FINISHMASTER, INC.
SUBORDINATED NOTE AGREEMENT
Senior Subordinated Note due 2004
Dated as of November 19, 1997
1
TABLE OF CONTENTS
Page
1. DEFINED TERMS.........................................................1
2. DESCRIPTION OF SENIOR SUBORDINATED NOTE...............................1
3. PURCHASE AND SALE OF SENIOR SUBORDINATED NOTE.........................1
4. CLOSING OF SALE OF SENIOR SUBORDINATED NOTE...........................2
5. CONDITIONS TO CLOSING.................................................2
5A. Acquisition of Xxxxxxxx......................................2
5B. Payment of Fee...............................................2
6. OPTIONAL PREPAYMENTS; PRIORITY OF PAYMENT.............................2
6A. Optional Prepayments.........................................2
6B. Notice of Prepayments........................................2
6C. Acquisition of Senior Subordinated Note......................3
6D. Subordination of Senior Subordinated Note....................3
7. AFFIRMATIVE COVENANTS.................................................3
7A. Required Notices; Other Information..........................3
7B. Corporate Existence; Maintenance of Properties...............3
7C. Payment Of Taxes And Claims..................................4
7D. Compliance With Laws, Etc....................................4
7E. Satisfaction of Obligations..................................4
7F. Proceeds of Financing........................................4
8. NEGATIVE COVENANTS....................................................5
8A. Liens........................................................5
8B. Merger or Sale of Assets.....................................6
8C. Amendments and Waivers of Charter Documents..................6
9. EVENTS OF DEFAULT.....................................................6
9A. Default; Acceleration........................................6
9B. Rescission of Acceleration...................................8
9C. Other Remedies...............................................8
9D. Default Rate.................................................9
10. REPRESENTATIONS AND WARRANTIES........................................9
10A. Organization, Powers, Good Standing,
Business and Subsidiaries..................................9
i
10B. Authorization of Financing, Etc..............................9
10C. No Material Adverse Change..................................10
10D. Title to Properties; Liens..................................10
10E. Litigation; Adverse Facts...................................10
10F. Payment of Taxes............................................11
11. DEFINITIONS..........................................................11
11A. Definitions.................................................11
11B. Accounting Terms............................................16
12. JUDICIAL PROCEEDINGS.................................................16
12A. Consent to Jurisdiction.....................................16
12B. Enforcement of Judgments....................................16
12C. Waiver of Jury Trial........................................16
12D. No Limitation on Service or Suit............................17
13. MISCELLANEOUS........................................................17
13A. Payments....................................................17
13B. Amendments; Waivers.........................................17
13C. Survival of Representations and Warranties;
Entire Agreement..........................................17
13D. Successors and Assigns......................................18
13E. Notices.....................................................18
13F. Descriptive Headings........................................18
13G. Severability................................................18
13H. Governing Law...............................................18
PURCHASER SCHEDULE
EXHIBITS
Exhibit A - Form of Senior Subordinated Note
ii
This SUBORDINATED NOTE AGREEMENT (as amended, supplemented or otherwise
modified from time to time, this "Agreement") dated as of November 19, 1997, is
among FinishMaster, Inc., Indiana corporation (the "Company"), and LDI, Ltd., an
Indiana limited partnership (the "Purchaser").
WHEREAS, in order to provide funds for the acquisition by the Company
of Xxxxxxxx PBE, Inc., a Delaware corporation ("Xxxxxxxx"), and for general
corporate purposes of the Company, the Company desires to issue and sell its
senior subordinated promissory note; and
WHEREAS, the Purchaser desires to purchase such senior subordinated
promissory note on the terms and conditions more fully set forth herein and in
such senior subordinated promissory note;
NOW, THEREFORE, in consideration of the mutual terms, conditions and
other agreements set forth herein, the parties hereto agree as follows:
1. DEFINED TERMS. Certain capitalized terms used in this Agreement are
defined in Section 11.
2. DESCRIPTION OF SENIOR SUBORDINATED NOTE.
The Company will authorize the issuance and sale of its 9.00% senior
subordinated promissory note due May 19, 2004 in substantially the form of
Exhibit A hereto (such note, together with any notes that may be issued
hereunder in substitution or exchange therefor, is referred to herein as the
"Senior Subordinated Note"), in the original aggregate principal amount of
$30,000,000.00, bearing interest from the date of issuance thereof at the rate
of 9.00% per annum, payable in arrears quarterly on the thirtieth day of each
March, June, September and December commencing December 30, 1997 and at
maturity, calculated on the basis of a 360-day year of twelve thirty-day months.
The Senior Subordinated Note is not subject to prepayment or redemption at the
option of the Company prior to its stated maturity date except on the terms and
conditions and with the premium, if any, set forth in Section 6. Principal and
premium not paid when due (whether at maturity, by optional prepayment, upon
acceleration, pursuant to a permitted demand, upon commencement of bankruptcy or
insolvency proceedings or otherwise) and any overdue installment of interest
shall bear interest at the Default Rate.
3. PURCHASE AND SALE OF SENIOR SUBORDINATED NOTE.
The Company hereby agrees to sell to the Purchaser and, subject to the
terms and conditions set forth herein, the Purchaser, agrees to purchase from
the Company the Senior Subordinated Note, in the form registered in the name of
such Purchaser, in the principal amount of $30,000,000.00 for a purchase price
equal to 100% of the principal amount thereof.
1
4. CLOSING OF SALE OF SENIOR SUBORDINATED NOTE.
The purchase and delivery of the Senior Subordinated Note shall take
place at a closing (the "Closing") at the offices of Xxxxxx & Xxxxxxxxx in
Indianapolis, Indiana (or at such other location as the Company and the
Purchaser may agree), at such time as the Purchaser and the Company may agree,
but in no event later than January 31, 1998 (the date of such Closing is
referred to herein as the "Closing Date").
5. CONDITIONS TO CLOSING.
The obligation of the Purchaser to purchase and pay for the Senior
Subordinated Note is subject to the satisfaction of the following conditions
precedent:
5A. Acquisition of Xxxxxxxx. Prior to or simultaneously with the
Closing, the Company shall have completed the acquisition of a majority of the
outstanding capital stock (on a fully diluted basis) of Xxxxxxxx.
5B. Payment of Fee. Prior to or simultaneously with the Closing, the
Company shall pay to the Purchaser a non-refundable facility fee in an amount
equal to 1.5% of the principal amount of the Senior Subordinated Note.
6. OPTIONAL PREPAYMENTS; PRIORITY OF PAYMENT.
6A. Optional Prepayments. The Company may prepay the Senior
Subordinated Note at any time in whole or ratably in part, at a price (the
"Make-Whole Prepayment Price") equal to 100% of the principal amount being so
prepaid plus (i) accrued and unpaid interest on such amount to and including the
date of prepayment, and (ii) the Yield-Maintenance Premium, if any, with respect
to the Senior Subordinated Note so prepaid; provided, however, that any such
prepayment (a) may be made only in accordance with the provisions of Sections 6B
and 6C, and (b) shall be in a principal amount of not less than $1,000,000 and
in an integral multiple of $100,000.
6B. Notice of Prepayments. The Company shall give Purchaser written
notice of each optional prepayment of Senior Subordinated Note pursuant to
Section 6A not less than two (2) days prior to the Settlement Date, which notice
shall (i) specify the Settlement Date (which shall be a Business Day), (ii)
state the aggregate principal amount of the Senior Subordinated Note to be
prepaid on such date and the amount of accrued and unpaid interest thereon to
and including such date, and (iii) set forth in reasonable detail calculations
specifying the Make-Whole Prepayment Price that would apply to the Senior
Subordinated Note if the date of such notice were the Settlement Date. Upon the
giving of any such prepayment notice, such principal amount, together with
accrued and unpaid interest thereon to and including the Settlement Date plus
the Yield-Maintenance Premium, if any, with respect thereto, shall become due
and payable on such Settlement Date.
2
6C. Acquisition of Senior Subordinated Note. The Company shall not, and
shall not permit any of its Affiliates to, purchase, prepay, redeem or otherwise
acquire the Senior Subordinated Note from the Purchaser, except pursuant to a
payment or prepayment in accordance with the specific terms of this Agreement.
6D. Subordination of Senior Subordinated Note. The Company, for itself
and its successors, and the Purchaser, by its acceptance of the Senior
Subordinated Note, agrees that the payment of the principal of, and interest and
premium due on, the Senior Subordinated Note is hereby expressly subordinate,
and junior in right of payment, to the extent and in the manner provided in that
certain Subordination Agreement dated November 19, 1997 among Purchaser, the
Company and the NBD Bank, N.A., as agent for certain lenders, to the payment of
principal, premium, if any, and interest on the Senior Debt.
7. AFFIRMATIVE COVENANTS.
The Company covenants and agrees that, until indefeasible payment in
full of the Senior Subordinated Note and all other amounts payable under this
Agreement, it shall perform all covenants in this Section 7.
7A. Required Notices; Other Information.
7A(i) Events of Default, Etc. Promptly but in no event later
than five (5) Business Days after any Executive Officer obtains knowledge (a) of
any condition or event that constitutes a Default or an Event of Default, (b)
that the Purchaser has given any notice or taken any other action with respect
to a claimed Default or Event of Default, (c) that any event or condition has
occurred which would give rise or could reasonably be expected to give rise to a
Material Adverse Effect, an Officer's Certificate specifying, as applicable, the
nature and period of existence of any such condition or event, the notice given
(and providing a copy thereof), action taken and the nature of such claimed
default, event of default, Default, Event of Default, event, breach or
condition, and what action the Company has taken, is taking and proposes to take
with respect thereto, or (d) a default or event of default under the Senior
Debt.
7A(ii) Other Information. With reasonable promptness, such
Consolidated, consolidating and other information and data with respect to the
Company or any Subsidiary and their respective Properties, assets and businesses
as may be reasonably requested from time to time by any Purchaser.
7B. Corporate Existence; Maintenance of Properties. The Company
covenants that it (a) will do or cause to be done all things necessary to
preserve and keep in full force and effect the corporate, trust, partnership or
other entity existence, rights, licenses, registrations and franchises of the
Company and the Subsidiaries, (b) will cause its properties and the properties
of the Subsidiaries used or useful in the conduct of its business, other than
properties which in the aggregate are not material to the business and
operations of the Company and the Subsidiaries, taken as a whole, to be
3
maintained and kept in good condition, repair and working order (ordinary wear
and tear excepted) and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereto, all as in the best judgment
of the Company may be necessary so that the operations of the Company and the
Subsidiaries may be properly and advantageously conducted and (c) will, and will
cause each of the Subsidiaries to, qualify and remain qualified to conduct
business in each jurisdiction where the nature of the business of or ownership
of Property by the Company or such Subsidiary, as the case may be, may require
such qualification, except where the failure to be so qualified would not, and
could not, have a Material Adverse Effect.
7C. Payment Of Taxes And Claims. The Company shall, and shall cause
each Subsidiary to, duly and timely file all tax returns and reports required to
be filed and pay all taxes, assessments and other governmental charges imposed
upon such entity or any Property of such entity or in respect of any franchises,
business, income or Property of the Company, or any Subsidiary before any
penalty or interest in a material amount accrues thereon, and pay all claims
(including, without limitation, claims for labor, services, materials and
supplies) for sums material in the aggregate that have become due and payable
and that by law have or may become a Lien upon any of such Properties, prior to
the time when any penalty or fine shall be incurred with respect thereto unless,
in each case, (i) no Property (other than money for such charge or claim and the
interest or penalty accruing thereon) of the Company, any Subsidiary is in
danger of being lost or forfeited as a result thereof, (ii) such charge or claim
is being contested in good faith by appropriate proceedings promptly instituted
and diligently conducted, and (iii) such reserve or other appropriate provision,
if any, as shall be required in conformity with GAAP shall have been made
therefor.
7D. Compliance With Laws, Etc. The Company will comply, and will cause
each of the Subsidiaries to comply, with all applicable laws, rules, regulations
and orders and obtain and maintain in good standing all licenses, permits and
approvals from any and all governments, governmental commissions, board or
agencies thereof or of jurisdictions in which it or any Subsidiary carries on
business required in respect of the business and operations of the Company
except for those laws, rules, regulations, orders, licenses, permits and
approvals which the failure to comply with or to maintain would not have a
Material Adverse Effect.
7E. Satisfaction of Obligations. Without limiting Section 7C, the
Company shall, and shall cause the Subsidiaries to, pay, discharge or otherwise
satisfy and perform as and when due, and at or before maturity or before they
become delinquent, as the case may be, all of their respective obligations of
whatever nature; except when, in the case of payment obligations, the amount or
validity thereof is currently being contested in good faith by appropriate
proceedings and reserves required by GAAP with respect thereto have been
provided on the books of the Company or the Subsidiaries, as the case may be, or
except where the failure to pay, discharge or otherwise satisfy such obligations
would not have a Material Adverse Effect.
7F. Proceeds of Financing. The proceeds of the issuance of the Senior
Subordinated Note hereunder shall be used to finance the acquisition of Shares
of Xxxxxxxx and for general corporate purposes.
4
8. NEGATIVE COVENANTS.
The Company covenants and agrees that, until indefeasible payment in
full of the Senior Subordinated Note and all other amounts payable under this
Agreement, it shall perform all covenants in this Section 8.
8A. Liens. The Company shall not, and shall not permit any Subsidiary
to, directly or indirectly, create, incur, assume or permit or suffer to exist
any Lien, or file or execute or agree to the execution of any financing
statement, on or with respect to any Property (including any document or
instrument in respect of goods or accounts receivable) of the Company or any
Subsidiary, whether now owned or hereafter acquired, or any income or profits
therefrom except:
(i) Liens created in favor of the Company or a Subsidiary;
(ii) Liens in favor of the holders of the Senior Debt or
permitted under the terms of the Senior Debt;
(iii) existing Liens and Liens to secure replacements,
extensions and renewals of the Debt or other obligations secured by
such Liens only if (a) the principal amount of the Debt or other
obligation secured thereby is not increased, and (b) such Lien does not
extend to any Property not previously subject thereto;
(iv) Liens in respect of Debt (other than as contemplated in
clause (v) below) constituting purchase money security interests
provided that such Liens attach solely to the property acquired or
purchased concurrently with such acquisition or purchase;
(v) deposits to secure payment of workers' compensation,
unemployment insurance, old age pensions or other social security
obligations, in the ordinary course of business of the Company or any
Subsidiary and not related to borrowed money or credit extended;
(vi) (a) Liens securing any judgment, award or order that does
not constitute an Event of Default, and (b) Liens arising in the
ordinary course of business (including easements and similar
encumbrances) that arise by operation of law and not related to
borrowed money or credit extended that arise in connection with claims,
the payment of which is not at the time required by Section 7C, but in
the case of (a) and (b) only if such Liens do not individually or in
the aggregate materially interfere with the conduct of the business of
the Company or any Subsidiary and would not individually or in the
aggregate have a Material Adverse Effect; and
(vii) deposits to secure the performance of statutory
obligations and other obligations of a like nature incurred in the
ordinary course of business.
5
8B. Merger or Sale of Assets.
(i) The Company covenants that it will not, and it will not
permit any Subsidiary to, enter into any transaction of merger or
consolidation or liquidate or wind up or dissolve itself (or suffer any
liquidation or dissolution), except that (X) the Company may merge or
consolidate if (a) the Company is the surviving entity or the survivor
assumes all of the Company's obligations hereunder and under the Senior
Subordinated Note and under the other Credit Documents and in either
case remains or is, as applicable, an entity incorporated under the
laws of a state of the United States of America, and (b) immediately
after such merger or consolidation (and giving effect thereto) no
Default or Event of Default shall have occurred and be continuing, and
(Y) any Subsidiary may merge or consolidate with or into the Company or
a Subsidiary, if the Company or such Subsidiary is the surviving entity
and remains incorporated under the laws of the state of its present
incorporation.
(ii) The Company covenants that it will not, and will not
permit any Subsidiary to, sell, dispose of or otherwise convey (by
merger, consolidation, sale of stock of any Subsidiary or otherwise),
in any single or related series of sales, dispositions or conveyances,
any Property of the Company or any Subsidiary, provided such limitation
shall not apply to transactions wherein (a) such transaction is in the
ordinary course of business and does not involve the sale or other
conveyance of all or a substantial part of the Property of the Company
and/or such Subsidiary, as applicable, and no Default or Event of
Default has occurred and is continuing or would result therefrom, or
(b) the Company or a Subsidiary sells or transfers its property to
another Subsidiary or the Company.
8C. Amendments and Waivers of Charter Documents. The Company shall not,
and shall not permit any Subsidiary to, amend, waive or terminate its Articles
of Incorporation or bylaws in any way that would have or could reasonably be
expected to have a Material Adverse Effect.
9. EVENTS OF DEFAULT.
9A. Default; Acceleration. If any of the following events (each an
"Event of Default") shall occur and be continuing for any reason whatsoever
(whether such occurrence shall be voluntary or involuntary or come about or be
effected by operation of law or otherwise):
(i) the Company shall fail to pay any principal of or premium,
if any, on the Senior Subordinated Note when due, or shall fail to pay
any interest thereon or any other amount payable hereunder within five
(5) days of the date due, in either case whether due at stated
maturity, upon acceleration or notice of optional prepayment or
otherwise; or
(ii) (a) The Company or any Subsidiary shall fail to pay when
due (upon maturity, acceleration or otherwise) any principal, premium,
fee or interest or similar amount in an individual or aggregate amount
exceeding $3,000,000 on any obligations for borrowed money outstanding
beyond any applicable period of grace, or (b) any other breach, default
or event
6
of default under any instrument or agreement relating to any
obligations for borrowed money of the Company or any Subsidiary shall
occur, and the effect of any such breach or default is to cause, or to
permit the Purchaser or the holder of such obligations for borrowed
money to cause an aggregate amount exceeding $3,000,000 to become or be
declared due prior to its stated maturity (or the stated maturity of
any underlying obligation, as the case may be), and such breach or
default shall not have been cured within any applicable period of
grace; or
(iii) any representation or warranty or other statement made
in any Officer's Certificate or by any Executive Officer or by the
Company in this Agreement, any other Credit Document or in any written
certificate, instrument or report furnished in compliance with or in
reference to this Agreement or any other Credit Document shall be false
in any material respect on the date as of which made or renewed; or
(iv) the Company or any Subsidiary shall fail duly and
punctually to perform or observe any other provision of this Agreement
or any other Credit Document and such default with respect to such
other provision shall not have been corrected or waived within 30 days
after any Executive Officer has knowledge thereof or the Company
receives notice thereof from the Purchaser; or
(v) the Company, or any Subsidiary shall generally not pay its
debts as they become due, or shall admit in writing its inability to
pay its debts generally, or shall make a general assignment for the
benefit of creditors; or any bankruptcy case shall be commenced
voluntarily by or involuntarily against the Company or any Subsidiary
or any other proceeding shall be instituted voluntarily by or
involuntarily against the Company or any Subsidiary seeking the
liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief or
protection of debtors, or seeking the entry of an order for relief or
the appointment of a receiver, trustee, custodian or other similar
official for it or for any substantial part of its Property and, in the
case of any such case or proceeding instituted against it (but not
instituted by it) that is being diligently contested by it in good
faith, either such proceeding shall remain undismissed or unstayed for
a period of sixty (60) days or any of the actions or relief sought in
such proceeding (including, without limitation, the entry of an order
for relief against it, or the appointment of a receiver, trustee,
custodian or other similar official for it or for any substantial part
of its Property) shall occur; or the board of directors of the Company
or any Subsidiary shall authorize it to take, or the Company or any
Subsidiary shall take any actions in furtherance of, any of the actions
described in this Section 9A(v); or
(vi) any judgments or orders (or series of related judgments
or orders) (other than any such judgments or orders (or series of
related judgments or orders) that do not equal or exceed in aggregate
$3,000,000) shall be entered or filed against the Company or any
Subsidiary or their respective Properties and shall remain
undischarged, unvacated, unbonded
7
or unstayed for a period of thirty (30) days, or by the date five (5)
days prior to the date of any proposed sale thereunder; or
(vii) any provision of this Agreement or any other Credit
Document shall for any reason cease to be valid and binding on or be
enforceable against the Company, or the Company shall state in writing
that any provision of this Agreement or any other Credit Document to
which it is a party is not valid and binding on or enforceable against
it in any respect.
then (a) upon the occurrence of any Event of Default described in Section 9A(v),
the unpaid principal amount of the Senior Subordinated Note, together with
accrued interest thereon and together with the Yield-Maintenance Premium, if
any, with respect thereto, shall automatically become due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Company, and (b) upon the occurrence and during the
continuance of any other Event of Default, the Purchaser may, at its option and
in addition to any other right, power or remedy permitted by law or in equity,
by notice in writing to the Company, declare the Senior Subordinated Note to be,
and the Senior Subordinated Note shall thereupon be and become, immediately due
and payable together with interest accrued thereon and together with the
Yield-Maintenance Premium, if any, with respect thereto, without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Company.
9B. Rescission of Acceleration. At any time after any declaration of
acceleration of the Senior Subordinated Note shall have been made pursuant to
Section 9A by the Purchaser and before a judgment or decree for the payment of
money due has been obtained by such Purchaser, the Purchaser may, by written
notice to the Company rescind and annul the declaration and its consequences but
only if (i) the principal of, premium, if any, and interest on the Senior
Subordinated Note that shall have become due otherwise than by such declaration
of acceleration shall have been duly and fully paid, and (ii) all Events of
Default other than the nonpayment of principal of, premium, if any, and interest
on the Senior Subordinated Note that have become due solely by such declaration
of acceleration shall have been cured or shall have been waived by the
Purchaser. No rescission or annulment referred to above shall affect any
subsequent Default or Event of Default or any right, power or remedy arising out
of such subsequent Default or Event of Default.
9C. Other Remedies. If any Event of Default shall occur and be
continuing, the Purchaser may proceed to protect and enforce its rights under
this Agreement and its Senior Subordinated Note by exercising such remedies as
are available to the Purchaser in respect thereof under applicable law, either
by suit in equity or by action at law, or both, whether for collection of any
payment then due the Purchaser under the Senior Subordinated Note, specific
performance of any covenant or other agreement contained in this Agreement or in
aid of the exercise of any power granted in this Agreement. No remedy conferred
in this Agreement upon the Purchaser is intended to be exclusive of any other
remedy, and each and every such remedy shall be cumulative and shall be in
addition to every other remedy conferred herein or now or hereafter existing at
law or in equity or by statute or otherwise.
8
9D. Default Rate. Upon the occurrence of a Default or an Event of
Default, the Senior Subordinated Note shall bear interest, to the fullest extent
permitted by law, at the rate otherwise applicable plus 2% per annum, calculated
from the date such Default or Event of Default has occurred and is outstanding
until the date such Default or Event of Default shall have been cured or waived
in writing or otherwise satisfied in full (the "Default Rate.).
10. REPRESENTATIONS AND WARRANTIES.
The Company represents, covenants and warrants to each Purchaser that,
as of the date of this Agreement and as of the Closing Date:
10A. Organization, Powers, Good Standing, Business and Subsidiaries.
10A(i) Organization and Powers. The Company is a corporation
duly organized, validly existing and in good standing under the laws of
the State of Indiana and has all requisite corporate power and
authority to own or lease and operate its Property, to carry on its
business as now conducted and, in the case of the Company, to enter
into this Agreement and each other Credit Document to which it is a
party and to issue the Senior Subordinated Note and to carry out the
transactions contemplated hereby and thereby.
10A(ii) Good Standing. The Company is in good standing
wherever necessary to carry on its present business and operations,
except in jurisdictions in which the failure to be in good standing has
not had, would not have, and could not reasonably be expected to have,
a Material Adverse Effect.
10B. Authorization of Financing, Etc.
10B(i) Authorization of Financing. The execution, delivery and
performance of this Agreement, the other Credit Documents, the
issuance, delivery and payment of the Senior Subordinated Note, and the
consummation of the transactions contemplated hereby and thereby have
been duly authorized by all necessary corporate action by the Company.
10B(ii) No Conflict. The execution, delivery and performance
by the Company of each Credit Document to which it is a party and the
issuance, delivery and payment of the Senior Subordinated Note and the
consummation of the transactions contemplated thereby, do not and will
not (a) violate the Articles of Incorporation or Bylaws of the Company,
or any order, judgment or decree of any court or other agency of any
government binding upon the Company or upon any property or assets of
the Company, (b) violate any provision of law, or any rules or
regulations of any governmental authority, applicable to the Company,
(c) violate, conflict with, result in a material breach of or
constitute (with notice or lapse of time or both) a default under any
indenture, mortgage, instrument, contract or other agreement to which
the Company is a party or pursuant to which any of their properties or
assets are bound, (d) result in or require the creation or imposition
of any Lien upon any of the Property
9
of the Company, or (e) require any approval or consent of stockholders
of the Company or require any approval or consent of any Person under
any material indenture, mortgage, instrument, contract or other
agreement to which the Company is a party or pursuant to which any of
their properties are bound, except for such approvals or consents as
will have been duly obtained on or before the Closing Date, copies of
which will have been provided to the Purchaser on or before the Closing
Date.
10B(iii) Governmental Consents. The execution, delivery and
performance by the Company of each Credit Document to which it is a
party and the issuance, delivery and payment of the Senior Subordinated
Note by the Company and the consummation of the transactions
contemplated hereby, do not and will not require any registration or
filing with, consent or approval of, or notice to, or other action to,
with or by, any federal, state or other governmental authority or
regulatory body.
10B(iv) Due Execution and Delivery; Binding Obligations. This
Agreement has been duly executed and delivered by the Company and, at
the time of the Closing, each other Credit Document to which the
Company is required by this Agreement to be a party will have been,
duly executed and delivered by the Company. This Agreement is, and, at
the time of the Closing, the Senior Subordinated Note (when issued and
delivered in accordance herewith) and each other Credit Document to
which the Company is a party will be, the legal, valid and binding
obligation of the Company, enforceable against each such party in
accordance with their respective terms.
10C. No Material Adverse Change. Since December 31, 1996, there has
been no material adverse change in the financial condition, operations, assets,
prospects or business of the Company and the Subsidiaries, taken as a whole or
event which would have or could reasonably be expected to have, a Material
Adverse Effect.
10D. Title to Properties; Liens. The Company and the Subsidiaries have
good and valid title to or beneficial ownership of all their respective Property
reflected in the most recent financial statements, except for assets acquired or
disposed of in transactions that are or, if entered into prior to the date of
this Agreement, would have been, permitted hereunder and have not had, do not
have, and could not reasonably be expected to have, a Material Adverse Effect.
10E. Litigation; Adverse Facts. There is no governmental investigation
of which the Company, or any Subsidiary has or could reasonably be expected to
have knowledge, and there is no action, suit, proceeding, governmental
arbitration (whether or not purportedly on behalf of the Company or any
Subsidiary) at law or in equity or before or by any federal, state, municipal or
governmental department, court, tribunal, commission, board, bureau, agency or
instrumentality, domestic or foreign, threatened and about which the Company or
any Subsidiary has or could reasonably be expected to have knowledge, or pending
against or affecting the Company or any Subsidiary or any of their respective
Properties which (i) if adversely determined, would have, or reasonably would be
expected to have, a Material Adverse Effect, or (ii) is not routine and does not
10
arise in the ordinary course of business. None of the Company or any Subsidiary
has received any notice of termination of any material contract, lease or other
agreement or suffered any material damage, destruction or loss, (whether or not
covered by insurance) or had any employee strike, work stoppage, slow-down or
lockout or any substantial or non frivolous threat of which the Company or any
Subsidiary has or could reasonably be expected to have knowledge directed to it
of any imminent strike, work stoppage, slowdown or lock-out, any of which remain
pending, that in any case, individually or in the aggregate, would have or could
reasonably be expected to have a Material Adverse Effect.
10F. Payment of Taxes. (a) All tax returns and reports of the Company
or each Subsidiary required to be filed by any of them have been duly and timely
filed; and (b) all taxes, assessments, fees and other governmental charges upon
the Company or each Subsidiary and upon any of their respective Properties,
income and franchises that are due and payable have been paid when due and
payable except as permitted by Section 7C, and there is no actual or proposed
tax assessment against it, about which the Company or any Subsidiary has or
could reasonably be expected to have knowledge, except for any failure of filing
or payment or assessment that, individually or in the aggregate, does not have
or could not reasonably be expected to have a Material Adverse Effect.
11. DEFINITIONS.
11A. Definitions.
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly in control of, controlled by, or under common control
with such Person, whether through power to direct or cause the direction of the
management or policies of such Person, ownership or control of more than 10% of
the voting stock of such Person, or otherwise and any Person who is an officer
or director of such Person; provided, however, that neither any Purchaser nor
any Affiliate of any Purchaser shall be deemed to be an Affiliate of the Company
or any Subsidiary solely by reason of its ownership of the Senior Subordinated
Note or by reason of benefiting from any agreements or covenants in this
Agreement or in any other Credit Document.
"Business Day" means any day excluding (i) Saturday and Sunday, (ii)
any day that is a legal holiday under the laws of the State of Indiana and (iii)
any day on which banking institutions located in Indiana are authorized or
required by law or other governmental action to close.
"Called Principal" means, with respect to the Senior Subordinated Note,
the outstanding principal amount of the Senior Subordinated Note that (i) is to
be prepaid or purchased at the Make- Whole Prepayment Price, or (ii) becomes or
is declared to be immediately due and payable pursuant to Section 9A.
"Capitalized Lease Obligations" means rental obligations under any
lease required to be capitalized in accordance with GAAP, taken at the amount
accounted for as indebtedness (net of interest expense).
11
"Closing" has the meaning specified in Section 4.
"Closing Date" has the meaning specified in Section 4.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor statute.
"Commission " means the United States Securities and Exchange
Commission and any successor Federal agency having similar powers.
"Company" has the meaning specified in the introductory paragraph
hereof.
"Contingent Obligation" as applied to any Person, means any direct or
indirect liability, contingent or otherwise, of that Person with respect to any
Debt, lease, dividend, letter of credit or other obligation of another, if a
purpose or intent of the Person incurring the Contingent Obligation is to
provide assurance to the obligee of such obligation of another that such
obligation of another will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders of such obligation
will be protected (in whole or in part) against loss in respect thereof.
Contingent Obligations shall include, without limitation, (i) the direct or
indirect guaranty, endorsement (other than for collection or deposit in the
ordinary course of business), co-making, discounting with recourse or sale with
recourse by such Person of the obligation of another; and (ii) any liability of
such Person for the obligations of another through any agreement (contingent or
otherwise) (a) to purchase, repurchase or otherwise acquire such obligation or
any security thereof, or to provide funds for the payment or discharge of such
obligation (whether in the form of loans, advances, stock purchases, capital
contributions or otherwise), (b) to maintain the solvency or any balance sheet
item, level of income or financial condition of another, or (c) to make
take-or-pay or similar payments if required regardless of non-performance by any
other party or parties to an agreement, if in the case of any agreement
described under clauses (a), (b) or (c) of this sentence the primary purpose or
intent thereof is as described in the preceding sentence. The amount of any
Contingent Obligation shall be equal to the amount of the obligation (or portion
thereof) so guaranteed or otherwise supported.
"Credit Documents" means this Agreement, the Senior Subordinated Note
and each other instrument or agreement executed and delivered by the Company or
any Subsidiary or Affiliate pursuant to any Credit Document or any transactions
contemplated thereby.
"Debt" means, with respect to any Person, the sum, without duplication,
of (i) all indebtedness of such Person for borrowed money or credit extended
(whether by loan or the issuance and sale of debt securities or otherwise) or in
respect of letters of credit or bankers' acceptances or credit enhancement and
the like or for the deferred purchase price of property or services (except
trade payables currently payable in the ordinary course of business), or which
otherwise should constitute debt on the balance sheet of such person in
accordance with GAAP, (ii) all obligations of such Person under Capitalized
Lease Obligations, (iii) all obligations of such Person to purchase, retire or
redeem any capital stock or any other equity interest, whether or not the
performance of such
12
obligation is fixed or contingent, (iv) all Contingent Obligations of such
Person, and all indebtedness and obligations of such Person or other Persons
that are secured by a Lien on any Property of such Person, whether or not such
Person has assumed liability therefor, and (v) other recourse obligations
related to asset sales to the extent not already reflected in such Person's
balance sheet.
"Default" means any event which, subject only to the lapse of a period
of time expressly set forth or referred to in Section 9A or the giving of a
notice expressly set forth or referred to in Section 9A, or both, would
constitute an Event of Default.
"Default Rate" has the meaning specified in Section 9E.
"Discounted Value" means, with respect to the Called Principal of any
Senior Subordinated Note, the amount obtained by discounting all Remaining
Scheduled Payments with respect to such Called Principal from their respective
scheduled due dates to the Settlement Date with respect to such Called
Principal, in accordance with accepted financial practice and at a discount rate
(applied on a semi-annual basis) equal to the Reinvestment Yield with respect to
such Called Principal.
"Event of Default" means any of the events specified in Section 9A.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and any successor statute.
"Executive Officer" means with respect to any matter, any of the
Chairman of its Board of Directors (if an officer) or Chief Executive Officer,
President, Vice President or Chief Financial Officer of the Company or any
Subsidiary (or equivalent officer).
"Fiscal Quarter" means a fiscal quarter of the Company and the
Subsidiaries.
"Fiscal Year" means a fiscal year of the Company and the Subsidiaries.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession that are applicable to the circumstances as of the date of
determination, applied on a consistent basis.
"Investment" means, as applied to any Person, any direct or indirect
purchase or other acquisition by that Person of, or a beneficial interest in,
stock or other securities or similar interests of any other Person, or any
direct or indirect loan, advance (other than advances to employees for moving
and travel expenses, drawing accounts and similar expenditures in the ordinary
course of business) or capital contribution by that Person to any other Person.
13
"Lien" means any assignment, mortgage, deed of trust, pledge, security
interest, charge, encumbrance, lien, easement or exception of any kind or any
other preferential arrangement of any kind that has the practical effect of
constituting a security interest or lien (including any conditional sale or
other title retention agreement and any agreement to give any security interest
and any lease in the nature thereof) or the filing of or agreement to give any
financing statement under the Uniform Commercial Code of any jurisdiction.
"Make-Whole Prepayment Price" has the meaning specified in Section 6A.
"Material" means material in relation to the business, affairs,
financial condition, assets or properties of the Company and/or the Company and
the Subsidiaries taken as a whole.
"Material Adverse Effect" means a material adverse effect on (i) the
condition (financial or otherwise), business, results of operations, prospects,
liabilities (absolute, accrued, contingent or otherwise), properties or assets
the Company and the Subsidiaries, taken as a whole, or (ii) the rights or
interests of any Purchaser under any Credit Document (including, without
limitation, the ability of any Purchaser to enforce the obligations of the
Company in respect of any Credit Document), or (iii) the Company's ability to
perform its obligations under, or as contemplated by, any Credit Document.
"Officer's Certificate" means a certificate signed in the name of the
Company by an Executive Officer.
"Permitted Liens" means Liens to the extent permitted under Section 8A.
"Person" means and includes natural persons, corporations, limited
partnerships, general partnerships, joint stock companies, joint ventures,
associations, companies, trusts, banks, trust companies, land trusts, business
trusts, unincorporated organizations or other organizations, whether or not
legal entities, and governments and agencies and political subdivisions thereof.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible, including, without
limitation, all interests in real estate and fixtures and all equipment,
inventory and other goods, all accounts, instruments, chattel paper, documents,
money and general intangibles (as such terms are defined in the Uniform
Commercial Code as in effect in all applicable jurisdictions) whether now owned
or hereafter acquired.
"Purchaser" has the meaning specified in the introductory paragraph
hereof.
"Reinvestment Yield" means, with respect to the Called Principal of any
Senior Subordinated Note, the yield to maturity implied by the sum of 0.50% plus
(i) the yields reported, as of 10:00 A.M. (Indianapolis time) on the Business
Day immediately preceding the Settlement Date with respect to such Called
Principal, on the display designated as "Page T 500", on the Telerate Service
(or such other display as may replace Page T 500 on the Telerate Service) for
actively traded U.S. Treasury
14
securities having a maturity equal to (or, if not available, having a maturity
closest to) the Remaining Average Life of such Called Principal as of such
Settlement Date or, if such yields shall not be reported as of such time or the
yields reported as of such time shall not be ascertainable, (ii) the Treasury
Constant Maturity Series yields reported for the latest day for which such
yields shall have been so reported as of the Business Day immediately preceding
the Settlement Date with respect to such Called Principal, in Federal Reserve
Statistical Release H.15(519) (or any comparable successor publication) for
actively traded U.S. Treasury securities having a constant maturity equal to the
Remaining Average Life of such Called Principal as of such Settlement Date. Such
implied yield shall be determined, if necessary, by (a) converting U.S. Treasury
xxxx quotations to bond equivalent yields in accordance with accepted financial
practice and (b) by interpolating linearly between reported yields.
"Remaining Average Life" means, with respect to the Called Principal of
the Senior Subordinated Note, the number of years (calculated to the nearest
one-twelfth year) obtained by dividing (i) such Called Principal into (ii) the
sum of the products obtained by multiplying (a) each Remaining Scheduled Payment
of such Called Principal (but not of interest thereon) by (b) the number of
years (calculated to the nearest one-twelfth year) that will elapse between the
Settlement Date with respect to such Called Principal and the scheduled due date
of such Remaining Scheduled Payment.
"Remaining Scheduled Payments" means, with respect to the Called
Principal of the Senior Subordinated Note, all payments of such Called Principal
and interest thereon that would be due on or after the Settlement Date, to and
including the scheduled due dates thereof, with respect to such Called Principal
if no payment of such Called Principal were made prior to its scheduled due
dates.
"Securities Act" means the Securities Act of 1933, as amended, and any
successor statute.
"Senior Debt" means Debt of the Company, including all interest and
fees accruing thereon or in connection therewith or any renewal, extension,
amendment, supplement or other modification to any of the documentation in
respect thereof, which is incurred pursuant to the terms of that certain Credit
Agreement dated as of November 19, 1997 among the Company, the lenders a party
thereto and NBD Bank, N.A., as Agent.
"Senior Subordinated Note" has the meaning specified in Section 2.
"Settlement Date" means, with respect to the Called Principal of any
Senior Subordinated Note, the date on which such Called Principal (i) is to be
prepaid or purchased at the Make-Whole Prepayment Price, or (ii) becomes or is
declared to be immediately due and payable pursuant to Section 9A, as the
context may require.
"Subsidiary" means any corporation, trust, association, partnership or
other business entity of which more than 50% of the total voting power of shares
of stock or other interests entitled to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled,
15
directly or indirectly, by the Company or one or more of the other Subsidiaries
or a combination thereof.
"Wholly Owned Subsidiary" means a Person of which all of the issued and
outstanding shares of stock (other than directors' qualifying shares as may be
required by law) or similar equity interests shall be owned by the Company
and/or one or more of its Wholly Owned Subsidiaries.
"Yield-Maintenance Premium" means, with respect to any Senior
Subordinated Note, a premium equal to the excess, if any, of the Discounted
Value of the Called Principal of such Senior Subordinated Note over the sum of
such Called Principal plus interest accrued thereon to (including interest due
on) the Settlement Date with respect to such Called Principal. The
Yield-Maintenance Premium shall in no event be less than zero.
11B. Accounting Terms. For purposes of this Agreement, all accounting
terms not otherwise defined herein shall have the meanings assigned to them in
conformity with GAAP. Financial statements and other information required to be
delivered by the Company pursuant to Section 7 shall be prepared in conformity
with GAAP as in effect at the time of such preparation.
12. JUDICIAL PROCEEDINGS.
12A. Consent to Jurisdiction. The Company hereby irrevocably submits to
the non-exclusive jurisdiction of any Indiana State or Federal court sitting in
the City of Indianapolis over any suit, action or proceeding arising out of or
relating to this Agreement, the Senior Subordinated Note, the other Credit
Documents or the transactions contemplated hereby or thereby. To the fullest
extent they may effectively do so under applicable law, the Company irrevocably
waives and agrees not to assert, by way of motion, as a defense or otherwise,
any claim that it is not subject to the jurisdiction of any such court, any
objection that it may now or hereafter have to the laying of the venue of any
such suit, action or proceeding brought in any such court and any claim that any
such suit, action or proceeding brought in any such court has been brought in an
inconvenient forum.
12B. Enforcement of Judgments. The Company agrees, to the fullest
extent it may effectively do so under applicable law, that a judgment in any
suit, action or proceeding of the nature referred to in Section 12A brought in
any such court shall be conclusive and binding upon the Company subject to
rights of appeal, as the case may be, and may be enforced in the courts of the
United States of America or the State of Indiana (or any other courts to the
jurisdiction of which the Company is or may be subject) by a suit upon such
judgment.
12C. Waiver of Jury Trial. THE COMPANY HEREBY WAIVES ITS RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING UNDER OR OUT OF
THIS AGREEMENT, THE SENIOR SUBORDINATED NOTE, ANY OTHER CREDIT DOCUMENT OR ANY
ISSUES RELATING HERETO, THERETO OR TO THE SUBJECT MATTER OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY. The scope of this waiver is intended to be
all-encompassing of any and all disputes that may be filed
16
in any court and that relate to the subject matter of the transactions
contemplated hereby, including without limitation, contract claims, tort claims,
breach of duty claims, and all other common law and statutory claims. The
Company, each Purchaser and each other Purchaser acknowledges that this waiver
is a material inducement to enter into a business relationship, that each has
already relied on the waiver in entering into or accepting the benefits of this
Agreement and that each will continue to rely on the waiver in their related
future dealings. The Company further warrants and represents that it has
reviewed this waiver with its legal counsel, and that it knowingly and
voluntarily waives its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR TO ANY OTHER
DOCUMENTS OR AGREEMENTS RELATING TO THIS AGREEMENT, THE SENIOR SUBORDINATED NOTE
OR THE OTHER CREDIT DOCUMENTS. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE
FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
12D. No Limitation on Service or Suit. Nothing in this Section 12 shall
affect the right of the Purchaser or the Purchaser to serve process in any
manner permitted by law, or limit any right that the Purchaser or the Purchaser
may have to bring proceedings against the Company in the courts of any
jurisdiction or to enforce in any lawful manner a judgment obtained in one
jurisdiction in any other jurisdiction.
13. MISCELLANEOUS.
13A. Payments. The Company agrees that, so long as the Senior
Subordinated Note remain outstanding, it will make all payments of principal of,
premium, if any, and interest on, the Senior Subordinated Note in accordance
with the terms of this Agreement.
13B. Amendments; Waivers. This Agreement may not be changed orally, but
(subject to the provisions of this Section 13B) only by an agreement in writing
signed by the party against whom enforcement of any waiver, change, modification
or discharge is sought. Any such waiver shall be effective only in the specific
instance and for the specific purpose for which it was given. No course of
dealing between the Company and the Purchaser and no failure to exercise or
delay in exercising any rights or remedies hereunder or under the Senior
Subordinated Note or any other Credit Document shall operate as a waiver of any
rights or remedies of any Purchaser, and no single or partial exercise by any
Purchaser of any right or remedy under this Agreement or any other Credit
Document shall preclude any other or further exercise thereof or the exercise of
any other right or remedy.
13C. Survival of Representations and Warranties; Entire Agreement. All
representations and warranties contained herein or made in writing by or on
behalf of the Company in connection herewith shall survive the execution and
delivery of this Agreement and the Senior Subordinated Note. Subject to the
preceding sentence, this Agreement, the Senior Subordinated Note and the other
17
Credit Documents embody the entire agreement and understanding between the
parties hereto and supersede all prior agreements and understandings, if any,
relating to the subject matter hereof. Without limiting any provisions hereof,
the Company agrees that it shall continue to perform and comply with its
covenants, obligations and duties contained herein until all of the Senior
Subordinated Note are paid in full and all amounts payable hereunder are paid in
full.
13D. Successors and Assigns. All covenants and agreements in this
Agreement and each other Credit Document by or on behalf of any of the parties
hereto shall bind and inure to the benefit of the respective successors and
assigns of the parties hereto whether so expressed or not; provided, however,
that the Company may not transfer or assign any of its rights or obligations
under this Agreement or any other Credit Document without the prior written
consent of all Purchaser.
13E. Notices. All communications provided for hereunder shall be in
writing and sent by telecopier, certified or registered first class mail or
nationwide overnight delivery service (with charges prepaid) and (i) if to the
Purchaser, addressed to it at 00 Xxxxxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxx 00000,
Attention: Xxxxx X. Xxxx, Chairman, or to such other address as such Purchaser
may have designated to the Company in writing, and (ii) if to the Company,
addressed to it at 0000 00xx Xxxxxx, X.X., Xxxxxxxx, Xxxxxxxx 00000 (telecopier
number: (000) 000-0000) Attention: Xxxxxx X. Xxxxx, President, or to such other
address for purposes hereof as the Company may have designated in writing to the
Purchaser (such notice being effective on receipt).
13F. Descriptive Headings. Descriptive headings of sections of this
Agreement are for convenience of reference only and do not constitute a part of
this Agreement.
13G. Severability. In case any provision in or obligation under this
Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
13H. Governing Law. THIS AGREEMENT AND THE SENIOR SUBORDINATED NOTE
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE
PARTIES SHALL BE GOVERNED BY, THE INTERNAL LAWS OF THE STATE OF INDIANA, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
18
IN WITNESS WHEREOF, the parties hereto have caused this Subordinated
Note Agreement to be duly executed and delivered by their respective duly
authorized officers.
Execution Date: November 19, 1997
FINISHMASTER, INC.,
an Indiana corporation
By: /s/ Xxxxx X. Xxxxxxx
----------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Vice President, Finance
19
EXHIBIT A
[FORM OF SENIOR SUBORDINATED NOTE]
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND MAY NOT BE SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION UNDER SUCH ACT
OR AN EXEMPTION THEREFROM.
THE OBLIGATIONS UNDER THIS NOTE ARE SUBORDINATED TO CERTAIN SENIOR INDEBTEDNESS
TO THE EXTENT AND ON THE TERMS SET FORTH IN THAT CERTAIN SUBORDINATION AGREEMENT
DATED AS OF NOVEMBER __, 1997, BY AND AMONG LDI, FINISHMASTER, AND THE NBD BANK,
N.A., AS AGENT, AS SUCH AGREEMENT IS FROM TIME TO TIME AMENDED.
FINISHMASTER, INC.
_____% Senior Subordinated Note
Due _________, 200__
No. [___] ________, 1997
$[----------]
FinishMaster, Inc., an Indiana corporation (the "Company"), for value
received, hereby promises to pay to
LDI, Ltd., an Indiana limited partnership
or registered assigns
on the ____ day of _______, 200__
the principal amount of
[INSERT PRINCIPAL AMOUNT IN WORDS] DOLLARS (U.S. $__________)
and to pay interest (computed on the basis of a 360-day year of twelve 30-day
months) on the principal amount from time to time remaining unpaid hereon at the
rate of ______% per annum from the date hereof until maturity. Interest shall be
payable, to the extent accrued and unpaid, quarterly in arrears on the thirtieth
day of each March, June, September and December in each year (with the first
such payment being due on [_______], 1997) and at maturity (whether on the date
stated, upon acceleration, pursuant to a permitted demand, upon commencement of
bankruptcy or insolvency proceedings or otherwise and upon any optional
prepayment in lieu of the amount prepaid). The
1
Company agrees to pay interest on any principal and premium not paid when due
(whether at maturity, by optional or mandatory prepayment, upon acceleration,
pursuant to a permitted demand, upon commencement of bankruptcy or insolvency
proceedings or otherwise) and on any overdue installment of interest, to the
fullest extent permitted by law, at the rate which is 2% above the interest rate
which is otherwise applicable, payable on demand. Both the principal hereof and
interest hereon and any Yield-Maintenance Premium (as defined in the
Subordinated Note Agreement referred to below) are payable in lawful money of
the United States of America and in same day funds in accordance with the
instructions with respect to the Purchaser of this Note set forth on the
relevant Purchaser Schedule to that certain Subordinated Note Agreement dated as
of November ___, 1997 (as amended, supplemented or otherwise modified from time
to time, the "Subordinated Note Agreement"), entered into by and among the
Company and the original Purchaser listed on the signature pages thereof.
This Note was issued pursuant to the terms and provisions of the
Subordinated Note Agreement. This Note and the holder hereof are subject to
certain obligations pursuant to, and is entitled to all the rights and benefits
provided for or referred to in, the Subordinated Note Agreement. Reference is
hereby made to the Subordinated Note Agreement for a statement of such
obligations, rights and benefits and other terms applicable hereto (including
provisions relating to the enforcement hereof), by each of which the holder and
any transferee of this Note shall be benefited and bound.
This Note may be declared due prior to their expressed maturity date,
all in the events, on the terms and in the manner provided in the Subordinated
Note Agreement.
The Company will make the required payments of principal at maturity
and in the amounts specified in the Subordinated Note Agreement. This Note is
not subject to prepayment or redemption at the option of the Company prior to
its expressed maturity date except on the terms and conditions and in the
amounts and with the premium, if any, set forth in the Subordinated Note
Agreement.
This Note is registered on the books of the Company and is transferable
only by surrender hereof for registration of transfer at the principal office of
the Company duly endorsed or accompanied by a written instrument of transfer
duly executed by the holder of this Note or such holder's attorney duly
authorized in writing. Payment of or on account of principal, Yield Maintenance
Premium, if any, and interest on this Note shall be made only to or upon the
order in writing of the registered holder.
2
THIS NOTE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE
RIGHTS OF THE COMPANY AND ANY PURCHASER HEREOF SHALL BE GOVERNED BY, THE
INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW.
FINISHMASTER, INC.
By:
------------------------------------------
Name:
Title:
3
