EXHIBIT 10.36
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SENIOR SECURED NOTE
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Original Aggregate Principal Amount: $5,000,000
Chicago, Illinois
July 30, 2001
FOR VALUE RECEIVED, the undersigned, ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ inc., a Michigan
corporation with its principal offices at ▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Borrower"), promises to pay to the order of
LANDMARK COMMUNICATIONS, INC., a Delaware corporation with an office at ▇▇▇
▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (hereinafter, with any subsequent
holder, the "Lender") at an office of Lender, on the Maturity Date (defined
below), without offset, the principal sum of Five Million and no/100
Dollars ($5,000,000), adjusted as provided below, together with interest as
provided below. This note (the "Note") evidences the Initial Loan made by
Lender to Borrower pursuant to the Amended and Restated Senior Secured Loan
and Security Agreement of even date (as such may be amended hereafter) (the
"Loan Agreement"). As additional consideration for the Initial Loan,
Borrower is issuing to Lender a warrant to purchase common stock as
described in and attached to the Loan Agreement (the "Initial Warrant").
The payment of this Note is secured by the Loan Agreement and the
collateral described therein. All capitalized terms not defined herein
shall have the meaning ascribed to them in the Loan Agreement. All
obligations under this Note shall be pari passu with the Grid Note,
consistent with the Loan Agreement.
The outstanding principal amount on this Note shall bear interest at
the rate of twelve percent (12%) per annum and shall commence from the date
hereof and shall continue on the outstanding principal; PROVIDED, HOWEVER,
that if the First Tranche Closing, as such term is defined in the Purchase
Agreement, is consummated, then from and after the date of such closing
this Note (including the outstanding principal and interest that has then
accrued) shall bear interest at the rate of eight percent (8%) per annum.
Interest shall be computed on the actual number of days elapsed on the
basis of a year consisting of 360 days. All interest shall accrue and
compound quarterly on: October 31, January 31, April 30 and July 31 each
year (each such date, a "Quarterly Payment Date"). Such accrued and
compounded interest shall be added to the principal amount of the Note.
Notwithstanding the foregoing, any amount outstanding under this Note
shall bear interest from and after the Maturity Date at the rate of sixteen
(16%) per annum (the "Default Interest Rate"), increasing monthly by an
annual rate which is one (1) percentage point above the then current
Default Interest Rate for each month that the Note remains overdue. Any
interest on this Note accruing after the Maturity Date shall accrue and be
compounded monthly (the date of such compounding, the "Monthly Compounding
Date" and collectively with the Quarterly Payment Date, the "Compounding
Date") until the obligation of Borrower, with respect to the payment of
such interest, has been discharged (whether before or after judgment).
Notwithstanding the foregoing, the effective annual rate under the
Loan (including the Default Interest Rate) shall not exceed a maximum
annual rate of twenty-four (24%) percent or the maximum annual rate
permitted by law, whichever is less.
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This Note shall be paid in full on the Maturity Date. Until this
Note is paid in full, on each Compounding Date, in lieu of a cash payment
of the interest due, Borrower shall pay such interest "in-kind". In lieu
of delivering separately documented and certificated promissory notes (the
"Note PIK Payment") and warrants (the "Warrant PIK Payment") for such "in-
kind" payments, the Note PIK Payment shall be effected by adding the
accrued interest to the principal amount of this Note (as described by the
compounding set forth above) and the Warrant PIK Payment shall be effected
through the provision in the Initial Warrant which provides that for every
dollar of interest accrued, compounded and added to the principal amount of
this Note, the aggregate number of shares of Borrower's common stock that
may be purchased under the Initial Warrant shall be increased by two (2)
(as such number may be adjusted for dividends, splits, combinations and the
like). The foregoing notwithstanding, no Warrant PIK Payment shall be
required until after the First Tranche Closing and then only in respect of
interest payments accruing thereafter under this Note. Lender acknowledges
that the amount of the Note PIK Payment shall be deemed an additional loan
borrowed from the Lender (it being further acknowledged by the Borrower
that it shall not receive additional funds in connection with any such
loan).
Borrower may not prepay this Note except as follows: On or after the
third anniversary of the date hereof, the Borrower may prepay the Note if
and only if (a) the Borrower has had earnings and positive cash flow for at
least 365 consecutive days in the one year period prior to such payment,
(b) the Borrower has no Indebtedness outstanding other than the Initial
Loan, the Grid Note and trade payables in the ordinary course of business,
and (c) the Quick Ratio set forth in Section 4.12 of the Loan Agreement is
2 to 1 and the Working Capital is a net positive of $3 million.
All payments shall be made to Lender at its address specified above,
or at such other address as Lender may specify in writing to Borrower. All
payments received from Borrower hereunder shall be applied first, to the
payment of any expenses due to Lender pursuant to the terms of the Loan
Agreement, second, to the payment of interest accrued and unpaid on the
Note, and third, to reduce the principal balance hereunder. Any payments
of expenses, principal or interest shall be made in lawful money of the
United States of America.
The Borrower shall pay all outstanding principal and unpaid accrued
interest on the Note in full on January 26, 2002 (the "Maturity Date");
PROVIDED, HOWEVER, that, if the transactions contemplated under the
Purchase Agreement are consummated, the Maturity Date shall be June 30,
2006. Notwithstanding the foregoing if any amount under the Note is not
paid in full when due, whether at maturity, by acceleration or otherwise
(the "Default Date"), the Maturity Date shall be the Default Date.
Within ten (10) days of each Compounding Date, or as reasonably
requested by the Holder, the Company shall issue to the Holder a
certificate executed by the Company's chief financial officer or other
executive officer setting forth the aggregate outstanding principal amount
of the Note as of such date and the amount of the interest accrued,
compounded and added to the Initial Loan.
This Note is secured by the Collateral defined and described in the
Loan Agreement. In addition, any and all deposits or other sums at any
time credited by or due to Borrower from Lender or any of its banking or
lending affiliates or any bank acting as a participant under any loan
arrangement between Lender of Borrower, and any cash, securities,
instruments, or other property of Borrower in the possession of Lender, or
any of its banking or lending affiliates, and any bank acting as a
participant under any loan arrangement between Lender and Borrower, whether
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for safekeeping, or otherwise, or in transit to or from Lender or any of
its banking or lending affiliates or any such participant, or in the
possession of any third party acting on ▇▇▇▇▇▇'s behalf (regardless of the
reason ▇▇▇▇▇▇ had received same or whether ▇▇▇▇▇▇ has conditionally
released the same) shall at all times constitute security for any and all
Liabilities, and may be applied or set off against such Liabilities at any
time, whether or not the Liabilities are then due or whether or not other
collateral is available to Lender.
Any Event of Default under the Loan Agreement shall constitute an
event of default under this Note. Upon an event of default, the entire
principal amount then outstanding, and all accrued and unpaid interest, and
all other sums required under this Note and the Loan Agreement shall,
notwithstanding the stated maturity in this Note, become immediately due
and payable, without notice or demand to Borrower. Upon default, Lender
shall have the right, immediately and without notice to Borrower or the
taking of any other action, to set-off against this Note, all liabilities
of Lender to Borrower and all obligations for money or money's worth owed
by ▇▇▇▇▇▇ to Borrower, whether or not due, without notice to Borrower (such
liabilities and obligations including, without limitation, all money,
stocks, bonds or other security or property of any kind or nature held by
or in the possession of Lender to or for the credit of ▇▇▇▇▇▇▇▇); and
Lender shall be deemed to have made a charge against any such liabilities
or obligations immediately upon the occurrence of any event of default
under this Note even though such charge is subsequently made or entered on
the behalf of ▇▇▇▇▇▇. The remedies provided in this Note upon default and
in other agreement between Lender and Borrower are cumulative and not
exclusive of any other remedies provided under the Loan Agreement or at law
or in equity.
No delay or omission by ▇▇▇▇▇▇ in exercising or enforcing any of
▇▇▇▇▇▇'s powers, rights, privileges, remedies, or discretions hereunder
shall operate as a waiver thereof on that occasion nor on any other
occasion. No waiver of any default hereunder shall operate as a waiver of
any other default hereunder, nor as a continuing waiver.
Borrower, and each endorser and guarantor, if any, of this Note,
shall indemnify, defend, and hold Lender harmless against any claim brought
or threatened against Lender by ▇▇▇▇▇▇▇▇ (other than a claim which is
finally judicially determined against Lender), by any endorser or
guarantor, or by any other person (as well as from attorneys' reasonable
fees and expenses in connection therewith) on account of ▇▇▇▇▇▇'s
relationship with Borrower or any endorser or guarantor hereof (each of
which may be defended, compromised, settled or pursued by ▇▇▇▇▇▇ with
counsel of ▇▇▇▇▇▇'s selection, but at the expense of Borrower and any
endorser and/or guarantor).
Borrower will pay on demand all attorneys' reasonable fees and out-
of-pocket expenses incurred by ▇▇▇▇▇▇ in the administration of all
Liabilities and obligations of Borrower to Lender, including, without
limitation, costs and expenses associated with travel on behalf of Lender.
Borrower will also pay on demand, without limitation, all attorneys'
reasonable fees, out-of-pocket expenses incurred by ▇▇▇▇▇▇'s attorneys and
all costs incurred by ▇▇▇▇▇▇, including, without limitation, costs and
expenses associated with travel on behalf of Lender, which costs and
expenses are directly or indirectly related to the protection or
enforcement of any of Lender's rights against Borrower or any such endorser
or guarantor and against any collateral given Lender to secure this Note or
any other Liabilities of Borrower or such endorser and guarantor to Lender
(whether or not suit is instituted by or against Lender).
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Borrower, and each endorser and guarantor of this Note, respectively
waives presentment, demand, notice, and protest, and also waives any delay
on the part of the holder hereof. Each assents to any extension or other
indulgence (including, without limitation, the release or substitution of
collateral) permitted Borrower or any endorser or guarantor by Lender with
respect to this Note and/or any collateral given to secure this note or any
extension or other indulgence, as described above, with respect to any
other liability or any collateral given to secure any other liability of
Borrower or any endorser or guarantor to Lender.
This Note shall be binding upon Borrower and each endorser and
guarantor hereof and upon their respective heirs, successors, assigns, and
representatives, and shall inure to the benefit of Lender and its
successors, endorsees, and assigns.
The liabilities of Borrower and any endorser or guarantor of this
Note are joint and several; provided, however, that the release by Lender
of Borrower or any one or more endorser or guarantor shall not release any
other person obligated on account of this Note. Each reference in this
Note to Borrower, any endorser, and any guarantor, is to such person
individually and also to all such persons jointly. No person obligated on
account of this Note may seek contribution from any other person also
obligated unless and until all liabilities, obligations and indebtedness to
Lender of the person from whom contribution is sought have been satisfied
in full.
Borrower and each endorser and guarantor hereof each authorizes
▇▇▇▇▇▇ to complete this Note if delivered incomplete in any respect.
This Note is delivered to Lender at its offices at ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, shall be governed by the laws of the State of
Illinois, and shall take effect as a sealed instrument. Borrower and each
endorser and guarantor of this Note each submits to the jurisdiction of the
courts of the State of Illinois for all purposes with respect to this Note,
any collateral given to secure their respective liabilities, obligations
and indebtedness to Lender, and their respective relationships with ▇▇▇▇▇▇.
Any determination that any provision of this Note or any application
thereof is invalid, illegal, or unenforceable in any respect in any
instance shall not affect the validity, legality or enforceability of such
provision in any other instance, or the validity, legality or
enforceability of any other provision of this Note.
The undersigned makes the following waiver knowingly, voluntarily,
and intentionally, and understands that ▇▇▇▇▇▇, in the establishment and
maintenance of ▇▇▇▇▇▇'s relationship with Borrower contemplated by the
within Note, is relying thereon. THE UNDERSIGNED, TO THE EXTENT ENTITLED
THERETO, WAIVES ANY PRESENT OR FUTURE RIGHT OF THE UNDERSIGNED, OR OF ANY
GUARANTOR OR ENDORSER OF THE UNDERSIGNED OR OF ANY OTHER PERSON LIABLE TO
LENDER ON ACCOUNT OF OR IN RESPECT TO THE LIABILITIES, TO A TRIAL BY JURY
IN ANY CASE OR CONTROVERSY IN WHICH LENDER IS OR BECOMES A PARTY (WHETHER
SUCH CASE OR CONTROVERSY IS INITIATED BY OR AGAINST LENDER OR IN WHICH
▇▇▇▇▇▇ IS JOINED AS A PARTY LITIGANT), WHICH CASE OR CONTROVERSY ARISES OUT
OF, OR IS IN RESPECT TO, ANY RELATIONSHIP AMONGST OR BETWEEN THE
UNDERSIGNED, ANY SUCH PERSON, AND LENDER.
▇▇▇▇▇▇▇▇ has read all of the terms and conditions of this Note and
acknowledges receipt of an exact copy of it.
WITNESS
Signed in my Presence ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ inc.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
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Title: President
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