Exhibit 10.3
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY SECURITIES LAW OF ANY STATE OF THE UNITED STATES (COLLECTIVELY, THE
"SECURITIES LAWS"). THIS SECURITY IS SUBJECT TO RESTRICTIONS ON TRANSFERABILITY
AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE
SECURITIES LAWS, PURSUANT TO REGISTRATION UNDER SUCH SECURITIES LAWS OR PURSUANT
TO AN EXEMPTION FROM REGISTRATION, WHICH EXEMPTION FROM REGISTRATION SHALL BE
DESCRIBED IN A WRITTEN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE PAYOR
DELIVERED TO THE PAYOR.
PACIFIC CIRCUITS, INC.
SUBORDINATED NOTE
$3,547,912.70 December 15, 1998
PACIFIC CIRCUITS, INC., a Washington corporation ("PAYOR"), for value
received, promises to pay to the order of Xxxxx X. Xxxxx, III ("PAYEE"), the
principal amount of THREE MILLION, FIVE HUNDRED AND FORTY SEVEN THOUSAND,
NINE HUNDRED AND TWELVE DOLLARS AND SEVENTY CENTS ($3,547,912.70), together
with accrued interest thereon, each calculated and payable only as and to the
extent set forth in this Note (together with any PIK Notes issued pursuant to
Section 1.1 below, the "NOTES"). The principal and interest on this Note is
payable in lawful money of the United States of America in immediately
available funds at such place in the United States as Payee may from time to
time designate in writing to Payor.
This Note is made pursuant to that certain Stock Purchase Agreement
dated as of December 15, 1998 among Circuit Holdings, LLC, Pacific Circuits,
Inc. and the Shareholders named therein (the "PURCHASE AGREEMENT"), and is
one of the "Promissory Notes" referred to therein. Payee is a shareholder of
the Payor and is receiving this Note pursuant to the Purchase Agreement. All
capitalized terms used herein and not defined herein shall have the meanings
assigned to such terms in the Purchase Agreement.
1. PAYMENT OF PRINCIPAL AND INTEREST
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SECTION 1.1. CALCULATION AND PAYMENT OF INTEREST. Interest on the
principal balance of this Note outstanding from time to time until paid in full
shall accrue at the rate of ten percent (10%) per annum computed on the basis of
a 365 or 366-day year, as appropriate, for the actual number of days elapsed,
commencing on the date hereof. Such interest shall be payable semi-annually in
arrears, beginning on June 15, 1999 and thereafter on each June 15 and December
15 until the Maturity Date; PROVIDED, HOWEVER, that any amount of cash interest
which is not paid as a result of the application of the provisions of Section
8.7 of the Credit Agreement or any similar provision contained in any documents
relating to the refinancing thereof (each, a "PAYMENT RESTRICTION") shall be
made by the issuance of a PIK Note and Payor shall be deemed to have issued a
PIK Note for any such interest regardless of whether Payor shall have actually
delivered any such PIK Note.
Each PIK Note, together with all accrued interest thereon, shall be due
and payable on the earlier of (i) the Maturity Date and (ii) the first day
following the expiration of the first 365 day period in which no Payment
Restriction exists; PROVIDED, HOWEVER, that, with respect to clause (ii) above,
in no event shall more than an aggregate of $880,000 of (i) principal and
interest with respect to all PIK Notes then outstanding and (ii) current
interest on all Promissory Notes (as defined in the Purchase Agreement) then
outstanding, become due and payable in any fiscal year. Principal and interest
on any PIK Note that is not paid solely by reason of the proviso in the
preceding sentence shall be due and payable on the first Business Day of the
next succeeding fiscal year, subject to such proviso.
Each Holder, by its acceptance hereof, acknowledges (i) that Payor is
contractually bound hereunder to pay cash interest only to the extent not
prohibited by a Payment Restriction, (ii) that any cash interest not so paid
shall be paid in the form of a PIK Note, and (iii) the failure to pay cash
interest as a result of a Payment Restriction shall not constitute a default or
Event of Default under this Note.
SECTION 1.2. PAYMENT ON MATURITY DATE. The principal balance of, and
any accrued and unpaid interest on, this Note shall be payable on the later of
(a) to the extent the term of the Credit Agreement has been extended in
connection with a default or anticipated default thereunder, the date which is
one hundred and eighty (180) days after the indefeasible payment in full in cash
of all amounts owing under the Credit Agreement, and (b) December 15, 2006 (as
applicable, the "MATURITY DATE"). Notwithstanding the foregoing, if this Note is
accelerated pursuant to the terms hereof, such date of acceleration shall be the
Maturity Date.
SECTION 1.3. PREPAYMENTS; ADDITIONAL INTEREST. (a) Payor may, at its
option at any time, without premium or penalty, prepay all or any portion of
this Note.
(b) Within 30 days after the occurrence of a Change of Control, Payor
shall prepay the entire principal amount hereof, together with any accrued
interest thereon.
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(c) Any prepayment of this Note shall be applied as follows: FIRST, to
payment of accrued interest; and SECOND, to payment of principal. Upon any
partial prepayment, at the request either of Payee or Payor, this Note shall be
surrendered to Payor in exchange for a substitute note, which shall set forth
the revised principal amount. In the event that this Note is prepaid in its
entirety, this Note shall be surrendered to Payor for cancellation as a
condition to any such prepayment.
(d) On and after the 60th day after the consummation of a Public Offering
in connection with which not less than 50% of the principal amount of Senior
Debt then outstanding was repaid, interest on this Note will accrue at a rate of
13% per annum, and the additional interest of 3% per annum on this Note shall be
due and payable only upon the Maturity Date.
(e) In the event that (i) Payor fails to pay in full its obligations
under this Note at the Maturity Date, or (ii) Payor fails to make the mandatory
prepayment specified in Section 1.3(b) hereof, or (iii) Payor fails to pay in
full when due interest on this Note when no Payment Restriction exists, then in
each such case, any principal and interest on this Note that is not so paid when
due shall accrue interest at a rate of 2% per annum in excess of the otherwise
applicable rate, which additional interest shall be due and payable only upon
the Maturity Date.
SECTION 1.4. PAYMENTS. Payor shall make each payment hereunder not
later than 11:00 a.m. (Seattle time) on the day when due in United States
dollars to Payee at the address set forth in Section 6.8 or to such account of
Payee of which Payee shall give Payor written notice, in same day funds, except
as provided in Section 1.1. Any payment hereunder which, but for this Section
1.4, would be payable on a day which is not a Business Day, shall instead be due
and payable on the Business Day next following such date for payment.
2. EVENTS OF DEFAULT
The following shall constitute "EVENTS OF DEFAULT" under this Note:
(a) Subject to Section 4 below, failure by Payor to make any payment or
prepayment of principal required under this Note, as and when the same shall
become due and payable (whether at maturity, by acceleration or otherwise); or
(b) Subject to Section 4 below, failure by Payor to make any payment of
interest required under this Note (whether represented by a PIK Note or
otherwise), as and when the same shall become due and payable, and the
continuation of such failure for a period of one hundred and eighty (180) days;
or
(c) Payor breaches any covenant under Section 3.1 or Section 3.2 of this
Note, which breach or failure, if curable, shall continue uncured for a period
of one hundred eighty (180) days
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after the date on which written notice specifying such breach, and stating
that such notice is a "Notice of Default" hereunder, shall have been given by
Payee to Payor; or
(d) Payor, pursuant to or within the meaning of any Bankruptcy Law:
(i) commences a voluntary case or other proceeding seeking
liquidation, reorganization or other relief with respect to itself or
reorganization or other relief with respect to its debts;
(ii) consents to the entry of an order for relief against it in an
involuntary case or proceeding;
(iii) consents to the appointment of a Custodian of it or for all
or any substantial portion of its property or assets;
(iv) makes a general assignment for the benefit of its creditors;
or
(e) an involuntary case or proceeding is commenced against Payor under
any Bankruptcy Law and is not dismissed, bonded or discharged within ninety (90)
days thereafter, or a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(i) is for relief against Payor in an involuntary case or
proceeding;
(ii) appoints a Custodian of Payor or for all or substantially all
of its properties; or
(iii) orders the liquidation of Payor;
and in each case the order or decree remains unstayed and in effect for ninety
(90) days.
If an Event of Default specified in Section 2(a), 2(b) or 2(c) shall have
occurred and be continuing and any Senior Debt shall then be outstanding,
subject to the provisions of Section 4 hereof, Payee may, at its option, by
notice in writing to Payor and to the Agent under the Senior Debt Documents (the
"ACCELERATION NOTICE"), declare the entire principal amount of this Note and the
interest accrued thereon to be due and payable upon the earlier of (i) one
hundred eighty (180) days after the receipt of the Acceleration Notice by Xxxxx
and the Agent under the Senior Debt Documents or (ii) an acceleration under the
Senior Debt Documents, and upon any such declaration the same shall become due
and payable at such time. If an Event of Default specified in Section 2(a),
2(b) or 2(c) shall have occurred and be continuing and no Senior Debt shall then
be outstanding, Payee may, at its option, declare the entire principal amount of
this Note and the interest accrued thereon to be due and payable upon the date
of delivery by Payee to Payor of a written notice of acceleration, and upon any
such declaration the same shall become due and payable at such time. If an
Event of Default specified in Section 2(d) or 2(e) hereof occurs, the
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principal balance of and accrued interest on this Note shall become due and
payable immediately without any declaration or other act on the part of Payee.
If any Event of Default shall have occurred and be continuing, subject to
the provisions of Sections 2 and 4 hereof, Payee may proceed to protect and
enforce its rights either by suit in equity or by action at law, or both,
whether for specific performance of any provision of this Note or in aid of the
exercise of any power granted to Payee under this Note.
3. COVENANTS
SECTION 3.1. AFFIRMATIVE COVENANT. Payor covenants and agrees that for
so long as any indebtedness evidenced by this Note remains outstanding, unless
waived in writing by the Noteholder Representative, Payor will give prompt
written notice to Payee of the existence of any default or event of default or
any event or condition which the giving of notice, the passage of time, or both,
would constitute a default under, or with respect to, the Senior Debt.
SECTION 3.2. NEGATIVE COVENANTS. Payor covenants and agrees that for so
long as any indebtedness evidenced by this Note remains outstanding, Payor will
not, without the prior written consent of the Noteholder Representative:
(a) with respect to any class of its Capital Stock, declare or pay any
dividends (other than dividends payable in the Capital Stock of the Payor) or
make any other distribution of any of its property or assets to the holders of
any class of Capital Stock, or purchase, redeem or retire for value any such
shares of Capital Stock; PROVIDED, HOWEVER, that, without such consent, Payor
shall be permitted to pay dividends to a holder of shares of Capital Stock of
Payor who holds such shares as a result of such holder's (or its predecessor's)
exercise of its remedies under any Senior Debt Document, but only for so long as
all obligations due such holder under any such Senior Debt Document have not
been paid in full in cash; or
(b) liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution); or
(c) convey, sell, lease, transfer or otherwise dispose of, in one
transaction or a series of related transactions, all or substantially all of its
assets; PROVIDED, HOWEVER, that the foregoing shall not apply in any way to the
foreclosure, sale or other disposition of collateral pledged to secure Senior
Debt pursuant to any judicial proceeding or by or at the direction of the
holders of any Senior Debt or any agent or other representative acting on their
behalf; or
(d) consolidate with, or merge with or into, any Person unless (i)
Payor shall be the continuing Person, or the Person (if other than Payor)
formed by such consolidation or into which Payor is merged shall be a
corporation organized and existing under the laws of the United States or any
state thereof or of the District of Columbia and, in the event Payor is
merged with or into any other Person, such Person shall expressly assume, by
an agreement executed and
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delivered to Payee, the obligations of Payor under this Note, (ii) no Event
of Default under this Note shall have occurred and be continuing, and (iii)
except with respect to a merger accounted for as a pooling of interests,
after giving effect to such consolidation or merger, the Person surviving
such consolidation or merger has a net worth (determined in accordance with
generally accepted accounting principles) that is equal to or greater than
the net worth of Payor immediately prior to such consolidation or merger.
Upon any consolidation or merger of Payor in accordance with this Section
3.2(d), the successor corporation formed by such consolidation or into which
Payor is merged shall succeed to, and be substituted for, and be bound by all
of the obligations of, and may exercise every right and power of, Payor under
this Note with the same effect as if such successor corporation had been
named as Payor herein.
(e) so long as a Payment Restriction exists, pay any management fee to
any shareholder of Payor or to TC Management LLC or Xxxxxxxx Xxxxx & Partners
Management L.P., or any of their respective affiliates.
4. SUBORDINATION
SECTION 4.1. NOTE SUBORDINATED TO SENIOR DEBT. To the extent and in the
manner hereinafter set forth in this Section 4, the indebtedness represented by
this Note and the payment of the principal of and the interest on this Note and
any claim for rescission of the purchase of this Note, and any claim which is
the equivalent of or substitute for principal of or interest on this Note, for
damages arising from the purchase of this Note or for reimbursement or
contribution on account of such a claim, and all other payments with respect to
or on account of this Note (collectively, the "SUBORDINATED DEBT") are hereby
expressly made subordinate and subject in right of payment to the prior payment
in full in cash of all Senior Debt. This Section 4 constitutes a continuing
offer to all Persons who become holders of, or continue to hold, Senior Debt,
each of whom is an obligee hereunder and is entitled to enforce such holder's
rights hereunder, subject to the provisions hereof, without any act or notice of
acceptance hereof or reliance hereon. For purposes of this Section 4, Senior
Debt shall not be deemed to have been paid in full until the termination of all
commitments or other obligations by any holder thereof and unless all such
holders shall have received indefeasible payment in full in cash of all
obligations under or in respect of Senior Debt (including, without limitation,
Post Petition Interest).
SECTION 4.2. NO PAYMENT ON NOTE IN CERTAIN CIRCUMSTANCES. (a) During
the continuance of any default in the payment of any Senior Debt, whether at
maturity, upon redemption or pursuant to acceleration or otherwise (each, a
"PAYMENT DEFAULT"), no direct or indirect payment of any kind (other than the
payment of interest on the Notes in PIK Notes) shall be made, asked for,
demanded, accepted, received or retained with respect to principal, interest
or other amounts due under the Notes nor shall any holder thereof exercise
any remedies with respect thereto.
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(b) Upon the occurrence of any default (other than a Payment Default)
under the Credit Agreement or any other Senior Debt Document (each, a
"NON-PAYMENT DEFAULT"), no payment or distribution (including any payment or
distribution that may be payable by reason of any other Indebtedness of Payor
being subordinated to payment of the Subordinated Debt) shall be made by or
on behalf of Payor for or on account of or in respect of the Subordinated
Debt until such Non-Payment Default shall have been cured or waived or
otherwise ceases to exist pursuant to the terms of such Senior Debt, or the
benefits of this sentence shall have been waived by or on behalf of, and at
the sole option of, the holders of a majority of the principal amount of such
Senior Debt. Notwithstanding the foregoing, the suspension of payments
described in the preceding sentence shall terminate, and the Payor shall be
obligated to make all payments of interest on this Note, including any
payments not made by virtue of such suspension, if any holder or holders of
the relevant Senior Debt has not, on or prior to the 180th day after the
occurrence of the Non-Payment Default under the Senior Debt, declared all
unpaid principal and interest on such Senior Debt to be immediately due and
payable, unless such Non-Payment Default shall have been cured or waived or
otherwise ceases to exist pursuant to the terms of such Senior Debt, or the
benefits of the previous sentence shall have been waived by or on behalf of,
and at the sole option of, the holders of a majority of the principal amount
of such Senior Debt.
(c) Payee agrees that, so long as payments or distributions for or on
account of the Subordinated Debt are not permitted pursuant to this Section
4, Payee will not take, sue for, ask or demand from Payor payment of all or
any amounts under or in respect of this Note, or commence, or join with any
creditor other than the holders of Senior Debt and their agents in
commencing, directly or indirectly cause Payor to commence, or assist Payor
in commencing, any proceeding referred to in Section 4.3, and Payee shall not
take or receive from Payor, directly or indirectly or on its behalf, in cash
or other property or by set-off or in any other manner, including, without
limitation, from or by way of collateral, payment of all or any amounts under
or in respect of the Subordinated Debt. In the event that notwithstanding
the foregoing provisions of this Section 4.2, any payment or distribution of
any kind or character, whether in cash, property or securities (including any
payment or distribution that may be payable by reason of any other
Indebtedness of Payor being subordinated to payment of the Subordinated
Debt), shall be received by Payee for or on account of or in respect of the
Subordinated Debt before all Senior Debt is indefeasibly paid in full, such
payment or distribution shall be received and held in trust for, and shall be
paid over (in the same form as so received, to the extent practicable, and
with any necessary endorsement) to the holders of the Senior Debt remaining
unpaid or their representative or representatives, or to the trustee or
trustees under any such indenture or agreement under which any Senior Debt
may have been issued, for application (in the case of cash) to, or as
collateral (in the case of non-cash property or securities) for the payment
or prepayment of Senior Debt, until all Senior Debt shall have been
indefeasibly paid in full in cash, after giving effect to any concurrent
payment or distribution to the holders of such Senior Debt.
SECTION 4.3. DISSOLUTION; LIQUIDATION; BANKRUPTCY; ACCELERATION. In
the event of (i) any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation,
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reorganization or other similar proceeding in connection therewith, relative
to the Payor or any of its assets, or (ii) any liquidation, dissolution or
other winding up of the Payor, whether voluntary or involuntary or whether or
not involving insolvency or bankruptcy, or (iii) any assignment for the
benefit of creditors or any other marshalling of assets or liabilities of the
Payor, or (iv) the acceleration of the Senior Debt by reason of the
occurrence of a default or an event of default thereunder (each such event,
if any, herein sometimes referred to as a "PROCEEDING"), or (v) a default in
the payment of any Senior Debt at maturity (whether by acceleration or
otherwise):
(a) The holders of all Senior Debt shall first be entitled to receive
payment in full in cash of all Senior Debt before any direct or indirect payment
may be made for or on account of payments under or in respect of the
Subordinated Debt, whether in cash, property or securities of any kind;
(b) Any payment or distribution of any kind or character, whether in
cash, property or securities (including any payment or distribution that may be
payable by reason of any other Indebtedness of Payor being subordinated to
payment of the Subordinated Debt), to which Xxxxx would be entitled except for
the provisions of this Section 4, shall be paid by the liquidating trustee or
agent or other person making such payment or distribution, whether a trustee in
bankruptcy, a receiver or liquidating trustee or other trustee or agent,
directly to the holders of Senior Debt or their representative or
representatives, or to the trustee or trustees under any indenture under which
any instrument evidencing any of such Senior Debt may have been issued for
application (in the case of cash) to, or as collateral (in the case of non-cash
property or securities) for the payment or prepayment of Senior Debt, to the
extent necessary to make payment in full of all Senior Debt remaining unpaid,
after giving effect to any concurrent payment or distribution to the holders of
such Senior Debt.
(c) The holders of Senior Debt are hereby irrevocably authorized and
empowered (in their own names or in the name of Payee or otherwise), but shall
have no obligation, to demand, sue for, collect and receive every payment or
distribution referred to in paragraph (b) above and give acquittance therefor
and to file claims and proofs of claim and take such other action (including,
without limitation, voting the amounts owing under the Subordinated Debt or
enforcing any security interest or other lien securing payment of the amounts
owing under the Subordinated Debt) as they may deem necessary or advisable for
the exercise or enforcement of any of the rights or interests of the holders of
Senior Debt hereunder; PROVIDED, HOWEVER, that (i) the holders of Senior Debt
shall not file any such claim or proof of claim referred to in this Section
4.3(c) unless Payee shall fail to file a proper claim, or proof of claim, in the
form or forms required, prior to 5 Business Days before the expiration of the
time to file such claim or claims and (ii) the holders of Senior Debt shall not
exercise any rights under this Section 4.3(c) unless and until the Noteholder
Representative has received three Business Days prior written notice from any
Person that an event of default exists under a Senior Debt Document.
(d) Xxxxx shall duly and promptly take such action as the holders of
Senior Debt may reasonably request to execute and deliver to the holders of
Senior Debt such powers of attorney,
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assignments, or other instruments as the holders of Senior Debt may request
in order to enable the holders of Senior Debt to enforce any and all claims
with respect to, and any security interests and other liens securing payment
of, the amounts owing under the Subordinated Debt.
(e) In the event that notwithstanding the foregoing provisions of this
Section 4.3, any payment or distribution of any kind or character, whether in
cash, property or securities (including any payment or distribution that may be
payable by reason of any other Indebtedness of Payor being subordinated to
payment of the Subordinated Debt), shall be received by Payee for or on account
of or in respect of the Subordinated Debt before all Senior Debt is indefeasibly
paid in full, such payment or distribution shall be received and held in trust
for, and shall be paid over (in the same form as so received, to the extent
practicable, and with any necessary endorsement) to the holders of the Senior
Debt remaining unpaid or their representative or representatives, or to the
trustee or trustees under any such indenture or agreement under which any Senior
Debt may have been issued, for application (in the case of cash) to, or as
collateral (in the case of non-cash property or securities) for the payment or
prepayment of Senior Debt, until all Senior Debt shall have been indefeasibly
paid in full in cash, after giving effect to any concurrent payment or
distribution to the holders of such Senior Debt.
SECTION 4.4. SUBROGATION. Upon the indefeasible payment in full in cash
of all Senior Debt, Payee shall be subrogated to the rights of the holders of
Senior Debt to receive payments or distributions of cash, property or securities
of Payor applicable to the Senior Debt until the principal of and interest on
and all other amounts payable under the Subordinated Debt shall be paid in full,
and for the purposes of such subrogation, no payments or distributions to the
holders of the Senior Debt of any cash, property or securities to which Payee
would be entitled except for the provisions of this Section 4 and no payment
over pursuant to the provisions of this Section 4 to the holders of Senior Debt
by Payee shall, as between Payor, its creditors other than holders of Senior
Debt, and Payee, be deemed to be a payment by Payor to or on account of the
Senior Debt. It is understood that the provisions of this Section 4 are and are
intended solely for the purpose of defining the relative rights of Xxxxx, on the
one hand, and the holders of the Senior Debt, on the other hand.
SECTION 4.5. OBLIGATIONS OF PAYOR UNCONDITIONAL. Nothing contained in
this Section 4 or elsewhere in this Note is intended to or shall impair, as
among Payor, its creditors other than the holders of Senior Debt, and Payee, the
obligation of Payor, which is absolute and unconditional, to pay to Payee the
principal of and interest on and all other amounts due under this Note in
accordance with its terms, or is intended to or shall affect the relative rights
of Payee and creditors of Payor other than the holders of the Senior Debt, nor
shall anything herein prevent Payee from exercising all remedies otherwise
permitted by applicable law upon default under this Note, subject to the
provisions of this Section 4 and to the rights of holders of Senior Debt to
receive distributions and payments otherwise payable to Payee.
SECTION 4.6. RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING
AGENT. Upon any payment or distribution of assets of Payor referred to in
this Section 4, Payee shall be
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entitled to rely upon any order or decree made by any court of competent
jurisdiction in which bankruptcy, dissolution, winding-up, liquidation or
reorganization proceedings are pending, or a certificate of the receiver,
trustee in bankruptcy, liquidating trustee, agent or other person making such
payment or distribution, delivered to Payee, for the purpose of ascertaining
the persons entitled to participate in such distribution, the holders of the
Senior Debt and other Indebtedness of Payor, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to Section 4 of this Note. Such reliance shall
not affect the rights of the holders of the Senior Debt.
SECTION 4.7. SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR OMISSIONS OF
PAYOR OR HOLDERS OF SENIOR DEBT. No right of any present or future holders of
any Senior Debt to enforce subordination as provided herein will at any time in
any way be prejudiced or impaired by any act or failure to act on the part of
Payor or by any act or failure to act by any such holder, or by any act, failure
to act or noncompliance by Payor, the holders of Senior Debt or their respective
agents with the terms of this Note, regardless of any knowledge thereof which
any such holder or Payor may have or otherwise be charged with. No amendment,
waiver or other modification of this Note shall in any way adversely affect the
rights of the holders of any Senior Debt under this Section 4 unless such
holders of Senior Debt consent in writing to such amendment, waiver or
modification. The provisions of this Section 4 are intended for the benefit of
and shall be enforceable directly by the holders of the Senior Debt.
SECTION 4.8. FURTHER ASSURANCES. Payee and Payor each will, at Xxxxx's
expense and at any time and from time to time, promptly execute and deliver all
further instruments and documents, and take all further action, that may be
reasonably necessary or appropriate, or that the holders of Senior Debt may
request, in order to protect any right or interest granted or purported to be
granted hereby or to enable the holders of Senior Debt to exercise and enforce
their rights and remedies hereunder.
SECTION 4.9. AGREEMENTS IN RESPECT OF SUBORDINATED DEBT. (a) Xxxxx
agrees that it will not make any payment for or on account of or in respect of
this Note, or take any other action, in contravention of the provisions of this
Section 4.
(b) Payee shall promptly notify the holders of Senior Debt, at Dresdner
Bank AG, New York and Grand Cayman Branches, 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx,
00000, or such other address of which Xxxxx has been notified in writing, of the
occurrence of any default under this Note of which Payee shall obtain knowledge.
SECTION 4.10. OBLIGATIONS HEREUNDER NOT AFFECTED. All rights and
interests of the holders of Senior Debt hereunder, and all agreements and
obligations of Payee and Payor under this Section 4, shall remain in full force
and effect irrespective of:
(a) any lack of validity or enforceability of the Credit Agreement or any
other Senior Debt Document;
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(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Senior Debt, or any other amendment or waiver
of or any consent to any departure from the Credit Agreement or any other Senior
Debt Document, including, without limitation, any increase in the Senior Debt
resulting from the extension of additional credit to Payor or any of its
Subsidiaries or otherwise;
(c) any taking, exchange, release or non-perfection of any collateral, or
any taking, release, amendment or waiver of or consent to departure from any
guaranty, for all or any of the Senior Debt;
(d) any manner of application of collateral, or proceeds thereof, to all
or any of the Senior Debt, or any manner of sale or other disposition of any
collateral for all or any of the Senior Debt or any other assets of Payor or any
of its Subsidiaries;
(e) any change, restructuring or termination of the corporate structure
or existence of Payor or any of its Subsidiaries; or
(f) any other circumstance which might otherwise constitute a defense
available to, or a discharge of, Payor or a subordinated creditor.
The provisions of this Section 4 shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any of the Senior
Debt is rescinded or must otherwise be returned by the holders of Senior Debt
upon the insolvency, bankruptcy or reorganization of Payor or otherwise, all as
though such payment had not been made.
SECTION 4.11. WAIVER. Payee and Payor each hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Senior Debt and this Section 4 and any requirement that the holders of Senior
Debt protect, secure, perfect or insure any security interest or lien on any
property subject thereto or exhaust any right or take any action against Payor
or any other person or entity or any collateral.
SECTION 4.12. NO WAIVER; REMEDIES. No failure on the part of the
holders of Senior Debt to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder preclude any other or further exercise thereof
or the exercise of any other right. The remedies herein provided are cumulative
and not exclusive of any remedies provided by law.
SECTION 4.13. CONTINUING AGREEMENT; ASSIGNMENTS UNDER SENIOR DEBT
AGREEMENTS. The provisions of this Section 4 constitute a continuing
agreement and shall (i) remain in full force and effect until the
indefeasible payment in full in cash of the Senior Debt, (ii) be binding upon
Payee, Payor and their respective successors and assigns, and (iii) inure to
the benefit of, and be enforceable by, the holders of Senior Debt and their
successors, transferees and assigns. Without limiting the generality of the
foregoing clause (iii), the holders of Senior Debt may
11
assign or otherwise transfer all or any portion of their rights and
obligations under the Credit Agreement or any other Senior Debt Document, as
applicable, to any other person or entity, and such other person or entity
shall thereupon become vested with all the rights in respect thereof granted
to the holders of Senior Debt herein or otherwise.
5. CERTAIN DEFINITIONS
"AGENT" means Dresdner Bank AG, New York and Grand Cayman Branches, as
agent for the lenders under the Credit Agreement, and its successors and
assigns.
"BANKRUPTCY LAW" means Title 11, United States Code, or any similar
federal, state or foreign law for the relief of debtors or any arrangement,
reorganization, assignment for the benefit of creditors or any other marshalling
of the assets and liabilities of Payor.
"BUSINESS DAY" means each day other than Saturdays, Sundays and days when
commercial banks are authorized or required by law to be closed for business in
Seattle, Washington.
"CAPITAL STOCK" means, with respect to any Person, any and all shares,
interests, participations, warrants, options or other equivalents (however
designated) of capital stock of such Person (if a corporation) and any and all
equivalent ownership interests in such Person (if other than a corporation), in
each case whether now outstanding or hereafter issued.
"CHANGE OF CONTROL" means (i) the closing of any transaction involving
the Payor as a result of which the holders of the Payor's common stock
immediately prior to the transaction being entered into will own less than a
majority of the common stock of Payor or of any other corporation or legal
entity succeeding to the Payor's business and assets; (ii) a sale by the holders
(other than Payee) of the Payor's common stock, in one or more related
transactions (other than sales pursuant to an offering registered under the
Securities Act of 1933, as amended, or sales made pursuant to Rule 144
thereunder), of a number of shares equal to greater than fifty percent (50%) of
the total number of shares of common stock of Payor outstanding; (iii) the
accumulation by any person (other than any person owning any shares of Payor's
common stock as of the date hereof or any affiliate of any such person) of a
majority of the outstanding common stock of Payor; or (iv) individuals who on
the date hereof constitute the board of directors of Payor (together with any
new directors whose election by the board of directors or whose nomination by
the board of directors for election by Xxxxx's stockholders was approved by a
vote of at least two-thirds of the members of the board of directors then in
office who either were members of the board of directors on the date hereof or
whose election or nomination for election was previously so approved) cease for
any reason to constitute a majority of the board of directors of Payor.
12
"CREDIT AGREEMENT" means the Credit Agreement dated as of December 15,
1998 among the Payor, Agent and the other parties thereto, together with all
agreements, instruments and documents related thereto (including without
limitation any guarantee agreements and security documents), in each case as
such agreement, instrument or document may be amended, modified, supplemented,
renewed or replaced from time to time, including without limitation any
agreement or document extending the maturity of, refinancing, replacing or
otherwise restructuring all or any part of the indebtedness or other obligations
under such agreement, instrument or document or any replacement or successor
agreement, instrument or document and whether by the same or any other agent,
lender or group of lenders.
"CUSTODIAN" means any receiver, trustee, assignee, liquidator, custodian
or similar official under any Bankruptcy Law.
"EVENT OF DEFAULT" means any of the occurrences specified under Sections
2(a) through 2(e) of this Note.
"INDEBTEDNESS" of any Person means all obligations of such Person for
borrowed money or evidenced by bonds, notes, debentures or similar instruments,
and capitalized lease obligations.
"NOTEHOLDER REPRESENTATIVE" means Xxxxx X. Xxxxx, XXX, as representative
of the holders of the Subordinated Notes outstanding from time to time
hereunder.
"PERSON" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"PIK NOTES" means the PIK Notes issued pursuant to Section 1.1 hereof in
lieu of cash interest, which shall contain terms substantially identical to this
Note except that (i) the interest on a PIK Note shall be 9.46% per annum and
(ii) any failure to pay principal as described in Section 2(a) with respect to a
PIK Note shall not constitute an Event of Default with respect to such PIK Note
until such failure shall have continued for a period of one hundred and eighty
(180) days.
"POST PETITION INTEREST" means interest at the contract rate (including
any rate applicable upon default) accrued or accruing after the commencement of
a Proceeding whether or not such interest is an allowed claim enforceable
against the debtor in a bankruptcy case under Title 11 of the United States Code
or whether or not such interest accrues after the filing of such petition for
purposes of such Title.
"REFINANCING DEBT" means any Indebtedness incurred to repay, refinance or
otherwise replace Indebtedness or obligations (including, without limitation,
commitments) under the Credit Agreement.
13
"SENIOR DEBT" means all obligations of Payor (including without
limitation contingent obligations with respect to undrawn letters of credit
issued under the Credit Agreement, any obligations owed with respect to
indemnification obligations, interest rate protection incurred to satisfy the
requirements of the Credit Agreement and commitment fees and agency fees payable
thereunder or pursuant thereto) (i) under the Credit Agreement or (ii) with
respect to Refinancing Debt (including in each such case fees, expenses, claims,
charges, indemnity obligations and Post Petition Interest). Senior Debt
outstanding under or in respect of Senior Debt Documents shall continue to
constitute Senior Debt notwithstanding that such Senior Debt may be disallowed,
avoided or subordinated pursuant to any Bankruptcy Law or other applicable
insolvency law or equitable principles.
"SENIOR DEBT DOCUMENTS" means the Credit Agreement and any other
agreement, indenture, mortgage, guaranty, pledge, security agreement, instrument
or document evidencing or securing or otherwise relating to Senior Debt or
pursuant to which Senior Debt is incurred.
"SUBORDINATED NOTE" means each of this Note and each other subordinated
promissory note made by Payor pursuant to the Purchase Agreement, including
without limitation, in each case, any PIK Notes issued pursuant to the terms
thereof.
"SUBSIDIARY" means, with respect to any Person, any corporation or other
entity, whether such corporation or entity now exists or shall hereafter be
created, of which a majority of the Capital Stock 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.
6. MISCELLANEOUS
SECTION 6.1. SECTION HEADINGS. The section headings contained in this
Note are for reference purposes only and shall not affect the meaning or
interpretation of this Note.
SECTION 6.2. AMENDMENT AND WAIVER. Subject to Section 6.9 hereof, no
provision of this Note may be amended or waived unless Payor shall have obtained
the written agreement of Payee and (unless there are no amounts and no
commitments outstanding under the Credit Agreement) the Agent under the Credit
Agreement, and any such waiver by Payee shall be effective only in the specific
instance for the specific purpose for which it is given. No failure or delay in
exercising any right, power or privilege hereunder shall imply or otherwise
operate as a waiver of any rights of Payee, nor shall any single or partial
exercise thereof preclude any other or future exercise thereof or the exercise
of any other right, power or privilege.
SECTION 6.3. SUCCESSORS, ASSIGNS AND TRANSFERORS. This Note may not
be assigned or transferred by Payee to (x) any competitor, customer or
supplier of Payor or any of its Subsidiaries or (y) to any other Person if
such assignment or transfer would cause any interest
14
payments due under this Note to become non-deductible as an expense for any
tax purposes. Payor may not assign its obligations under this Note without
the prior written consent of Payee except in connection with a transaction
permitted under Section 3.2(d) hereof. Subject to the foregoing, the
obligations of Payor and Payee under this Note shall be binding upon, and
inure to the benefit of, and be enforceable by, Payor and Payee, and their
respective successors and permitted assigns, whether or not so expressed.
SECTION 6.4. GOVERNING LAW. This Note shall be governed by, and
construed in accordance with, the laws of the State of New York without giving
effect to any conflicts of laws principles thereof that would otherwise require
the application of the law of any other jurisdiction.
SECTION 6.5. LOST, STOLEN, DESTROYED OR MUTILATED NOTE. Upon receipt of
evidence reasonably satisfactory to Payor of the loss, theft, destruction or
mutilation of this Note and of indemnity arrangements reasonably satisfactory to
Payor from or on behalf of the holder of this Note, and upon surrender or
cancellation of this Note if mutilated, Payor shall make and deliver a new note
of like tenor in lieu of such lost, stolen, destroyed or mutilated Note, at
Xxxxx's expense.
SECTION 6.6. WAIVER OF PRESENTMENT, ETC. Except as otherwise provided
herein, presentment, demand, protest, notice of dishonor and all other notices
are hereby expressly waived by Payor.
SECTION 6.7. USURY. Nothing contained in this Note shall be deemed to
establish or require the payment of a rate of interest in excess of the maximum
rate legally enforceable. If the rate of interest called for under this Note at
any time exceeds the maximum rate legally enforceable, the rate of interest
required to be paid hereunder shall be automatically reduced to the maximum rate
legally enforceable. If such interest rate is so reduced and thereafter the
maximum rate legally enforceable is increased, the rate of interest required to
be paid hereunder shall be automatically increased to the lesser of the maximum
rate legally enforceable and the rate otherwise provided for in this Note.
SECTION 6.8. NOTICES. Any notice, request, instruction or other
document to be given hereunder by either party to the other shall be in writing
and shall be deemed given when received and shall be (i) delivered personally or
(ii) mailed by certified mail, postage prepaid, return receipt requested or
(iii) delivered by Federal Express or a similar overnight courier or (iv) sent
via facsimile transmission to the fax number given below, as follows:
IF TO PAYOR, ADDRESSED TO:
Pacific Circuits, Inc.
c/x Xxxxxx Equity Investors III, L.P.
0000 Xxxxxxxxxxxx Xxxxxx, X.X., Xxxxx 000
15
Washington, D.C. 20004
Attention: Xxxxxxx Xxxxxxxx
Fax Number: (000) 000-0000
WITH A COPY TO:
Xxxxxxxx & Sterling
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxxxxx X. Xxxxxx, Esq. and Xxxxxx X. Xxxxxxx, Esq.
Fax Number: (000) 000-0000
IF TO PAYEE, ADDRESSED TO:
Xxxxx X. Xxxxx, III
1925 X. Xxxxxx Lake Dr., S.E.
Issaquah, Washington 98029
WITH A COPY TO:
Xxxxxxx Xxxxx & Xxxxx LLP
5000 Columbia Center
000 0xx Xxx.
Seattle, WA 98104-7078
Attention: Xxxxxx X. Xxxxxxxxxxxxx, Esq.
Fax Number: (000) 000-0000
or to such other place and with such other copies as either party may designate
as to itself by written notice to the other party.
In the event that any notice under this Note is required to be made on or
as of a day which is not a Business Day, then such notice shall not be required
to be made until the first day thereafter which is a Business Day.
SECTION 6.9. ACTION BY THE NOTEHOLDER REPRESENTATIVE. Subject to the
provisions of this Section 6.9, the Noteholder Representative and Payor may
enter into agreements for the purpose of adding or modifying provisions of the
Notes or changing in any manner the rights of the Payee or Payor hereunder or
waiving any covenant, default or Event of Default hereunder; PROVIDED, HOWEVER,
that no supplemental agreement shall, without the consent of the Payee: (a)
extend the stated maturity of this Note or reduce the principal amount hereof,
or reduce the rate or change the time of payment of interest due on this Note;
or (b) amend this Section 6.9; or (c) effect any change in the terms of this
Note which is not also applicable to each other
16
Subordinated Note; and PROVIDED, FURTHER, that no change may be made to this
Note which would either modify the subordination provisions hereof or would
otherwise adversely affect the rights of the holders of Senior Debt without
the written consent, prior to the indefeasible repayment thereof in cash, of
the Lenders (as defined in the Credit Agreement) and thereafter the holders
of a majority in principal amount of Senior Debt.
SECTION 6.10. EXPENSES. Payor and Xxxxx hereby agree that, in
connection with any action, suit, claim or proceeding by Payor or Payee to
enforce any of its rights hereunder, the amount of any and all reasonable fees
and expenses of counsel incurred by the prevailing party in such action, suit,
claim or proceeding shall be payable by the non-prevailing party upon demand.
Payor hereby agrees to pay to Payee the amount of any and all reasonable
expenses, including reasonable fees and expenses of its counsel, which Payee may
incur in connection with the successful defense of any claims made against Payee
by the holders of the Senior Debt in respect of Xxxxx's rights hereunder.
Notwithstanding the foregoing, any amounts payable by Payor under this Section
6.10 shall be paid only after all obligations of Payor under the Senior Debt
Documents shall have been paid in full in cash.
IN WITNESS WHEREOF, Xxxxx has executed and delivered this Note as of the
date hereinabove first written.
PACIFIC CIRCUITS, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Secretary
17
ACKNOWLEDGMENT
Xxxxx X. Xxxxx, III, Xxxxx under the attached Subordinated Note, dated as
of December 15, 1998 (the "Note") hereby acknowledges the provisions of Section
4 and Section 6.9 of the Note and agrees to be bound by the provisions thereof.
/s/ Xxxxx X. Xxxxx, III
-----------------------------
