of this Debenture from exercising all
remedies otherwise permitted by applicable law upon the occurrence of an event
of default (as that term is hereinafter defined), subject to the rights, if any,
under this paragraph of the holders of Senior Indebtedness in respect of cash,
property or securities of the Company received upon the exercise of any such
remedy.
(b) (i) No payment on account of principal or interest on this
Debenture shall be made by the Company unless full payment of amounts then due
for principal, premium, if any, sinking fund and interest on all Senior
Indebtedness has been made or duly provided for in money, and (ii) no payment on
account of principal, premium, if any, or interest on this Debenture shall be
made by the Company if, at the time of such payment or immediately after giving
effect thereto, (x) there shall exist a default in the payment of principal,
premium, if any, sinking fund or interest with respect to any Senior
Indebtedness, or (y) there shall have occurred an event of default (other than a
default in the payment of principal, premium, if any, sinking fund or interest)
with respect to any Senior Indebtedness, as defined therein or in the instrument
under which the same is outstanding, permitting the holders thereof to
accelerate the maturity thereof, and such event of default shall not have been
cured or waived or shall not have ceased to exist.
3 REMEDIES.
(a) Wherever used herein, the term "Event of Default" means
any one of the following events (whatever the reason for such Event of Default
and whether it shall be voluntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
(i) default by the Company in the payment of any
installment of interest on this Debenture when such interest shall have
become due and payable and such default continues for a period of 10
days; or
(ii) default by the Company in the payment of any
installment or final payment of principal of this Debenture when such
installment or final payment becomes due and payable; or
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(iii) the entry with respect to the Company by a
court having competent jurisdiction of:
(A) a decree or order for relief in respect
of the Company in an involuntary proceeding under any
applicable bankruptcy, insolvency, reorganization or other
similar law and such decree or order shall remain unstayed and
in effect for a period of 60 consecutive days; or
(B) a decree or order adjudging the Company
to be insolvent, or approving a petition seeking
reorganization, arrangement, adjustment or composition of the
Company and such decree or order shall remain unstayed and in
effect for a period of 60 consecutive days; or
(C) a decree or order appointing any person
to act as a custodian, receiver, liquidator, assignee, trustee
or other similar official of the Company or of any substantial
part of the property of the Company, or ordering the winding
up or liquidation of the affairs of the Company and such
decree or order shall remain unstayed and in effect for a
period of 60 consecutive days; or
(iv) the commencement by the Company of a voluntary
case or proceeding under any applicable bankruptcy, insolvency,
reorganization or other similar law or of any other case or proceeding
seeking to be adjudicated bankrupt or insolvent or the consent by the
Company to the entry of a decree or order for relief in an involuntary
case or proceeding under any applicable bankruptcy, insolvency,
reorganization or other similar law or to the commencement of any
bankruptcy or insolvency case or proceeding against it, or the filing
by the Company of a petition or answer or consent seeking
reorganization or relief under any applicable law, or the consent by
the Company to the filing of such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator, assignee,
trustee or similar official for the Company or for any substantial part
of the property of the Company, or the making by the Company of an
assignment for the benefit of creditors, or the admission by it in
writing of its inability to pay its debts generally as they become due
or the taking of corporate action by the Company in furtherance of any
such action.
(b) If an Event of Default occurs and is continuing, then the
holder of this Debenture may declare the outstanding principal balance
of this Debenture, and the interest accrue thereon, to be due and
payable immediately, by notice in writing to the Company, and upon such
declaration such amount shall become immediately due and payable.
(c) No right or remedy herein conferred upon or reserved to
the holder of this Debenture is intended to be exclusive of any other
right or remedy, and every right and remedy, to the extent permitted by
law, shall be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity
or otherwise. The assertion or exercise of any right or remedy
hereunder, or otherwise, shall
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not prevent the concurrent assertion or exercise of any other right or
remedy available at law or in equity.
(d) No delay or omission of the holder of this Debenture to
exercise any right or remedy accruing upon any Event of Default shall
impair any such right or remedy or constitute a waiver of any such
Event of Default or an acquiescence therein. Every right and remedy
given by this paragraph or by law to the holder of this Debenture may
be exercised from time to time, and as often as may be deemed expedient
by such holder.
IN WITNESS WHEREOF, the Company has caused this Debenture to be signed
in its name by its President and attested by its Secretary.
Dated: CA SHORT COMPANY
By:
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as President
ATTEST:
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as Secretary
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SCHEDULE A
PRINCIPAL PAYMENT SCHEDULE
PAYMENT DATE AMOUNT
January 1, 1998 $100,000
January 1, 1999 $100,000
January 1, 2000 $100,000
January 1, 2001 $100,000
January 1, 2002 $4,600,000
