Contract
EXHIBIT 10.3
This
Subordinated Promissory Note (this “Note”) and the indebtedness
evidenced by this Note are subordinate to any and all indebtedness, obligations
and liabilities of the Maker to the Lenders (collectively, the “Senior Lenders”) party to
that Credit Agreement with the Maker dated as of September 14, 2007 (the “Credit Agreement”), as the
same may be amended, modified, restated or supplemented from time to time, in
the manner and to the extent set forth herein.
| $2,500,000.00 | Cincinnati, Ohio |
| March 31, 2010 (the “Issuance Date”) |
For value
received, the undersigned, Champion Industries,
Inc., a West Virginia corporation (the “Maker”), hereby promises to
pay to an account designated in writing by Xxxxxxxx Xxxxxxxx, a
individual residing in the State of West Virginia (the “Payee”), in lawful money of
the United States of America, in immediately available funds to such account,
the principal amount of Two Million Five Hundred
Thousand and 00/100 Dollars ($2,500,000.00)
or, if less, the aggregate unpaid principal amount of all Loans (as hereinafter
defined) made by the Payee to the Maker under the terms of this Note, together
with interest accruing on such amount from the Issuance Date, at the rate
provided in this Note.
1.Loans. Prior to
the Maturity Date, the Payee agrees, subject to the terms and conditions of, and
at the times and in the manner required by the Contribution Agreement and Cash
Collateral Security Agreement dated of event date herewith among the Maker, the
Payee and the Administrative Agent (as hereinafter defined) (such Contribution
Agreement and Cash Collateral Security Agreement, as the same may be amended,
restated, supplemented or otherwise modified in its entirety from time to time,
the “Contribution
Agreement”), to make loans (each individually a “Loan” and, collectively, the
“Loans”) in U.S.
Dollars to the Maker from time to time in an aggregate principal amount of up to
Two Million Five Hundred Thousand and 00/100 Dollars.
2.Interest. Interest under this
Note will accrue beginning on the Issuance Date (computed on the basis of a 365
day year and based upon the number of days actually elapsed), at an interest
rate which is subject to change from time to time based on changes in an
independent index which is the highest Prime Rate most recently published in
“The Wall Street Journal’s money rates column” as the base rate on corporate
loans at large U.S. money center commercial banks (the “Index”). If
the Index becomes unavailable during the term of this loan, the Payee may
designate a substitute index after notifying Maker. The interest rate
change will not occur more often than each day. Any change in the
Prime Rate shall be effective as of the day on which the change is announced to
become effective.
3.Payment. Subject to the terms
hereof, the Maker shall pay all outstanding accrued interest and the outstanding
principal balance of this Note, if not paid sooner, on September 14, 2014 (the
“Maturity
Date”). The Payee acknowledges that no cash payments of
principal or interest (except as provided in Section 8 hereof) shall be made
prior to January 31, 2011, and thereafter, only to the extent expressly
permitted by the Administrative Agent in writing pursuant to Section 7 hereof.
4.Event of Default. The Maker
will be in default under this Note upon the occurrence of any of the following
events of default (each, an “Event of
Default”):
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(a)the failure to pay any amount of
the principal or interest due on this Note within 10 days after notice to
the Maker that such amount is past due; or
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(b)the dissolution, voluntary or
involuntary bankruptcy, termination of existence, insolvency or
appointment of a receiver of any part of the property of the Maker or any
of the obligations of the Maker, and in the case of an involuntary
proceeding filed against the Maker, such proceeding is not discharged or
dismissed within 90 days.
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5.Default
Rate. Subject to Section 7 hereof, upon the occurrence of an
Event of Default, the then entire outstanding principal balance of this Note,
together with all accrued interest, will, at the Payee’s option (exercised then
or thereafter), accrue interest until such default is cured, payable on demand,
at a rate per annum equal to the Index plus two percent (2%).
6.Acceleration. Upon
the occurrence of any Event of Default defined in Section 3(a), and at any time
thereafter as long as any such Event of Default is continuing, subject to
Section 7 hereof, the Payee may declare all liabilities and obligations of the
Maker under this Note immediately due and payable and the same will thereupon
become immediately due and payable without any further action on the part of the
Payee. Upon the occurrence of any Event of Default defined in Section
3(b), subject to Section 7 hereof, all liabilities and obligations of the Maker
under this Note will become due and payable without any action upon the part of
the Payee.
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7.Subordination.
Notwithstanding anything to the contrary contained in this Note, the
Maker and the Payee agree that all indebtedness evidenced by this Note,
including principal, interest and all other amounts payable hereunder
(collectively, the “Subordinated Indebtedness”),
shall be and remain junior and subordinate to any and all indebtedness,
obligations and liabilities, including principal and interest, of the Maker to
the Senior Lenders now existing or hereafter arising, whether direct or
indirect, secured or unsecured, absolute or contingent, joint or several or
joint and several, and howsoever owned, held or acquired, whether through
discount, purchase, direct loan or as collateral or otherwise and all
post-petition interest in a bankruptcy or similar proceeding whether or not
allowed (collectively, the “Superior Indebtedness”), all
on the following terms and conditions:
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(a)So
long as any Superior Indebtedness shall remain outstanding and unpaid or
the Senior Lenders have any obligation to extend credit to the Maker, no
payment either of principal or interest (notwithstanding the expressed
maturity or any time for the payment of principal of or interest on any
Subordinated Indebtedness) shall be made on the Subordinated Indebtedness
prior to January 31, 2011, and thereafter, such payments shall only be
permitted with the Administrative Agent’s prior written
consent. The Payee will take no steps, whether by suit or
otherwise, to compel or enforce the collection of Subordinated
Indebtedness, nor will the Payee use Subordinated Indebtedness by way of
counterclaim, set-off, recoupment or otherwise so as to diminish,
discharge or otherwise satisfy in whole or in part any indebtedness or
liability of the Payee to the Maker, whether now existing or hereafter
arising and howsoever evidenced.
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(b)In
the event of any distribution, dividend, or application, partial or
complete, voluntary or involuntary, by operation of law or otherwise, of
all or any part of the assets of the Maker or of the proceeds thereof to
the creditors of the Maker or upon any indebtedness of the Maker,
occurring by reason of the liquidation, dissolution, or other winding up
of the Maker, or by reason of any execution sale, or bankruptcy,
receivership, reorganization, arrangement, insolvency, liquidation or
foreclosure proceeding of or for the Maker or involving its property, no
dividend, distribution or application shall be made, and the Payee shall
not be entitled to receive or retain any dividend, distribution, or
application on or in respect of principal of or interest on Subordinated
Indebtedness, unless and until all principal of and interest on Superior
Indebtedness then outstanding shall have been paid and satisfied in full,
and in any such event any dividend, distribution or application otherwise
payable in respect of Subordinated Indebtedness shall be paid and applied
on Superior Indebtedness until such Superior Indebtedness has been fully
paid and satisfied.
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(c)No
Senior Lender need at any time give the Payee notice of any kind of the
creation or existence of any Superior Indebtedness, nor of the amount or
terms thereof, all such notice being hereby expressly
waived. Also, the Senior Lenders may at any time from time to
time, without the consent of or notice to the Payee, without incurring
responsibility to the Payee, and without impairing or releasing the
obligation of the Payee under this Note (i) renew, refund or extend
the maturity of, or increase or decrease the amount of, any Superior
Indebtedness, or any part thereof, or otherwise revise, amend or alter the
terms and conditions thereof, (ii) sell, exchange, release or
otherwise deal with any property by whomsoever at any time pledged,
mortgaged or otherwise hypothecated or subjected to a lien to secure any
Superior Indebtedness, and (iii) exercise or refrain from exercising
any rights against the Maker and others, including the
Payee.
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(d)The
Payee will not sell, assign or otherwise transfer any Subordinated
Indebtedness, or any part thereof, except subject to and in accordance
with the terms of this Note and upon the agreement of the transferee or
assignee to abide by and be bound by the terms of this
Note.
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(e)The
Payee represents and warrants that the Payee has no lien on or security
interest in any assets of the Maker and will not accept any such lien or
security interest so long as any Superior Indebtedness shall remain
outstanding and unpaid or the Senior Lenders have any obligations to
extend credit to the Maker. Notwithstanding the foregoing, the
Payee expressly subordinates all of the Payee’s rights in any collateral
now or later securing the Subordinated Indebtedness (the “Collateral”) to all
rights of Fifth Third Bank, as Administrative Agent for the Senior
Lenders, and any and all of its successors and assigns (collectively, the
“Administrative
Agent”), now or later existing in any of the same Collateral to
secure the Superior Indebtedness, and any and every lien or security
interest with respect to the Collateral in favor of or held for the
benefit of the Administrative Agent has and shall have priority over every
lien and security interest that the Payee now has or may hereafter acquire
with respect to the Collateral, all notwithstanding any statement or
provision contained in the instruments evidencing the Subordinated
Indebtedness, or agreements with respect thereto or otherwise to the
contrary and irrespective of the time or order of filing or recording of
financing statements, deeds of trust, mortgages or other notices of
security interests, liens or assignments granted pursuant thereto, and
irrespective of anything contained in any filing or agreement to which any
part hereto or its respective successors and assigns may now or hereafter
be a party, and irrespective of the ordinary rules for determining
priorities under the Uniform Commercial Code of the State of Ohio or under
any other law governing the relative priorities of secured
creditors. The Payee consents to the creation and continuance
of all present and future liens and security interests of the
Administrative Agent in the Collateral to secure the Superior Indebtedness
and to the enforcement of those liens and security interests, including
the removal of the Collateral from the real property of the
Maker. This subordination as to the Collateral is intended to
define the rights and duties of the Administrative Agent and the Payee; it
is not intended that any third party shall benefit from it. If
the effect of any provision of this Note would be to give any third party
a priority status to which that party would not otherwise be entitled,
that provision shall, to the extent necessary to avoid that priority, be
given no effect and the rights and priorities of the Administrative Agent
and the Payee shall be determined in accordance with applicable
law.
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(f)If
notwithstanding the provisions of this Section 7, the Payee shall receive
any payment of principal or interest on Subordinated Indebtedness which
the Maker is not entitled to make pursuant to the terms hereof, whether or
not the Payee has knowledge that the Maker is not entitled to make such
payment, the Payee shall promptly account for such payment and upon the
Administrative Agent’s demand pay over such payment to the Administrative
Agent for application to the Superior Indebtedness owing to the Senior
Lenders. No payment or any distribution received by the
Administrative Agent in respect of Subordinated Indebtedness pursuant to
any of the terms hereof shall entitle the Payee to any right, whether by
virtue of subrogation or otherwise, in and to any Superior Indebtedness
unless and until all Superior Indebtedness owing to the Senior Lenders has
been fully paid and satisfied and the Senior Lenders obligations, if any,
to extend credit to the Maker have expired or otherwise been
terminated.
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8.Prepayment. The
Maker has the right to prepay, in whole or in part, without premium or penalty,
the unpaid principal amount (or any portion thereof) of this Note and accrued
interest on such amount (i) if consented to in writing by the Administrative
Agent and the Lenders or (ii) at any time after the payment in full in cash of
all Obligations (as defined in the Credit Agreement) and the termination of the
Credit Agreement.
9.Successors and
Assigns. This Note will bind the Maker and its successors and
assigns, and the benefits of this Note will inure to the benefit of the Payee
and its successors and assigns. The Payee may not assign all or any
portion of its rights or obligations under this Note. Furthermore,
this Note may not be assigned by the Maker without the prior written consent of
the other party. All references herein to the “Maker” and the “Payee”
are deemed to apply to the Maker and the Payee, respectively, and to their
respective successors and assigns.
10.Interest Rate
Limitation. Nothing contained in this Note or any transaction
related to this Note, will be construed or so operate as to require the Maker to
pay interest at a greater rate than is now lawful or in such case to contract
for, or to make any payment, or to do any act contrary to applicable
law. Should any interest or other charges paid by the Maker, or
parties liable for the payment of this Note, in connection with the indebtedness
evidenced by this Note or any other document delivered in connection with this
Note, result in the computation or earning of interest in excess of the maximum
legal rate of interest that is legally permitted under applicable law, then any
and all such excess will be, and the same hereby is, waived by the Payee, and
any and all such excess will be automatically credited against and in reduction
of the balance due under this Note, and the portion of said excess that exceeds
the balance due under this Note shall be paid by the Payee to the
Maker.
11.Failure to Make
Payments. If the Maker is not able to perform any of its
obligations under this Note because, in the judgment of the board of directors
of the Maker, based on the advice of counsel, such performance would violate
applicable statutes, the by-laws or the articles of incorporation of the Maker,
any agreement to which the Maker is a party or any rule, regulation, decree or
order to which the Maker is subject, the Maker will take all commercially
reasonable action (including, without limitation, seeking waivers, consents and
approvals and making partial payments to the extent permitted) to fulfill its
obligations as soon as practicable. The Maker shall not voluntarily
amend its by-laws or articles of incorporation or enter into any agreement with
the intent or result of avoiding its obligations under this Note.
12.Governing Law and
Severability. The provisions of this Note will be construed
according to the laws of the State of Ohio without regard to conflict of laws
principles. If any provision of this Note is in conflict with any
statute or rule of law of the State of Ohio or is otherwise unenforceable for
any reason whatsoever, then such provision will be ineffective to the extent of
such invalidity and will be deemed separable from and will not invalidate any
other provision of this Note.
[Signature
Page Follows]
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In witness whereof, the
Maker has caused this Note to be executed by its officer thereunto duly
authorized, as of the date first written above.
| Champion Industries, Inc. | ||
| By | /s/ Xxxx X. Xxx | |
| Name | Xxxx X. Xxx | |
| Title | Senior Vice President and Chief Financial Officer | |
| Acknowledged and Agreed to: | ||
| /s/ Xxxxxxxx X. Xxxxxxxx | ||
| Xxxxxxxx Xxxxxxxx, individually |
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