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EXHIBIT 4.06
PAYMENT ON THIS JUNIOR SUBORDINATED PROMISSORY NOTE IS
SUBORDINATED TO THE CLAIMS OF THE SENIOR LENDER REFERRED
TO IN THAT INTERCREDITOR AND SUBORDINATION AGREEMENT DATED
AS OF DECEMBER 21, 1994 BETWEEN ▇▇▇▇▇-▇▇▇▇▇▇▇ FIBERGLAS
CORPORATION AND BARCLAYS BUSINESS CREDIT, INC.
JUNIOR SUBORDINATED PROMISSORY NOTE
in the aggregate principal amount of
$7,500,000
(Subject to Adjustment as Provided Herein)
issued on
December 23, 1994
by
OCTANS, INC.
(being renamed FLUID CONTAINMENT, INC.)
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TABLE OF CONTENTS
PAGE
1. Payment Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3. Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.1 Reports and Rights of Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(a) Quarterly Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(b) Annual Statements; . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(c) Officers' and Accountant's Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(d) Operating Budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(e) Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.2 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4. Additional Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.1 Events of Default; Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.2 Suits for Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6. Subordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(a) Default on Senior Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(b) Dissolution, Liquidation or Reorganization of the Company . . . . . . . . . . . . . . . . . . . . . 10
(c) Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(d) Payments Held in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(e) Changes in Senior Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(f) Third Party Beneficiary, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(g) Rights of Holder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(h) Authorization to Senior Lenders to Take Action to Effectuate Subordination . . . . . . . . . . . . . 12
(i) Rights of Holders of Senior Debt Not to be Impaired, Etc . . . . . . . . . . . . . . . . . . . . . . 12
(j) Distribution or Notice to Representative; Reliance . . . . . . . . . . . . . . . . . . . . . . . . . 12
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TABLE OF CONTENTS
(Continued)
PAGE
7. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.1 No Right of Set-Off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.2 Amendments, Waivers, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.3 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.4 Rights Confined to Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.5 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.6 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.7 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.8 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.9 Governing Law and Consent to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.10 Agent for Service of Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.11 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.12 Waiver of Usury Defense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.13 Payment and Return of Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
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OCTANS, INC.
(BEING RENAMED FLUID CONTAINMENT, INC.)
JUNIOR SUBORDINATED PROMISSORY NOTE
$7,500,000 December 23, 1994
New York, New York
1. Payment Obligation.
OCTANS, INC. (BEING RENAMED FLUID CONTAINMENT, INC.), a Nevada
corporation (the "COMPANY"), for value received, hereby promises (i) to pay to
▇▇▇▇▇-▇▇▇▇▇▇▇ Fiberglas Corporation, a Delaware corporation ("HOLDER"), or its
permitted assigns, the principal amount of SEVEN MILLION FIVE HUNDRED THOUSAND
DOLLARS ($7,500,000), consisting of $7,000,000 of purchase price and $500,000
of reimbursed severance-related costs under that certain Asset Purchase
Agreement of even date herewith (the "SALE AGREEMENT") among the Company,
Holder and Fluid Containment Property, Inc., and as such amount may be adjusted
in accordance with the provisions of Sections 3.4 and 6.4(b) or offset, if
applicable, in accordance with the provisions of Section 8.5 of the Sale
Agreement, and (ii) to pay interest (computed on the basis of a 360-day year of
twelve 30-day months) on the unpaid principal amount hereof at the rate of TEN
PERCENT (10%) per annum; provided, however that interest shall be payable on
any overdue principal, and, to the extent permitted by applicable law, on any
overdue interest, at the rate of FOURTEEN PERCENT (14%) per annum until the
same shall be paid. Accrued interest under this Junior Subordinated Promissory
Note (this "NOTE") shall be paid semiannually, in cash, on the last day of June
and December of each year, commencing June 30, 1995, and the principal balance
of this Note together with all accrued, unpaid interest hereunder shall be
payable on December 31, 1999. Payments of principal and interest on this Note
shall be made by wire transfer in immediately available funds to an account
designated by the Holder, in lawful money of the United States of America.
Payments herein will first be applied to interest due and then to principal.
Notwithstanding the foregoing, the Company may pay up to two installments of
interest due under this Note in-kind by adding the amount of such interest to
the principal balance due; provided the Company delivers written notice to
Holder at least 3 days prior to the date the installment of interest proposed
to be paid in-kind is due and payable hereunder that the Company wishes to pay
such installment in-kind; and provided further that such payment in-kind would
not result in the interest payable under this Note being in violation of
applicable laws.
The Company may at its election prepay this Note in whole, or in part,
without premium, but with interest accrued but unpaid thereon through the date
of prepayment.
This Note is subject to the following additional provisions, terms and
conditions:
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2. Definitions.
"AFFILIATE" means a Person that directly, or indirectly through one or
more intermediaries, controls, is controlled by or is under common control
with the Person specified. For purposes of this definition, the term
"control" (including the terms "controlling," "controlled by" and "under
common control with") of a Person means the possession, direct or indirect,
of the power to (i) vote more than 50% of the Voting Stock of such Person
or (ii) direct or cause the direction of the management and policies of
such Person, whether by contract or otherwise.
"AUTHORIZED OFFICER" means the President, any Vice President or the
Controller of the Company.
"BLOCKAGE PERIOD" has the meaning assigned to such term in Section
6(a).
"CLOSING" has the meaning assigned such term in the Sale Agreement.
"CLOSING DATE" means the date of the Closing.
"COMPANY" has the meaning specified in the first paragraph hereof and
shall include any successor in interest to the Company.
"DEFAULT" means any event or condition which, with due notice or lapse
of time or both, would become an Event of Default.
"DISTRIBUTION OF ASSETS" means any distribution of assets of the
Company of any kind or character, whether (a) a payment, purchase or other
acquisition or retirement for cash, property or securities, or (b) by way
of cancellation, forgiveness or offset of the Indebtedness evidenced by
this Note against any Indebtedness owed to the Company by Holder or any
subsequent holder of this Note, or (c) payable or deliverable by reason of
the payment of any other Indebtedness of the Company which is subordinated
to the payment of this Note; provided, however, that no Distribution of
Assets shall be deemed to occur in the event of a distribution of
securities of the Company or any other Person provided for by a plan of
reorganization or comparable arrangement in the case of an insolvency,
bankruptcy, receivership, dissolution, liquidation or comparable
proceeding, the payment of which is subordinated, at least to the same
extent as this Note, to the payment of all Senior Debt which may at the
time be outstanding and the principal of which securities is due no earlier
than the principal of this Note.
"EVENT(S) OF DEFAULT" has the meaning specified in Section 4.1.
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"GAAP" means, as of the date of any determination with respect thereto,
generally accepted accounting principles as used by the Financial
Accounting Standards Board and/or the American Institute of Certified
Public Accountants, consistently applied and maintained throughout the
periods indicated.
"HOLDER" has the meaning specified in the first paragraph hereof and
shall include any successor in interest to or permitted assigns of the
Holder.
"INDEBTEDNESS" means, with respect to any Person, (a) all
indebtedness, obligations and other liabilities (contingent or otherwise)
of such Person for borrowed money or evidenced by bonds, debentures, notes
or similar instruments (whether or not the recourse of the lender is to the
whole of the assets of such Person or to only a portion thereof); (b) all
reimbursement obligations and other liabilities (contingent or otherwise) of
such Person with respect to letters of credit or bankers' acceptances issued
for the account of such Person or with respect to interest rate protection
agreements or currency exchange agreements; (c) all obligations and other
liabilities (contingent or otherwise) of such Person with respect to any
conditional sale, installment sale or other title retention agreement,
purchase money mortgage or security interest, or otherwise to pay the
deferred purchase price of property or services (except trade accounts
payable and accrued expenses arising in the ordinary course of business) or
in respect of any sale and leaseback arrangement; (d) all obligations and
liabilities (contingent or otherwise) in respect of leases by such Person as
lessee which, in conformity with GAAP, are required to be accounted for as
capitalized lease obligations on the balance sheet of such Person; and (e)
all direct or indirect guaranties or similar agreements in respect of, and
obligations or liabilities (contingent or otherwise) to purchase or
otherwise acquire or otherwise to assure a creditor against loss in respect
of, indebtedness, obligations or liabilities of others.
"NOTE" has the meaning specified in the first paragraph hereof.
"NON-PAYMENT DEFAULT" has the meaning assigned to such term in Section
6(a).
"PAYMENT DEFAULT" has the meaning assigned to such term in Section
6(a).
"PAYMENT IN FULL" or "PAID IN FULL" means indefeasible payment in
full, in cash, cash equivalents or as otherwise may be acceptable to the
applicable creditor.
"PERSON" means and includes an individual, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization and a
government or any department or agency thereof.
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"REPLACEMENT FACILITY" means any agreements or instruments evidencing
any amendment, extension, renewal, refunding or refinancing of any Senior
Debt.
"REPRESENTATIVE" means, with respect to any issue of Senior Debt, the
trustee, agent or other representative for all or any of the Senior
Lenders, if any, designated in the indenture, agreement or other document
creating, evidencing or governing such Senior Debt or pursuant to which it
was issued, or otherwise duly designated by the holders of such Senior
Debt; provided that in any case notice of the identity of the
Representative shall have been given to Holder, and as of the date hereof
the Representative is Barclays Business Credit, Inc. which shall be the
Representative until another Representative has been designated by notice
to Holder.
"SALE AGREEMENT" has the meaning specified in the first paragraph
hereof.
"SENIOR CREDIT AGREEMENT" means that certain Loan and Security
Agreement (the "Barclays Agreement"), dated as of December 21, 1994,
entered into between the Company and Barclays Business Credit, Inc.
("Barclays"), as the same may be amended from time to time, or in the event
the Loan and Security Agreement with Barclays shall no longer be in effect,
the agreement, if any, evidencing the largest principal amount of senior
debt of the Company outstanding.
"SENIOR DEBT" means the following, whether outstanding on the date of
this Note or hereafter created, incurred or assumed by the Company:
(a) the principal of, the premium and interest on, all loans,
letters of credit and bankers' acceptances to the Company by, and other
Indebtedness for borrowed money of the Company to, any Person (other
than by an Affiliate of the Company, or by an officer, director or
shareholder of the Company, other than an institutional lender or
investor, or by any Person which is an Affiliate of any of the
foregoing other than a Person which is an institutional lender or
investor), however evidenced, and all commitment, facility and other
fees, and all expenses, reimbursements, indemnities and other amounts
payable by the Company thereunder or with respect thereto;
(b) any Replacement Facility;
(c) all interest accrued or accruing on any obligation
described in clause (a) or (b) above after the commencement of any
insolvency, bankruptcy or receivership case or proceeding in
accordance with and at the contract rate (including, without
limitation, any rate applicable upon default) specified in the
agreement or instrument creating, evidencing or
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governing any such Indebtedness, whether or not, pursuant to
applicable law or otherwise, the claim for such interest is allowed as
a claim in such case or proceeding; and,
(d) any refundings, renewals, extensions, substitutions,
refinancings or replacements of any obligation described in clauses (a)
or (b) above (including those that increase the amount of such
obligation).
"SENIOR LENDER" or "SENIOR LENDERS" means one or more of the holders of
the Senior Debt and includes the respective Representatives of such holders.
"VOTING STOCK" means capital stock or other equity interest of any
class or classes of a corporation or other entity the holders of which are
ordinarily, in the absence of contingencies, entitled to vote for the
election of corporate directors (or Persons performing similar functions).
3. Covenants. The Company covenants and agrees that, commencing on
the Closing Date and so long as this Note shall remain outstanding:
3.1 Reports and Rights of Inspection. The Company will keep
proper accounts of its business and affairs and furnish to Holder:
(a) Quarterly Statements. As soon as available after the end
of each fiscal quarter (except the last) of each fiscal year of the
Company, but in any case no later than 45 days after the end of such
quarter, copies of:
(1) the balance sheet of the Company as of the close of
such period, and
(2) the statements of operations and cash flows and
changes in financial position of the Company for the portion of the
fiscal year ending with such period,
in each case, setting forth in comparative form (if available) the figures
for the corresponding period of the preceding fiscal year, all in
accordance with GAAP consistently applied (except for changes disclosed
therein and concurred in by the independent public accountants referred to
in Section 3.1(b) below) and in reasonable detail and certified by the
controller of the Company as presenting fairly in all material respects
the information contained therein as of the date of such financial
statements and for the period covered thereby, subject to normal year-end
audit adjustments;
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(b) ANNUAL STATEMENTS. As soon as available after the close
of each fiscal year of the Company, but in any case no later than 90 days
after the end of such year, copies of:
(1) the balance sheet of the Company as of the close of
such fiscal year, and
(2) the statements of operations and cash flows of the
Company for such fiscal year,
in each case setting forth in comparative form the figures for the
preceding fiscal year (if available), all in reasonable detail and
accompanied by an opinion thereon of a firm of independent public
accountants of recognized national standing to the effect that such
financial statements have been prepared in accordance with GAAP (except for
changes in which such accountants concur), that such financial statements
present fairly in all material respects the financial condition of the
Company as of the date of the financial statements and for the period
covered thereby and that the examination of such accountants in connection
with such financial statements has been made in accordance with generally
accepted auditing standards; provided, however, that the Company shall not
be required to furnish Holder with copies of its balance sheet and
statements of operations and cash flows for its fiscal year ended December
31, 1994;
(c) OFFICERS' AND ACCOUNTANT'S CERTIFICATES. Together with the
financial statements referred to in Sections 3.l(a) and (b) above, a
certificate of the controller of the Company stating that he or she has
reviewed the provisions of this Agreement and setting forth, to the best of
his or her knowledge, in his or her capacity as an officer of the Company,
whether there existed as of the date of such financial statements and
whether there exists on the date of the certificate or existed at any time
during the period covered by such financial statements any Default or Event
of Default and, if, to the best of his or her knowledge in his or her
capacity as an officer of the Company, any such condition or event exists
on the date of the certificate, specifying the nature and period of
existence thereof and the action the Company is taking and proposes to take
with respect thereto; and, together with the financial statements referred
to in Section 3,1(b) above, a certificate of the Company's accountants
stating that in the course of their audit of the Company they have obtained
no knowledge that a Default or Event of Default has occurred and is
continuing, or if, in the opinion of such accountants, a Default or Event
of Default has occurred and is continuing, a statement as to the nature
thereof, and
(d) OPERATING BUDGET. As soon as available and in any event
no later than thirty (30) days prior to the end of each fiscal year of the
Company, an annual operating budget for the Company, projecting operating
statistics and financial reports for the following fiscal year; and
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(e) NOTICE OF DEFAULTS. Promptly (and in any event within 2
business days) following any Authorized Officer becoming aware of the
occurrence of any Default or Event of Default under this Note, notice in
writing to the Holder of such Default or Event of Default.
Without limiting the foregoing, the Company will permit the Holder (and its
advisors) to examine all books of account, records, reports and other
papers of the Company, to make copies and extracts therefrom, and to
discuss its affairs, finances and accounts with its officers and employees,
all during regular business hours and to the extent reasonably necessary
for Holder to verify that the Company is in compliance with the terms of
this Note; provided that prior to receiving any nonpublic, confidential or
proprietary information concerning the Company, Holder shall execute and
deliver to the Company an agreement reasonably acceptable to the Company
agreeing to keep any such information confidential.
3.2 FURTHER ASSURANCES. From time to time hereafter, the
Company will execute and deliver, or will cause to be executed and delivered,
such additional instruments and other documents consistent with the terms of
this Note, and shall take such further actions as the Holder may reasonably
request, for the purposes of effectuating, carrying out and complying with the
provisions of this Note.
4. ADDITIONAL COVENANTS. The Company covenants and agrees that,
commencing on the Closing Date, so long as this Note shall remain outstanding,
the Company shall comply with the affirmative and negative covenants set forth
in the Senior Credit Agreement, as may be in effect from time to time, except
that in the case of the Barclays Agreement the Company need not comply with the
covenants set forth in Section 8.1, 8.2.6, 8.2.8, 8.2.11, 8.2.13 or 8.3 thereof
(and such in any case the foregoing covenants as applicable shall be deemed to
be incorporated herein as if set forth herein in full, provided that if a
Senior Credit Agreement shall no longer be in effect the covenants set forth in
the Senior Credit Agreement most recently in effect shall be the covenants
deemed incorporated herein (except that any consent to be given by the lender
thereunder is to be given by Holder), so long as such covenants were not agreed
to or amended in anticipation of the termination of such Senior Credit
Agreement.
5. EVENTS OF DEFAULT.
5.1 EVENTS OF DEFAULT: REMEDIES. If, at any time that this
Note or any portion of this Note shall be outstanding, any of the following
events (herein called "EVENTS OF DEFAULT") shall have occurred and be continuing
(whatever the reason for such Event of Default and whether it shall be voluntary
or involuntary or by operation of law or otherwise):
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(a) the Company shall default in the due and punctual payment
of all or any part of the principal of or interest on this Note when
and as the same shall become due and payable, whether at stated
maturity, by acceleration or otherwise and, in the case of payment of
interest, such default shall continue unremedied for a period of three
days after Holder has given written notice to the Company;
(b) the Company shall default in the performance or
observance in any material respect of any of the covenants, agreements
or conditions contained in this Note, and such default shall continue
unremedied for a period of 30 days after Holder has given written
notice to the Company;
(c) any uncured and unwaived Event of Default shall occur
with respect to any Indebtedness of the Company to any holder of Senior
Debt, the effect of which is that all or any portion of such
Indebtedness becomes immediately due and payable prior to the stated
maturity thereof and such holder of Senior Debt takes steps to effect
collection thereof;
(d) the Company shall (i) apply for or consent to the
appointment of, or the taking of possession by, a receiver, custodian,
trustee or liquidator in respect of itself or of all or a substantial
part of its property, (ii) be generally unable to pay its debts as
such debts become due, (iii) make a general assignment for the benefit
of its creditors, (iv) commence a voluntary case under the Federal
Bankruptcy Code, (v) fail to controvert in a timely or appropriate
manner, or acquiesce in writing to, any petition filed against it in an
involuntary case under the Federal Bankruptcy Code, (vi) admit in
writing its inability to pay its debts generally as such debts become
due or (vii) take any action under the laws of its jurisdiction of
organization analogous to any of the foregoing, or take any requisite
corporate action for the purpose of effecting any of the foregoing;
(e) a proceeding or case shall be commenced, without the
application or consent of the Company in any court of competent
jurisdiction, seeking (i) the liquidation, reorganization, dissolution,
winding-up, or composition or readjustment of the debts of the Company,
(ii) the appointment of a trustee, receiver, custodian, liquidator or
the like of the Company or of all or any substantial part of the assets
of the Company, or (iii) similar relief in respect of the Company,
under any law providing for the relief of debtors generally, and such
proceeding, case or appointment shall continue undismissed, or unstayed
and in effect, for a period of 60 days after notice thereof, or an
order for relief shall be entered in an involuntary case under the
Federal Bankruptcy Code against the Company and shall continue
undismissed, or unstayed and in effect, for a period of 60 days; and
(f) final judgment for the payment of money in excess of
$1,000,000 shall be rendered by a court of competent jurisdiction
against the Company, and the Company shall not discharge the same or
provide for its discharge in accordance with its terms, or procure a
stay for execution thereof, within 30 days from the date of entry
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thereof and within said period of 30 days, or such longer period
during which execution of such judgment shall have been stayed, appeal
therefrom and cause the execution thereof to be stayed during such
appeal;
then, (x) in the case of any Event of Default described in Section 5.1 (d) or
(e) the unpaid principal amount of this Note together with the interest accrued
thereon shall automatically become immediately due and payable, or (y) in the
case of any other Event of Default, the Holder, by written notice, may declare
the unpaid principal amount of the Note at the time outstanding to be, and the
same shall forthwith become, immediately due and payable, in each case together
with the interest accrued thereon.
5.2 SUITS FOR ENFORCEMENT. If any Event of Default shall have
occurred and be continuing, (i) the Holder may, subject to the terms of
Section 6, proceed to protect and enforce its rights, either by suit in
equity or by action at law, or both, whether for the specific performance of
any covenant or agreement contained in this Note or in aid of the exercise of
any power granted in this Note, or the Holder may proceed to enforce the payment
of all sums due upon this Note or to enforce any other legal or equitable right
of the Holder and (ii) the Company will pay to the Holder such further amounts,
to the extent lawful, as shall be sufficient to pay the reasonable,
out-of-pocket costs and expenses of collection or of otherwise enforcing such
Holder's rights, including reasonable counsel fees and costs.
6. SUBORDINATION. Other than for the subordination provisions
contained in the Intercreditor and Subordination Agreement entered into
pursuant to the Barclays Agreement (which shall be applicable in respect
thereof in lieu of the provisions of this Section 6) and anything in this Note
to the contrary notwithstanding, the Company covenants and agrees, and Holder
and, by its acceptance of this Note, any subsequent holder of this Note
likewise covenants and agrees, that the Indebtedness of the Company hereunder
shall be junior and subordinate to the Senior Debt to the extent and in the
manner set forth in this Section 6. Each Subsection of this Section 6 shall be
given independent effect so that if a particular payment is prohibited by any
one of such Subsections, it shall be prohibited although it otherwise would not
be prohibited by another Subsection.
(a) DEFAULT ON SENIOR DEBT. If any default in the payment
when due (whether at maturity or upon acceleration or mandatory prepayment, or
on any principal installment payment date or interest payment date, or
otherwise) of any Senior Debt shall at any time occur (a "PAYMENT DEFAULT") or
there shall at any time exist any Event of Default (other than a Payment
Default) under any Senior Debt pursuant to which such Senior Debt may be
accelerated (a "NON-PAYMENT DEFAULT"), then at all times thereafter until
Payment in Full of all Senior Debt, such Payment Default or Non-Payment Default
shall have been cured, or such Payment Default or Non-Payment Default or the
benefits of this sentence shall have been waived in writing by or on behalf of
the Senior Lenders that hold such Senior Debt, the Company shall not, directly
or indirectly, make any payment (other than payments of interest in-kind in
accordance with Section 1 above) or Distribution of Assets with respect to this
Note. Notwithstanding the foregoing, (i) in the event of a Non-Payment Default,
unless the Senior
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Debt with respect thereto has been accelerated within 179 days after
written notice thereof to the Company (the "Blockage Period") and that
acceleration has not been rescinded, the Company is required to pay to
Holder forthwith all sums not paid to Holder during the Blockage Period
due to the foregoing prohibitions and to resume any and all other
payments, as and when due, on the Note and in the event that all such
payments are made to Holder at or before the end of the Blockage
Period, Holder will have no right to accelerate the principal of this
Note as a result of any failure by the Company to make such payments
during the Blockage Period; (ii) the provisions of the first sentence
of this paragraph (a) shall not be applicable in the case of any
Non-Payment Default for more than 179 days during any period of 365
consecutive days; and (iii) no circumstance or event giving rise to a
Non-Payment Default existing on the date of any other Non-Payment
Default applicable pursuant to such sentence shall be the basis for a
subsequent Non-Payment Default. The Company shall give prompt notice to
Holder and any subsequent holder of this Note of any Payment Default or
Non-Payment Default, of the commencement of any Blockage Period, and
any Payment in full, cure or waiver of the benefits of the first
sentence of this paragraph (a) as referred to in such first sentence.
(b) Dissolution, Liquidation or Reorganization of the Company.
In the event of any insolvency, bankruptcy or receivership case or
proceeding, or any dissolution, winding up, liquidation, or
reorganization or other similar proceedings, relative to the Company,
its property or its operations (whether voluntary or involuntary and
whether in bankruptcy, insolvency or receivership proceedings or
otherwise) or upon an assignment for the benefit of creditors, or any
other marshalling of the assets of the Company, then all Senior Debt
shall first be Paid in Full before Holder or any subsequent holder of
this Note shall be entitled to receive or retain any payment or
Distribution of Assets with respect to this Note made after the
initiation of any such proceeding, assignment or marshalling. In any
such proceedings, any such payment or Distribution of Assets to which
Holder or any such subsequent holder would be entitled if this Note
were not subordinated to the Senior Debt shall be paid by the Company
or by the trustee or agent or other Person making such payment or
distribution, or by Holder or such subsequent holder if received by
Holder or such subsequent holder, directly to the Senior Lenders
(pro rata in accordance with the amount of the Senior Debt owing to
the Senior Lenders) to the extent necessary to make Payment in Full
of all Senior Debt, after giving effect to any concurrent payment or
distribution to or for the benefit of the Senior Lenders.
(c) Subrogation. No payment or Distribution of Assets to
which Holder or any subsequent holder of this Note would have been
entitled except for the provisions of this Section 6 and which
has been received by or paid over to the Senior Lenders or their
Representative shall, as between the Company, its creditors other
than the Senior Lenders, and Holder or any subsequent holder of this
Note, be deemed to be a payment by the Company to the Senior Lenders
or on account of the Senior Debt, and from and after the Payment in
Full of all Senior Debt, Holder or any subsequent holder of this Note
shall be subrogated to all then or thereafter existing rights of the
Senior Lenders to receive payments or Distributions of Assets made on
the Senior Debt until this Note shall be Paid in Full.
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(d) Payments Held in Trust. If Holder or any subsequent
holder of this Note shall receive any payment or Distribution of Assets
which Holder or such subsequent holder is not entitled to retain under
the provisions of this Section 6, any such payment or Distribution of
Assets so received shall be held in trust for the Senior Lenders and
shall be paid to the Senior Lenders (pro rata) to the extent necessary
to make Payment in Full of all Senior Debt, after giving effect to any
concurrent payment or distribution to or for the benefit of the Senior
Lenders.
(e) Changes in Senior Debt. Any Senior Lender may at any time
and from time to time without the consent of or notice to Holder or any
subsequent holder of this Note: (a) extend, renew, modify, waive or
amend the terms of the Senior Debt; (b) sell, exchange, release or
otherwise deal with any property pledged, mortgaged or otherwise
securing Senior Debt; (c) release any guarantor or any other Person
(except the Company) liable in any manner for the Senior Debt or amend
or waive the terms of any guaranty of the Senior Debt; (d) exercise or
refrain from exercising any rights against the Company or any other
Person; (e) apply any sums by whomever paid or however realized to
Senior Debt; and (f) take any other action which otherwise might be
deemed to impair the rights of the Senior Lenders. Any and all of such
actions may be taken by the Senior Lenders without incurring
responsibility to Holder or any subsequent holder of this Note and
without impairing or releasing the obligations of Holder or any
subsequent holder of this Note to the Senior Lenders.
(f) Third Party Beneficiary, Etc. The foregoing provisions of
this Section 6 are solely for the purpose of defining the relative
rights of the Senior Lenders on the one hand and Holder and any
subsequent holder of this Note on the other hand. Such provisions are
for the benefit of the Senior Lenders (and their successors and
assigns) and shall be enforceable by them directly against Holder and
any such subsequent holder (and their successors and assigns). This
Section 6 shall constitute a continuing offer to all Persons who become
holders of, or continue to hold, Senior Debt (whether such Senior Debt
was created or acquired before or after the issuance of this Note).
This Section 6 may not be amended without the consent of each Senior
Lender.
(g) Rights of Holder. Nothing in this Note is intended to or
shall impair, as between the Company and Holder or any subsequent
holder, the obligation of the Company, which is unconditional and
absolute, to pay to Holder or such subsequent holder the principal of
and interest on this Note as and when the same shall become due in
accordance with its terms, or is intended to or shall affect the
relative rights against the Company of Holder or such subsequent holder
and creditors of the Company other than the Senior Lenders. The failure
to make a payment on account of this Note by reason of any provision of
this Section 6 shall not be construed as preventing the occurrence of
an Event of Default, nor shall anything herein prevent Holder or any
subsequent holder from exercising all remedies otherwise permitted by
applicable law upon default under this Note, subject, however, to (i)
the rights under this Section 6 of the Senior Lenders to receive
payments or Distributions of Assets otherwise payable to or received by
Holder or any subsequent holder of this Note upon the exercise of any
such remedy
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and (ii) the limitation on the ability of any holder of this Note to
accelerate the principal of this Note during any Blockage Period as
provided in Section 6(a) above.
(h) Authorization to Senior Lenders to Take Action to
Effectuate Subordination. If Holder or any subsequent holder of this
Note does not take all such action as may be necessary or appropriate
to effectuate the subordination provided in this Section 6, including,
in the event of any insolvency, bankruptcy or receivership case or
proceeding or any dissolution, winding-up, liquidation, reorganization
or other similar proceedings relative to the Company (whether voluntary
or involuntary and whether in bankruptcy, insolvency or receivership
proceedings or otherwise), the timely filing of a claim for the unpaid
balance of this Note in the form required in such proceedings and the
causing of such claim to be approved, prior to 30 days before the
expiration of the time to file such claims or proofs, then the Senior
Lenders are hereby authorized, and shall have the right (without any
duty), to demand, ▇▇▇ for, collect, receive and receipt for the
payments and distributions in respect of this Note which are required
to be paid or delivered to the Senior Lenders as provided in this
Section 6, and to file and prove all claims therefor and to take all
such other action in the name of Holder or any subsequent holder of
this Note, or otherwise, as any such Senior Lender or such Senior
Lender's Representative may determine to be necessary or appropriate
for the enforcement of the provisions of this Section 6.
(i) Rights of Holders of Senior Debt Not to be Impaired, Etc.
No right of any present or future holder of any Senior Debt to enforce
subordination as herein provided shall at any time in any way be
prejudiced or impaired by any action or failure to act on the part of
the Company or anyone in custody of its assets or property or by any
action or failure to act on the part of any such holder or any other
holder of Senior Debt, or by any noncompliance by the Company with the
terms, provisions or covenants of this Note, regardless of any
knowledge thereof which any such holder or any other holder of Senior
Debt may have or otherwise be charged with.
(j) Distribution or Notice to Representative: Reliance.
Whenever a payment or distribution is to be made or a notice given to
Senior Lenders, the payment or distribution may be made and the notice
given to their Representative. In any such case, or in the case of any
other payment, distribution or notice to the Senior Lenders, or in the
case of any proceeding referred to in Section 6(b) above, Holder or any
subsequent holder shall be entitled to rely upon any order or decree
made by any court of competent jurisdiction in which such proceeding is
pending, or a certificate of the liquidating trustee or agent or other
Person making any distribution to Holder or such subsequent holder, for
the purpose of ascertaining the Persons entitled to participate in such
distribution, the holders of the Senior Debt and other Indebtedness of
the Company, the amount thereof or payable thereon, the amount or
amounts paid or distributed thereon and all other facts pertinent
thereto or to this Section 6.
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7. Miscellaneous.
7.1 No Right of Set-Off. Except as provided in Section 1
above, the Company shall have no right to set-off and reduce the principal
amount of this Note by amounts to which the Company is, or claims that it is,
owed by Holder for any reason whatsoever, including but not limited to any claim
arising out of or in connection with the Sale Agreement or any agreement or
other document executed in connection therewith or referred to therein.
7.2 Amendments, Waivers, Etc. This Note may not be amended,
changed, supplemented, waived or otherwise modified except by an instrument in
writing signed by the party against whom enforcement is sought. Failure of
either party to exercise any right, power or remedy provided under this Note or
otherwise available in respect hereof at law or in equity, or to insist upon
compliance by the other party with its obligations hereunder, and any custom or
practice of the parties at variance with the terms hereof, shall not constitute
a waiver by such party of its right to exercise any such or other right, power
or remedy or to demand such compliance.
7.3 Successors and Assigns. All covenants and agreements in
this Note shall be binding upon and shall inure to the benefit of and be
enforceable by the parties and their respective successors and assigns, provided
that neither the rights nor the obligations of the Company may be assigned or
delegated without the prior written consent of the Holder.
7.4 Rights Confined to Parties. Nothing expressed or
implied in this Note is intended or shall be construed to confer upon or to give
to any Person, other than the parties hereto and their respective permitted
successors and assigns, any right, remedy or claim under or by reason of this
Note or of any term, covenant or condition hereof.
7.5 Captions. The Section captions used herein are for
convenience of reference only and shall not affect the interpretation or
construction hereof.
7.6 Severability. If any term of this Note or the application
thereof to any party or circumstance shall be held invalid or unenforceable to
any extent, the remainder of this Note and the application of such term to the
other parties or circumstances shall not be affected thereby and shall be
enforced to the greatest extent permitted by applicable law.
7.7 Notices. All notices, requests, demands or other
communications required by or otherwise with respect to this Note shall be in
writing and shall be deemed to have been duly given to any party when delivered
personally (by courier service or otherwise), when delivered by facsimile (and
confirmed by return facsimile) or five business days after being mailed by
first-class, registered or certified mail, postage prepaid and return receipt
requested, in each case to the applicable addresses set forth below; provided,
however, that delivery shall
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be deemed complete when delivered to the address designated below and shall not
require actual receipt by the individual to whom the communication's attention
has been marked:
If to the Holder:
▇▇▇▇▇-▇▇▇▇▇▇▇ Fiberglas Corporation
Fiberglas Tower
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Treasurer
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
and to:
Law Department
▇▇▇▇▇-▇▇▇▇▇▇▇ Fiberglas Corporation
Fiberglas Tower
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Facsimile no.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Company:
Fluid Containment, Inc.
▇▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: President
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
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With copies to:
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: V. ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
National Investment Management, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as such party shall have designated by notice so given
to each other party.
7.8 Entire Agreement. This Note, together with the Sale
Agreement, embodies the entire agreement and understanding between the parties
relating to the subject matter hereof and supersedes all prior agreements and
understandings relating to such subject matter. There are no representations,
warranties or covenants by the parties hereto relating to this Note or the
performance thereof other than those expressly set forth in this Note and the
Sale Agreement.
7.9 Governing law and Consent to Jurisdiction. This Note and
all disputes hereunder shall be governed by, and construed in accordance with,
the internal laws of the State of New York, without regard to principles of
conflict of laws. The Company and Holder irrevocably submit to the jurisdiction
of the federal and state courts located in New York City regarding any action,
suit or proceeding in connection with any controversies or claims arising under
this Note or any alleged breach or default hereunder and waives any objection
which they may now or hereafter have to the laying or convenience of the venue
of any such action, suit or proceeding.
7.10 Agent for Service of Process.
(a) The Company hereby irrevocably designates and
appoints CT Corporation System with an office on the date hereof in New York,
NY, as its authorized agent to accept and acknowledge on its behalf service of
any and all process which may be served in any action, suit or proceeding
referred to in Section 7.9 brought in any federal or state court in New York
City and agrees that service of process shall be
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deemed in every respect effective and complete upon the Company in any such
action, suit or proceeding and shall be taken and held to be valid personal
service upon the Company, only when (i) such process is personally delivered to
its designated agent at the address indicated above (or a new address as to
which notice has been given pursuant to this Section 7.10), and (ii) a copy
thereof is personally delivered in accordance with Section 7.7 to the Company
(and the other Persons designated to receive copies of notices to the Company
pursuant to Section 7.7).
(b) Nothing contained in Section 7.9 or this Section
7.10 shall be deemed to affect the right of any party to serve process in any
other manner permitted by law or to commence legal proceedings or otherwise
proceed against any other party in any other jurisdiction in an action arising
under this Note or otherwise.
(c) The Company may change the agent it has designated
for service in this Section 7.10 or the address of such agent, by delivering
notice in accordance with Section 7.7 provided any such new address is in New
York City.
7.11 Waiver of Jury Trial. The Company hereby irrevocably and
unconditionally waives trial by jury in any legal action or proceeding referred
to in Section 7.9.
7.12 Waiver of Usury Defense. To the extent permitted by
applicable law, the Company agrees that it will not assert, plead (as a defense
or otherwise) or in any manner whatsoever claim in any action, suit or
proceeding that the effective interest rate on this Note violates present or
future usury or other laws relating to the interest payable on any indebtedness
and will not otherwise avail itself of the benefits or advantages of any such
laws.
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7.13 Payment and Return of Note. Upon the payment of all
amounts payable under this Note, Holder shall promptly return this Note, stamped
"CANCELLED", to the Company.
OCTANS, INC. (to be renamed
FLUID CONTAINMENT, INC.),
a Nevada corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
Accepted and Agreed to:
▇▇▇▇▇-▇▇▇▇▇▇▇ FIBERGLAS CORPORATION,
a Delaware corporation
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Executive Vice President