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EXHIBIT 10.5
FORM OF PROMISSORY NOTE
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD UNLESS IT
HAS BEEN REGISTERED UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR
UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE. THIS NOTE ALSO IS SUBJECT TO
ADDITIONAL RESTRICTIONS ON TRANSFER BY THE HOLDER HEREOF AS SET FORTH HEREIN.
SUBORDINATED PROMISSORY NOTE
$_____________ Dated: April 15, 2003
New York, New York
FOR VALUE RECEIVED, SportRack, LLC, a Delaware limited liability company
("SPORTRACK") and Valley Industries, LLC, a Delaware limited liability company
("VALLEY", and together with SportRack, the "ISSUERS", and each individually, an
"ISSUER"), each HEREBY PROMISES TO PAY, jointly and severally to _______________
(the "HOLDER"), or permitted registered assigns, the principal amount of
______________________ DOLLARS ($___________), or such other principal amount
which may be outstanding hereunder as a result of the capitalization of
interest, payments or prepayments, on the Final Maturity Date (as defined
below), together with interest on the unpaid principal amount hereof outstanding
from time to time until paid in full at a rate per annum equal to twelve percent
(12%), and at a rate per annum equal to 2% above such interest rate (the
"DEFAULT INTEREST RATE") on any overdue principal and on any overdue interest,
from the date thereof until the obligation of the Issuers with respect to the
payment thereof shall be discharged, in lawful money of the United States of
America in immediately available funds at the address of the Holder set forth in
the Purchase Agreement or at such other address as the Holder may designate by
notice hereunder to the Issuers. For the avoidance of doubt, principal and
interest shall be deemed to be "overdue" if such principal or interest is not
paid on or before their due date, without any consideration given as to the
reason why such payment was not made on such date, including, without
limitation, by reason of Section 2 hereof or otherwise. Any capitalized term
used but not defined herein shall have the meaning ascribed to such term in the
Purchase Agreement (as defined below).
This Note is one of the Promissory Notes referred to in the Purchase
Agreement (as defined below).
Interest on the outstanding principal of this Note shall be
capitalized quarterly in arrears on March 31, June 30, September 30 and December
31 of each year, commencing June 30, 2003, and, accordingly, shall increase the
principal amount hereof on each such date. Notwithstanding any other provision
of this Note, interest becoming due hereunder shall in no event exceed the
maximum rate permitted by applicable law. All interest shall be computed on the
basis of a 365 or 366 day year for the actual number of days (including the
first day but excluding the last day) elapsed.
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The Holder may not sell, assign, or otherwise transfer or dispose of,
in whole or in part, any interest in this Note, other than to an Affiliate of
the Holder, without the prior written consent of the Issuers until June 30,
2007, or for such longer period until any claim against the Sellers under the
Purchase Agreement remains unresolved or unpaid if any such claim exists on such
date; PROVIDED, HOWEVER, that prior to any such sale, assignment, transfer or
disposition, such Affiliate or other permitted transferee shall acknowledge in
writing to the Issuers the set-off right of CHAAS Acquisition set forth in
Section 6.2 hereof and the subordination of the obligations hereunder to Senior
Indebtedness as provided herein. Notwithstanding the foregoing, Section 2 and
Section 6.2 shall survive any sale, assignment or other transfer or disposition
of all or any interest in this Note in violation of the foregoing sentence, and
Section 2 and Section 6.2 hereof shall be binding upon the successors and
assigns of the Holder.
One of the Issuers shall maintain at its office a register for
recording the name and address of the Holder of each Note. No assignment or
other sale, disposition or transfer of this Note or any other Note shall be
effective unless and until such Issuer is notified in writing of such assignment
or other sale, disposition or transfer and such assignment, sale, disposition or
transfer is reflected in such register by recording the identity of the assignee
or transferee of such Note in such register. Such Issuer shall reflect in such
register any such assignment, sale, disposition or transfer upon written notice
thereof from the Holder. Such Issuer shall treat the person whose name is
recorded in the register as the holder of this Note (and any other Note) as the
holder of this Note (and each such other Note) for all purposes.
Section 1. DEFINITIONS.
As used in this Note, the following terms shall have the respective
meanings indicated below, such meanings to be applicable equally to the
singular, plural, masculine, feminine and neuter forms of such terms:
"ADJUSTED CONSOLIDATED EBITDA" means, for any period, the net income
(or net loss) of CHAAS Acquisition and its consolidated Subsidiaries, determined
in accordance with GAAP, plus (a) any provision for (or less any benefit from)
Income Taxes, (b) any deduction for interest expense, net of interest income and
(c) depreciation and amortization expense (including the amortization of
capitalized tooling that is customer owned and non-reimbursed), and as adjusted
for the following items (to the extent that they are reflected in net income or
net loss):
(i) elimination of: (A) all extraordinary gains and losses
determined in accordance with GAAP (APB 30), (B) gains and losses from sales or
dispositions of property and equipment or other fixed assets, (C) all
non-recurring income and expense items not incurred in the ordinary course of
business to the extent included in the determination of net income for the
relevant determination period and (D) foreign currency transaction gains and
losses, to the extent included in the determination of net income for the
relevant determination period;
(ii) add-back for all management fees (but not reimbursed or
advanced expenses) paid or accrued to members of the Castle Harlan Group,
pursuant to the Management Agreement or otherwise and all expenses of CHAAS
Acquisition or any member of the Castle Harlan Group that were paid by the
Company in connection with the Transaction (as defined in the Purchase
Agreement) and all transactions occurring in connection with the Closing to the
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extent such expenses are included in the determination of net income for the
relevant determination period;
(iii) elimination of any income statement impact from the reserve
established by the Company in connection with the G3.0 Model Recall, to the
extent losses arising from the G3.0 Model Recall are actually paid for or
reimbursed by the Sellers or are subject to a continuing obligation of
indemnification of the Sellers pursuant to Article IX under the Purchase
Agreement under which the Sellers are not in default in respect thereof; and
(iv) elimination of any income statement impact in respect of fees
and expenses of law firms, accounting firms and other advisors paid or accrued
by the Company in connection with the negotiation of the Transaction (as defined
in the Purchase Agreement) to the extent such fees and expenses are taken into
account in computing Net Indebtedness (as defined in the Purchase Agreement) as
of the date of issuance of this Note under the Purchase Agreement or are
otherwise treated as current liabilities in the determination of Adjusted
Working Capital in accordance with the Purchase Agreement and Exhibit J thereto.
Each of the financial accounting terms used in this definition of
Adjusted Consolidated EBITDA shall be determined in accordance with GAAP, to the
extent such items are addressed by GAAP.
"AFFILIATE" means, with respect to any specified Person, a Person
that, directly or indirectly, through one or more intermediaries, controls, is
controlled by or is under common control with, such specified Person (it being
understood that a Person shall be deemed to "control" another Person, for
purposes of this definition, if such Person directly or indirectly has the power
to direct or cause the direction of the management and policies of such other
Person, whether through holding beneficial ownership interests in such other
Person, through contracts or otherwise). For purposes of a natural person, an
Affiliate shall also mean (i) the spouse or any lineal descendant (including
adopted children) of such person or (ii) any Person acting as custodian or
trustee for (A) any trust solely for the benefit of such person or the spouse or
lineal descendants (including adopted children) of such person, (B) any family
trust, partnership or limited liability company established solely for the
benefit of such person or such person's spouse or lineal descendants (including
adopted children) or for estate planning purposes, provided such trust, family
trust, partnership or limited liability company remains under the control of
such person, or (C) the estate of such person.
"CASTLE HARLAN GROUP" means CHP IV, CHI and any other accounts or
funds managed by CHI or any Affiliate of CHI, other than members of the CHAAS
Group.
"CHAAS ACQUISITION" means CHAAS Acquisitions, LLC, a Delaware limited
liability company.
"CHAAS GROUP" means CHAAS Acquisition and its direct and indirect
Subsidiaries.
"CHANGE IN CONTROL" means the initial event or series of events, other
than, for the avoidance of doubt, the Transaction (as defined in the Purchase
Agreement) in which:
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(a) any Persons who are not Equityholders as of the date
hereof shall become the direct or indirect beneficial owners (within the meaning
of Section 13(d) of the Exchange Act) of equity interests in CHAAS Acquisition
which represent a majority of the voting power of all classes of equity
interests of CHAAS Acquisition taken together as one class, except pursuant to
an underwritten Public Offering of such equity interests by CHAAS Acquisition;
or
(b) there shall occur a sale or other disposition of all or
substantially all of the assets of CHAAS Acquisition, other than to CHAAS
Acquisition and/or to one or more Subsidiaries of CHAAS Acquisition that are and
that remain a corporation, partnership, association or other business entity of
which securities or other ownership interests representing more than 50% of the
equity and more than 50% of the ordinary voting power or more than 50% of the
general partnership interests are owned by CHAAS Acquisition or any Subsidiaries
of CHAAS Acquisition; or
(c) so long as no Change in Control has occurred under
clauses (a) or (b) above at such time, CHP IV, John K. Castle or Leonard M.
Harlan shall cease to have the right to designate and elect a majority of the
members of the Board of Managers of CHAAS Acquisition; or
(d) a CHP IV Distribution has occurred.
"CHI" means Castle Harlan, Inc., a Delaware corporation.
"CHP IV" means Castle Harlan Partners IV, L.P., a Delaware limited
partnership.
"CHP IV DISTRIBUTION" shall mean the distribution by CHP IV of all of
its equity interests in CHAAS Acquisition (or the securities issued in respect
thereof or in exchange therefor) to its limited partners, other than by reason
of the dissolution, liquidation or termination of CHP IV.
"COMMON UNITS" means the common units and any other equity interests
of CHAAS Acquisition, the holders of which have the right, without limitation as
to amount, either to all or to a share of the balance of current dividends and
liquidating dividends after the payment of dividends and distributions on any
equity interests entitled to a preference.
"COMPANY" means Advanced Accessory Systems, LLC, a Delaware limited
liability company.
"DESIGNATED CHP SALE" means a sale of equity interests or assets,
directly or indirectly, of CHAAS Acquisition, in a single transaction or a
series of related transactions, that does not constitute a Change in Control
under clauses (a) or (b) of such definition in which the Castle Harlan Group
sells to one or more unaffiliated third parties or, in the context of an asset
sale where proceeds therefrom are distributed to member(s) of the Castle Harlan
Group, where Castle Harlan Group member(s) receive payments (excluding in all
cases, tax distributions and management fees paid or payable to members of the
Castle Harlan Group) in respect of its equity interests in CHAAS Acquisition,
whether in the form of distributions, the redemption of equity interests, or the
repayment or prepayment of Indebtedness held by members of the Castle Harlan
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Group that is, by its terms, convertible into or exercisable or exchangeable for
equity securities of CHAAS Acquisition or any of its Subsidiaries, but excluding
in all cases any Indebtedness held by any member of the Castle Harlan Group
under the Senior Subordinated Loan Document outstanding or in effect on the date
hereof, with a dollar value equal to at least one-third of its economic equity
interest, whether in the form of Common Units, Preferred Units or otherwise, in
CHAAS Acquisition or any of its Subsidiaries as of the date of the sale (when
combined with prior sales), it being understood and agreed that, for the
avoidance of doubt, any benefit to the Buyer or any of its Subsidiaries arising
from any Designated CHP Sale, including an increase in cash or Cash Equivalents
(as defined in the Purchase Agreement) or reduction in Indebtedness of the Buyer
or any of its Subsidiaries, shall not constitute an "indirect" dividend,
distribution or proceed to any member of the Castle Harlan Group; PROVIDED,
HOWEVER, that in determining whether such one-third threshold has been
satisfied, the value of the interests of the Castle Harlan Group shall be
calculated based on the value allocated to such interests at the time any such
interests were sold in the Designated CHP Sale (with all interests of the same
kind that were not sold in the Designated CHP Sale being calculated on the same
basis), or, for any portion of the equity interests that has not been attributed
a value that may be clearly extrapolated from the express provisions of the
agreements or instruments governing the Designated CHP Sale, the price allocated
to such interests at the time acquired.
"DESIGNATED PUBLIC OFFERING" means a Public Offering that does not
constitute a Change in Control in which or in connection with which the Castle
Harlan Group has sold or has redeemed at least one-third of its economic equity
interest, whether in the form of Common Units, Preferred Units or otherwise, in
CHAAS Acquisition or any of its Subsidiaries, (when combined with prior sales)
as of the date of the Designated Public Offering; PROVIDED, HOWEVER, that in
determining whether such one-third threshold has been satisfied, the value of
the interests of the Castle Harlan Group shall be calculated based on the price
allocated to any such interests at the time such interests were sold or redeemed
in, or in connection with, the Designated Public Offering, (with all interests
of the same kind that were not sold in the Designated Public Offering being
calculated on the same basis) or, for any portion of the equity interests that
have not been attributed a value that may be clearly extrapolated from the
express provisions of the agreements or instruments governing the Designated
Public Offering, the price allocated to such interests at the time acquired.
"ENFORCEMENT ACTION" shall mean (a) to take from or for the account of
any Issuer or any guarantor or any other obligor on the Subordinated
Indebtedness, by set-off or in any other manner, the whole or any part of any
moneys which may now or hereafter be owing by any Issuer or any such guarantor
or obligor with respect to the Subordinated Indebtedness, other than the
capitalizing of interest in accordance with the terms hereof and the set-off of
payments due hereunder as provided in Section 6.2 hereof, (b) to sue for payment
of, or to initiate or participate with others in any suit, action or proceeding
against any Issuer or any such guarantor or obligor to (i) enforce payment of or
to collect the whole or any part of the Subordinated Indebtedness or (ii)
commence judicial enforcement of any of the rights and remedies under this Note
or under any guaranty hereof or other agreement or applicable law with respect
to the Subordinated Indebtedness, (c) accelerate the Subordinated Indebtedness,
(d) exercise any put option or to cause any Issuer or any such guarantor or
obligor to honor any redemption or mandatory prepayment obligation under this
Note or under any guaranty hereof or any other agreement related to the
Subordinated Indebtedness or (e) to take any action under the provisions of any
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state or federal law, including, without limitation, the Uniform Commercial
Code, or under any contract or agreement, to enforce, foreclose upon, take
possession of or sell any property or assets of any Issuer or any such guarantor
or obligor to satisfy obligations hereunder.
"EQUITYHOLDERS" means holders of equity interests of CHAAS
Acquisition, or any member of the Castle Harlan Group and their respective
Affiliates but only to the extent the foregoing hold interests in CHAAS
Acquisition, the voting control over which interests is vested with an officer,
director or senior employee of CHI.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"FINAL MATURITY DATE" means January 17, 2011; PROVIDED that the Final
Maturity Date shall automatically be extended, without further action on the
part of any Person, to the date 91 days after the scheduled maturity date under
any Senior Indebtedness incurred or created after the date of the issuance of
this Note to refinance or replace the Indebtedness owing under the Senior
Subordinated Loan Document in effect on the date hereof but in no event shall
the Final Maturity Date extend beyond October 17, 2011.
"G3.0 MODEL RECALL" means the recall initiated by Volvo, Saab and
Volkswagen prior to the date of original issuance of this Note as set forth on
the respective recall notices issued in or about July 2002.
"GAAP" means US generally accepted accounting principles, Consistently
Applied (as such term is defined in the Purchase Agreement).
"GOVERNMENTAL ENTITY" means any nation or government, any foreign,
federal, state, province, city, town, municipality, county, local or other
political subdivision thereof or thereto and any department, commission, court
or arbitrator of competent jurisdiction, stock exchange board, bureau,
instrumentality, agency, organization, self-regulatory authority or other entity
exercising executive, legislative, judicial, taxing, regulatory,
quasi-governmental or administrative powers or functions of or pertaining to
government.
"HEDGE AGREEMENTS" means interest rate swap, cap or collar agreements,
interest rate future or option contracts, commodity future or option contracts,
currency swap agreements, currency future or option contracts and other similar
agreements.
"INCOME TAXES" means Taxes imposed upon, or measured by, net income.
"INCREMENTAL AMOUNT" shall have the meaning ascribed thereto in
Section 6.9 hereof.
"INDEBTEDNESS" means (without duplication), with respect to any
Person, whether recourse to all or a portion of the assets of such Person and
whether or not contingent, (a) every obligation of such Person for money
borrowed, (b) every obligation of such Person evidenced by bonds, debentures,
notes or other similar instruments, (c) every reimbursement obligation of such
Person with respect to letters of credit, bankers' acceptances or similar
facilities issued for the account of such Person, (d) every obligation of such
Person issued or assumed as the deferred
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purchase price of property or services, (e) every capitalized lease obligation
of such Person, (f) every obligation of such Person under Hedge Agreements, and
(g) every obligation of the type referred to in clauses (a) through (f) of
another Person and all other obligations of another Person (i) the payment of
which, in either case, such Person has guaranteed or (ii) which is secured by
any Lien on any property or asset of such Person, the amount of such
Indebtedness being deemed to be the lesser of the actual amount of the guarantee
or the value of such property or assets subject to such Lien, as the case may
be, and the amount of the Indebtedness so guaranteed or secured, as the case may
be. Notwithstanding the foregoing, trade accounts payable arising in the
ordinary course of business and any liability for federal, state or local taxes
or other taxes owed by such Person will not be considered Indebtedness for
purposes of this definition. The amount outstanding at any time of any
Indebtedness issued with original issue discount shall be the aggregate
principal amount at maturity of such Indebtedness, less the remaining
unamortized portion of the original issued discount of such Indebtedness at such
time, as determined in accordance with GAAP.
"LIEN" means any preemptive right, mortgage, restriction on voting or
transfer or any pledge, lien (statutory or otherwise), usufruct, hypothetical
assignment for security, "claim" (as such term is used in this context outside
of the United States), preference priority charge, hypothecary, encumbrance or
security interest of any kind.
"LIQUIDATION" means any voluntary or involuntary liquidation,
dissolution or winding up of any of (x) the Issuers or (y) one or more members
of the CHAAS Group that, in the aggregate, generate more than 25% of the
Adjusted Consolidated EBITDA of the CHAAS Group taken as a whole, determined,
for purposes of the Liquidation of more than one such member, by the sum of the
contribution of such members to such Adjusted Consolidated EBITDA as of the time
of the consummation of the Liquidation of such members and, in all cases, based
on the trailing four fiscal quarters for which financial statements of the CHAAS
Group are at the time of the consummation thereof available; PROVIDED, HOWEVER,
that the term Liquidation shall not include any dissolution, liquidation or
winding up in connection with any merger or consolidation of any such member or
members of the CHAAS Group effected to reincorporate in another jurisdiction or
the conversion of any such member or members into another legal form (so long as
such successor assumes by operation of law or otherwise expressly assumes all
obligations hereunder).
"MANAGEMENT AGREEMENT" means the management agreement among CHAAS
Acquisition, the Company and CHI, as may be amended, modified or supplemented
from time to time.
"PERSON" means a natural person, a corporation, a limited liability
company, a partnership, an association, a trust or any other entity or
organization, including a Governmental Entity.
"PREFERRED UNITS" means the preferred units of CHAAS Acquisitions and
any other equity interests of CHAAS Acquisition which entitle the holder thereof
to a preference with respect to the payment of dividends or distributions, or as
to the liquidating dividends or distribution of assets upon any voluntary or
involuntary liquidation or dissolution of CHAAS Acquisition, over the Common
Units.
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"PROCEEDING" means, as to any Person, (i) any insolvency, bankruptcy,
receivership, liquidation, reorganization, readjustment, composition or other
similar proceeding relating to such Person or its properties as such or (ii) any
assignment for the benefit of creditors or marshalling of the assets of such
Person.
"PUBLIC OFFERING" shall mean a public offering of equity interests of
CHAAS Acquisition or any of its Subsidiaries or any successor to CHAAS
Acquisition or such Subsidiaries.
"PURCHASE AGREEMENT" means the Securities Purchase Agreement among
CHAAS Acquisition, the Company, Holder, J. P. Morgan Partners (23A SBIC),
L.L.C., in its capacity as Sellers' Representative, and the other parties
thereto, dated as of April 15, 2003, relating to the acquisition of all of the
membership interests of the Company, as may be amended, modified or supplemented
from time to time.
"SECURITY" shall have the meaning given to such term in Section 2(1)
of the Securities Act.
"SELLERS" shall mean the Persons designated as Sellers on the
signature pages to the Purchase Agreement.
"SENIOR AGENT" means General Electric Capital Corporation, as agent
for the lenders under the Senior Secured Loan Document, or any other Person
appointed by the holders of the Indebtedness owing under the Senior Secured Loan
Document as "Senior Agent" for the purposes of this Note and, after the
Indebtedness under the Senior Secured Loan Document has been paid in full, CHP
IV under the Senior Subordinated Loan Document, any other Person appointed by
the holders of the Indebtedness owing under any Senior Subordinated Loan
Document as "Senior Agent" for the purposes of this Note or any other Person
serving in a comparable capacity with respect to any other Senior Indebtedness.
"SENIOR EVENT OF DEFAULT" means an Event of Default, as such term or
comparable term is defined or otherwise used in a Senior Loan Document.
"SENIOR INDEBTEDNESS" means the principal of and premium, if any, and
interest on any Indebtedness (including interest accruing (at the rate provided
for in the Senior Loan Documents applicable thereto) after the filing of a
petition initiating any Proceeding or any other proceeding pursuant to any
bankruptcy law, insolvency law or other similar law, in each case, whether or
not a claim for such interest is allowed) and all other amounts due (including
without limitation all fees, costs, indemnities and expenses) on or in
connection with any Indebtedness of CHAAS Acquisition, the Issuers, Brink B.V.,
a Netherlands BESLOTEN VENNOOTSCHAP MET BEPERKTE AANSPRAKELIJKHEID ("BRINK BV"),
or any of their respective direct or indirect Subsidiaries, including without
limitation, under (i) any Senior Secured Loan Document (including without
limitation all US Loans and all European Loans, each as defined in the Senior
Secured Loan Document in effect on the date hereof) or (ii) any Senior
Subordinated Loan Document, in each case, outstanding on the date hereof or
hereafter incurred; PROVIDED, HOWEVER, that Senior Indebtedness (which shall,
for the avoidance of doubt, include all Indebtedness owing under any Senior Loan
Document) shall not include any Subordinated Indebtedness or Indebtedness which,
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by its terms, is pari passu with, or subordinated in right of payment to, any
Subordinated Indebtedness of any Issuer.
"SENIOR LOAN DOCUMENT" means a credit agreement, loan agreement,
securities purchase agreement, indenture, promissory note, guaranty, security
agreement or other agreement, instrument or other document (as the same may be
amended, supplemented or otherwise modified from time to time) entered into from
time to time by CHAAS Acquisition, any Issuer, Brink BV and/or any of their
respective direct and indirect Subsidiaries in connection with any Senior
Indebtedness, including without limitation, the Senior Secured Loan Document,
the Senior Subordinated Loan Document and all Loan Documents (as defined under
the Senior Secured Loan Document), each as may be amended, supplemented, or
otherwise modified from time to time, including, without limitation, amendments,
modifications, supplements and restatements thereof giving effect to increases,
renewals and extensions thereof, or refunded, deferred, restructured, replaced
or refinanced from time to time in whole or in part (whether with the original
agent or agents and lenders or other agents and lenders or otherwise, and
whether provided under the original Senior Loan Document or other credit,
finance, loan, underwriting or purchase agreements, instruments, indentures or
otherwise).
"SENIOR SECURED LOAN DOCUMENT" means the Credit Agreement dated as of
the date hereof among SportRack, Valley, Brink B.V., various lenders from time
to time party thereto, and General Electric Capital Corporation as agent for
such lenders, as such Credit Agreement may be amended, supplemented, or
otherwise modified from time to time, including, without limitation, amendments,
modifications, supplements and restatements thereof giving effect to increases,
renewals and extensions thereof, or refunded, deferred, restructured, replaced
or refinanced from time to time in whole or in part (whether with the original
agent or agents and lenders or other agents and lenders or otherwise, and
whether provided under the original Credit Agreement or other credit, finance,
loan, underwriting or purchase agreements, instruments, indentures or
otherwise).
"SENIOR SUBORDINATED LOAN DOCUMENT" means the Convertible Subordinated
Bridge Promissory Note issued by SportRack and Valley to CHP IV or one or more
of its Affiliates, dated as of the date hereof, as may be amended, supplemented,
or otherwise modified from time to time, including, without limitation,
amendments, modifications, supplements and restatements thereof giving effect to
increases, renewals and extensions thereof, or refunded, deferred, restructured,
replaced or refinanced from time to time in whole or in part (whether with CHP
IV, any Affiliate of CHP IV, any other agents or lenders or otherwise, and
whether provided under the Convertible Subordinated Bridge Promissory Note or
any other credit, finance, loan, underwriting or purchase agreements,
instruments, indentures or otherwise).
"SUBORDINATED INDEBTEDNESS" means all principal of, and interest on,
and any other amounts owing under this Note and any other promissory notes
issued by the Issuers from time to time to the Sellers in connection with the
Purchase Agreement, including any Contingent Payment Notes.
"SUBSIDIARY" means, with respect to any Person at any time, any
corporation, partnership, joint venture, limited liability company, trust or
estate of which (or in which) more than 50% of:
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(a) the issued and outstanding shares of capital stock having
ordinary voting power to elect a majority of the board of directors of such
corporation (irrespective of whether at the time shares of capital stock of
any other class or classes of such corporation shall or might have voting
power upon the occurrence of any contingency);
(b) the interest in the capital or profits of such partnership,
joint venture or limited liability company; or
(c) the beneficial interest in such trust or estate,
is, at such time, directly or indirectly owned or controlled by such Person, by
such Person and one or more of its other Subsidiaries or by one or more of such
Person's other Subsidiaries.
"TAX" (or, when referring to more than one Tax, the term "TAXES")
includes any Federal, state, provincial, local or foreign net income, gross
income, net receipts, gross receipts, profit, capital, severance, property,
production, sales, use, license, excise, franchise, employment, payroll,
withholding, alternative or add-on minimum, AD VALOREM, value-added, transfer,
stamp, employment or other tax, custom, duty, fee or other governmental charge
of any kind, together with any interest, fine, penalty, addition to tax or
additional amount imposed with respect thereto.
Section 2. SUBORDINATION.
Section 2.1. AGREEMENT TO SUBORDINATE. The Issuers and the Holder
agree that the Subordinated Indebtedness does not constitute Senior Indebtedness
and is and shall be subordinate, to the extent and in the manner hereinafter set
forth, in right of payment to the prior payment in full of the Senior
Indebtedness. For purposes of this Note, the Senior Indebtedness shall not be
deemed to have been paid in full until the holders thereof shall have received
payment in full of the Senior Indebtedness in cash and all commitments to lend
under the Senior Loan Documents have terminated.
Section 2.2. RESTRICTIONS ON PAYMENT OF THE SUBORDINATED
INDEBTEDNESS.
(a) Notwithstanding any other term of this Note or any other
document, the Holder will not ask, demand, sue for, take or receive,
directly or indirectly, from any Issuer, any guarantor or any other obligor
of the Subordinated Indebtedness (and the Issuers, any guarantor or obligor
of the Subordinated Indebtedness will not make) in cash or other property,
by set-off, or in any other manner, payment of, or security for, any or all
of the Subordinated Indebtedness unless and until the Senior Indebtedness
shall have been paid in full; PROVIDED, HOWEVER, that, subject to the
following proviso, the Holder may receive, and any Issuer may pay (i) in
cash or other property, the principal amount of this Note on or after the
Final Maturity Date ("PERMITTED CASH PRINCIPAL PAYMENT"), (ii) in kind,
either through the issuance of new subordinated notes on the exact same
terms or capitalization of such interest to the Note (as opposed to payment
in cash or other property), interest on the Subordinated Indebtedness
evidenced by this Note in the stated amounts and on the stated dates of
payment hereof ("PERMITTED PIK PAYMENTS"), (iii) in cash or other property,
all accrued and unpaid interest on the Subordinated Indebtedness evidenced
by this Note in the stated amounts on or after the Final Maturity Date
("PERMITTED CASH INTEREST PAYMENT"), (iv) by way of set-off, the
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principal amount and all accrued and unpaid interest on the Subordinated
Indebtedness evidenced by this Note against payments due by the Holder to
the extent provided under Section 6.2 hereof ("PERMITTED SET-OFF PAYMENTS")
and (v) to the extent permitted under Section 6.9 hereof, in cash or other
property, the principal amount of this Note represented by any Incremental
Amount, which shall in no event exceed the US Dollar equivalent of EURO
45,379, in the aggregate, in any twelve-month period, together with any
accrued and unpaid interest on such Incremental Amount ("PERMITTED CASH
INCREMENTAL AMOUNT PAYMENTS"); PROVIDED, however, no Permitted Cash
Principal Payment, Permitted Cash Incremental Amount Payment or Permitted
Cash Interest Payment shall be made if, at the time of making such payment
and immediately after giving effect thereto, a Senior Event of Default
shall have occurred and be continuing or would result after giving effect
to such payment or the Senior Agent shall have delivered to the Issuers and
the Holder a written notice (a "PAYMENT BLOCKAGE NOTICE"), and which shall
specify that it is a Payment Blockage Notice delivered pursuant to these
subordination provisions, shall state that a Senior Event of Default has
occurred and is continuing and (x) 180 days shall not have elapsed from the
Final Maturity Date (but in no event shall a Payment Blockage Notice be
effective for any period after July 15, 2011, at which time all existing
Payment Blockage Notices shall cease to be effective and no Senior Agent or
any holder of Senior Indebtedness shall have the right to deliver any other
Payment Blockage Notices thereafter (and if delivered shall be void)) and
(y) such Senior Event of Default described in each Payment Blockage Notice
(if effective) shall not have been remedied or waived by the requisite
percentage of holders of Senior Indebtedness under the applicable Senior
Loan Document pursuant to which each such Senior Event of Default has
arisen; PROVIDED, FURTHER, HOWEVER, that in no event may the periods
covered by any one or more Payment Blockage Notice exceed 180 days in any
360 consecutive day period.
(b) This Note shall continue to accrue interest during any period
of Payment Blockage Notice and may not be paid except for Permitted PIK
Payments and Permitted Set-Off Payments.
Section 2.3. ADDITIONAL PROVISIONS CONCERNING SUBORDINATION.
(a) If any Proceeding shall have been commenced and be continuing
with respect to any Issuer or any guarantor or obligor of any Subordinated
Indebtedness, all Senior Indebtedness (including without limitation all
Indebtedness owing under any Senior Secured Loan Document and any Senior
Subordinated Loan Document, whether in effect on the date hereof or
hereafter) shall first be paid in full before the Holder shall be entitled
to receive any payment (whether in cash, securities or other property),
other than Permitted PIK Payments or Permitted Set-Off Payments, by or on
behalf of any Issuer, such guarantor or such obligor on account of any
Subordinated Indebtedness.
(b) All payments or distributions upon or with respect to the
Subordinated Indebtedness which are received by the Holder contrary to the
provisions of this Note shall be received in trust for the benefit of the
holders of the Senior Indebtedness, shall be segregated from other funds
and property held by the Holder and shall be forthwith paid over to the
Senior Agent, in the same form as so received (with any necessary
indorsement) to be applied (in the case of cash) to or held as collateral
(in the case of securities or other non-cash property) for the payment or
prepayment of the Senior Indebtedness under the Senior
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Secured Loan Document until the Senior Indebtedness under the Senior
Secured Loan Document shall have been paid in full, and after all Senior
Indebtedness under the Senior Secured Loan Document has been paid in full,
to the "Senior Agent" designated under any Indebtedness that is junior or
pari passi in right of payment to the Senior Indebtedness owing under any
Senior Secured Loan Document and senior in right of payment to the Senior
Indebtedness owing under any Senior Subordinated Loan Document, and after
all such Senior Indebtedness has been paid in full, to the Senior Agent
under the Senior Subordinated Loan Document for the payment or prepayment
of the Senior Indebtedness under the Senior Subordinated Loan Document
until the Senior Indebtedness under the Senior Subordinated Loan Document
shall have been paid in full. In the event of a Proceeding involving any
Issuer or any guarantor or obligor of any Subordinated Indebtedness, the
Holder (i) irrevocably authorizes, empowers and directs any debtor, debtor
in possession, receiver, trustee, liquidator, custodian, conservator or
other Person having authority, to pay or otherwise deliver all such
payments or distributions upon or with respect to the Subordinated
Indebtedness to Senior Agent and (ii) irrevocably authorizes and empowers
Senior Agent, in the name of the Holder, to demand, sue for, collect and
receive any and all such payments or distributions on the Subordinated
Indebtedness, in each case, in accordance with the terms hereof.
(c) Holder agrees not to initiate, prosecute or participate in any
claim, action or other proceeding challenging the enforceability, validity,
perfection or priority of the Senior Indebtedness or any liens and security
interests securing the Senior Indebtedness.
(d) In the event of a Proceeding involving any Issuer or any
guarantor or obligor of any Subordinated Indebtedness, Holder empowers and
appoints Senior Agent its agent and attorney-in-fact to (i) execute,
verify, deliver and file such proofs of claim upon the failure of Holder
promptly to do so prior to 30 days before the expiration of the time to
file any such proof of claim and (ii) vote such claim in any such
Proceeding upon the failure of Holder to do so prior to 15 days before the
expiration of the time to vote any such claim; provided Senior Agent shall
have no obligation to execute, verify, deliver, file and/or vote any such
proof of claim. In the event that Senior Agent votes any claim in
accordance with the authority granted hereby, Holder shall not be entitled
to change or withdraw such vote.
(e) The holders of Senior Indebtedness are hereby authorized to
demand specific performance of this Note, and the Issuers hereby
irrevocably waive any defense based on the adequacy of a remedy at law
which might be asserted as a bar to such remedy of specific performance.
Section 2.4. SENIOR INDEBTEDNESS STANDSTILL PROVISIONS. Until the
earlier of (i) the Senior Indebtedness being paid in full and (ii) the later of
(x) the Final Maturity Date and (y) the date that all Payment Blockage Notices
have expired or are no longer effective in accordance with Section 2.2(a), but,
in each case, in no event later than July 15, 2011 (at which time all existing
Payment Blockage Notices shall cease to be effective and no Senior Agent or any
holder of Senior Indebtedness shall have the right to deliver any other Payment
Blockage Notices thereafter (and, if so delivered, shall be void)), Holder shall
not, without prior written consent of each of the holders of the Senior
Indebtedness, take any Enforcement Action with respect to the Subordinated
Indebtedness, other than Enforcement Actions with respect to the Issuers'
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obligation to make Permitted Cash Incremental Amount Payments in accordance with
Section 6.9 hereof. Notwithstanding the foregoing, Holder may file proofs of
claim against any Issuer in any Proceeding involving any Issuer. Any
distributions, payments or other proceeds of any Enforcement Action obtained by
Holder in violation of the foregoing prohibition shall be subject to Section
2.3(b) above.
Section 2.5. SENIOR INDEBTEDNESS UNCONDITIONAL.
(a) All rights and interests of the holders of the Senior
Indebtedness hereunder, and all agreements and obligations of the Holder
and any Issuer hereunder, shall remain in full force and effect, and the
Senior Indebtedness shall continue to be treated as Senior Indebtedness
under this Note, irrespective of: (i) any lack of validity or
enforceability of any Senior Loan Document or any other agreement or
instrument relating thereto, (ii) any change in the time, manner or place
of payment of, or in any other term in respect of, all or any of the Senior
Indebtedness, or any other amendment or waiver of or any consent to
departure from any Senior Loan Document, (iii) any exchange or release of,
or non-perfection of any Lien on or security interest in, any collateral,
or any release or amendment or waiver of or consent to departure from any
guaranty, for all or any of the Senior Indebtedness, (iv) whether all or
any part of the Senior Indebtedness or the security interests securing the
Senior Indebtedness are subordinated, set aside, avoided, invalidated or
disallowed in connection with any Proceeding or (v) any other circumstance
which might otherwise constitute a defense available to, or a discharge of,
any Issuer in respect of the Senior Indebtedness of the Holder or any
Issuer in respect of this Note.
(b) This entire Section 2 shall continue to be effective or shall
be reinstated, as the case may be, if at any time any payment of any of the
Senior Indebtedness is rescinded or must otherwise be returned by a holder
of Senior Indebtedness upon the commencement of a Proceeding or otherwise,
all as though such payment had not been made.
Section 2.6. WAIVERS. Except as otherwise expressly provided
herein, each Issuer hereby waives promptness and diligence, and each of the
Holder and the Issuers hereby waives (a) notice of acceptance and notice of the
incurrence of any Senior Indebtedness by the Issuers, (b) notice of any actions
taken by the holder of any Senior Indebtedness or the Issuers or any other
Person under any Senior Loan Document or any other agreement or instrument
relating thereto other than Payment Blockage Notices, (c) all other notices,
demands and protests, and all other formalities of every kind in connection with
the enforcement of the Senior Indebtedness or of the obligations of the Holder
and the Issuers hereunder, the omission of or delay in which, but for the
provisions of this Section, might constitute grounds for relieving the Holder or
the Issuers of their obligations hereunder and (d) any requirement that any
holder of Senior Indebtedness protect, secure, perfect or insure any security
interest or other lien or any property subject thereto or exhaust any right to
take any action against any Issuer or any other Person or any collateral.
Section 2.7. SUBROGATION. No payment or distribution to a holder of
Senior Indebtedness pursuant to the provisions of this Note shall entitle the
Holder to exercise any rights of subrogation in respect thereof until all of the
Senior Indebtedness shall have been paid in full. After all of the Senior
Indebtedness shall have been paid in full, the Holder shall be subrogated to the
rights of the holders of the Senior Indebtedness to receive payments or
distributions of
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assets of the Issuers applicable to the Senior Indebtedness until all amounts
owing in respect of the Subordinated Debt shall be paid in full, and for the
purpose of such subrogation, no such payments or distributions to the holders of
the Senior Indebtedness by or on behalf of the Issuers or by or on behalf of the
Holder by virtue of this Section 2 which otherwise would have been made to the
Holder shall, as among the Issuers, their creditors (other than the holders of
its Senior Indebtedness) and the Holder, be deemed to be payment by the Issuers
to or on account of the Senior Indebtedness, it being understood that the above
provisions relating to subordination are solely for the purpose of defining the
relative rights of the holders of the Senior Indebtedness on the one hand, and
the Holder, on the other hand.
Section 2.8. OBLIGATIONS OF ISSUERS UNCONDITIONAL; ABSENCE OF
NOTICE.
(a) Except to the extent that the Holder has authorized the
Issuers, and the Issuers have bound themselves, not to make any payment on
the Subordinated Indebtedness other than in accordance with this Note, as
set forth in the Issuers' undertaking appearing in this Note, nothing
contained herein shall impair, as between the Issuers and the Holder, the
obligation of the Issuers, which is absolute and unconditional, to pay the
principal amount of and interest on the Subordinated Indebtedness in
accordance with the terms hereof, or affect the relative rights of the
Holder and creditors of the Issuers other than the holders of the Senior
Indebtedness, nor shall anything herein (other than Section 2.4 above)
prevent the Holder from exercising all remedies otherwise permitted by
applicable law upon default, subject to the rights, if any, under this Note
of the holders of the Senior Indebtedness.
(b) The Holder shall not at any time be charged with knowledge of
the existence of any facts which would prohibit the making of any payment
to it or the taking of any other action under this Note, unless and until
the Holder and the Issuers shall have received a notice thereof from the
applicable holders of the Senior Indebtedness and, prior to the receipt of
any such notice, the Holder shall be entitled to assume that no such facts
exist.
Section 3. INTENTIONALLY OMITTED
Section 4. EVENTS OF DEFAULT. If any of the following events (each, an
"EVENT OF DEFAULT," and collectively, the "EVENTS OF DEFAULT") shall occur and
be continuing:
(a) the failure of any Issuer to pay any principal amount of, or
interest on, this Note when due, by acceleration or otherwise;
(b) default in the observance of the covenants set forth herein in
any of Sections 7.6, 7.7, 7.8 or 7.9 of the Purchase Agreement, which
default shall remain uncured for a period of fifteen (15) days after notice
thereof by the Holder to the Issuers;
(c) (i) commencement of any Liquidation; (ii) the general
assignment for the benefit of its creditors by any Issuer or by one or more
members of the CHAAS Group that generate more than 25% of the Adjusted
Consolidated EBITDA of the CHAAS Group taken as a whole, determined, for
purposes of the general assignment by more than one such member, by the sum
of the contribution of such members to such Adjusted Consolidated EBITDA as
of the date of the general assignment by such members and, in all cases,
based on the trailing four fiscal quarters for which financial statements
of the CHAAS Group are
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then available; (iii) the commencement of any Proceeding by or against any
Issuer or one or more members of the CHAAS Group that generate more than
25% of the Adjusted Consolidated EBITDA of the CHAAS Group taken as a
whole, determined, for purposes of a Proceeding by or against more than one
such member, by the sum of the contribution of such members to such
Adjusted Consolidated EBITDA as of the date of the Proceeding of such
members and, in all cases, based on the trailing four fiscal quarters for
which financial statements of the CHAAS Group are then available, whether
voluntary or involuntary, or other action referred to in clause (i) or (ii)
which results in the entry of an order for relief or any such adjudication
or appointment which remains undismissed, undischarged, or unstayed for a
period of ninety (90) days; or (iv) the taking of any corporate action for
the purposes of any of the foregoing;
(d) default by the obligor or any guarantor under any Senior
Indebtedness shall be made with respect to any Senior Indebtedness and as a
result thereof the maturity of Senior Indebtedness in an aggregate
principal amount of at least $15,000,000 shall have been accelerated prior
to its stated maturity; or
(e) any Change in Control shall have occurred.
then and in any such event, the Holder may, upon notice to the Issuers, declare
the entire unpaid principal amount of this Note, together with all accrued and
unpaid interest thereon (including, but not limited to, any overdue interest),
to be due and payable, PROVIDED, HOWEVER, that as to clause (c), the entire
unpaid principal amount of this Note, together with all accrued and unpaid
interest thereon (including, but not limited to, any overdue interest) shall be
due and payable automatically and without diligence, presentment, demand,
protest, or other notice of any kind, all of which are hereby expressly waived.
Section 5. PREPAYMENT.
Section 5.1. OPTIONAL PREPAYMENT. Subject to the provisions
contained in Section 2 of this Note, any Issuer may, at its option, prepay the
principal of and interest on this Note, in whole or in part, at any time and
from time to time, without penalty or premium.
Section 5.2. MANDATORY PREPAYMENTS. Subject to the provisions
contained in Section 2 of this Note, upon the occurrence of each Designated
Public Offering and each Designated CHP Sale, the Issuers shall prepay a
percentage of the then outstanding principal of this Note and accrued and unpaid
interest thereon equal to the percentage of the value of equity interests sold
by the Castle Harlan Group in relation to the value of its equity interests as
of the date thereof in such Designated Public Offering, valuing such interests
as provided in the definition of "Designated Public Offering" or "Designated CHP
Sale," as the case may be.
Section 6. MISCELLANEOUS.
Section 6.1. AMENDMENTS/THIRD PARTY BENEFICIARIES. No amendment of
any provision of this Note shall be effective unless it is in writing and signed
by the Issuers and the holders of a majority of the then outstanding aggregate
principal amount of all of the outstanding Promissory Notes, and no waiver of
any provision of this Note, and no consent to any departure therefrom, shall be
effective unless it is in writing and signed by such holders, and then such
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waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given. In addition to the foregoing, no amendment,
waiver or other modification of any provision of this Note shall be effective
unless it is in writing and signed by (i) if all of the Senior Indebtedness
under the Senior Secured Loan Document has not been paid in full, the Senior
Agent and (ii) if all of the other Senior Indebtedness has not been paid in
full, the lowest percentage of holders of Senior Indebtedness under the relevant
Senior Loan Document necessary to effect a waiver or amendment under such Senior
Loan Document to the extent that the effect of such amendment is to: (a)
increase the principal, premium, interest rate, fees and expenses under this
Note or provide for interest to be payable in cash or property, except as set
forth in Section 6.9; (b) accelerate the dates upon which payments of principal,
interest or other amounts are due under this Note or accelerate the principal,
interest or other amount of the Indebtedness owing under this Note (including by
amending the definition of Final Maturity Date to provide for a maturity date
that is earlier than the Final Maturity Date (as this Note is in effect on the
date hereof)); (c) add or make more restrictive any Event of Default or covenant
with respect to the Indebtedness under this Note; (d) make more onerous on the
Issuers the redemption or prepayment provisions of the Indebtedness under this
Note; (e) make more onerous the subordination provisions under this Note (or the
subordination terms of any guaranty of this Note), including without limitation
Section 2 hereof and any definition relating thereto; (f) alter this sentence in
a manner adverse to any holder of Senior Indebtedness, (g) change or amend the
definitions of Senior Indebtedness, Enforcement Action, Subordinated
Indebtedness, Senior Secured Loan Document, Senior Subordinated Loan Document
and any definitions relating to any of the foregoing in a manner adverse to any
holder of Senior Indebtedness or (h) change or amend any other term hereof if
such change or amendment would materially increase the obligations of any Issuer
or confer additional material rights on the Holder in a manner adverse to any
holder of the Senior Indebtedness. The holders of the Senior Indebtedness are
intended beneficiaries of the foregoing sentence and all the subordination
provisions set forth in this Note, including without limitation Section 2 and
Section 6.2 hereof.
Section 6.2. SET-OFF. Payments of all or any portion of the
outstanding principal amount, together with unpaid interest thereon, due and
payable to any Holder hereunder shall be subject to set-off by any Issuer for
any amounts due to CHAAS Acquisition or its Affiliates as provided in Article IX
of the Purchase Agreement (as in effect on the date hereof). Without the consent
of Senior Agent, no such set-off shall be permitted unless (i) such set-off is
being made with respect to non-monetary payments and expenses as provided under
Section 9.5(g)(i) (as in effect on the date hereof) of the Purchase Agreement
for which no cash indemnification is provided for under the Purchase Agreement
or (ii) all of the funds in the Escrow Agreement (as defined in the Purchase
Agreement as in effect on the date hereof) and, if applicable, the additional
$10 million of indemnification provided in Section 9.5(f) (as in effect on the
date hereof) of the Purchase Agreement, have each been fully exhausted.
Section 6.3. EXERCISE OF REMEDIES. No failure on the part of the
Holder to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right preclude any other or further exercise thereof or the exercise of any
other right.
Section 6.4. UNENFORCEABILITY. Any provision of this Note which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of
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such prohibition or unenforceability without invalidating the remaining portions
hereof or thereof or affecting the validity or enforceability of such provision
in any other jurisdiction.
Section 6.5. NOTICES. All notices and other communications provided
for hereunder shall be in writing, shall be mailed, telecopied or delivered, if
to the Holder, to it at its address as specified in the Purchase Agreement, with
a copy to the Sellers' Representative under the Purchase Agreement at J.P.
Morgan Partners (23A SBIC), L.L.C., c/o J.P. Morgan Partners, LLC, 1221 Avenue
of the Americas, New York, New York 10020; Attention: Official Notices Clerk;
facsimile no. (212) 899-3401; and if to the Issuers, to it Attention: Howard
Weiss c/o Castle Harlan Partners IV, L.P., 150 East 58th Street, New York, New
York 10155, facsimile no: (212) 207-8042; and if to the Senior Agent under the
Senior Secured Loan Document: General Electric Corporation, 335 Madison Avenue,
12th Floor, New York, New York 10017, Attention: SportRack/Valley/Brink Account
Officer, facsimile no: 212 983-8766, General Electric Capital Corporation, 201
High Ridge Road, Stamford, Connecticut 06927-5100. Attention: Corporate
Financial Services - General Counsel, facsimile: (203) 316-7899 and General
Electric Capital Corporation, 500 West Monroe Street, Chicago, Illinois 60661,
Attention: Corporate Counsel, Commercial Finance - Merchant Banking; facsimile:
(312) 441-6876; and to any other Senior Agent under any other Senior Loan
Document to the address designated by the Issuers from time to time, or as to
any such Person at such other address as shall be designated by such Person and
shall be deemed to have been duly given or made as of the date delivered, mailed
or transmitted, and shall be effective upon receipt, if delivered personally,
mailed by registered or certified mail (postage prepaid, return receipt
requested) or sent by fax (with immediate confirmation) or nationally recognized
overnight courier service and shall be effective (i) if mailed, five days after
being deposited in the mails, (ii) if telecopied, when received, and (iii) if
delivered, upon delivery. One of the Issuers shall notify the Senior Agent as to
any change in address of any of the Issuers. Notice of any action by (including,
without limitation, delivery of a Payment Blockage Notice) the Senior Agent or
any Issuer delivered to the Sellers' Representative shall be deemed notice to
all Holders for all purposes under this Note. The Sellers' Representative shall
notify the Issuers and the Senior Agent of any change in address of the Sellers'
Representative.
Section 6.6. JURISDICTION. EACH ISSUER AND THE HOLDER (BY ITS
ACCEPTANCE HEREOF) EACH HEREBY (A) IRREVOCABLY SUBMITS TO THE EXCLUSIVE
JURISDICTION OF ANY NEW YORK STATE OR FEDERAL COURT SITTING IN NEW YORK CITY IN
ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE, (B) WAIVES ANY
DEFENSE BASED ON DOCTRINES OF VENUE OR FORUM NON CONVENIENS, OR SIMILAR RULES OR
DOCTRINES, AND (C) IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH AN
ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR
FEDERAL COURT.
Section 6.7. JURY TRIAL. EACH ISSUER AND THE HOLDER (BY ITS
ACCEPTANCE HEREOF) MUTUALLY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS NOTE.
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Section 6.8. GOVERNING LAW. This Note shall be governed by, and
construed and interpreted in accordance with, the internal laws of the State of
New York applicable to contracts made and to be performed therein without
consideration as to choice of law.
Section 6.9. PROVISIONS RELATING TO NETHERLANDS DOMICILIARIES. To
the extent that the Holder of this Note is entitled to an increase in the
principal amount of this Note by virtue of the operation of Section 2.4(c) of
the Purchase Agreement, each such time an increase in the principal amount of
this Note is required in accordance with Section 2.4(c) of the Purchase
Agreement and provided the Holder shall have certified to CHAAS Acquisition and
the Issuers at such time that it is a Netherlands Domiciliary (as defined in the
Purchase Agreement) and the Holder is not eligible to be issued a Contingent
Payment Note in an amount less than EURO 45,379 without registration of such
Contingent Payment Note under the Laws of the Netherlands, the Issuers shall
issue to the Holder of this Note a new Note upon delivery of this Note by the
Holder to the Issuers reflecting the increase in the principal amount of such
Promissory Note (such amount, the "INCREMENTAL AMOUNT"). Subject to the
provisions contained in Section 2 of this Note, following the end of each fiscal
year in which this Note remains outstanding, the Issuers shall pay in cash the
maximum amount of the principal outstanding under this Note represented by any
Incremental Amount (together with any accrued and unpaid interest on such
Incremental Amount) to the extent the payment of which would not reasonably
likely result in or cause, without giving effect to the passage of time, at the
time of such payment or during the fiscal quarter in which such payment is
otherwise to be made, a Senior Event of Default. Such payments shall be made as
to such Incremental Amount owing under this Note (together with accrued and
unpaid interest on such Incremental Amount) in the same proportion as payments
are made in respect of any Contingent Payment Notes (together with accrued and
unpaid interest thereon) and any other Incremental Amount (together with any
accrued and unpaid interest on such other Incremental Amount) outstanding under
any other Promissory Note that has an Incremental Amount outstanding thereunder
and shall be made promptly following the Issuers' delivery of covenant
compliance certificates required under any Senior Loan Document for the fiscal
year then ended. Any dispute concerning payments of any Incremental Amount under
this Section 6.9 shall be governed by Sections 2.3(b)(ii) and (iii) of the
Purchase Agreement.
Section 6.10. SUBORDINATED GUARANTEE. The obligation to pay
principal and interest on this Note when due is guaranteed, jointly and
severally, by CHAAS Acquisition, AAS Acquisitions, LLC, a Delaware limited
liability company, the Company, Valtek, LLC, a Delaware limited liability
company and AAS Capital Corporation, a Delaware corporation, pursuant to that
certain Subordinated Guarantee dated as of even date herewith in favor of
Holder.
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ISSUERS
SPORTRACK, LLC
By:
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Name:
Title:
VALLEY INDUSTRIES, LLC
By:
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Name:
Title: