STOCK PURCHASE NOTE
$1,200,000 December 13, 1995
FOR VALUE RECEIVED, the undersigned, Discus Acquisition Corporation
("Buyer"), a Minnesota corporation, hereby promises to pay to the order of
Bridgewater Resources Corp. ("Seller"), a Texas corporation, at the address
provided under Section 8 in lawful money of the United States in accordance with
the terms hereof the sum of One Million Two Hundred Thousand Dollars
($1,200,000) plus interest thereon at the rate provided herein from the date
hereof until paid in full.
1. Purchase Agreement. This Note is given pursuant to that certain
Stock Purchase Agreement dated November 22, 1995 (as amended, the "Purchase
Agreement") by and between Buyer and Seller for the sale of all of the
outstanding capital stock of Peerless Chain Company (the "Company"), a Minnesota
corporation, by Seller to Buyer, and as partial payment of the Purchase Price
(as defined in the Purchase Agreement). Capitalized terms not otherwise defined
herein will have the meanings set forth in the Purchase Agreement. To the extent
the terms of this Note as executed vary from Exhibit G to the Purchase Agreement
or the description hereof contained in the Purchase Agreement, the terms hereof
govern.
2. Definitions. Unless the context otherwise requires, the following
terms have the following meanings:
"Affiliate" means any Person (i) which directly or indirectly
through one or more intermediaries controls, or is controlled by, or is under
common control with, Buyer, (ii) which beneficially owns or holds five percent
(5%) or more of any class of the capital stock of Buyer or (iii) five percent
(5%) or more of the capital stock (or in the case of a Person which is not a
corporation, five percent (5%) or more of the equity interest) of which is
beneficially owned or held by Buyer or a Subsidiary. The term "control" means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of capital stock, by contract or otherwise.
"CIT" means The CIT Group/Business Credit, Inc.
"Closing Notes" means promissory notes issued by Xxxxx on the
date of this Agreement to the order of Xxxxx Xxxxx and Pyramid Partners c/o
Perkins Capital Management in the aggregate principal amount of Two Hundred
Twenty-Five Thousand Dollars ($225,000).
"Guaranty" means any obligations (other than endorsements in the
ordinary course of business of negotiable instruments for deposit or collection)
of Buyer or the Company guarantying in any manner, whether directly or
indirectly, any obligation, direct or indirect, absolute, contingent or
inchoate, whether existing now or in the future, of any other Person.
"Indebtedness" means any and all amounts owing or which may
become owing by Buyer pursuant to the terms of this Note.
"Permitted Investments" means:
(a) Investments in commercial paper maturing in two hundred
seventy (270) days or less from the date of issuance which, at the time of
acquisition, is accorded the highest rating by Standard & Poor's Corporation or
Moodys Investors Services, Inc. (or other nationally recognized credit rating
agency of similar standing if neither of such corporations is then in the
business of rating commercial paper);
(b) Investments in direct obligations of the United States
of America or any agency thereof maturing within one (1) year from the date of
acquisition thereof;
(c) Investments in bank accounts or certificates of deposit
maturing within one (1) year from the date of origin and issued by a bank or
trust company having capital, surplus and undivided profits aggregating at least
One Hundred Million Dollars ($100,000,000); and
(d) Investments in money market preferred stocks for so
long as the same are accorded the highest rating by Standard & Poor's
Corporation or Moodys Investors Service, Inc. (or other nationally recognized
credit rating agency of similar standing if neither of such corporations is then
in the business of rating such preferred stocks).
"Person" means an individual, partnership, corporation, trust or
unincorporated organization, and a governmental agency or political subdivision.
"Pledged Stock" is as defined in Section 6.1.
"Redemption Note" means the Redemption Note dated December 13,
1995 issued by the Company to the order of Seller pursuant to the Purchase
Agreement.
"Senior Credit Facility" means the credit facilities with CIT
under that certain Financing Agreement dated December 13, 1995, or any
replacement credit facility.
"Senior Obligations" means the Senior Credit Facility and the
Winona Lease.
"Senior Pledge" means the security interest in the Pledged Stock
granted pursuant to that certain Stock Pledge Agreement by and between Buyer and
CIT dated December 13, 1995, and any security interest in the Pledged Stock
granted to the holder of any replacement Senior Credit Facility pursuant to
which such holder agrees to deliver the stock certificates representing the
Collateral, upon satisfaction of such Senior Credit Facility, to the holder of
this Note or the holder of a succeeding replacement Senior Credit Facility
taking a security interest in the Pledged Stock including such terms.
"Spell Employment Agreement" means the Employment Agreement dated
December 13, 1995 by and between the Company and Xxxxxxx Xxxxx.
"Subordination Agreement" means the Subordination Agreement dated
December 13, 1995 by and among CIT, Seller, Buyer, the Company and Peerless
Chain of Iowa, Inc.
"Subsidiary" means any corporation of which more than fifty
percent (50%) (by number of votes) of the voting stock is owned by Buyer and/or
one or more corporations which are themselves Subsidiaries of Buyer.
"Winona Lease" means that certain Lease Agreement by and between
PRC Corp. (formerly Peerless Chain Company) and Corporate Property Associates 6
dated June 18, 1986, as assigned to the Company by Assignment and Assumption
Agreement dated September 26, 1989, as amended by Lease Amendment dated
September 26, 1989, Letter Amendment dated August 2, 1994 and Amendment to Lease
dated December 13, 1995.
"Winona Lease Obligations" means the obligations of the Company
under the Winona Lease.
3. Payment Terms.
3.1 Interest. Interest will accrue on the unpaid principal of
this Note at the annual rate of twenty percent (20%) through March 31, 1996,
eight percent (8%) from April 1, 1996 through August 31, 1996, and thirteen
percent (13%), compounded annually, from September 1,1996 until this Note is
paid in full.
3.2 Principal. The principal of this Note, together with all
accrued and unpaid interest not then otherwise due, will be due March 31, 1996.
3.3 Prepayments; Application of Payments. This Note may be
prepaid, in whole or in part, at any time and from time to time without premium
or penalty. Payments on this Note will be applied first to accrued interest due
and unpaid, next (to the extent such payment is a prepayment) to accrued
interest unpaid and not yet due, next to costs and expenses accrued hereunder,
with the balance to principal.
4. Buyer Covenants. From the date hereof and continuing so long as any
amount remains unpaid on this Note:
4.1 Corporate Existence, etc. Buyer will, and will cause the
Company to, preserve and keep in force and effect its corporate existence and
all licenses and permits necessary to the proper conduct of the business of
Buyer and the Company taken as a whole.
4.2 Restricted Buyer Issuances and Distributions. Buyer will not:
(a) issue any shares of Buyer's capital stock of any class
or any warrants, rights or options to purchase any shares of Buyer's capital
stock, whether by reason of stock split or combination or reclassification,
dividend, exchange, new consideration or otherwise, except (i) issuances of
shares of capital stock of Buyer the proceeds of which are applied in payment of
the Indebtedness, (ii) issuances of options for up to six hundred sixteen
thousand five hundred (616,500) shares of the common stock of Buyer under
Buyer's 1994 Stock Option Plan (net of any shares the option for which is
terminated in connection with any such issuance) and issuances of shares of such
common stock upon exercise thereof or of any options scheduled on Exhibit I to
the Purchase Agreement, (iii) consummation of issuance of shares payment for
which has been received by Buyer but not yet cleared as of the date of this
Note, and (iv) issuances of shares of common stock of Buyer the proceeds of
which are applied in payment of the Closing Notes.
(b) declare or pay any dividends or make any other payment
or distribution, either in cash or property, on or in purchase, redemption or
retirement of any shares of Buyer's capital stock of any class or any warrants,
rights or options to acquire any such shares by purchase, conversion or
otherwise, except, provided that when made, no Default exists hereunder, amounts
due under redemption provisions under Repurchase Agreements entered into on the
Closing Date with management personnel of the Company with respect to an
aggregate of not more than four hundred twenty-five thousand four hundred
fifty-one (425,451) shares of the common stock of Buyer.
4.3 Restricted Company Issuances and Distributions. Buyer will
cause the Company to not:
(a) issue any shares of the Company's capital stock of any
class or any warrants, rights or options to purchase any shares of the Company's
capital stock, whether by reason of stock split or combination or
reclassification, dividend, exchange, new consideration or otherwise;
(b) declare or pay any dividends or make any other payment
or distribution, either in cash or property, on or in purchase, redemption or
retirement of any shares of the Company's capital stock, or make any other
payment or distribution, either directly or indirectly, in respect of the
Company's capital stock or otherwise, including without limitation for goods or
services, to Buyer or to any Affiliate of Buyer, except (i) payments equal to
state and federal income tax liability on Buyer's consolidated tax returns
resulting from the Company's operations, made on the due date of the applicable
return, (ii) payments when and as due under the Spell Employment Agreement,
(iii) provided that when made, no Default exists hereunder, payments equal to
amounts due under redemption provisions under Repurchase Agreements entered into
on the Closing Date with management personnel of the Company with respect to an
aggregate of not more than four hundred twenty-five thousand four hundred
fifty-one (425,451) shares of the common stock of Buyer, (iv) payments applied
by Buyer in payment of the Indebtedness, and (v) payments not to exceed One
Hundred EightyEight Thousand Dollars ($188,000) annually to fund normal
operating expenses of Buyer.
4.4 Mergers, Consolidations and Sales of Assets. Buyer will cause
the Company to not (i) consolidate with or be a party to a merger with any other
corporation, or (ii) sell, lease or otherwise dispose of all or any substantial
part of its assets.
4.5 Guaranties. Buyer will not, and will cause the Company to
not, become or be liable in respect of any Guaranty except Guaranties entered
into in the ordinary course of the Business, Buyer's Guaranty of the Redemption
Note, Xxxxx's Guaranty of any Senior Obligations and Guaranties of Buyer of
loans to management personnel of the Company for the purchase of an aggregate of
not more than four hundred twenty-five thousand four hundred fifty-one (425,451)
shares of the common stock of Buyer.
4.6 Transactions with Affiliates. Buyer will, and will cause the
Company to, not enter into or be a party to any transaction or arrangement with
any Affiliate (including without limitation the purchase from, sale to or
exchange of property with, or the rendering of any service by or for, any such
Affiliate), except pursuant to the reasonable requirements of such party's
business and upon fair and reasonable terms no less favorable to such party than
would obtain in a comparable arm's-length transaction with a person other than
an Affiliate. The Spell Employment Agreement and the Closing Notes are deemed to
meet the requirements of this Section 4.6.
4.7 Reports and Rights of Inspection. Buyer will, and will cause
the Company to, keep proper books of record and account in which full and
correct entries will be made of all dealings or transactions of or in relation
to the business and affairs of Buyer or the Company, in accordance with
generally accepted accounting principles consistently applied (except for
changes in application disclosed in the financial statements furnished to the
holder hereof pursuant to this Section 4.7 and concurred in by the independent
public accountants referred to in (b) hereof), and will furnish to the holder
hereof:
(a) As soon as available and in any event within forty-five
(45) days after the end of each quarterly fiscal period of each fiscal year
consolidated and consolidating balance sheets of Buyer and the Company as of the
close of such period, and consolidated and consolidating statements of income
and retained earnings and statements of cash flows of Buyer and the Company for
the quarterly fiscal period then ending and for the portion of the fiscal year
ending with such period in each case setting forth in comparative form the
figures for the corresponding period of the preceding fiscal year, all in
reasonable detail and certified by an authorized financial officer of Buyer to
the effect that (except for the exclusion in unaudited quarterly financial
statements of certain footnote and other information normally presented with
annual audited financial statements, and subject to changes resulting from
year-end adjustments) such financial statements have been prepared in accordance
with generally accepted accounting principles consistently applied (except for
changes in application in which the accountants referred to in clause (b) hereof
concur) and present fairly the financial condition of Buyer and the Company.
(b) As soon as available and in any event within ninety
(90) days after the close of each fiscal year of Buyer consolidated and
consolidating balance sheets of Buyer and the Company as of the close of such
fiscal year, and consolidated and consolidating statements of income and
retained earnings and statements of cash flows of Buyer and the Company for such
fiscal year, in each case setting forth in comparative form the figures for the
preceding fiscal year, all in reasonable detail and accompanied by an opinion
thereon of a firm of independent public accountants of recognized national
standing selected by Buyer to the effect that the financial statements have been
prepared in accordance with generally accepted accounting principles
consistently applied (except for changes in application in which such
accountants concur and as are noted therein) and present fairly the financial
condition of Buyer and the Company and that the examination of such accountants
in connection with such financial statements has been made in accordance with
generally accepted auditing standards and, accordingly, includes such tests of
the accounting records and such other auditing procedures as were considered
necessary in the circumstances.
(c) Promptly upon receipt thereof, each interim or special
audit made by independent accountants of the books of Buyer or the Company.
(d) Promptly upon their becoming available, each financial
statement, report, notice or proxy statement sent by Buyer to stockholders
generally, and each report and any registration statement or prospectus filed by
Buyer with Nasdaq or any securities exchange or the Securities Exchange
Commission or any successor agency, and copies of any orders in any proceedings
to which Buyer or the Company is a party issued by any governmental agency,
federal or state, having jurisdiction over Buyer or the Company.
(e) Within the periods provided in paragraphs (a) and (b)
above, a certificate of an authorized financial officer of Buyer stating that
such officer has reviewed the provisions of this Note and setting forth, to the
best of such officer's knowledge, whether there existed as of the date of such
financial statements and whether there exists on the date of the certificate or
existed at any time during the period covered by such financial statements any
Default or any condition which but for the passage of time or the giving of
notice or both would constitute a Default and, if any such condition or event
existed during such period or exists on the date of the certificate, specifying
the nature and period of existence thereof and the action Buyer has taken or is
taking and proposes to take with respect thereto;
(f) The annual plans and operating projections Buyer and
the Company furnish to CIT when and as so furnished.
5. Subordination. Notwithstanding anything to the contrary contained
herein, this Note is in all respects subject to the terms and provisions of the
Subordination Agreement. No right of any present or future holder of the Senior
Credit Facility to enforce subordination as herein provided will at any time or
in any way be prejudiced or impaired by any failure to act on the part of Buyer
or the Company, or by any noncompliance by Buyer or the Company with the terms,
provisions and covenants of this Note, regardless of any knowledge thereof that
any such holders of the Senior Credit Facility may have or with which they may
be otherwise charged. The provisions of this Section 5 are solely for the
purpose of defining the relative rights of the holders of the Senior Credit
Facility on the one hand, and the holder hereof on the other hand, and nothing
in this Section 5 will impair, as between Buyer or the Company and the holder
hereof as applicable, the obligations of Buyer and the Company to pay to the
holder hereof Indebtedness in accordance with the remaining terms of this Note,
nor will anything herein prevent the holder hereof from exercising all remedies
otherwise permitted by applicable law or hereunder upon any Default, subject to
the rights, if any, of the holders of the Senior Credit Facility as herein
provided. Without limiting the foregoing, no suspension of any payment of
Indebtedness pursuant to the provisions of this Section 5 will suspend or defer
the due date of such payment as determined by the remaining provisions of this
Note.
6. Security Agreement.
6.1 Security Interest. In order to secure the Indebtedness, Buyer
hereby grants to the holder hereof a security interest in all shares of stock
owned by Buyer in the Company (and any and all additions thereto, substitutions
therefor, and proceeds thereof) (the "Pledged Stock").
6.2 Warranties and Obligations of Buyer. Buyer hereby warrants
and covenants to the holder hereof:
(a) The Pledged Stock represents 100% of the issued and
outstanding shares of capital stock of the Company.
(b) Buyer has and will maintain during the term of this
Note sole title to and beneficial ownership of the Pledged Stock, free of all
liens, charges, security interests and encumbrances (other than the security
interest created hereby and under the Senior Pledge), and has full power and
authority to subject the Pledged Stock to the security interest created hereby.
(c) Buyer will hereafter from time to time execute and
deliver such financing statements, assignments separate from certificates and
other instruments or documents, deliver the certificates representing the
Pledged Stock to the holder hereof upon termination of the Senior Pledge and
perform such other acts as the holder hereof may reasonably request to
establish, protect and maintain a perfected security interest in the Pledged
Stock and an ability to effectively enforce its remedies hereunder with respect
to the Pledged Stock. Xxxxx will at all times cause all certificates
representing the Pledged Stock to include a legend referencing this Note and the
security interest of the holder hereof provided hereunder.
6.3 Priority. The holder of this Note by acceptance hereof agrees
that the security interest granted hereunder in the Pledged Stock is subordinate
and junior in interest and priority to the Senior Pledge.
6.4 Nonimpairment. The holder hereof may from time to time,
without notice to Buyer, and without impairing or affecting the security
interest created hereby: (a) acquire a security interest in any property in
addition to the Pledged Stock, or release any such interest so acquired or
release any security interest in any of the Pledged Stock, or permit any
substitution or exchange for such property or any part thereof; (b) acquire the
primary or secondary liability of any party or parties with respect to all or
any of the Indebtedness, or release, modify, or compromise the same or any part
thereof; (c) modify, extend or renew for any period any of the Indebtedness; and
(d) resort to the Pledged Stock for payment of the Indebtedness whether or not
the holder hereof has resorted to any other collateral or proceeding against any
party primarily or secondarily liable on the Indebtedness.
6.5 Voting Rights. Buyer hereby grants to the holder hereof an
irrevocable proxy, coupled with an interest, to vote any or all of the Pledged
Stock, which proxy may be exercised by the holder hereof only at such time as a
Default in the payment of principal under this Note is continuing and no Senior
Pledge is in effect. Such proxy will remain in effect until this Note is
satisfied in full. Except for those instances where the holder hereof exercises
such proxy, Buyer will be entitled to exercise the voting power with respect to
the Pledged Stock consistent with the terms or purposes of this Note.
6.6 Remedies. In the event a Default hereunder has occurred and
is continuing, the holder hereof will have, in addition to any other rights and
remedies a secured party can assert under the Minnesota Uniform Commercial Code
and to the extent not inconsistent with nonwaivable provisions thereof, the
following rights and remedies, without having to give notice except as is
hereinafter specifically provided:
(a) The holder hereof may sell the Pledged Stock, or any
part thereof, at a public or private sale, following the notice hereinafter
provided, for cash, upon credit, or for future delivery at such price or prices
as the holder hereof deems satisfactory. The holder hereof, or any parties
related to or affiliated with the holder hereof, may purchase any or all of the
Pledged Stock sold at a public sale. The holder hereof is authorized at any
sale, if the holder hereof deems it advisable to do so, to restrict the
prospective bidders or purchasers to persons who will represent and agree that
they are purchasing for their own account for investment, and not with a view to
the distribution or sale of any of the Pledged Stock. Upon any such sale, the
holder hereof will have the right to deliver, assign, and transfer to the
purchaser thereof the Pledged Stock so sold. Each purchaser at any such sale
will hold the property sold absolutely free from any claim or right of Buyer of
whatsoever kind, including any equity or right of redemption of Buyer which
Buyer has under any rule of law or statute now existing or hereafter adopted;
and as to such purchaser, Buyer hereby specifically waives all such rights of
redemption, of stay, or of appraisal, which might in any way affect such
purchaser. The holder hereof will give Buyer at least ten (10) days' written
notice of intention to make such public or private sale, which notice will state
the time and place fixed for such public sale or the time after which such
private sale may be consummated and whether the sale is to be public or private.
At any such sale the Pledged Stock may be sold in one lot as an entirety or in
separate parcels, as the holder hereof may determine. In case of any sale on
credit or for future delivery, the Pledged Stock so sold may be retained by the
holder hereof until the selling price is paid by the purchaser thereof, and the
holder hereof will not incur any liability in case of the failure of such
purchaser to take up and pay for the Pledged Stock so sold, and in case of any
such failure, such Pledged Stock may be again sold upon like notice. The holder
hereof will not be obligated to complete any sale for which the holder hereof
sends out notice and may, without notice or publication, adjourn any sale or
cause the same to be adjourned by announcement at the time and place fixed for
such sale, and such sale may thereafter be made at the time and place to which
the same has been so adjourned.
(b) The holder hereof, instead of exercising the power of
nonjudicial sale herein conferred, may proceed by a suit or suits at law or in
equity to foreclose the pledge and sell the Pledged Stock, or any portion
thereof, under a judgment or decree of a court or courts of competent
jurisdiction.
(c) Without limiting the rights of the holder hereof under
any other provision of this Note, and in addition thereto, Buyer will be
obligated, to the maximum extent permitted by law, if a Default is continuing
and if counsel for the holder hereof determines that it is necessary for the
lawful sale of the Pledged Stock in a commercially reasonable manner, upon
written request from the holder hereof, to vote its shares to cause the Company,
at the Company's or Buyer's expense, to prepare, file and cause to become
effective promptly, a registration statement complying with the Securities Act
of 1933, as amended, for the public sale of such of the Pledged Stock as the
holder hereof may elect, and to take comparable action to permit such sales
under the securities laws of such state jurisdictions as the holder hereof may
designate. If such registration statement is filed, Buyer further will be
obligated to vote its shares to cause the Company, at the Company's or Buyer's
expense, to enter into and perform its obligations under one or more
underwriting agreements in connection therewith, containing customary
representations, warranties, covenants, and indemnities and contribution
provisions if requested by the holder hereof. Buyer will be obligated to vote
its shares to cause the Company, at the Company's or Buyer's expense, (i) to
keep any such registration statement and related prospectus current and in
compliance with applicable federal and state securities laws so long as required
to satisfy applicable prospectus delivery requirements and (ii) at the request
of the holder hereof at any time after the effective date of any such
registration statement, to file post-effective amendments to such registration
statement so that sales of Pledged Stock by the holder hereof will be covered by
a current prospectus and can be made in compliance with all applicable federal
and state securities laws.
(d) Buyer further will be obligated to (i) take such action
as is necessary to cause the Company to delivery to the holder hereof such
information as the holder hereof reasonably requests for inclusion in any
registration statement, prospectus or offering memorandum or in any preliminary
prospectus or preliminary offering memorandum or any amendment or supplement to
any thereof or in any other writing prepared in connection with the offer, sale
or resale of all or any portion of the Pledged Stock and to deliver such
information regarding Buyer as the holder hereof reasonably requests, which
information will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated or necessary to make such
information not misleading, and (ii) vote its shares to do or cause to be done
all such other acts and things as may be necessary to make such offer, sale or
resale of all or any portion of the Pledged Stock valid and binding and in
compliance with any and all applicable laws, regulations, orders, writs,
injunctions, decrees or awards of any and all courts, arbitrators or
governmental agencies or instrumentalities, domestic or foreign, having
jurisdiction over any such offer, sale or resale.
(e) Without limiting paragraphs (c) and (d) of this Section
6.6, if the holder hereof decides to exercise its right to sell all or any of
the Pledged Stock, upon written request Buyer will from time to time take such
action as is necessary to cause to be furnished to the holder hereof all such
information as the holder hereof may request and as is accessible to Buyer in
order to qualify such Pledged Stock as exempt securities, or the sale or release
of such Pledged Stock as exempt transactions, under federal or state securities
laws. Buyer will be obligated to take such action as is necessary to cause the
Company to allow the holder hereof and any underwriter access at reasonable
times and places to the books, records and premises of the Company; Buyer
further will be obligated to assist, and take such action as is necessary to
cause the Company to assist the holder hereof, any underwriter, any agent of any
thereof, and any counsel, accountant or other expert for any thereof, in
inspection, evaluation, and any other "due diligence" action of or with respect
to any such books, records and premises; and Xxxxx further will be obligated to
cause any independent public accountant for the Company to furnish a letter to
the holder hereof and underwriters in customary form and covering matters of the
type customarily covered by letters of accountants for issuers to underwriters.
(f) Xxxxx further acknowledges the impossibility of
ascertaining the amount of damages which would be suffered by the holder hereof
by reason of the failure by Buyer to perform any of the covenants contained in
this Section and, consequently, agrees that, if Xxxxx fails to perform any of
such covenants, the holder hereof will be entitled to equitable relief for the
enforcement of the provisions of this Section 6.6. Buyer will indemnify the
holder hereof for any and all fees, charges, reimbursements, judgments or other
expenses incurred by the holder hereof due to any failure of Buyer to perform
its obligations under this Section 6.6.
(g) Notwithstanding the foregoing provisions of this
Section 6.6, the holder of this Note will not be permitted to exercise any of
the foregoing rights or remedies contained or referenced in this Section 6.6 for
so long as any Senior Pledge remains in effect without the prior written consent
of the holder thereof.
6.7 Application of Proceeds. The proceeds of any sale of the
Pledged Stock hereunder will be applied by the holder hereof:
(a) first, to the payment of the costs and expenses of such
sale, including reasonable attorneys' fees and all expenses and advances made or
incurred by it in connection therewith;
(b) second, to the payment of the Indebtedness;
(c) finally, to the payment to Buyer or its successors and
assigns of any surplus then remaining from such proceeds.
(d) The holder hereof will not be required to make any
allocation or distribution to Buyer of proceeds from sale except from collected
funds after satisfaction or release of all indemnification or other payment
obligations that may be asserted against the holder hereof or such proceeds in
connection with such sale. Any collected funds retained pursuant to this
provision will be promptly deposited or invested in Permitted Investments until
disbursed in accordance herewith.
7. Default, Remedies
7.1 Default. Any one or more of the following constitutes a
Default as that term is used herein:
(a) Failure of Buyer to pay any principal amount or
interest hereunder when due and continuation of such condition for fifteen (15)
days after written notice thereof by the holder hereof to Buyer;
(b) Failure to perform any obligation of Buyer hereunder
other than for the payment of money and continuation of such condition for
thirty (30) days after written notice thereof by the holder hereof to Buyer;
(c) Failure of the Company to pay any principal amount or
interest under the Redemption Note when due and continuation of such condition
for fifteen (15) days after written notice thereof by the holder thereof to the
Company;
(d) Failure to perform any obligation of the Company under
the Redemption Note other than for the payment of money and continuation of such
condition for thirty (30) days after written notice thereof by the holder
thereof to the Company;
(e) Failure of the Company to pay any amount under the
Senior Obligations when due for so long as such condition continues;
(f) Bankruptcy, reorganization, arrangement or insolvency
proceedings, or other proceedings for relief under any bankruptcy or similar law
or laws for the relief of debtors, are instituted by or against Buyer or the
Company and, if instituted against Buyer or the Company are consented to or are
not dismissed within sixty (60) days after such institution; or
(g) Buyer or the Company becomes insolvent or bankrupt,
generally does not pay its debts as they become due or makes an assignment for
the benefit of creditors, or Buyer or the Company applies for or consents to the
appointment of a custodian, trustee or receiver for Buyer or the Company or for
the major part of the property of either, or a custodian, trustee or receiver is
appointed for Buyer or the Company or for the major part of the property of
either and is not discharged within sixty (60) days after such appointment.
7.2 Acceleration of Maturity. When any Default described in
Sections 7.1(b), (d) or (g) has happened and is continuing, and in the case of
Section 7.1(b) or (d) provided no Senior Obligation is then outstanding, the
holder hereof may, by written notice to the Company, declare the entire
principal and all interest accrued hereunder to be, and the same will thereupon
become, immediately due and payable, without any presentment, demand, protest or
other notice of any kind. When a Default described in Section 7.1 (f) has
occurred, the entire principal and all interest accrued hereunder will thereupon
become immediately due and payable without presentment, demand, protest or other
notice of any kind.
7.3 Costs of Enforcement. Upon a Default, Xxxxx will be obligated
to pay all costs of collection and enforcement of the rights and remedies of the
holder hereof, including court costs and attorneys' fees, whether or not legal
proceedings are commenced.
7.4 Waivers. Buyer waives presentment for payment, demand,
protest, notice of protest and notice of dishonor. No delay by the holder hereof
in exercising any right or remedy hereunder, at law or in equity will operate as
a waiver of such right or remedy and no single or partial exercise of any such
right or remedy will preclude any further exercise thereof, or the exercise of
any other rights or remedies.
8. Notices. Any notice, request, instruction or other document to be
given hereunder by Xxxxx or the holder of this Note to the other party will be
in writing and delivered personally or by telephonic facsimile transmission or
sent by registered or certified mail, postage prepaid (and if by telephonic
facsimile transmission with a copy sent by mail),
if to the holder of this Note to:
Bridgewater Resources Corp.
c/o BRC Management Corp.
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx Xxxxxx
Xxxxxxxxx No.: 000-000-0000
with a copy to:
Xxxxxxxxxxx Xxxxx & Xxxxxxxx
Suite 0000, Xxxxx XXX
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx
Facsimile No.: 000-000-0000
if to Buyer to:
Discus Acquisition Corporation
2430 Metropolitan Centre
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx
Facsimile No.: 000-000-0000
with a copy to:
Xxxxxx and Xxxxxx
2400 IDS Center
00 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxx
Xxxxxxxxx No.: 000-000-0000
or at such other address for a party as may be specified by like notice. Any
notice which is delivered personally or by telephonic facsimile transmission in
the manner provided herein will be deemed to have been duly given to the party
to whom it is directed upon actual receipt by such party (or its agent for
notices hereunder). Any notice which is addressed and mailed in the manner
herein provided will be conclusively presumed to have been duly given to the
party to which it is addressed at the close of business, local time of the
recipient, on the third day after the day it is so placed in the mail.
9. Arbitration. Subject to the last sentence of this Section, any
controversy or claim arising out of or relating to any provisions of this Note
or the breach hereof, unless resolved by mutual agreement of the parties, will
be finally settled by arbitration in accordance with the Commercial Arbitration
Rules of the American Arbitration Association in effect on the effective date of
this Agreement by a single arbitrator appointed in accordance with said Rules.
The determination of the arbitrator will be final and binding upon the parties
to the arbitration and judgment upon the award rendered by the arbitrator will
be entered in any court of competent jurisdiction. The place of arbitration will
be Minneapolis, Minnesota. Notwithstanding the foregoing, a party may seek
injunctive relief with respect to any controversy or claim arising out of or
relating to any provisions of this Note in any court of competent jurisdiction.
10. Governing Law; Consent to Jurisdiction. This Note will be construed
in accordance with and governed by the laws of the State of Minnesota applicable
to agreements made and to be performed in such jurisdiction without reference to
conflicts of law principles. Buyer by execution and delivery of this Note, and
the holder of this Note by acceptance hereof, each irrevocably consents that any
legal action or proceeding against it under, arising out of or in any manner
relating to this Note may be brought only in an arbitration proceeding as
provided in Section 9 or in a court of the State of Minnesota or in the United
States District Court for the District of Minnesota. Each of Buyer and the
holder of this Note further expressly and irrevocably assents and submits to the
personal jurisdiction of the arbitrators selected pursuant to Section 9 or any
of such courts in any such action or proceeding. Each of Buyer and the holder of
this Note further irrevocably consents to the service of any complaint, summons,
notice or other process relating to any such action or proceeding by delivery
thereof to it by hand or by mail in the manner provided for in Section 8 hereof.
Each of Buyer and the holder of this Note further hereby expressly and
irrevocably waives any claim or defense in any action or proceeding based on any
alleged lack of personal jurisdiction, improper venue or forum non conveniens or
any similar basis.
11. Neither this Note nor any term hereof may be changed, waived,
discharged or terminated orally but only by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought.
12. This Note is not an obligation of the Company.
IN WITNESS WHEREOF, Xxxxx has caused this Note to be duly executed and
delivered on the day and year first above written.
DISCUS ACQUISITION CORPORATION
By Xxxxxxx X. Xxxxx
Its CEO
