EXHIBIT 10.21
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF
UNLESS THE BORROWER HAS RECEIVED A WRITTEN OPINION FROM COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO THE BORROWER STATING THAT SUCH TRANSFER IS BEING MADE
IN COMPLIANCE WITH ALL APPLICABLE FEDERAL AND STATE SECURITIES LAWS.
THIS INSTRUMENT AND THE RIGHTS AND OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATE
IN THE MANNER AND TO THE EXTENT SET FORTH IN THAT CERTAIN INTERCREDITOR AND
SUBORDINATION AGREEMENT DATED AS OF NOVEMBER 14, 2002 AMONG JPMORGAN CHASE BANK,
GENERAL ELECTRIC CAPITAL CORPORATION AND KEY PRINCIPAL PARTNERS, LLC (THE
"SUBORDINATION AGREEMENT") TO THE "SENIOR DEBT" (AS DEFINED IN THE SUBORDINATION
AGREEMENT), AND EACH HOLDER OF THIS INSTRUMENT, BY ITS ACCEPTANCE HEREOF,
IRREVOCABLY AGREES TO BE BOUND BY THE PROVISIONS OF THE SUBORDINATION AGREEMENT.
THIS NOTE WILL BE CONSIDERED TO HAVE BEEN ISSUED WITH ORIGINAL ISSUE DISCOUNT
("OID") FOR PURPOSES OF SECTIONS 1271 ET SEQ. OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED. THE ISSUE DATE OF THIS NOTE IS NOVEMBER 14, 2002. FOR
INFORMATION REGARDING THE ISSUE PRICE, AMOUNT OF OID PER $1,000 OF PRINCIPAL
AMOUNT AND YIELD TO MATURITY FOR PURPOSES OF THE OID RULES, PLEASE CONTACT THE
TREASURER OF THE BORROWER AT 0000 XXXXXXXX XXXXX, XXXXX 000, XXXXXXXXXX, XXXXX
00000, TELEPHONE: (000) 000-0000.
T-NETIX, INC.
13% SENIOR SUBORDINATED PROMISSORY NOTE
DUE NOVEMBER 13, 2008
$9,000,000 Cleveland, Ohio
November 14, 2002
FOR VALUE RECEIVED, the undersigned, T-NETIX, INC., a Delaware
corporation (the "Borrower"), hereby promises to pay to the order of KEY
PRINCIPAL PARTNERS, L.L.C. ("KPP" and together with its registered assigns, the
"Holder"), the principal sum of Nine Million Dollars ($9,000,000) on November
13, 2008 (the "Maturity Date"), with interest thereon from time to time as
provided herein.
1. Securities Purchase Agreement. This Senior Subordinated Promissory
Note (the "Note") is issued by the Borrower, on the date hereof, pursuant to the
Securities Purchase Agreement (the "Securities Purchase Agreement"), dated as of
November 14, 2002, by and between the Borrower and KPP and is subject to the
terms thereof. This Note, together with
all other promissory notes issued pursuant to Sections 11 or 12 hereof, are
hereinafter referred to as the "Notes." The Holder is entitled to the benefits
of this Note and the Securities Purchase Agreement, as it relates to this Note,
and may enforce the agreements of the Borrower contained in this Note and the
Securities Purchase Agreement and exercise the remedies provided for in this
Note and the Securities Purchase Agreement or otherwise available in respect
hereto and thereto. Capitalized terms used herein and not defined herein shall
have the meanings ascribed to such terms in the Securities Purchase Agreement.
2. Interest.
(a) Interest Rate. The Borrower promises to pay interest
("Interest") on the principal amount of this Note and any Deferred PIK Interest
(from the Deferral Date) at the rate of 13.00% per annum (the "Interest Rate").
Interest on this Note shall accrue from and including the date of issuance
through and until repayment of the principal amount of this Note and payment of
all Interest and PIK Interest in full and shall be computed on the basis of a
360-day year comprised of twelve 30-day months. Interest shall be paid quarterly
in arrears on each April 1, July 1, October 1 and January 1 of each year or, if
any such date shall not be a Business Day, on the next succeeding Business Day
to occur after such date (each date upon which interest shall be so payable, an
"Interest Payment Date"), beginning on January 1, 2003.
(b) PIK Interest. The Borrower further promises to pay PIK interest
("PIK Interest") on the principal amount of this Note at the rate of 4.75% per
annum. PIK Interest on this Note shall accrue from and including the date of
issuance through and until repayment of the principal amount of this Note and
payment of all Interest and PIK Interest in full and shall be computed on the
basis of a 360-day year comprised of twelve 30-day months. PIK Interest shall be
paid at the option of the Borrower (i) on each Interest Payment Date, or (ii)
such PIK Interest payment may be deferred until the Maturity Date ("Deferred PIK
Interest"), whereby the amount of such Deferred PIK Interest shall be added to
the principal balance of this Note as of the applicable Interest Payment Date
(the "Deferral Date").
(c) Payment of Interest. Interest and PIK Interest on this Note
shall be paid in cash by wire transfer of immediately available funds to an
account at a bank designated in writing by the Holder. In the absence of the
written designation of an account for the payment of Interest or PIK Interest by
wire transfer, any such Interest or PIK Interest payment shall be deemed made on
the date a certified check in the applicable amount payable in lawful money of
the United States of America to the order of the Holder is received by the
Holder at its last address as reflected in the Note Register (as defined in
Section 11(b) hereof); if no such address appears, then to such Holder in care
of the last address in such Note Register of any predecessor Holder of this
Note.
(d) Default Rate of Interest. Notwithstanding the foregoing
provisions of this Section 2, but subject to applicable law, any overdue
principal of and overdue Interest on this Note shall bear interest, payable on
demand in immediately available funds, for each day from the date payment
thereof was due to the date of actual payment, at a rate equal to the sum of (i)
the Interest Rate and (ii) an additional 2.00% per annum (such sum being
referred to herein as
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the "Default Rate"), and, upon and during the occurrence of an Event of Default
(as defined in the Securities Purchase Agreement), this Note shall bear
interest, from the date of the occurrence of such Event of Default until such
Event of Default is cured or waived, payable on demand in immediately available
funds, at a rate equal to the Default Rate. Subject to applicable law, any
interest that shall have accrued on overdue Interest on this Note as provided in
the preceding sentence and that shall not have been paid in full on or before
the next Interest Payment Date to occur after the date on which the overdue
Interest became due and payable shall itself be deemed to be overdue Interest on
this Note to which the preceding sentence shall apply.
(e) No Usurious Interest. In the event that any interest rate(s)
provided for in this Section 2, shall be determined to be unlawful, such
interest rate(s) shall be computed at the highest rate permitted by applicable
law. Any payment by the Borrower of any interest amount in excess of that
permitted by law shall be considered a mistake, with the excess being applied to
the principal amount of this Note without prepayment premium or penalty; if no
such principal amount is outstanding, such excess shall be returned to the
Borrower.
3. Redemption. This Note, the Borrower and the Holder are subject to
mandatory and optional redemption provisions contained in Section 12 of the
Securities Purchase Agreement.
4. Amendment. Amendments and modifications of this Note may be made,
subject to the terms and conditions of the Subordination Agreement, only in the
manner provided in Section 13.4 of the Securities Purchase Agreement.
5. Subordination. This Note shall at all times be subject to the terms
and conditions of the Subordination Agreement.
6. Use of Proceeds. The Borrower shall use the principal amount of this
Note in accordance with the permitted uses described in Section 7.4 of the
Securities Purchase Agreement.
7. Suits for Enforcement.
(a) Subject to the subordination provisions of Section 5 hereof and
the Subordination Agreement, upon the occurrence of any one or more Events of
Default, the Holder of this Note may proceed to protect and enforce its rights
hereunder by suit in equity, action at law or by other appropriate proceeding,
whether for the specific performance of any covenant or agreement contained in
the Securities Purchase Agreement or this Note or in aid of the exercise of any
power granted in the Securities Purchase Agreement or this Note, or may proceed
to enforce the payment of this Note, or to enforce any other legal or equitable
right of the Holders of this Note.
8. Remedies Cumulative. No remedy herein conferred upon the Holder 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 given
hereunder or now or hereafter existing at law or in equity or by statute or
otherwise.
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9. Remedies Not Waived. No course of dealing between the Borrower and
the Holder or any delay on the part of the Holder in exercising any rights
hereunder shall operate as a waiver of any right.
10. Transfer.
(a) The term "Holder" as used herein shall also include any
transferee of this Note whose name has been recorded or is required to be
recorded by the Borrower in the Note Register. Each transferee of this Note
acknowledges that this Note has not been registered under the Securities Act,
and may be transferred only pursuant to an effective registration under the
Securities Act or pursuant to an applicable exemption from the registration
requirements of the Securities Act and in accordance with the procedures
provided in the Securities Purchase Agreement.
(b) The Borrower shall maintain a register (the "Note Register") in
its principal offices for the purpose of registering the Note and any transfer
or partial transfer thereof, which register shall reflect and identify, at all
times, the ownership of record of any interest in the Note. Upon the issuance of
this Note, the Borrower shall record the name and address of the initial
purchaser of this Note in the Note Register as the first Holder. Upon surrender
for registration of transfer or exchange of this Note at the principal offices
of the Borrower, the Borrower shall, at its expense, execute and deliver one or
more new Notes of like tenor in accordance with and subject to the procedures
for transfer and exchange set forth in the Securities Purchase Agreement.
(c) Subject to Sections 10(a) and 10(b) hereof, this Note may be
transferred or assigned, in whole or in part, by the Holder at any time.
11. Replacement of Note. On receipt by the Borrower of an affidavit of
an authorized representative of the Holder stating the circumstances of the
loss, theft, destruction or mutilation of this Note (and in the case of any such
mutilation, on surrender and cancellation of such Note), the Borrower, at its
expense, will promptly execute and deliver, in lieu thereof, a new Note of like
tenor. If required by the Borrower, such Holder must provide indemnity
sufficient in the reasonable judgment of the Borrower to protect the Borrower
from any loss which the Borrower may suffer if a lost, stolen or destroyed Note
is replaced.
12. Covenants Bind Successors and Assigns. All the covenants,
stipulations, promises and agreements in this Note contained by or on behalf of
the Borrower shall bind its successors and assigns, whether so expressed or not.
13. Notices. All notices, demands and other communications provided for
or permitted hereunder shall be made in writing and shall be by registered or
certified first-class mail, return receipt requested, telecopier (with receipt
confirmed), courier service or personal delivery at the addresses and in the
manner specified in Section 14.2 of the Securities Purchase Agreement. All such
notices and communications shall be deemed to have been duly given: if
personally delivered, when delivered by hand; if delivered by commercial
overnight courier
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service, when delivered by courier; if mailed, five (5) Business Days after
being deposited in the mail, postage prepaid; or if telecopied, when receipt is
acknowledged.
14. GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY, CONSTRUED IN
ACCORDANCE WITH, AND ENFORCED UNDER, THE LAWS OF THE STATE OF OHIO, WITHOUT
REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW OF SUCH STATE (INCLUDING GIVING
EFFECT TO GENERAL OBLIGATIONS LAW SECTION 5-1401).
15. JURISDICTION, JURY TRIAL WAIVER, ETC.
(a) EACH PARTY TO THIS NOTE HEREBY IRREVOCABLY AGREES THAT ANY
LEGAL ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE OR ANY
AGREEMENTS OR TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY MAY BE BROUGHT IN THE
COURTS OF THE STATE OF OHIO OR OF THE UNITED STATES OF AMERICA FOR THE NORTHERN
DISTRICT OF OHIO AND HEREBY EXPRESSLY SUBMITS TO THE PERSONAL JURISDICTION AND
VENUE OF SUCH COURTS FOR THE PURPOSES THEREOF AND EXPRESSLY WAIVES ANY CLAIM OF
IMPROPER VENUE AND ANY CLAIM THAT SUCH COURTS ARE AN INCONVENIENT FORUM. EACH
PARTY HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING BY THE MAILING OF
COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO ITS ADDRESS
SET FORTH IN SECTION 14.2 OF THE SECURITIES PURCHASE AGREEMENT, SUCH SERVICE TO
BECOME EFFECTIVE TEN (10) DAYS AFTER SUCH MAILING.
(b) EACH PARTY TO THIS NOTE HEREBY WAIVES ITS RIGHT TO A JURY TRIAL
WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION
WITH THIS NOTE OR ANY OF THE OTHER TRANSACTION DOCUMENTS, ANY RIGHTS OR
OBLIGATIONS HEREUNDER OR THEREUNDER OR THE PERFORMANCE OF SUCH RIGHTS AND
OBLIGATIONS. THE BORROWER (I) CERTIFIES THAT NEITHER THE HOLDER NOR ANY
REPRESENTATIVE OR ATTORNEY OF THE HOLDER HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT THE HOLDER WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVERS AND (II) ACKNOWLEDGES THAT THE HOLDER HAS BEEN
INDUCED TO PURCHASE THIS NOTE BY, AMONG OTHER THINGS, THE WAIVERS AND
CERTIFICATIONS CONTAINED HEREIN.
16. Severability. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, unless the provisions held
invalid,
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illegal or unenforceable shall substantially impair the benefits of the
remaining provisions hereof. The Borrower and the Holder further agree to
replace such invalid, illegal or unenforceable provision of this Agreement with
a valid, legal and enforceable provision that will achieve, to the extent
possible, the economic, business and other purposes of such invalid, illegal or
unenforceable provision.
17. Headings. The headings in this Note are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
18. No Strict Construction. The Borrower and the Holder each
acknowledge that they have been represented by counsel in connection with this
Note, the other Investment Documents and the Transactions. The Borrower and the
Holder have participated jointly in the negotiation and drafting of this Note
and the other Investment Documents. In the event an ambiguity or question of
intent or interpretation arises under any provision of this Note or any
Investment Document, this Note or such other Investment Document shall be
construed as if drafted jointly by the parties thereto, and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any of the provisions of this Note or any other Investment
Document.
19. IN WITNESS WHEREOF, the undersigned has executed this Note as
of the date first written above.
T-NETIX, INC.
By:
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Name:
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Title:
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