Initial Public Offering (IPO): Registration Statement (General Form) — Form S-1
Filing Table of Contents
Document/Exhibit Description Pages Size
1: S-1 Registration Statement (General Form) 112 656K
9: EX-10.10 Amendment No. 2 to Loan and Security Agreement 10 32K
10: EX-10.11 Pledge Agreement, Made as of March 31, 1995 17 46K
11: EX-10.12 Pledge Agreement, Made as of March 31, 1995 16 45K
12: EX-10.13 Subordination Agreement, Dated March 31, 1995 9 34K
13: EX-10.14 Unconditional Guaranty, Made March 31, 1995 12 35K
14: EX-10.15 Subordinated Note, Dated March 31, 1995 16 68K
15: EX-10.16 Subordinated Note, Dated March 31, 1995 11 45K
16: EX-10.17 Form of Distribution Agreement 19 54K
17: EX-10.18 Form of Amendment Agreement 15 24K
18: EX-10.19 Addendum to Form of Distribution Agreement 4 18K
19: EX-10.22 Employment Agreement:Adzia 9 40K
20: EX-10.23 Employment Agreement:Garcia De Quevedo 16 40K
21: EX-10.24 Employment Agreement: Andruskiewicz 9 39K
22: EX-10.25 Employment Agreement:Foley 13 38K
2: EX-10.3 Stock Subscription Warrant, Dated March 31, 1995 26 96K
3: EX-10.4 Agreement Dated November 10, 1994 88 268K
4: EX-10.5 Purchase Agreement Amendment Dated Feb. 24, 1995 25 72K
5: EX-10.6 Second Purchase Agreement Amendment 2 15K
6: EX-10.7 Third Purchase Agreement Amendment 2 14K
7: EX-10.8 Loan and Security Agreement Dated March 31, 1995 185 566K
8: EX-10.9 Amendment No. 1 to Loan and Security Agreement 8 26K
23: EX-21.1 Subsidiaries of the Company 1 8K
24: EX-23.1 Consent of Kpmg Peat Marwick LLP 1 9K
25: EX-23.2 Consent of Price Waterhouse LLP 1 8K
26: EX-27.1 Financial Data Schedule 1 11K
EX-10.15 — Subordinated Note, Dated March 31, 1995
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Exhibit 10.15
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES OR "BLUE SKY" LAWS (COLLECTIVELY, "SECURITIES LAWS") AND
MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN REGISTERED
UNDER THE SECURITIES LAWS OR AN EXEMPTION FROM REGISTRATION APPLIES TO SUCH
TRANSFER OR DISPOSITION.
PROSOURCE, INC.
Subordinated Note
Due March 31,2002
New York, New York
U.S. $10,000,000 March 31, 1995
FOR VALUE RECEIVED, the undersigned, ProSource, Inc., a Delaware
corporation (the "Company"), hereby promises to pay to The Martin-Brower Company
("MB"), or registered assigns (in either case, the "Holder"), (i) the principal
sum of U.S. $10,000,000 on March 31, 2002 (the "Maturity Date"), and (ii)
interest at the Applicable Interest Rate on the unpaid principal of this Note
(including any capitalized interest and any amount added to the principal of
this Note pursuant to Section 1 that remains unpaid), payable on March 31 and
September 30 of each year, commencing September 30, 1996 (each an "Interest
Payment Date"), except as provided in Section 1. Interest shall be calculated on
the basis of a 365 or 366 day year, as appropriate, and the actual number of
days elapsed. Payments of principal and interest are to be made by bank wire
transfer, in immediately available funds, to an account specified by the Holder
by notice to the Company not less than five business days prior to the date such
payment is due, or, if the Holder so specifies by notice to the Company not less
than five business days prior to the date such payment is due or (if the Holder
has failed to specify an account to which a bank wire transfer is to be made),
by federal funds check payable to the order of the Holder, in lawful money of
the United States of America. Any payment of principal or payment of interest
that is due on a date that is not a business day shall be paid on the next
succeeding business day.
1. DEFERRAL OF INTEREST. The interest otherwise payable on September 30,
1996, March 31, 1997, September 30, 1997 and March 31, 1998 shall not be payable
in cash, but shall be accrued and added to the unpaid principal balance of this
Note and shall not he deemed due until the principal balance is otherwise
payable in accordance with the terms of this Note.
2. PREPAYMENTS. (a) Subject to the provisions of Section 3, the Company
shall have the right at any time or from time to time to repay this Note,
together with accrued interest on the amount prepaid, in whole or in part,
without premium or penalty.
(b) Subject to the provisions of Section 3, if the Company at any
time prepays or retires any principal amount of the Company's Indebtedness
for Money Borrowed which is owed to an Affiliate of the Company, the
Company shall prepay a portion of the unpaid principal balance of this
Note in an amount equal to 66.6% of the principal amount so prepaid or
retired. However, no prepayment hereunder shall be required by reason of
(i) the prepayment or retirement of the 12%
Convertible Note of the Company dated March 31, 1995 (the "Onex Ohio Note
") in the original principal amount of $3,500,000 payable to the order of
Onex Ohio Holdings, Inc to the extent that the proceeds utilized to fund
such prepayment or retirement result from an equity issuance by the
Company after the date of this Note or (ii) conversion of the Onex Ohio
Note to equity of the Company.
3. SUBORDINATION. The Company agrees, and the Holder by accepting this
Note agrees, as follows:
(a) The indebtedness evidenced by this Note is subordinated in right
of payment, to the extent and in the manner provided in this Section 3, to
the prior indefeasible payment in full of all Senior Indebtedness, and the
subordination and the provisions of this Section 3 are for the benefit of
the Administrative Agent and the Senior Creditors.
(b) The Company shall not make, and shall not allow any of its
Subsidiaries to make, directly or indirectly, in cash or other property or
in any other manner (including, without limitation, from or by way of
collateral but excluding by way of accrual and addition of interest to
principal hereunder in accordance with the provisions of Section 1), and
the Holder shall not ask, demand, sue for, take or receive from the
Company or any such Subsidiary, directly or indirectly, any payment of or
pledge or grant of a security interest in any property as collateral
security for the payment of any principal, interest or other amounts owing
under this Note or take any action to enforce the obligations of the
Company under this Note; provided, however, that subject to the provisions
of Section 3(c), (i) regularly scheduled (unaccelerated) payments of
principal and interest shall be made when and as due and payable hereunder
and (ii) subject to the provisions of Section 3(h) hereof the Holder shall
be entitled to ask, demand and sue for the payment of any principal,
interest or other amounts owing under this Note, in each case unless,
(i) at the time such payment otherwise is required to be made
hereunder, there exists and is continuing any Material Default or
Event of Default under the Bank Loan Agreement. or
(ii) any Default or Event of Default under the Bank Loan
Agreement would occur upon or by reason of such payment, or
(iii) if there is no Bank Loan Agreement in effect, there
exists any default in the payment, including payment upon
acceleration, of all or any installments of principal or interest on
Senior Indebtedness or any other default under any instruments
evidencing or governing the term of any Senior Indebtedness (or if
such a default on Senior Indebtedness would occur upon or by reason
of such payment),
provided, in each case that unless on or prior to the date that such
payment otherwise is required to be made hereunder, the Holder shall
have received a copy of a written notice (a "Payment Blockage
Notice") from the Administrative Agent (or if there is no
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Administrative Agent, any Senior Creditor) to the Company that there
exists a Material Default or Event of Default under the Bank Loan
Agreement (or if there is no Bank Loan Agreement in effect, any
default referred to in clause (iii) above), the Company may make and
the Holder may accept and retain such payment subject only to the
obligation to repay the amount so paid if the Holder subsequently is
notified that a Default or Event of Default (or default referred to
in clause (iii) above) occurred upon or by reason of such payment.
In the event that the Holder shall have received a Payment Blockage
Notice on or prior to the date that such payment otherwise is
required to be made hereunder, the Company shall not be entitled to
make and the Holder shall not be entitled to accept such payment or
any other payment hereunder for a period of 365 days after receipt
by the Holder of such Payment Blockage Notice (a "Payment Blockage
Period"), provided, that neither the continued existence of the
event or occurrence giving rise to such Payment Blockage Notice nor
the delivery of an additional Payment Blockage Notice with respect
thereto or any other event or occurrence that existed at the time of
the giving of such Payment Blockage Notice shall prevent the making
or acceptance of such payment beyond 365 days from the first such
Payment Blockage Notice.
(c) Upon any payment or distribution of assets of the Company or any
Subsidiary in the event of any dissolution or winding up or total or
partial liquidation or reorganization of the Company, whether voluntary or
involuntary or in bankruptcy, insolvency, receivership or other
proceedings, any payment or distribution of any kind whether in cash,
securities, or other property which shall be payable or deliverable upon
or with respect to any indebtedness evidenced by this Note shall be paid
or delivered directly to the Administrative Agent for the ratable benefit
of the Senior Creditors, or if there is no Administrative Agent, then
ratably to the Senior Creditors, until all of the Senior Indebtedness has
been indefeasibly paid in full. Before any payment in respect of this Note
may be made by the Company upon any such dissolution or winding up or
liquidation or reorganization, any payment or distribution of assets of
the Company to which the Holder would be entitled, except for the
provisions of this subsection (c), shall be made by the Company or by any
receiver, trustee in bankruptcy, liquidating trustee, agent or other
Person making such payment or distribution, or by the Holder if received
by it, directly to the Administrative Agent for the ratable benefit of the
Senior Creditors, or if there is no Administrative Agent, then ratably to
the Senior Creditors to the extent necessary to pay all Senior
Indebtedness in full after giving effect to any concurrent payment or
distribution to the holders of such Senior Indebtedness.
(d) If any proceeding referred to in subsection (c) above is
commenced by or against the Company,
(i) the Holder shall duly and promptly take such action as the
Administrative Agent, or if there is no Administrative Agent, any
Senior Creditor, may request (at the expense of the requesting
party) (A) to collect the obligations evidenced by this Note for the
account of the Administrative Agent and the Senior Creditors and to
file appropriate claims or proofs of claim in respect of such
obligations and this
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Note, (B) to execute and deliver to the Administrative Agent, or if
there is no Administrative Agent, any Senior Creditor, such powers
of attorney, assignments or other instruments as it may request in
order to enable it to enforce any and all claims with respect to the
obligations evidenced by this Note, and (C) to collect and receive
any and all payments or distributions which may be payable or
deliverable upon or with respect to other obligations evidenced by
this Note; and
(ii) the Administrative Agent, or if there is no
Administrative Agent, any Senior Creditor, is hereby irrevocably
authorized and empowered (in its own name or in the name of the
Holder or otherwise), but shall have no obligation, if, after demand
the Holder refuses to do so, to demand, sue for, collect and receive
every payment or distribution referred to in subsection (c) above
and give acquittance therefor and to file claims and proofs of claim
and take such other action (including, without limitation, voting
this Note and the obligations evidenced hereby) as it may deem
necessary or advisable for the exercise or enforcement of any of its
rights or interests hereunder.
(e) If, notwithstanding the foregoing provisions of this Section 3
prohibiting payments or distributions, the Holder receives any payment in
violation of paragraphs (b) or (c) of this Section 3, then and in such
event those payments or distributions shall be held in trust for the
benefit of and shall be promptly paid over or delivered to, the
Administrative Agent for the ratable benefit of the Senior Creditors, or
if there is no Administrative Agent, then ratably to the Senior Creditors
for application to the payment of all Senior Indebtedness remaining unpaid
to the extent necessary to pay in full the principal of, interest on, or
fees, costs or expenses relative to, or any other amounts due in respect
of, any of the Senior Indebtedness after giving effect to any concurrent
payment or distribution to the Senior Creditors.
(f) The Administrative Agent, or if there is no Administrative
Agent, any Senior Creditor, is hereby authorized to demand specific
performance of the provisions of this Section 3, whether or not the
Company shall have complied with any of the provisions hereof applicable
to it, at any time when the Holder shall have failed to comply with any of
the provisions of this Section 3 applicable to it. The Holder hereby
irrevocably waives any defense based on the adequacy of a remedy at law
which might be asserted as a bar to such remedy of specific performance.
(g) The Holder agrees that it will not at any time commence, or join
with any creditor other than any Senior Creditor in commencing, any
proceeding referred to in paragraph (c) of this Section 3 unless at such
time it is permitted to accelerate the obligations under this Note
pursuant to paragraph (h) of this Section 3 and has accelerated such
obligations.
(h) Anything herein or in any other agreement between the Company
and the Holder or applicable law to the contrary notwithstanding, in no
event shall the Holder have any right to accelerate The obligations under
this Note (i) prior to October 1, 1998, unless (A) all
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of the Senior Indebtedness shall have been accelerated or (B) a
bankruptcy, reorganization or insolvency proceeding shall have been
commenced by or against the Company, provided that if the Holder shall
accelerate the obligations hereunder upon the commencement of any such
proceeding and such proceeding thereafter shall be dismissed, then such
acceleration shall be rescinded and (ii) on or after October 1, 1998
during any Payment Blockage Period, unless (A) all of the Senior
Indebtedness shall have been accelerated or (B) a bankruptcy,
reorganization or insolvency proceeding shall have been commenced by or
against the Company, provided that if the Holder shall accelerate the
obligations hereunder upon the commencement of any such proceeding and
such proceeding thereafter shall be dismissed, then such acceleration
shall be rescinded; provided, however, that notwithstanding any other
terms or provisions of this Note, but nevertheless subject to the
provisions of this Section 3, the Holder shall be entitled to ask, demand
and sue for the payment of the obligations hereunder if the Holder has the
right (pursuant to this Section 3(h)) to accelerate the obligations
hereunder and has accelerated such obligations.
(i) No present or future holder of Senior Indebtedness shall be
prejudiced in its right to enforce subordination of this Note by any act
or failure to act on the part of the Company. Nothing contained in this
Section 3 is intended to or shall impair, as between the Company and its
Subsidiaries, their respective creditors (other than the Senior Creditors)
and the Holder, the obligation of the Company, which is absolute and
unconditional, to pay to the Holder the principal of and interest on this
Note, as and when the same become due and payable, or to affect the
relative rights against the Company of the Holder and other creditors of
the Company and its Subsidiaries (other than the holders of Senior
Indebtedness). Upon any distribution of assets of the Company or any
Subsidiary referred to in this Section 3, the Holder shall be entitled to
rely upon any order or decree made by any court of competent jurisdiction
in which such dissolution, winding up, liquidation or reorganization
proceedings are pending, or a certificate of the liquidating trustee or
agent or other Person making such distribution, delivered to the Holder,
for the purpose of ascertaining the Persons entitled to receive payment
from the Holder pursuant to subsection (e) of this Section 3, the amount
thereof or payable thereon, the amount or amounts paid or distributed
thereon and all the other facts pertinent thereto or to this Section 3.
(j) The provisions of this Section 3 shall continue to be effective
or be reinstated, as the case may be, if at any time any payment in
respect of any Senior Indebtedness is rescinded or must otherwise be
returned by the holder thereof upon the insolvency, bankruptcy or
reorganization of the Company or otherwise, all as though such payment had
not been made.
(k) In the event that cash, securities or other property otherwise
payable or deliverable to the Holder of this Note shall have been applied
to the payment of Senior Indebtedness in full, then the Holder of this
Note shall be subrogated, from and after such time as the Senior
Indebtedness shall have been paid in full and the commitments of the
Senior Creditors under the Bank Loan Agreement shall have terminated, to
any rights of any holder of Senior Indebtedness to receive any further
payments or distributions of assets of the Company applicable to the
Senior Indebtedness until this Note shall be paid in full. For
5
purposes of such subrogation, no payments or distributions to the holder
of Senior Indebtedness of any cash, property or securities to which the
Holder of this Note would be entitled except for the provisions of this
Section 3 shall, as between the Company and its creditors other than the
Senior Creditors on the one hand and the Holder of this Note on the other
hand, be deemed to have been made as a payment by the Company to the
holders of or on account of Senior Indebtedness.
(l) The Holder shall not
(i) cancel or otherwise discharge any of the obligations
evidenced by this Note (except upon payment in full thereof paid to
the Administrative Agent as contemplated by paragraph (e) of this
Section 3) or subordinate any of the obligations evidenced by this
Note to any indebtedness of the Company or its Subsidiaries other
than the Senior Indebtedness;
(ii) sell, assign, pledge, encumber or otherwise dispose of
any of the obligations evidenced hereby unless such sale,
assignment, pledge, encumbrance or disposition is made expressly
subject to the terms of this Section 3; or
(iii) permit the terms of this Note or of any other agreement
evidencing or relating to the obligations evidenced hereby to be
changed in such a manner as to have an adverse effect upon the
rights or interests of the Administrative Agent or any Senior
Creditor hereunder.
(m) All rights and interests of the Administrative Agent and the
Senior Creditors, and all agreements and obligations of the Holder and the
Company, under this Section 3 shall remain in full force and effect
irrespective of:
(i) any change in the time, manner or place of payment of, or
in any other terms of, all or any of the Senior Indebtedness, or any
other amendment or waiver or any consent to departure from the Bank
Loan Agreement or any other agreement or instrument evidencing or
relating to the Senior Indebtedness (the "Senior Indebtedness
Documents"); or
(ii) any exchange, release or non-perfection of any collateral
for the Senior indebtedness, or any release or amendment or waiver
of or consent to departure from any guaranty, for all or any of the
Senior Indebtedness.
(n) The provisions of this Section 3 evidence a continuing agreement
and shall (i) remain in full force and effect until the Senior
Indebtedness shall have been paid in full and the commitments of the
Senior Creditors under the Bank Loan Agreement shall have terminated (and
shall be reinstated and remain in full force and effect for the benefit of
any subsequent Senior Creditors), (ii) be binding upon the Holder, the
Company and their respective successors and assigns, and (iii) inure to
the benefit of and be enforceable by the
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Administrative Agent and the Senior Creditors and their respective
successors, transferees and assigns. Without limiting the generality of
clause (iii) of this Section 3(n), any Senior Creditor may assign or
otherwise transfer its interest in the Senior Indebtedness and the
instruments governing or evidencing such Senior Indebtedness to any other
Person in accordance with the Bank Loan Agreement, which Person shall
thereupon be vested with all the rights in respect thereof granted to such
Senior Creditor herein or otherwise.
(o) The Holder shall deliver written notice to the Administrative
Agent promptly upon the occurrence of an Event of Default under this Note
or the occurrence of any event that with the giving of notice or the
expiration of time or both would constitute an Event of Default under this
Note.
4. AFFILIATE SUBORDINATED INDEBTEDNESS. The Company shall not incur any
Indebtedness for Money Borrowed to an Affiliate of the Company ("Affiliate
Subordinated Indebtedness") unless the instruments evidencing or governing such
indebtedness provide that (i) no payments of principal of or interest on such
Affiliate Subordinated Indebtedness shall be made during the continuance of an
Event of Default under this Note and (ii) such Affiliate Subordinated
Indebtedness shall be subordinate in right of payment to the prior payment of
this Note in the event of any dissolution or winding up or liquidation or
reorganization of the Company, whether voluntary or involuntary or in
bankruptcy, insolvency, receivership or other similar proceedings. However, this
Section 4 shall not prohibit or otherwise restrict the (i) prepayment or
retirement of the Onex Ohio Note to the extent that the proceeds utilized to
fluid such prepayment or retirement result from an equity issuance by the
Company after the date of this Note or (ii) conversion of the Onex Ohio Note to
equity of the Company.
5. EVENTS OF DEFAULT; ACCELERATION.
(a) Any of the following events constitutes an "Event of Default
under this Note":
(i) the Company defaults in the payment of any portion of the
principal of this Note when such principal shall become due and
payable, and such default continues uncured for a period of five
business days after the Holder gives the Company notice of such
default; or
(ii) the Company defaults in the payment of any interest on
this Note when such interest shall become due and payable, and such
default continues uncured for a period of five business days after
the Holder gives the Company notice of such default; or
(iii) the Company defaults in the due observance or
performance of any other term, covenant, agreement or warranty of
the Company in this Note, and such default continues uncured for a
period of 30 days after the Holder gives the Company notice
specifying such default or breach and requesting that such default
or breach be remedied and stating that such notice is a notice of
default hereunder; or
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(iv) Senior Indebtedness or other Indebtedness for Money
Borrowed of the Company having an aggregate principal amount of at
least $10,000,000 shall have become due and payable prior to its
stated maturity by reason of a default or event of default
thereunder; or
(v) the Company pursuant to or within the meaning of any
Bankruptcy Law:
(1) commences a voluntary case in bankruptcy or any
other action or proceeding for any other similar relief under
any Bankruptcy Law,
(2) consents by answer or otherwise to the commencement
against it of an involuntary case of bankruptcy,
(3) seeks or consents to the appointment of a receiver,
trustee, assignee, liquidator, custodian or similar official
(collectively, a "Custodian") of it or for all or
substantially all of its assets,
(4) makes a general assignment for the benefit of its
creditors, or
(5) generally is unable to pay its debts as its debts
become due; or
(vi) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(1) is for relief against the Company in an involuntary
case of bankruptcy against the Company,
(2) appoints a Custodian of the Company for all or
substantially all of its assets, or
(3) orders the liquidation of the Company,
and the order remains unstayed and in effect for 30 days, or any
dismissal, stay, rescission or termination thereof ceases to remain
in effect.
(b) Subject to the provisions of Section 3, if any Event of Default
under this Note shall occur and be continuing, the Holder shall have the
right, by notice to the Company, to declare the entire principal amount
then outstanding on this Note and accrued interest thereon immediately due
and payable, whereupon all such amounts shall become immediately due and
payable, all without diligence, presentment, demand of payment, protest or
further notice of any kind, all of which are hereby expressly waived by
the Company, provided, however, that so long as any Senior Indebtedness is
outstanding, such declaration shall not become effective until the earlier
of (a) five business days after delivery of a notice to the Administrative
Agent (or, if there is no Administrative Agent, the Senior Creditors) that
the Holder has declared the principal of and interest on this Note to be
due and
8
payable immediately and (b) the acceleration of any Senior Indebtedness.
If the Company shall default in the payment of principal of, or interest
on, this Note, it will pay the Holder such amounts, to the extent lawful,
as shall be sufficient to pay costs and expenses of collection or of
otherwise enforcing the Holder's rights incurred in connection with the
exercise of any remedy whether provided herein or available under any
applicable law, including reasonable counsel fees and expenses.
The preceding paragraph is subject to the condition that if at any
time after the principal of this Note has been declared due and payable
and before any judgment with respect thereto has been entered, all arrears
of interest have been paid and every other Event of Default under this
Note has been made good or cured, then the Holder of this Note shall, by
written instrument filed with the Company, rescind and annul such
declaration and its consequences; but no such rescission shall extend to
or affect any subsequent default or Event of Default under this Note or
impair any right thereon. Upon any such rescission, any enforcement action
commenced pursuant to the preceding paragraph shall be terminated.
6. COVENANTS. Until payment in full of the principal of this Note and all
interest accrued hereunder:
(a) The Company will deliver to the Holder, within 120 days after
the end of the Company's fiscal year, a copy of the consolidated balance
sheet of the Company and its Consolidated Subsidiaries as at the end of
such fiscal year, and a consolidated statement of income and of changes in
the financial position of the Company and its Subsidiaries for such fiscal
year, prepared in accordance with generally accepted accounting principles
and accompanied by a reponed of KPMG Peat Marwick LLP or other independent
certified public accountants of nationally recognized standing.
(b) The Company will maintain its corporate existence, rights,
franchises, licenses and privileges in the jurisdiction of its
incorporation and qualify and remain qualified as a foreign corporation
authorized to do business in all jurisdictions in which it is required to
do so, except in all such cases where the failure to do so would not have
a Material Adverse Effect.
(c) The Company shall pay or discharge when due all taxes,
assessments, fees and governmental charges or levies imposed upon it or
upon its income or profits or upon any, properties belonging to it, except
that real property ad valorem taxes shall be deemed to have been paid or
discharged if the same are paid before they become delinquent except in
all such cases where the failure to do so would not have a Material
Adverse Effect.
(d) The Company shall not sell, lease or transfer or otherwise
dispose of all or substantially all of its assets to any Person.
(e) The Company shall not declare any dividends payable in cash or
property (other than capital stock of the Company), other than dividends
determined by the Board of
9
Directors of the Company in good faith to be comparable to dividends paid
by comparable companies.
(f) The Company will not, and will not permit any of its
Subsidiaries to, enter into or be a party to any transaction or
arrangement with any Affiliate of the Company, except upon terms
determined by the Board of Directors of the Company in good faith to be no
less favorable to the Company than would be obtained in a comparable
arm's-length transaction with a Person other than an Affiliate of the
Company. The foregoing shall not apply to the payment of management or
similar fee to Onex or any of its Subsidiaries in the amount of $792,796
in each calendar year, which may be increased by the Company in each year
after 1995 based on the Consumer Price Index - All Urban Consumers -
National Average (published by the United States Department of Labor
Statistics).
(g) The Company will not claim the benefit of any stay, extension or
usury law as a defense to its obligations to make payments pursuant to
this Note.
(h) The Company will not enter into any new agreement, or any
agreement to amend or otherwise modify any of its existing agreements,
that prohibits the Company from making scheduled payments under this Note
in accordance with the terms hereof in the absence of a default under such
other agreement.
7. TRANSFER OF THE NOTE. This Note may be transferred only in accordance
with this Section 7. If the Holder desires to transfer this Note to a Qualified
Purchaser pursuant to a bona fide written offer (an "Offer") to purchase this
Note for cash, the Holder shall give Onex written notice thereof ("Notice"),
attaching a copy of such Offer. If a Notice is given, Onex shall have the option
exercisable by notice to the Holder within 30 days after the date of such Notice
is given, to purchase or designate a Person to purchase this Note at the same
price and on the same terms as the Offer. If Onex does not exercise such option
within such 30-day period, the Holder shall have the right at any time within 30
days after the expiration of the 30-day option period provided for in this
Section 7, to sell this Note to the proposed transferee for the price and on the
terms set forth in the Offer. if this Note shall remain unsold at the end of
such 30-day period, this Note may not thereafter be transferred unless the
Holder again complies with this Section 7.
8. DEFINITIONS. For purposes of this Note:
"Administrative Agent" means NationsBank of Georgia, N.A. or any
successor agent appointed pursuant to the Bank Loan Agreement or if there
is no agent under the Bank Loan Agreement or if there is no Bank Loan
Agreement in effect, any other agent for the Senior Creditors.
"Affiliate" means, with respect to a Person, any Person (other than
a Subsidiary of such First Person) that, directly or indirectly through
one or more intermediaries, controls, or is controlled by, or is under
common control with, such First Person. The term "control" means
10
the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through
ownership of voting securities or partnership or other voting interest, by
contract or otherwise.
"Applicable Interest Rate" means: (i) for the period commencing on
April 1, 1995 and ending on March 31, 1996, 0% per annum; (ii) for the
period commencing on April 1, 1996 and ending on March 31, 1998, 4% per
annum; (iii) for the period commencing on April 1, 1998 and ending on
March 31, 1999, 7% per annum; (iv) for the period commencing on April 1,
1999 and ending on March 31, 2000, 10% per annum; and (v) for the period
commencing on April 1, 2000, 13% per annum.
"Bank Loan Agreement" means the Loan and Security Agreement dated as
of March 31, 1995, by and between ProSource Services Corporation, certain
of its Subsidiaries, the Lenders and the Co-Agents, and the Administrative
Agent, as agent for the Lenders, as the same shall be amended,
supplemented, restated or extended from time to time, including any such
amendment, supplement, restatement or extension resulting in an increase
in the amount of the credit facilities provided for thereunder.
"Bankruptcy Law" shall mean Title 11 of the United States Code or
any similar Federal, state, Canadian or provincial law for the relief of
debtors.
"Co-Agents" means NationsBank of Georgia, N.A., The First National
Bank of Boston and Shawmut Capital Corporation.
"Default" shall have the meaning ascribed thereto in the Bank Loan
Agreement.
"Division" means the business operated as the "National Accounts
Division" of MB and Martin-Brower of Canada, Ltd.
"Event of Default" shall have the meaning ascribed thereto in the
Bank Loan Agreement, except that an "Event of Default under this Note" has
the meaning specified in Section 5(a).
"Guaranty" (including, with correlative meaning, "Guaranteed") as
applied to any Indebtedness for Money Borrowed of another Person shall
mean
(a) a guaranty (other than by endorsement of negotiable instruments
for collection in the ordinary course of business), directly or
indirectly, in any manner, of any part or all of such Indebtedness for
Money Borrowed of such other Person, and
(b) an agreement, direct or indirect, contingent or otherwise, and
whether or not constituting a guaranty, the practical effect of which is
to assure the payment (or payment of damages in the event of nonpayment)
of any part or all of such Indebtedness for Money Borrowed of such other
Person by requiring
11
(i) the purchase of securities or obligations of such other
Person,
(ii) the purchase, sale or lease (as lessee or lessor) of
property or the purchase or sale of services primarily for the
purpose of enabling such other Person to make any payment (or
payment of damages in the event of nonperformance) of or on account
of any part or all of such Indebtedness for Money Borrowed, or to
assure the owner of such Indebtedness for Money Borrowed against
loss,
(iii) the supplying of fluids to or in any other manner
investing in such other Person for the purpose of enabling such
other Person to make any payment (or payment of damages in the event
of nonpayment) of or on account of any part or all of such
Indebtedness for Money Borrowed, or
(iv) repayment of amounts drawn under letters of credit issued
as security for Indebtedness for Money Borrowed of such other
Person.
"Indebtedness for Money Borrowed" of any Person means, without
duplication, (i) all indebtedness of such Person for money borrowed, (ii)
all indebtedness of such Person constituting obligations evidenced by
bonds, debentures, notes or similar instruments, (iii) all Indebtedness
for Money Borrowed of other Persons which such Person has Guaranteed to
the extent of the amount of the Guaranty, and (iv) in The case of the
Company, all obligations under the Bank Loan Agreement.
"Lender" means each of the financial institutions party from time to
time to the Bank Loan Agreement and its successors and assigns.
"Material Default" means any Default other than a Non-Material
Default.
"Material Adverse Effect" means a material adverse effect upon the
Company's business, assets, liabilities, condition (financial or
otherwise) or results of operations of the Company and its Subsidiaries,
taken as a whole.
"Non-Material Default" means a Default the existence of which the
Agent has actual notice of and as to which the Agent and the Required
Lenders under the Bank Loan Agreement have elected not to take any action
required to be taken under the Bank Loan Agreement as a precondition for
such Default to become an Event of Default.
"Onex" means Onex Corporation, a corporation organized under the
laws of Ontario, Canada.
"Onex Ohio Note" shall have the meaning ascribed thereto in Section
2(b).
"Person" means an individual, corporation, partnership, association,
trust or unincorporated organization, or a government or any agency or
political subdivision thereof
12
"Qualified Purchaser" means any Person not engaged in (and which
does not have a Subsidiary engaged in) the food distribution business or
the fast food or casual dining restaurant business.
"Reimbursement Obligations" means the Reimbursement Obligations as
defined in the Bank Loan Agreement.
"Senior Creditor" means each of the Lenders and each other holder,
from time to time, of any portion of the Senior Indebtedness, including,
without limitation, each creditor that extends credit to the Company for
the purpose of refinancing or repaying the Senior Indebtedness, in whole
or in part.
"Senior Indebtedness" shall consist of any obligation pursuant to
the Bank Loan Agreement to pay principal, premium (if any), interest,
reimbursements (including the Reimbursement Obligations) or indemnity
amounts and fees, costs or expenses (including interest that would accrue
on or after the filing of any petition in bankruptcy or for the
reorganization relating to the Company but for the filing of such
petition) or, following the irrevocable payment in full of all Secured
Obligations (as defined in the Bank Loan Agreement) and termination of the
Revolving Credit Facility (as defined in the Bank Loan Agreement), any
Indebtedness for Money Borrowed from any bank or institutional lender if
the agreement providing for such indebtedness provides that it is senior
in right of payment to the indebtedness evidenced by this Note.
"Subsidiary" means a Person of which an aggregate of 50% or more of
the stock of any class or classes or 50% or more of other ownership
interests is owned of record or beneficially by such other Person, or by
more or one Subsidiaries of such other Person, or by such other Person and
one or more Subsidiaries of such Person.
9. NOTICES. All notices hereunder shall be in writing and delivered
personally or sent by telecopier or by registered or certified mail (return
receipt requested) to the Holder or the Company at the following addresses (or
such other addresses as shall be specified by like notice):
(a) If to Holder, to:
The Martin-Brower Corporation
1020 West 31st Street
Downers Grove, Illinois 60515-5508
Attention: President
Phone: (708) 663-4355
Facsimile: (708) 663-4237
13
with copies to:
Dalgety plc
100 George Street
London WIH 5RH
United Kingdom
Attention: Commercial Director
Facsimile: 44/71/493-0892
and
McDermott, Will & Emery
227 West Monroe Street
Chicago, Illinois 60603-4067
Attention: C. E. Hussey II
Facsimile: (312) 984-2097
and, so long as any Senior Indebtedness under the Bank Loan
Agreement shall remain outstanding, to
NationsBank of Georgia, N.A.
Business Credit Division
600 Peachtree Street
13 Plaza
Atlanta, Georgia 30308
Attention: John W. Getz
Facsimile: (404) 607-6439
(b) If to the Company, to:
ProSource, Inc.
550 Biltmore Way, 10th Floor
Coral Gables, Florida 33134
Attention: President
Facsimile: (305) 529-2573
with copies to:
Onex Corporation
Canada Trust Tower
161 Bay Street -49th Floor
Toronto, Ontario, Canada M5J 2S1
Attention: Gerald W. Schwartz
Facsimile: (416)362-5765
14
and
Kaye, Scholer, Fierman, Hays & Handler
425 Park Avenue
New York, New York 10022
Attention: Joel I. Greenberg, Esq.
Phone: (212) 836-8201
Facsimile: (212) 836-7149
and, so long as any Senior Indebtedness under the Bank Loan
Agreement shall remain outstanding, to
NationsBank of Georgia, N.A.
Business Credit Division
600 Peachtree Street
13 Plaza
Atlanta, Georgia 30308
Attention: John W. Getz
Facsimile: (404) 607-6439
(c) if to the Administrative Agent to:
NationsBank of Georgia, N.A.
Business Credit Division
600 Peachtree Street
13 Plaza
Atlanta, Georgia 30308
Attention: John W. Getz
Facsimile: (404) 607-6439
All notices shall be deemed given when received by the addressees.
15
10. CHOICE OF LAW. This Note shall be construed and enforced in accordance
with the laws of the State of New York, without reference to the choice of law
principles thereof.
WITNESS WHEREOF, the Company has caused this Note to be signed on its
behalf, in its corporate name, by its duly authorized officer, as an instrument
under seal, as of the day and year first above written.
PROSOURCE, INC.
By:/s/ D.R. PARKER
------------------------
Chairman
Attest:
16
Dates Referenced Herein and Documents Incorporated by Reference
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