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EXHIBIT 10.4
AMENDED AND RESTATED
DEMAND NOTE
$26,588,734.07 May 18, 2001
FOR ▇▇▇▇▇ RECEIVED, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("Borrower"), does hereby
unconditionally promise to pay to the order of ▇▇▇▇▇▇▇▇ INSURANCE, LTD., a
British Virgin Islands corporation, its successors and assigns ("Lender"), at
Lender's office c/o Safeguard Delaware, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, or at such other place as Lender may from time to time
designate in writing, the principal sum of TWENTY SIX MILLION FIVE HUNDRED
EIGHTY-EIGHT THOUSAND SEVEN HUNDRED THIRTY-FOUR and 07/100 DOLLARS
($26,588,734.07), or such lesser or other sum as has been advanced to Borrower
from time to time hereunder by ▇▇▇▇▇▇ or any of its affiliates in accordance
with the Restructuring Agreement (as defined below) and is outstanding, ON
DEMAND, together with interest on the unpaid principal balance under this note
(the "Note"), payable as set forth below.
1. Amended and Restated Demand Note. This Note is the "Amended
and Restated Note" as defined in the Agreement to Restructure, dated as of April
16, 2001, by and among ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Safeguard Scientifics,
Inc. ("Safeguard") and Lender (the "Restructuring Agreement") and, as such shall
be construed in accordance with all terms and conditions thereof. Capitalized
terms not defined herein shall have such meaning as provided in the
Restructuring Agreement. This Note is entitled to all of the rights and remedies
provided in the Restructuring Agreement, and the collateral documents relating
thereto, and is secured by all Collateral as described therein.
2. Continuing Indebtedness. This Note evidences and
constitutes the renewal, modification and consolidation of (i) the Demand Note
executed by ▇▇▇▇▇▇▇▇ in favor of ▇▇▇▇▇▇, dated as of April 16, 2001, in the
original principal amount of $4,113,279.00, (ii) the Letter Agreement, dated as
of October 4, 2001, as amended on November 8, 2001, by ▇▇▇▇▇▇▇▇ in favor of
Safeguard, as assigned to Lender pursuant to an Assignment dated as of November
13, 2000 (the "Letter Agreement") and (iii) certain additional advances made or
which may be made pursuant to an in accordance with the Restructuring Agreement.
The execution and delivery of this Note shall not in any circumstances be deemed
to have terminated, extinguished, released or discharged Borrower's indebtedness
under the Demand Note or obligations under the Letter Agreement, which
indebtedness and obligations shall continue under and be governed by this Note
and shall continue to be secured by the collateral security for the Demand Note
and Letter Agreement, as provided under the Restructuring Agreement.
3. Rate of Interest. Interest on the principal amount
outstanding from time to time hereunder shall accrue at an annual rate equal to
seven percent (7.0%) (the "Interest Rate") and shall be capitalized annually, on
each anniversary of the date hereof. Interest payable on all advances made
hereunder shall be calculated for actual days elapsed on the basis of a 360-day
year. Notwithstanding anything herein, the Interest Rate charged hereon shall
not exceed the
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maximum rate allowable by applicable law. If any stated interest rate herein
exceeds the maximum allowable rate, then the interest rate shall be reduced to
the maximum allowable rate, and any excess payment of interest made by Borrower
at any time shall be applied to the unpaid balance of any outstanding principal
hereunder.
4. Payment of Principal and Interest; Prepayments; Offset. Principal
and interest on the principal amount outstanding hereunder shall be due and
payable in full by Borrower upon the demand of Lender; provided, however, that
Lender shall not demand any payment prior to January 1, 2003. Borrower may, from
time to time, prepay all or any portion of the principal balance and other
amounts outstanding hereunder without premium or penalty. Notwithstanding the
foregoing, this Note shall be subject to mandatory prepayment and offset as
required pursuant to Section 4.1(c) of the Restructuring Agreement.
5. Method and Application of Payments. All amounts payable hereunder
shall be paid by Borrower in lawful money of the United States of America and in
immediately available and freely transferable funds at the place designated by
Lender to Borrower for such payment. All payments made hereon (including,
without limitation, prepayments) shall be applied to fees and expenses
(including attorneys' fees), accrued interest and principal in any order Lender
may choose, in its sole discretion.
6. Events of Default. Each of the following events shall constitute an
event of default (an "Event of Default") hereunder:
a. If Borrower shall fail to pay when due any interest or
principal or any other sum payable to Lender hereunder.
b. If (1) Borrower or (2) his spouse, with respect to 2000 tax
obligations or for any subsequent year with respect to which she participates in
a joint filing, shall fail to return to Lender, within three (3) business days
after receipt thereof any tax overpayment refund required to be so returned
pursuant to Section 4.1(a)(2) (incorporating the provisions of Sections
3.1(a)(1)(A)(i) and 3.1(a)(1)(B)(iv) of the Restructuring Agreement).
c. If there shall occur any of the following events by
▇▇▇▇▇▇▇▇, his spouse or the WVM Entities:
i. Any payments are made or Collateral or other
property subject to the Existing Documents (if any such document then remains
operative) or Related Documents, are sold, mortgaged or otherwise transferred
and/or accepted in violation of the existing obligations of Borrower, his spouse
or the WVM Entities, whether under the Existing Documents (if any such document
then remains operative) or the Related Documents;
ii. Any default or event of default, or event which,
with the passage of time, the giving of notice or both, would be a default or
event of default (whether or not such term is used with initial capital
letters), shall have occurred under any of the Existing Documents (if any such
document then remains operative) or any Related Document, so long as same is in
effect;
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iii. Any representation or warranty made in the
Restructuring Agreement or in any document, agreement, or instrument required to
be delivered thereunder or in connection therewith shall be false or misleading
in any material respect when made;
iv. Any of Borrower, his spouse or any WVM Entity
shall seek to rescind, terminate or contest or otherwise declare ineffective any
document executed and delivered in connection with the Restructuring Agreement;
v. Failure to perform any obligations under the
Restructuring Agreement or, except as provided therein, any default in the
performance of any obligation or covenant contained in any document, agreement
or instrument referenced therein.
d. If any representation or warranty made by Borrower to
Lender in any statement, certificate or other document, including, without
limitation, the Restructuring Agreement, or any financial statement provide to
Lender, is false, erroneous or misleading in any material respect.
e. If Borrower shall become insolvent or bankrupt; or if
▇▇▇▇▇▇▇▇ shall admit in writing his inability to pay his debts; or if ▇▇▇▇▇▇▇▇
shall suffer the appointment of a receiver or trustee for substantially all of
his property; or if Borrower makes an assignment for the benefit of creditors;
or if proceedings under any law related to bankruptcy or insolvency or the
reorganization or the release of debtors are instituted against Borrower and are
not dismissed or stayed within sixty (60) days; or if a receiver or trustee for
Borrower or a significant portion of his property shall be appointed without
▇▇▇▇▇▇▇▇'s consent and such receiver or trustee shall not be discharged within
sixty (60) days; or if proceedings relating to Borrower under any law related to
bankruptcy or insolvency or the reorganization or the release of debtors are
instituted or commenced by Borrower.
7. Remedies.
a. General Rights of Lender. Upon the occurrence of any Event
of Default, (i) interest shall automatically and without notice begin to accrue
on the outstanding balance of this Note at the rate of nine percent (9.0%) per
annum, (ii) the entire unpaid principal amount of this Note and all unpaid
interest accrued thereon shall, at the sole option of Lender upon notice to
Borrower, become immediately due and payable, (iii) Lender shall have the right
to offset all amounts owed by Borrower hereunder against any amounts owed by
Lender or any of its Affiliates, in any capacity to Borrower, whether or not
due, and (iv) Lender shall thereupon have the immediate right to exercise from
time to time all rights and remedies now or hereafter available at law or in
equity, all of which shall be cumulative in nature including the right to
exercise its remedies with respect to any collateral securing this Note under
the Security Agreement (as defined below) or otherwise.
b. Recourse. Until May 18, 2006, this Note shall be a
non-recourse obligation of Borrower, and ▇▇▇▇▇▇'s rights and remedies are solely
to proceed against the Collateral, as defined in the Security Agreement, and not
to proceed against the Borrower, individually, or to seek recovery from any of
Borrower's other assets or property. The taking of possession of Collateral by
the Lender or the sale of the Collateral to provide funds with which
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to satisfy amounts owed to Lender hereunder shall be ▇▇▇▇▇▇'s sole remedy and
shall discharge all obligations evidenced by this Note. From and after May 18,
2006, this Note shall constitute a general and direct obligation of Borrower,
with full recourse to all of his assets, except as specifically limited in the
Restructuring Agreement.
8. Security. ▇▇▇▇▇▇▇▇'s obligations under this Note are secured by a
security interest in certain of the assets of Borrower and certain of his
affiliates, as provided in the Security Agreement, dated as of even date
herewith, by and between Borrower and Lender (the "Security Agreement") and
related documents and instruments set forth in detail in the Restructuring
Agreement.
9. Miscellaneous. Except as expressly set forth herein, Borrower hereby
waives presentment, demand, protest and notice of dishonor and protest, and also
waives all other exemptions; and agrees that extensions of the time of payment
of this Note or any installment or part thereof may be made before, at or after
maturity by agreement by ▇▇▇▇▇▇. Borrower shall pay to Lender, upon demand, all
costs and expenses that may be incurred by Lender in connection with the
enforcement of this Note including, without limitation, fees and expenses of
▇▇▇▇▇▇'s counsel. Any failure by Lender to exercise any right hereunder shall
not be construed as a waiver of the right to exercise the same or any other
right at any time. No amendment to or modification of this Note shall be binding
upon Lender unless in writing and signed by it. Any provision hereof found to be
illegal, invalid or unenforceable for any reason whatsoever shall not affect the
legality, validity or enforceability of the remainder hereof. This Note shall
apply to and bind ▇▇▇▇▇▇▇▇, his heirs, administrators, executors, successors and
assigns and shall inure to the benefit of Lender, its successors and assigns;
provided, however, that ▇▇▇▇▇▇▇▇ may not assign his rights and obligations under
this Note without the express prior written consent of ▇▇▇▇▇▇. No course of
dealing on the part of the Lender, nor any delay or failure on the part of the
Lender to exercise any right, shall operate as a waiver of such right or
otherwise prejudice the Lender's rights, powers and remedies. The rights, powers
and remedies of Lender, permitted by law or contract or as stated herein, shall
be cumulative and concurrent and may be exercised or otherwise pursued by ▇▇▇▇▇▇
singly, successively or together against Borrower at the sole discretion of
Lender; and the failure to exercise any such right, power or remedy shall in no
event be construed as a waiver or release of the same. Lender shall not by any
act of omission or commission be deemed to waive any of its rights, powers or
remedies hereunder unless such waiver be in writing and signed by ▇▇▇▇▇▇, and
then only to the extent specifically set forth therein, and a waiver of one
event shall not be construed as continuing or as a bar to or waiver of such
right, power or remedy on a subsequent event. This Note shall be governed by and
interpreted in accordance with the laws of the Commonwealth of Pennsylvania.
Borrower hereby consents to the jurisdiction of the courts of Pennsylvania in
any action or proceeding which may be brought against Borrower under or in
connection with this Note, and in the event any such action or proceeding shall
be brought against ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ agrees not to raise
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any objection to such jurisdiction or the laying of the venue thereof in
Philadelphia, Pennsylvania.
IN WITNESS WHEREOF, ▇▇▇▇▇▇▇▇, intending to be legally bound
hereby, has duly executed this Note as of the date first written above.
___________________________________ /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Witness Borrower: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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