Exhibit 10(v)
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS AND ACCORDINGLY MAY
NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT OR LAWS OR PURSUANT TO
AN EXEMPTION THEREFROM. THE PRINCIPAL AMOUNT OF THIS NOTE, AND INTEREST
IN RESPECT THEREOF, IS SUBORDINATED TO THE PAYMENT IN FULL OF ALL
SENIOR INDEBTEDNESS AND IS SUBJECT TO SET-OFF, AS DESCRIBED IN THIS
NOTE.
FLAVORSOURCE HOLDINGS, INC.
NON-NEGOTIABLE SUBORDINATED NOTE
$1,000,000 Deerfield, Illinois
October 23, 2000
FOR VALUE RECEIVED, the undersigned, FLAVORSOURCE HOLDINGS, INC., a
Delaware corporation (together with its successors, the "Corporation"), hereby
promises to pay to Xxx Xxxxxxxx and Xxxxxxx Xxxxxxxx, husband and wife, jointly
as community property (together with their successors and permitted assigns, the
"Holder"), at the Holder's residence at 000 Xxxxxxxxx Xxxxx, Xxxxxxx Xxxxx,
Xxxxxxxxxx 00000, the aggregate principal amount of One Million Dollars
($1,000,000) on the installment dates stated in Section 1.2 hereof. Certain
capitalized terms are used in this Note as defined in Article 6.
ARTICLE I
PAYMENT
1.1 Interest. Subject to Article 3, the outstanding principal amount of
this Note shall bear interest (computed on the basis of a 365 or 366 day year,
as the case may be) at a rate equal to eight percent (8%) per annum from (but
excluding) the date hereof to (and including) the Maturity Date. Subject to
Article 3, such interest shall be payable (i) annually in arrears, with respect
to each fiscal year of the Corporation (or portion thereof), no later than the
120th day following the end of such Corporation's fiscal year (or portion
thereof), commencing with the period ending December 31, 2000, and (ii) on the
Maturity Date.
1.2 Principal. Subject to Article 3, the Corporation shall pay, annually
with respect to each fiscal year of the Corporation, commencing with the period
ending December 31, 2003, no later than 120 days following the end of the
Corporation's fiscal year, all installment of principal on this Note equal to
the principal payment for such fiscal year as set forth on the attached Exhibit
A (or such lesser principal amount then outstanding), and on the Maturity Date
the entire then outstanding principal amount of this Note.
1.3 Business Days. Whenever payment of principal of, or interest on, this
Note shall be due on a date that is not a Business Day, the date for payment
thereof shall be the next succeeding Business Day and interest due on the unpaid
principal and any other Amounts Payable hereunder shall accrue during such
extension and shall be payable on such succeeding Business Day.
1.4 Series of Notes. This Note is one of a series of six notes issued by
the Corporation and Key Essentials, Inc., a Delaware corporation, in connection
with the Key Holdings Purchase Agreement and the Purchase Agreement (this Note
and such other notes being collectively referred to as the "Series of Notes").
The total principal amount of the notes issued in this series is $4,000,000.
Subject to the terms of Article 3 and Article 5, except for the calendar year
ending December 31, 2000 (the "2000 Year"), all payments of interest or
principal, if any, on this Note shall be made pro rata (based upon the
outstanding principal balances) with all other notes in such series and the
provisions of Article 3 hereof shall be applied to the entire Series of Notes
outstanding and then each note shall be entitled only to its pro rata share
(based upon the outstanding principal balances) of any payments available to the
entire Series of Notes. Subject to the terms of Article 3 and Article 5, with
respect to the 2000 Year, all payments of interest, if any, on the Series of
Notes shall be made pro rata based upon the respective Interest Ratio of each of
the non-negotiable subordinated promissory notes included within the Series of
Notes.
ARTICLE II
PREPAYMENTS; SET-OFF
2.1 Optional Prepayment. The Corporation shall have the right to prepay
the principal amount of this Note in whole or in part at any time, or from time
to time, without payment of any premium or penalty whatsoever, together with
interest thereon accrued to the date of prepayment, and any such prepayment
shall be applied to reduce the Corporation's principal payment obligations under
Section 1.2 in the order of maturity of such payment obligations; provided,
however, that so long as any Senior Indebtedness remains outstanding and unpaid,
any commitment to provide Senior Indebtedness is outstanding, or any other
amount is owing to the holders of Senior Indebtedness, this Note may not be
prepaid in whole or in part, without the written consent of the holders of
Senior Indebtedness.
2.2 Set-off. The Corporation shall be entitled to set-off and reduce any
Amounts Payable hereunder for any obligations or liabilities of the Holder to
the Corporation or any claims by the Corporation against the Holder. The Holder,
by accepting this Note, hereby acknowledges and agrees to the foregoing
provisions and any subsequent transferee or successor shall by becoming such
transferee or successor be bound by the foregoing.
ARTICLE III
FREE CASH FLOW
3.1 Payment Limitation. Notwithstanding any other provision of this Note,
the Corporation shall only be required to pay interest, principal or any other
Amounts Payable in respect of this Note if and to the extent the Combined Free
Cash Flow for the Corporation's fiscal year immediately preceding the required
payment date is sufficient and available to make such payment. If the Combined
Free Cash Flow for such fiscal year is not sufficient to make such payments,
then such payments will not be made nor be required to be made under this Note,
and the Corporation's payment obligation under this Note will be deferred until
the Combined Free Cash Flow would permit payment under this Article 3, and such
deferral of payment will not be an Event of Default under this Note, provided
that the Maturity Date will not be deferred under this Article 3 for more than
two years, at which time, all principal of, interest on and other Amounts
Payable in respect of this Note will be due and payable, subject to the terms of
Article 5.
3.2 Interest Limitation. If, as a result of Section 3.1, the Corporation
does not pay interest on an Interest Payment Date, then such interest will be
deferred (and not bear interest) and be paid at the Maturity Date; provided,
that the amount of such deferred interest in the aggregate will not exceed an
amount equal to the interest that would accrue on the initial principal amount
of this Note for two years ("Maximum Interest"). Any deferred interest that
exceeds the Maximum Interest will not accrue or be payable under this Note and
will be automatically eliminated.
3.3 Principal and Amounts Payable Deferral. If, as a result of
Section 3.1, the Corporation does not pay principal or any other Amounts
Payable (other than interest) on any required payment date, then such principal
and Amounts Payable will be deferred (and not bear interest) and be paid at
the Maturity Date.
3.4 Allocation. Subject to Section 1.4, if the Combined Free Cash Flow for
any fiscal year is available to pay some, but not all, of the required payments,
then such available Combined Free Cash Flow will be allocated first to required
principal payments, second to required interest payments, and then to required
payments of any other Amounts Payable.
ARTICLE IV
DEFAULTS
4.1 Events of Default. If one or more of the following events ("Events of
Default") shall have occurred and be continuing:
(a) the Corporation shall fail to pay within ten Business Days of the
due date thereof any principal of this Note or shall fail to pay within ten
Business Days of the due date thereof any interest or any other Amounts
Payable hereunder and the same shall not have been cured within 45 days
after written notice thereof has been given by the Holder to the
Corporation;
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(b) the Corporation shall commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect
to itself or its debts under any bankruptcy, insolvency or other similar
law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official, or shall consent
to any such relief or to the appointment of or taking possession by any
such official in an involuntary case or other proceeding commenced against
it, or shall make a general assignment for the benefit of creditors; or
(c) an involuntary case or other proceeding shall be commenced against
the Corporation seeking liquidation, reorganization or other relief with
respect to it or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official, and
such involuntary case or other proceeding shall remain undismissed and
unstayed for a period of 90 days; or an order for relief shall be entered
against the Corporation under the Federal bankruptcy laws as now or
hereafter in effect;
then, and in every such event, subject to the provisions of Article 5, the
Holder may, by notice to the Corporation and to the holders of Senior
Indebtedness, declare the principal amount of this Note together with accrued
interest thereon, to be, and such portions of the principal amount of this Note
(and accrued interest thereon) shall thereupon become, due and payable on the
tenth Business Day following delivery of such notice to the Corporation and to
the holders of Senior Indebtedness without presentment, demand, protest or
further notice of any kind, all of which are hereby waived by the Corporation,
provided, however, that the Event of Default specified in paragraph (a) will be
subject to Article 3.
ARTICLE V
SUBORDINATION
5.1 Loans Subordinated to Senior Indebtedness. Notwithstanding any
provision of this Note to the contrary, the Corporation covenants and agrees,
and the Holder by acceptance of this Note likewise covenants and agrees, that
all Amounts Payable shall be subordinated to the extent set forth in this
Article 5 to the prior payment in full, in cash or cash equivalents satisfactory
to the holders of Senior Indebtedness, of all Senior Indebtedness. This Article
5 shall constitute a continuing offer to and covenant with all persons who
become holders of, or continue to hold, Senior Indebtedness (irrespective of
whether such Senior Indebtedness was created or acquired before or after the
issuance of this Note). The provisions of this Article 5 are made for the
benefit of all present and future holders of Senior Indebtedness (and their
successors and assigns), and shall be enforceable by them directly against the
Holder.
5.2 Priority and Payment Over of Proceeds in Certain Events.
(a) Upon any payment or distribution of assets of the Corporation,
whether in cash, property, securities or otherwise, in the event of any
dissolution, winding up or total or partial liquidation, reorganization,
arrangement, adjustment, protection, relief or composition, or assignment
for the benefit of creditors of the Corporation, whether voluntary or
involuntary or in bankruptcy, insolvency, receivership, reorganization,
relief or other proceedings or upon an assignment for the benefit of
creditors or any other marshalling of all or part of the assets and
liabilities of the Corporation (the foregoing events herein collectively
referred to as an "Insolvency Event"), all Senior Indebtedness shall first
be paid in full, in cash, or payment provided for in cash equivalents in a
manner satisfactory to the holders of Senior Indebtedness, before the
Holder shall be entitled to receive any payment or distribution of assets
of the Corporation relating to any Amounts Payable. Upon any Insolvency
Event, any payment or distribution of assets of the Corporation, whether in
cash, property, securities or otherwise, to which the Holder would be
entitled relating to any Amounts Payable other than pursuant to the
provisions of this Article 5, shall be made by the Corporation or by any
receiver, trustee in bankruptcy, liquidating trustee, agent or other person
making such payment or distribution, directly to the holders of the Senior
Indebtedness or their representatives for application to the payment or
prepayment of all such Senior Indebtedness in full after giving effect to
any concurrent payment or distribution to the holders of such Senior
Indebtedness.
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(b) If (x) there has occurred and is continuing a default in the
payment of all or any portion of any Senior Indebtedness, unless and until
such default shall have been cured or waived, the Corporation shall not
make any payment on or with respect to any Amounts Payable or acquire this
Note (or any portion thereof) for cash, property, securities or otherwise;
or (y) an event (not involving the non-payment of any Senior Indebtedness)
shall have occurred or, with the giving of notice, or passage of time, or
both, would occur, that would allow holders of any Senior Indebtedness to
accelerate or otherwise demand the payment thereof, and any holders of the
Senior Indebtedness give notice of such event to the Corporation (the date
that such notice is received by the Corporation is the "Notice Date"), the
Corporation shall not make any payment on or with respect to any Amounts
Payable or acquire this Note (or any portion hereof) for cash, property,
securities or otherwise during the period (the "Blockage Period")
commencing on the Notice Date and ending on the earlier of (1) two years
after the Notice Date if at the end of such two year period such event is
not the subject of judicial proceedings and such Senior Indebtedness shall
not have been accelerated, (2) the date such event is cured or waived to
the satisfaction of the holders of the Senior Indebtedness, or (3) the date
the holders of such Senior Indebtedness shall have given notice to the
Corporation of the voluntary termination of the Blockage Period. By virtue
of accepting this Note and the benefits hereof, during any time period
during which payment of any part of Amounts Payable due under this Note is
prohibited by any of the terms of this Note, the Holder shall not be
entitled, and will not take any action, including any judicial process, to
accelerate, demand payment or enforce any Indebtedness in respect of this
Note or any other claim with regard to any Amounts Payable.
(c) If, notwithstanding the foregoing provisions prohibiting payments
or distributions, the Holder shall have received any payment of, or on
account of, any Amounts Payable that was deferred pursuant to Article 3 or
prohibited by this Article 5, before all Senior Indebtedness shall have
been paid in full, in cash or cash equivalents satisfactory to the holders
of the Senior Indebtedness, then and in such event such payments or
distributions shall be received and held in trust for the holders of the
Senior Indebtedness and promptly paid over or delivered to the holders of
the Senior Indebtedness remaining unpaid thereof to the extent necessary to
pay in full, in cash or cash equivalents satisfactory to the holders of the
Senior Indebtedness, such Senior Indebtedness in accordance with its terms
after giving effect to any concurrent payment or distribution to the holder
of such Senior Indebtedness; provided, that any such payment which is, for
any reason, not so paid over or delivered shall be held in trust by the
Holder for the holders of Senior Indebtedness.
(d) So long as any Senior Indebtedness remains outstanding, or the
commitment to make credit extensions of said Senior Indebtedness shall not
have been terminated, the Holder will not be entitled to take, demand, or
receive, directly or indirectly, by setoff, redemption, purchase or in any
manner, any voluntary prepayment or other payment of any Amounts Payable in
amounts or in a manner which are deferred pursuant to Article 3 or are in
violation of the provisions of this Article 5.
(e) Upon any payment or distribution of assets referred to in Section
5.2(a), the Holder shall be entitled to rely upon any order or decree of a
court of competent jurisdiction in which such dissolution, winding up,
liquidation or reorganization proceedings are pending, and upon a
certificate of the receiver, trustee in bankruptcy, or liquidating trustee
delivered to the Holder for the purpose of ascertaining the persons
entitled to participate in such distribution of assets, the holders of
Senior Indebtedness and other Indebtedness of the Corporation, the amount
thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Article 5.
5.3 Rights of Holders of Senior Indebtedness Not To Be Impaired, etc.
(a) No right of any present or future holder of any Senior
Indebtedness to enforce the subordination and other terms and conditions
provided herein shall at any time in any way be prejudiced or impaired by
any act or failure to act by any such holder, or by any noncompliance by
the Corporation, with the terms and provisions and covenants herein
regardless of any knowledge thereof that any such holder may have or
otherwise be charged with.
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(b) Article 3 and this Article 5 may not be amended without the
written consent of each holder of the Senior Indebtedness and of the
Holder, and any purported amendment without such consent shall be void. No
holder of Senior Indebtedness shall be prejudiced in such holder's right to
enforce the subordination and other terms and conditions of this Note by
any act or failure to act by the Corporation or anyone in custody of its
assets or property.
5.4 Subrogation. Subject to and upon the payment in full, in cash or cash
equivalents satisfactory to the holders of the Senior Indebtedness, of all
Senior Indebtedness, the Holder shall be subrogated, to the extent of payments
or distributions made to the holders of Senior Indebtedness pursuant to or by
reason of this Article 5, to the rights of the holders of such Senior
Indebtedness to receive payments or distributions of assets of the Corporation
made on such Senior Indebtedness until all amounts due under this Note shall be
paid in full; and for the purposes of such subrogation, no payments or
distributions to holders of such Senior Indebtedness of any cash, property or
securities to which the Holder would be entitled except for the provisions of
this Article 5, and no payment over pursuant to the provisions of this Article 5
to holders of such Senior Indebtedness by the Holder, shall, as among the
Corporation, its creditors (other than holders of such Senior Indebtedness) and
the Holder be deemed to be a payment by the Corporation to or on account of such
Senior Indebtedness, it being understood that the provisions of this Article 5
are solely for the purpose of defining the relative rights of the holders of
such Senior Indebtedness, on the one hand, and the Holder, on the other hand.
5.5 Obligations of the Corporation Unconditional. Nothing contained in this
Note is intended to or shall impair, as between the Corporation and the Holder,
the obligation of the Corporation, which is absolute and unconditional, to pay
to the Holder all Amounts Payable, as and when the same shall become due and
payable in accordance with their terms, or to affect the relative rights of the
Holder and other creditors of the Corporation (other than the holders of Senior
Indebtedness), except as provided in Section 5.2(b).
5.6 Article 5 Not To Prevent Events of Default. The failure to make a
payment of any Amounts Payable by reason of any provision of this Article 5
shall not be construed as preventing the occurrence of an Event of Default under
Section 4.1 hereof, except as provided in Section 5.2(b).
5.7 Additional Rights of Holders of Senior Indebtedness. If the Senior
Indebtedness has not been paid in full, in cash or cash equivalents satisfactory
to the holders of Senior Indebtedness, at a time in which the Corporation is
subject to an Insolvency Event, (a) the holders of the Senior Indebtedness are
hereby irrevocably authorized, but shall have no obligation, to demand, sue for,
collect and receive every payment or distribution received in such Insolvency
Proceeding in respect of any and all amounts payable by the Corporation in
respect of this Note and give acquittance therefor and to file claims and proofs
of claim, as their interests may appear, and (b) the Holder shall duly and
promptly take, for the account of the holders of the Senior Indebtedness, as
their interests may appear, such actions as the holders of the Senior
Indebtedness may request to collect and receive all Amounts Payable by the
Corporation in respect of this Note and to file appropriate claims or proofs of
claim in respect of this Note. Upon request by the Corporation, the Holder of
this Note shall deliver to the holders of Senior Indebtedness or parties
contemplating becoming holders of Senior Indebtedness a written statement
confirming that (i) the provisions (including the subordination provisions) of
this Note are in full force and effect; and (ii) that such party is or will be
entitled to rely upon and enjoy the benefits of the provisions (including the
subordination provisions) of this Note as a holder of Senior Indebtedness.
5.8 Senior Indebtedness Changes. By virtue of accepting this Note and the
benefits hereof, the Holder hereby waives any and all notice of renewal,
extension or accrual of any of the Senior Indebtedness, present or future, and
agrees and consents that without notice to or consent of the Holder: (a) the
obligations and liabilities of the Corporation or any other party or parties
under the Senior Indebtedness may, from time to time, in whole or in part, be
renewed, refinanced, replaced, extended, refunded, modified, amended,
accelerated, compromised, supplemented, terminated, increased, decreased, sold,
exchanged, waived or released; (b) the holders of Senior Indebtedness and their
representatives may exercise or refrain from exercising any right, remedy or
power granted by any document creating, evidencing or otherwise related to the
Senior Indebtedness or at law, in equity, or otherwise, with respect to the
Senior Indebtedness or in connection with any collateral security or lien (legal
or equitable) held, given or intended to be given therefor (including, without
limitation, the right to perfect any lien or security interest created in
connection therewith); (c) any and all collateral security and/or liens (legal
or equitable) at any time, present or future, held, given or intended to be
given for the Senior Indebtedness, and any rights or remedies of the holders of
Senior Indebtedness and their representatives in respect thereof, may, from time
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to time, in whole or in part, be exchanged, sold, surrendered, released,
modified, perfected, unperfected, waived or extended by the Holders and their
representatives; (d) any balance or balances of funds with any holder of Senior
Indebtedness at any time standing to the credit of the Corporation or any
guarantor of any of the Senior Indebtedness may, from time to time, in whole or
in part, be surrendered or released, all as the holders of Senior Indebtedness,
their representatives or any of them may deem advisable and all without
impairing, abridging, diminishing, releasing or affecting the subordination to
the Senior Indebtedness provided for herein; and (e) the Corporation may incur
any amount or type of Senior Indebtedness (including Senior Indebtedness owed to
Affiliates), or modify, restate, refinance, replace or amend any Senior
Indebtedness from time to time, on terms and conditions acceptable to the
Corporation, without notice to or approval by the Holder.
5.9 Waivers. In the event the holders of Senior Indebtedness elect to
exercise their remedies to liquidate any collateral given to secure the Senior
Indebtedness, the Holder hereby waives any right it may have to contest the
validity of or the value obtained as a result of the exercise of remedies by the
holders of Senior Indebtedness, including, but not limited to, a foreclosure, a
sale pursuant to the Uniform Commercial Code or the acceptance by the holders of
Senior Indebtedness in lieu of foreclosure. The Holder further waives any right
it may have either in or out of any bankruptcy or similar proceeding to
challenge any action taken by the holders of Senior Indebtedness as either a
preference or fraudulent conveyance and further agrees not to take any active
role in such a proceeding other than the filing of claim in any such proceeding,
which claim shall be subordinate (to the extent set forth above) to the claims
of the holders of Senior Indebtedness.
ARTICLE VI
DEFINITIONS
For purposes of this Note, the following terms have the meanings set forth
below.
"Affiliate" means Jordan Industries, Inc., and any of their respective
direct and indirect Subsidiaries, and any other person or entity that directly,
or indirectly through one or more intermediaries, controls or is controlled by
or is under common control with them.
"Amounts Payable" means all principal of, interest on, premium, if any,
fees, costs, expenses, indemnities or any other amounts due from the Corporation
under this Note, and all claims against or liabilities of the Corporation in
respect of this Note.
"Business Day" means any day except a Saturday, Sunday or other days on
which commercial banks in New York City are required or authorized by law to
close.
"Capital Expenditures" means the capital expenditures of the Corporation,
determined in accordance with generally accepted accounting principles,
consistently applied.
"Closing Date" means the date on which the transactions contemplated by the
Purchase Agreement are consummated.
"Combined Free Cash Flow" means an amount, calculated with appropriate
adjustments for or eliminations of intercompany transactions, equal to the
combination of (i) the Flavorsource Free Cash Flow and (ii) the Key Essentials
Free Cash Flow.
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"Default" means any condition or event that constitutes an Event of Default
or that with notice or lapse of time or both would, unless cured or waived,
become an Event of Default.
"Flavor Source" means Flavor Source, Inc., a California corporation.
"Flavorsource Free Cash Flow" means, for any period, (i) the consolidated
net income (or net deficit) of the Corporation and its subsidiaries (excluding,
however, (A) all extraordinary and other non-recurring items of income, but not
loss, and (B) all interest income as reflected in the Corporation's financial
statements (the "Net Income"), plus (ii) interest (including deferred financing
fees and expense) and other expense in respect of the Corporation's Indebtedness
(including intercompany Indebtedness or Indebtedness owed to Affiliates)
charged, accrued or otherwise allocated against such net income; plus (iii)
expenses for amortization charged, accrued or otherwise allocated against such
net income; plus (iv) expenses for depreciation (including increased
depreciation and increased inventory values resulting from purchase accounting
in connection with acquisitions and business combinations) charged, accrued or
otherwise allocated against such net income; plus (v) any reductions in Working
Capital from the beginning to the end of such period; minus (vi) payments of
interest and principal on Indebtedness (other than required interest and
principal payments on the Series of Notes) paid or accrued during such period or
otherwise payable on the applicable payment date, provided, however, the
aggregate amount of the principal payments on the Senior Indebtedness included
in this calculation of Free Cash Flow shall equal the amount set forth in
Exhibit B hereto for the period in question, whether or not paid during such
period; minus (vii) any increases in Working Capital from the beginning to the
end of such period; minus (viii) Capital Expenditures during such period. Free
Cash Flow will reflect a one percent (1%) management fee payment. Free Cash Flow
will be determined by the Corporation's Board of Directors by reference to the
Corporation's financial statements, prepared in accordance with generally
accepted accounting principles, consistently applied, whose determination will
be final binding, conclusive and nonappealable. Other than with respect to
clause (vi) set forth above (which for purposes of calculating the Flavorsource
Free Cash Flow for the 2000 Year, the principal amortization for the 2000 Year
shall be set forth on Exhibit B), notwithstanding anything to the contrary
contained herein, the Flavorsource Free Cash Flow for the 2000 Year shall be
calculated for the period from the date hereof to and including December 31,
2000.
"Indebtedness" means the principal, interest (including any interest
accruing subsequent to an event specified in Section 4.1(b) or Section 4.1(c) at
the rate specified in the applicable contract whether or not a claim for such
interest is allowed in any such proceeding or case), premium, if any, fees
(including, without limitation, any commitment, agency, facility, structuring,
restructuring or other fee), costs, expenses, indemnities and other amounts due
on or in connection with any indebtedness (including, without limitation, Senior
Indebtedness), whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or representing the
deferred and unpaid balance of the purchase price of any property (including
pursuant to capital leases), and any financial hedging obligations, if and to
the extent such indebtedness (other than a financial hedging obligation) would
appear as a liability upon a balance sheet of such person or entity prepared on
a consolidated basis in accordance with generally accepted accounting
principles, other than a trade payable or accrued expense, and also includes, to
the extent not otherwise included, the guarantee of such items of Indebtedness
of another person that are included within this definition.
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"Interest Ratio" means, with respect to any non-negotiable subordinated
promissory note in the Series of Notes, an amount equal to (1) the interest
accrued on such non-negotiable promissory note for the 2000 Year divided by (ii)
the aggregate amount of interest accrued on all the non-negotiable subordinated
promissory notes included in the Series of Notes for the 2000 Year.
"Key Essentials Free Cash Flow" has the meaning set forth in the Amended
and Restated Subordinated Note, dated as of the date hereof, issued by Key
Essentials, Inc., a Delaware corporation, to Xxxxxx Xxx.
"Key Holdings Purchase Agreement" means the Purchase Agreement, dated as of
December 23, 1999, by and among the Corporation and Xxxxxx Xxx, Xxxxxxxxx
Xxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx Xxxxx and Xxxxx Xxxxxx, as the same has been or
may be amended from time to time.
"Maturity Date" means the date that is 120 days from December 31, 2006
subject to extension to a later date as provided by the terms of this Note, but
in no event shall it mean a date later than 120 days from December 31, 2008.
"Note" means this Non-Negotiable Subordinated Note.
"Purchase Agreement" means the Agreement for Purchase and Sale of Stock
Agreement dated as of October ___, 2000 among the Corporation and Xxx Xxxxxxxx
and Xxxxxxx Xxxxxxxx, as the same has been or may be amended from time to time.
"Senior Indebtedness" shall mean any Indebtedness of the Corporation and
its Subsidiaries (including, without limitation, any intercompany Indebtedness),
now or hereafter incurred, or any documents executed under or in connection
therewith, and any amendments, modifications, deferrals, renewals or extensions
of such Indebtedness, and any amounts owed in respect of any Indebtedness
incurred in refinancing, replacing or refunding the foregoing (including any
refinancing, replacing or refunding with new lenders), unless the terms of such
Indebtedness expressly provide that such Indebtedness is not Senior Indebtedness
with respect to this Note. Nothing in this Note shall restrict an affiliate of
the Corporation from being a holder of Senior Indebtedness. Indebtedness owed to
Affiliates will be Senior Indebtedness for purposes of this Note.
Notwithstanding anything herein to the contrary, Senior Indebtedness shall
include any payables, accrued expenses, fees or other amounts due to an
Affiliate of the Corporation.
"Subsidiary" of a person means any corporation or other entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the Board of Directors or other persons performing similar functions
are at the time directly or indirectly owned by such person.
"Working Capital" means the difference of (a) the sum of Corporation's net
account receivables, inventories (net of reserves), and prepaid expenses, minus
(b) the sum of accounts payable and accrued expenses, determined in accordance
with generally accepted accounting principles, consistently applied.
ARTICLE VII
MISCELLANEOUS
7.1 Notices. All notices, requests and other communications to any party
hereunder shall be in writing and shall be delivered personally, or sent by
certified, registered or express mail, postage prepaid, and shall be deemed
given when so delivered personally, or if mailed or sent by overnight courier,
upon receipt thereof, as follows:
(a) If to the Corporation, to:
Xxxx X. Xxxxxx XX
Xxxx Xxxxxxx Building, Suite 4020
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Telephone: 000-000-0000
Telecopier: 000-000-0000 and
Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxxx, Xx.
Flavorsource Holdings, Inc.
Arborlake Centre, Suite 550
8
0000 Xxxx Xxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
Telephone: 000-000-0000
Telecopier: 000-000-0000
with a copy to (which shall not constitute Notice):
X. Xxxxxx Xxxxxx, Esq.
Xxxxxx X. Xxxx, Esq.
XXXXXXXXXXXX XXXX & XXXXXXXXX
0000 Xxxx Xxxxxx, Xxxxx X 000
Xxxxxx Xxxx, Xxxxxxxx 00000
Telephone: 000-000-0000
Telecopier: 816-531-7545
(b) If to the Holder, to:
Xxx Xxxxxxxx and Xxxxxxx Xxxxxxxx
000 Xxxxxxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Telephone: 000-000-0000
with a copy to (which shall not constitute Notice):
Xxxxxx Xxxxxxxx, Esq.
Xxxx XxXxxxxx, Esq.
Troop Xxxxxxx Xxxxxx Xxxxxxx & Xxxxx, LLP
0000 Xxxxxxx Xxxx Xxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Telephone: 000-000-0000
Telecopier: 000-000-0000
Each party may, by notice given in accordance with this Section to the other
party, designate another address or person for receipt of notices hereunder.
7.2 No Waivers. No failure or delay by the Holder in exercising any right,
power or privilege hereunder or under this Note shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein provided shall be cumulative and not exclusive of
any rights or remedies provided by law. No notice to or demand on the
Corporation in any case shall entitle the Corporation to any other or further
notice or demand in related or similar circumstances requiring such notice.
7.3 Amendments and Waivers. Subject to Section 5.3, any provision of this
Note may be amended or waived if, but only if, such amendment or waiver is in
writing, signed by the Corporation and the Holder.
7.4 Successors and Assigns. The provisions of this Note shall be binding
upon and inure to the benefit of the Holder and its respective successors and
permitted assigns. Without the prior written consent of the Corporation and the
holders of Senior Indebtedness, the Holder of this Note agrees that it will not
(a) sell, assign, pledge or otherwise transfer, in whole or in part, directly or
indirectly, by operation of law or otherwise, this Note or any interest therein
or (b) create, incur or suffer to exist any security interest, lien, charge or
other encumbrance whatsoever upon this Note. If requested by a holder of Senior
Indebtedness as part of any consent, the assignee or transferee of the Holder
shall agree in writing to be bound by all of the terms of this Note. The holder
hereof hereby waives proof of reliance hereon by the holders of Senior
Indebtedness.
9
7.5 Replacement Note. Upon receipt of evidence reasonably satisfactory to
the Corporation of the loss, theft, destruction or mutilation of this Note and
of a letter of indemnity reasonably satisfactory to the Corporation from the
Holder and upon reimbursement to the Corporation of all reasonable expenses
incident thereto, and upon surrender or cancellation of this Note, if mutilated,
the Corporation will make and deliver a new Note of like tenor in lieu of such
lost, stolen, destroyed or mutilated Note.
7.6 Corporation's Obligations. The Holder agrees and acknowledges that
this Note and the Corporation's obligations hereunder and for all Amounts
Payable are solely obligations and liabilities of the Corporation. None of the
Corporation's directors, officers, employees, stockholders, advisors,
consultants and affiliates or any other persons shall be obligated or liable in
respect of this Note or any Amounts Payable, and Holder hereby releases them
from any such obligation of liability.
7.7 LITIGATION. THIS NOTE SHALL BE GOVERNED BY, CONSTRUED, APPLIED AND
ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF CALIFORNIA, AND NO
DOCTRINE OF CHOICE OF LAW SHALL BE USED TO APPLY ANY LAW OTHER THAN THAT OF
CALIFORNIA, AND NO DEFENSE, COUNTERCLAIM OR RIGHT OF SET-OFF GIVEN OR ALLOWED BY
THE LAWS OF ANY OTHER STATE OR JURISDICTION, OR ARISING OUT OF THE ENACTMENT,
MODIFICATION OR REPEAL OF ANY LAW, REGULATION, ORDINANCE OR DECREE OF ANY
FOREIGN JURISDICTION, BE INTERPOSED IN ANY ACTION HEREON. SUBJECT TO SECTION
7.8, THE PARTIES AGREE THAT ANY ACTION OR PROCEEDING TO ENFORCE OR ARISING OUT
OF THIS NOTE MAY BE COMMENCED IN THE STATE COURTS, OR IN THE UNITED STATES
DISTRICT COURTS IN ORANGE COUNTY, CALIFORNIA. THE PARTIES CONSENT TO SUCH
JURISDICTION, AGREE THAT VENUE WILL BE PROPER IN SUCH COURTS AND WAIVE ANY
OBJECTIONS BASED UPON FORUM NON CONVENIENS. THE CHOICE OF FORUM SET FORTH IN
THIS SECTION 7.7 SHALL NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT OF ANY ACTION
UNDER THIS AGREEMENT IN ANY OTHER JURISDICTION.
7.8 ARBITRATION. THE HOLDER HEREBY WAIVES AND SHALL NOT SEEK JURY TRIAL IN
ANY LAWSUIT, PROCEEDING, CLAIM, COUNTERCLAIM, DEFENSE OR OTHER LITIGATION OR
DISPUTE UNDER OR IN RESPECT OF THIS NOTE. THE HOLDER AGREES THAT ANY SUCH
DISPUTE RELATING TO OR IN RESPECT OF THIS NOTE, ITS NEGOTIATION, EXECUTION,
PERFORMANCE, SUBJECT MATTER, OR ANY COURSE OF CONDUCT OR DEALING OR ACTIONS
UNDER OR IN RESPECT OF THIS NOTE, SHALL BE SUBMITTED TO, AND RESOLVED
EXCLUSIVELY PURSUANT TO ARBITRATION IN ACCORDANCE WITH THE COMMERCIAL
ARBITRATION RULES OF THE AMERICAN ARBITRATION ASSOCIATION. SUCH ARBITRATION
SHALL TAKE PLACE IN ORANGE COUNTY, CALIFORNIA, AND SHALL BE SUBJECT TO THE
SUBSTANTIVE LAW OF THE STATE OF CALIFORNIA. DECISIONS PURSUANT TO SUCH
ARBITRATION SHALL BE FINAL, CONCLUSIVE AND BINDING ON THE PARTIES. UPON THE
CONCLUSION OF ARBITRATION, THE PARTIES MAY APPLY TO ANY APPROPRIATE COURT OF THE
TYPE DESCRIBED IN SECTION 7.7 TO ENFORCE THE DECISION PURSUANT TO SUCH
ARBITRATION.
[SIGNATURE ON NEXT PAGE]
10
FLAVORSOURCE HOLDINGS, INC.
By:
-------------------------------------
Xxxxxx X. Xxxxxxxx, Vice President
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Exhibit A
Annual Principal Payments Schedule
Year Principal Amount
---- ----------------
2003 $164,000
2004 $196,000
2005 $328,000
2006 $312,000
12
Exhibit B
(A) Principal Amortization Schedule for Senior Indebtedness incurred in
connection with the consummation of the transactions contemplated by
the Purchase Agreement
Year Principal Amortization
---- ----------------------
1 $140,000
2 $500,000
3 $750,000
4 $900,000
5 $1,200,000
6 $1,550,000
7 $2,000,000
8 $1,460,000
(B) The principal amount of all other Senior Indebtedness incurred by the
Corporation for acquisitions shall be amortized over a period of rive
years
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