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EXHIBIT 10.3
FORM OF SERIES II PROMISSORY NOTE
$__________ September __, 1994
Dallas, Texas
FOR VALUE RECEIVED, the undersigned, _______________ [MANAGER]
(the "Maker"), hereby unconditionally promises to pay to the order of CHIEF
AUTO PARTS INC., or its successors and assigns (the "Payee"), on or before
______________, 2002 [eighth anniversary of the Closing Date] at the address of
the Payee set forth herein for notices and other communications, the aggregate
principal amount of ______________________ ($_____________) in lawful money of
the United States of America and in immediately available funds. This Series
II Note shall bear interest, payable in like funds at such address, on the
unpaid principal amount hereof from the date hereof until the principal amount
hereof is paid in full at the rate of 7.05% per annum (calculated on the basis
of the actual number of days elapsed in a year of 365 days). All or part of
such interest on the unpaid principal balance shall be payable annually on each
anniversary of this Series II Note as hereinafter set forth. Accrued and
unpaid interest shall be payable upon the maturity of this Series II Note with
the payment of principal.
This Series II Note is secured by that certain Stock Pledge
Agreement, dated as of even date herewith, between the Maker and the Payee (the
"Stock Pledge Agreement"), pursuant to which the Maker grants the Payee a
security interest in the shares of common stock of the Payee purchased by Maker
on the date hereof (the "Pledged Shares") and any dividends or distributions
thereon.
Notwithstanding any other provision to the contrary contained
herein, the Payee's sole recourse against the Maker for the payment of
principal, interest, fees, costs and other expenses in connection with this
Series II Note shall be limited to the Payee's security interest in the Pledged
Shares. The Payee shall at all times have the right to proceed against any
portion of the security held herefor in such order and in such manner as the
Payee may select, without waiving any rights with respect to any other
security. The Payee shall not seek a personal judgment against the Maker for
payment under this Series II Note and no recourse shall be had for the payment
of this Series II Note against the Maker or his or her successors or any of the
Maker's or his or her successor's properties or assets (except as to the
aforesaid security interest in the Pledged Shares), all such liability being,
by the acceptance hereof and as part of the consideration for the receipt of
the security interests
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provided for pursuant to the Stock Pledge Agreement, expressly waived and
released by the Payee and any of its assignees.
Within ten (10) business days of the date of payment of any
cash dividends payable or otherwise distributed in respect of the Pledged
Shares, to the extent not used to prepay the Maker's Series I Note, the Maker
shall be required to make a mandatory prepayment on this Series II Note in an
amount equal to one hundred percent (100%) of such cash dividends less any
potential tax liabilities, computed at the then applicable maximum combined
federal and state rates, which the Maker may incur in connection with the
receipt of such dividends.
The Maker shall have the right at any time and from time to
time on any business day to prepay the principal and interest due on this
Series II Note, in whole or in part, without penalty or premium, upon at least
three business days' prior written notice to the holder hereof, such notice to
specify the prepayment date and the amount to be prepaid. In the event the
Maker decides not to so prepay this Series II Note in accordance with any such
notice delivered to the holder hereof, the Maker shall so notify the holder
hereof not less than two business days before such prepayment would otherwise
have been made.
All mandatory and optional prepayments made by the Maker shall
be applied first to the outstanding interest accrued on this Series II Note and
then to the reduction of the outstanding principal.
Upon each anniversary of the date of issuance of this Series
II Note, the Maker shall be required to pay to the Payee an amount equal to the
excess, if any, of the amount of interest accrued on this Series II Note during
the preceding year over the amount paid by the Maker to the Payee during the
preceding year.
If the Maker elects to sell any of the Pledged Shares as
permitted under the Stock Pledge Agreement, then the Maker shall be required to
apply the proceeds of such sale as a prepayment of principal and interest due
on this Series II Note within three (3) business days of receipt of such
proceeds.
In case of the happening of any of the following events
("Events of Default"):
(a) default shall be made in the payment of the principal
of or interest on this Series II Note when and as the same shall
become due and payable, whether at the due date thereof or at a date
fixed
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for prepayment thereof or otherwise which default shall continue
unremedied for five (5) business days after written notice thereof
by the holder hereof;
(b) a breach of any covenant contained in this Series II
Note, other than the covenant to pay the principal of and interest on
this Series II Note, which breach shall continue unremedied for thirty
days after written notice to the Maker by the holder hereof;
(c) the Maker shall (i) voluntarily commence any
proceeding or file any petition seeking relief under Title 11 of the
United States Code or any other Federal or state bankruptcy,
insolvency, liquidation or similar law, (ii) consent to the
institution of, or fail to controvert in a timely and appropriate
manner, any such proceeding or the filing of any such petition, (iii)
apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator or similar official for him or for a
substantial part of his property, (iv) file an answer admitting the
material allegations of a petition filed against him in any such
proceeding, (v) make a general assignment for the benefit of creditors
or (vi) become unable, admit in writing his inability or fail
generally to pay his debts as they become due;
(d) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent
jurisdiction seeking (i) relief in respect of the Maker, or of a
substantial part of the property of the Maker, under Title 11 of the
United States Code or any other Federal or state bankruptcy,
insolvency, receivership or similar law or (ii) the appointment of a
receiver, trustee, custodian, sequestrator or similar official for the
Maker or for a substantial part of the property of the Maker; and such
proceeding or petition shall continue undismissed for 60 days or an
order or decree approving or ordering any of the foregoing shall
continue unstayed and in effect for 60 days;
(e) an Event of Default (as defined in the Stock Pledge
Agreement) shall have occurred under the Stock Pledge Agreement;
then, in any such event (other than an event described in paragraph (c) or (d)
above), the holder hereof may declare the principal amount of this Series II
Note then outstanding to be forthwith due and payable, whereupon the principal
hereof,
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together with accrued and unpaid interest thereon, shall become forthwith due
and payable both as to principal and interest, without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived by the Maker (to the extent permitted by law), anything contained herein
to the contrary notwithstanding; and, in any event described in paragraph (c)
or (d) above, the principal amount of this Series II Note, together with
accrued and unpaid interest thereon, shall automatically become due and payable
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived by the Maker.
The nonexercise by the Payee of any of its rights hereunder or
under the Stock Pledge Agreement in any particular instance shall not
constitute a waiver thereof in that or any subsequent instance. No delay or
omission on the part of the Payee in exercising any right hereunder or under
the Stock Pledge Agreement or other agreement shall operate as a waiver of such
right or of any other right under this Series II Note.
Maker hereby certifies and declares that all acts, conditions
and things required to be done and performed and to have happened precedent to
the creation and issuance of this Series II Note, and to constitute this Series
II Note the legal, valid and binding obligation of Maker, enforceable in
accordance with the terms hereof, have been done and performed and happened in
due and strict compliance with all applicable laws.
All payments of the principal hereof and interest hereon and
the respective dates thereof shall be endorsed by the holder hereof on the
schedule attached hereto and made a part hereof, or on a continuation thereof
which shall be attached hereto and made a part hereof; provided, however, that
the failure of the holder hereof to make such a notation or any error in such a
notation shall not affect the obligations of the Maker under this Series II
Note.
This Series II Note may be assigned, pledged, hypothecated or
otherwise transferred by the holder hereof.
The Maker hereby expressly waives presentment for payment or
for acceptance, demand, protest, notice of protest, notice of dishonor or
acceptance and any other notice of any kind.
All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered, telexed or telecopied to, or, if mailed, when received
by, the
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other party at the following addresses (or at such other address as shall be
given in writing by any party to the others):
If to the Maker: ---------------------
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If to the Payee: Chief Auto Parts Inc.
00000 Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxx, Esq.
Telephone: 000-000-0000
with a copy to: Xxxxxx, Xxxx & Xxxxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Telephone: 000-000-0000
If any provision hereof is invalid or unenforceable in any
jurisdiction, the other provisions hereof shall remain in full force and effect
in such jurisdiction and shall be liberally construed in favor of the Payee.
This Series II Note may not be changed orally.
THIS SERIES II NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS, WITHOUT GIVING
EFFECT TO CONFLICT OF LAWS.
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[MANAGER]
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SCHEDULE I
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Amount of Amount of Unpaid
Principal Interest Principal Notation
Date Prepaid Paid Amount Made By
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