JOURNAL COMMUNICATIONS, INC.
UNSECURED SUBORDINATED PROMISSORY NOTE
$[_____________] | August [__], 2012 |
1. Principal and Interest. FOR VALUE RECEIVED, the undersigned (“Maker”) hereby promises to pay to [_____________________] (“Payee”), or to Payee’s successors or permitted assigns, the principal sum of [_______________] Dollars and [_______] Cents ($[_____________]), payable [for certain Payees—on September 21, 2012] [for certain Payees—on December 31, 2012] [for certain Payees—on July 15, 2013] [for certain Payees—in equal annual principal installments of $[_____________] on September 30 of each of 2013, 2014, 2015, 2016, 2017 and 2018], subject to the terms of this note. The unpaid principal balance hereof shall bear interest, payable quarterly on the last day of each calendar quarter, computed at a rate equal to 7.25% per annum. Interest shall be calculated for the actual number of days elapsed, using a daily rate determined by dividing the annual rate by 365 or 366, as applicable. All amounts payable under this note shall be payable in lawful money of the United States of America. Notwithstanding any provision of this note to the contrary, any payment that is due under this note on a date other than a business day shall be made on the next succeeding business day without including the additional days elapsed in the computation of the interest payable on such next succeeding business day. [For Notes payable on September 21, 2012, December 31, 2012 or July 15, 2013—This note may be prepaid in full or in part at any time without premium or penalty. All prepayments shall be applied against installments of principal due hereunder as directed by Maker.] This note is one of fifteen (15) notes issued on the date hereof by Maker in exchange for all of the outstanding shares of the Class C Common Stock of Maker (together the “Purchase Notes”). Notwithstanding any provision hereof to the contrary, the Purchase Notes shall rank equally in priority with one another, and all payments on account of principal and interest [For Notes payable on September 21, 2012, December 31, 2012 or July 15, 2013—(including prepayments as provided above)] with respect to any of the Purchase Notes shall be applied ratably and proportionately in accordance with the amounts of principal and interest then due and owing on such notes, if any; provided that it is understood that the Purchase Notes may have different principal and interest payment dates and that the foregoing requirement shall not apply to notes that do not have the same principal and interest payment date as this note. In addition, no provision of this note shall restrict the Maker’s ability to purchase any other note from a holder thereof, including during an Event of Default.
2. Events of Default. If (a) Maker fails to make any payment under this note when due and such failure continues unremedied for ten (10) consecutive business days after Payee provides written notice thereof to Maker, or (b) a Change in Control (as defined below) occurs, or (c) an Event of Default (as defined below) occurs with respect to any of the other Purchase Notes, or (d) there is an acceleration of any of the Senior Credit Facilities (as defined below) (any such event in (a), (b), (c) or (d) constituting an “Event of Default”), then, subject to Section 3 below, the unpaid principal balance of this note shall, at the option of Payee upon notice and demand made by Payee upon Maker, mature and become immediately payable. Subject to Section 3 below, the unpaid principal balance of this note shall automatically mature and become immediately payable in the event Maker becomes the subject of bankruptcy or other insolvency proceedings. After acceleration, the unpaid principal balance shall bear interest at a rate equal to the sum of the interest rate expressed above plus an additional two percent (2%) per annum.
“Change in Control” shall mean the consummation of one or more of the following: (a) the acquisition by any one or more Persons acting in concert (other than Maker or any of its Affiliates) of securities of Maker representing at least 50% of the combined voting power of Maker’s then outstanding securities (other than pursuant to a tender offer or exchange offer that is subject to Section 13(e) or Section 14(d) of the Securities Exchange Act of 1934, as amended (or successor provision)); (b) any consolidation, merger, share exchange or other business combination of Maker in which Maker is not the continuing or surviving corporation or pursuant to which shares of Maker’s capital stock would be converted into cash, securities or other property, other than a consolidation, merger, share exchange or other business combination of Maker following which at least 50% of the combined voting power of the surviving corporation is owned by holders of Maker’s capital stock immediately prior to the merger; (c) any sale, lease, exchange or other transfer of all, or substantially all, of the consolidated assets of Maker, or (d) any action or transaction that results in the common stock of Maker ceasing to be traded on a national securities exchange. For purposes of the foregoing definition, the term “Person” shall include natural persons, corporations, trusts, associations, limited liability companies, partnerships, joint ventures and governmental units; and the term “Affiliate” shall have the meaning ascribed to such term in Rule l2b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended.
| | 3. | Subordination Provisions. |
(a) Agreement to Subordinate. Maker and Payee unconditionally and irrevocably agree that (i) the payment of all obligations owing in respect of this note is subordinated in right of payment, to the extent and in the manner provided herein, to the prior payment in full of all existing and future Senior Indebtedness (as defined below), (ii) all security interests, liens, interests and rights (whether consensual or by operation of law) in or against any asset of Maker now or hereafter securing this note are subordinate to any security interest, lien, interest or right therein held from time to time by holders of Senior Indebtedness, (iii) any security interest, lien, interest or right in or against any asset of Maker now or hereafter held by any holder of Senior Indebtedness shall be superior to those (if any) of Payee securing this note notwithstanding the date, manner or order of perfection of the security interest, lien, interest or right of such holder or Payee, such holder’s failure to perfect its security interest, lien, interest or right or any provisions of any other agreements between Payee and such holder regarding Maker or such asset to the contrary and (iv) the subordination provisions set forth in this Section 3 are for the benefit of and enforceable by the holders of Senior Indebtedness and Maker. No right of any holder of Senior Indebtedness to enforce the subordination of the indebtedness evidenced by this note shall be impaired by any act or failure to act by Maker or by Maker’s failure to comply with this note.
(b) Senior Indebtedness. “Senior Indebtedness” means the principal or other outstanding amount of, premium, if any, and interest on obligations of Maker for money borrowed in respect of Credit Facilities (as defined below), whether outstanding on the date of this note or thereafter created, incurred or assumed, whether voluntary or involuntary and however arising, whether due or not due, absolute or contingent, liquidated or unliquidated, determined or undetermined, secured or unsecured, and whether Maker is liable individually or jointly with others, including obligations arising or accruing after the filing of a petition in bankruptcy, but excluding: (i) trade accounts payable and indebtedness incurred for the purchase of goods, materials or property in the ordinary course of business, or for services obtained in the ordinary course of business or for other liabilities arising in the ordinary course of business; (ii) any indebtedness that, by its terms, is expressly made pari passu with or subordinated to this note, and (iii) indebtedness (other than the Purchase Notes) to persons from whom Maker has purchased shares of its common stock representing the purchase price for such shares. “Credit Facilities” means one or more debt facilities, including the Senior Credit Facilities (as defined below), or other financing arrangements (including, without limitation, commercial paper facilities or indentures) providing for revolving credit loans, term loans, obligations under leases required or permitted to be capitalized under generally accepted accounting principles, obligations in connection with any sale and leaseback transaction, letters of credit or other extensions of credit with respect to borrowed money, including any notes, bonds, debentures, mortgages, guarantees, collateral documents, instruments and agreements executed in connection therewith, and any amendments, supplements, modifications, extensions, renewals, restatements or refundings thereof and any indentures or credit facilities or commercial paper facilities that replace, refund or refinance any part of the loans, notes, other credit facilities or commitments thereunder, including any such replacement, refunding or refinancing facility or indenture that increases the amount permitted to be borrowed thereunder or alters the maturity thereof or adds additional borrowers or guarantors and whether by the same or any other agent, lender or group of lenders. “Senior Credit Facilities” means any Credit Facility that constitutes indebtedness for borrowed funds in a principal amount outstanding of at least $15 million and will mature in more than one year from the time entered into (other than capitalized leases, obligations in connection with sale and lease back transactions, purchase money financing incurred by Maker or its subsidiaries, and intercompany indebtedness), and including in particular the Credit Facility under the Amended and Restated Credit Agreement dated as of December 2, 2005, as amended by that certain Amendment No. 1 dated as of August 13, 2010, among Maker, certain subsidiaries of Maker, the lenders from time to time party thereto and U.S. Bank National Association, as administrative agent, including any guarantees, collateral documents, instruments and agreements executed in connection therewith, and any amendments, supplements, modifications, extensions, renewals, restatements, refundings or refinancings thereof and any indentures or credit facilities or commercial paper facilities with banks or other institutional lenders or investors that replace, refund or refinance any part of the loans, notes, other credit facilities or commitments thereunder, including any such replacement, refunding or refinancing facility or indenture that increases the amount borrowable thereunder or alters the maturity thereof. Senior Indebtedness shall continue to be Senior Indebtedness and to be entitled to the benefits of the subordination provisions herein irrespective of any amendment, modification or waiver of any term thereof or any extension or renewal thereof.
| | (c) | Liquidation, Dissolution, Bankruptcy. In the event of: |
(i) any insolvency, bankruptcy, receivership, liquidation, reorganization, readjustment, composition or other similar proceeding relating to Maker or its property, whether voluntary or involuntary;
(ii) any proceeding for the liquidation, dissolution or other winding-up of Maker, voluntary or involuntary, whether or not involving insolvency or bankruptcy proceedings;
(iii) any assignment by Maker for the benefit of creditors generally; or
(iv) any other marshalling of Maker’s assets,
all Senior Indebtedness, which will include, without limitation, interest accruing after the commencement of any proceeding, assignment or marshalling of assets described above, will first be paid in full before any payment, whether in cash, securities or other property, will be made by Maker on account of this note.
(d) Default on Senior Indebtedness. No direct or indirect payment, in cash, property or securities, by setoff or otherwise (except for setoff by Maker in accordance with Section 1 above or any voluntary payment or prepayment by Maker), may be made or agreed to be made (or accepted or retained by Payee) on account of principal or interest on this note, or in respect of any payment, retirement, purchase or other acquisition of this note, if at the time of such payment:
(i) Maker is in default in any payment of any principal of (or premium, if any) or interest on any, or any other amount constituting, Senior Indebtedness when due, whether at maturity or at a date fixed for prepayment or upon acceleration or otherwise; or
(ii) a default or an event of default has occurred with respect to any Senior Indebtedness permitting the holders thereof to accelerate the maturity thereof,
unless and until such default in payment, default or event of default has been cured or waived or ceases to exist.
(e) Enforcement Actions; Liens.
(i) Until all Senior Indebtedness has been indefeasibly paid in full and no party has any further obligation to extend credit to Maker that would constitute Senior Indebtedness, Payee shall not directly or indirectly (A) sue for or accelerate all or any part of any amount payable under this note, except in respect of an Event of Default (1) with respect to which Payee has provided written notice to Maker, specifically referencing this note, indicating that such notice is a “Notice of Event of Default” under this note and specifically describing the facts and circumstances underlying such Event of Default and (2) that has occurred and is continuing and has not been cured or waived or otherwise ceased to exist (a) for a period of at least 120 consecutive calendar days after Maker’s receipt of such notice and (b) at the time of the demand, suit or acceleration; (B) request, obtain or alter any security interest, lien, interest or right in any asset of Maker to secure amounts payable under this note, (C) take any action against any asset of Maker securing payment of any amount payable under this note, (D) assert against any holder of Senior Indebtedness any claim pursuant to the doctrine of marshalling assets or under the United States Bankruptcy Code with respect to any asset of Maker or any Senior Indebtedness in a manner inconsistent with the provisions hereof, or (E) vote in any bankruptcy, insolvency or reorganization proceedings with respect to Maker in a manner inconsistent with the provisions hereof.
(ii) So long as any Senior Indebtedness remains outstanding, Payee shall not hold (and hereby releases) any security interest, lien, interest or right in or on any assets of Maker, now owned or hereafter acquired, securing this note.
(f) When Distribution Must Be Paid Over. In the event that any payment or distribution of assets of Maker of any kind or character prohibited by this Section 3, whether in cash, property or securities, shall be received by Payee before all Senior Indebtedness is indefeasibly paid in full, such payment or distribution shall be held in trust for the benefit of, and, upon written request, shall be paid over or delivered to, the holders of the applicable Senior Indebtedness or their agents or representatives, or to the trustee or trustees under any indenture pursuant to which any instruments evidencing any of such Senior Indebtedness may have been issued, as their respective interests may appear, for application to the payment of all Senior Indebtedness remaining unpaid to the extent necessary to pay all such Senior Indebtedness in full in accordance with its terms, after giving effect to any concurrent payment or distribution to the holders of such Senior Indebtedness.
(g) Reliance by Holders of Senior Indebtedness on Subordination Provisions. Payee acknowledges and agrees that the foregoing subordination provisions are, and are intended to be, an inducement and a consideration to each holder of any Senior Indebtedness, whether such holder’s Senior Indebtedness was created or acquired before or after the issuance of this note, to acquire and continue to hold, or to continue to hold, such holder’s Senior Indebtedness, and such holder of such Senior Indebtedness shall be deemed conclusively to have relied on such subordination provisions in acquiring and continuing to hold, or in continuing to hold, such Senior Indebtedness. Without in any way limiting the generality of the foregoing, the holders of Senior Indebtedness may, at any time and from time to time, without the consent of or notice to Payee, without incurring responsibility to Payee and without impairing or releasing the subordination provided in this Section 3 or the obligations hereunder of Payee to the holders of the Senior Indebtedness, do any one or more of the following: (a) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, Senior Indebtedness, or otherwise amend or supplement in any manner Senior Indebtedness, or any instrument evidencing or securing the same or any agreement under which Senior Indebtedness is outstanding from time to time; (b) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing Senior Indebtedness in any manner and order; (c) release any party liable in any manner for the payment or collection of Senior Indebtedness; (d) exercise or refrain from exercising any rights against Maker and any other party; and (e) apply payments and/or proceeds of collateral in any order to the Senior Indebtedness. Notwithstanding the foregoing or any other provision of this note to the contrary, Maker and Payee may amend, supplement and otherwise modify this note, and enter into consents and waivers with respect to this note, without the need to obtain the consent of, or provide notice to, any holder of Senior Indebtedness.
(h) Conflict with Other Provisions. To the extent that this Section 3 conflicts with any other provisions governing obligations arising under or in connection with this note, this Section 3 shall govern.
4. Representations, Warranties and Acknowledgements of Payee. Payee represents and warrants to Maker (which representations and warranties shall survive the date hereof) as follows: (a) Payee has requested, received, reviewed and considered all information Payee deemed relevant in making an informed decision to acquire this note; (b) Payee is acquiring this note for its own account for investment only and with no (i) present intention of distributing all or any portion of this note or (ii) any arrangement or understanding with any other parties regarding the distribution of all or any portion of this note; (c) Payee has consulted such legal, tax and investment advisors as Payee, in its sole discretion, has deemed necessary or appropriate in connection with its acquisition of this note; and (d) to the extent this note is a security, Payee is not relying on any statements made by or documents or other information delivered by Maker or any statements, documents or other information Maker could have made to or delivered to Payee in connection with the issuance of this note. Payee acknowledges that (i) Payee was a holder of Class C Common Stock of Maker until the exchange thereof by Payee to Maker in return for this note on or about the date hereof and that such exchange and the issuance of this note discharges the obligations of Maker with respect to Payee’s Class C Common Stock and all accumulated and unpaid dividends on such stock, and (ii) Maker has no obligation to update any statements, documents or information previously made or delivered to Payee in connection with the issuance of this note.
5. Limitations on Transfer. This note shall be binding upon, and inure to the benefit of, Maker and Payee and their respective successors and assigns, except that Payee may not assign, participate or otherwise transfer any of its rights or obligations hereunder except to a Permitted Transferee (as defined below) (and any other purported assignment or transfer of all or any portion of this note by Payee shall be null and void). “Permitted Transferee” means (a) a transferee to which a transfer of the Class C Common Stock of Maker owned by Payee prior to the date hereof would have been permitted under the terms of Article 2, Paragraph (C)(3)(f), and the definition of “Transfer” in Article 2, Paragraph (A)(42), of Maker’s amended and restated articles of incorporation, as amended through June 30, 2006, applied mutatis mutandis to this note at the time of the proposed assignment, participation or other transfer, and (b) a transferee of the entire remaining balance of this note (whether by sale or pledge) that is a bank or other financial institution (including for this purpose an insurance company) regulated by the Federal Deposit Insurance Corporation or any state Commissioner of Insurance which in the case of a sale covenants that it will hold the note for its own account. Any determination as to whether a proposed assignee, participant or transferee is a Permitted Transferee shall be in the reasonable judgment of Maker, which judgment shall be conclusive and binding.
6. Governing Law; Binding Effect on Payee. This note is governed by the internal laws of the State of Wisconsin, without regard to conflict of law principles providing for the application of another jurisdiction’s laws. Payee, by acceptance of this note and its benefits, acknowledges and agrees to be bound by its terms (including, without limitation, Section 3 hereof) and makes the representations and warranties of Payee set forth herein.
7. Notices. All notices, requests and demands to or upon Maker in respect of this note to be effective shall be in writing (including by facsimile or e-mail), and shall be deemed to have been duly given or made upon Maker’s receipt thereof at the following address, facsimile number or e-mail address, as the case may be (or such other address, facsimile number or e-mail address as Maker may specify from time to time in a written notice to Payee): Journal Communications, Inc., 333 West State Street, Milwaukee, Wisconsin 53203, Attention: Chief Financial Officer, facsimile no: 414-224-2469, e-mail address: afernandez@jrn.com, with a copy to the General Counsel, facsimile no: 414-224-2469, e-mail address: mleahy@jrn.com.
8. Expenses. All costs and expenses incurred in connection with any suit, action, proceeding or other enforcement action relating to this note shall be paid by the party incurring such cost or expense.
9. Jurisdiction; Waiver of Jury Trial. Maker and Payee hereby consent to the exclusive jurisdiction of any state or federal court situated in Milwaukee County, Wisconsin, and waive any objection based on lack of personal jurisdiction, improper venue or forum non conveniens, with regard to any actions, claims, disputes or proceedings relating to this note. Payee hereby waives any and all right to trial by jury in any action or proceeding relating to this note. This waiver is knowingly, willingly and voluntarily given. Maker acknowledges that the holders of one or more of the Purchase Notes may join together in the enforcement or defense of any claim, action or proceeding arising under this note.
| | JOURNAL COMMUNICATIONS, INC. |
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