EXHIBIT 10.3
THIS PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), NOR UNDER ANY APPLICABLE STATE SECURITIES LAWS. THIS
PROMISSORY NOTE HAS BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT
WITH RESPECT TO THIS PROMISSORY NOTE OR AN OPINION OF COUNSEL OR OTHER EVIDENCE
REASONABLY ACCEPTABLE TO MAKER THAT SUCH SALE OR TRANSFER IS EXEMPT FROM
REGISTRATION UNDER THE ACT.
VGR ACQUISITION INC.
PROMISSORY NOTE
$________________ _____________, 2002
FOR VALUE RECEIVED, VGR Acquisition Inc., a Delaware corporation
("Maker"), promises to pay [___________________________________] ("Payee"), in
lawful money of the United States of America, the principal sum of
[___________________________ ($______________)], together with interest in
arrears on the unpaid principal balance at an annual rate of 6 1/2%, in the
manner provided below. Interest shall be calculated on the basis of a year of
365 or 366 days, as applicable, and charged for the actual number of days
elapsed.
This Note has been executed and delivered pursuant to and in accordance
with the terms and conditions of the Purchase and Sale Agreement, dated as of
February 15, 2002, among Maker, Payee, The Medallion Company Inc. (the
"Company") and the other stockholders of the Company (the "Agreement"), and is
subject to the terms and conditions of the Agreement, which are, by this
reference, incorporated herein and made a part hereof. Capitalized terms used in
this Note without definition shall have the respective meanings set forth in the
Agreement.
1. PAYMENTS
1.1 PRINCIPAL AND INTEREST
The principal amount of this Note shall be due and payable on [THE
FIFTH ANNIVERSARY OF THE CLOSING DATE]. Interest in arrears on the unpaid
principal balance of this Note shall be due and payable semi-annually on
__________ and __________, with the first payment on ________, 2002.
1.2 MANNER OF PAYMENT
All payments of principal and interest on this Note shall be made by
wire transfer of immediately available funds to an account designated by Payee
in writing. If any payment of principal and interest on this Note is due on a
day that is not a Business Day, such payment shall be due on the next succeeding
Business Day, and such extension of time shall not be taken into
account in calculating the amount of interest payable under this Note. "Business
Day" means any day other than a Saturday, Sunday or legal holiday in the State
of New York.
1.3 PREPAYMENT
Maker may, without premium or penalty, at any time and from time to
time, prepay all or any portion of the outstanding principal balance due under
this Note, provided that each such prepayment is accompanied by accrued interest
on the amount of principal prepaid calculated to the date of such prepayment.
1.4 RIGHT OF SET-OFF
Maker shall have the right to withhold and set-off against any amount
due hereunder the amount of any claim for indemnification or payment of damages
to which Maker may be entitled under the Agreement, as provided in Section 9.03
thereof.
2. DEFAULTS
2.1 EVENTS OF DEFAULT
The occurrence of any one or more of the following events shall
constitute an event of default hereunder ("Event of Default"):
(a) If Maker shall fail to pay when due any payment of principal or
interest on this Note and such failure continues for 30 days after Payee
notifies Maker in writing; PROVIDED, HOWEVER, that the exercise by Maker in good
faith of its right of set-off pursuant to Section 1.4 above, whether or not
ultimately determined to be justified, shall not constitute an Event of Default.
(b) If an "Event of Default" (as therein defined) shall occur under any
one or more of the other Promissory Notes.
(c) The (i) filing by Maker or Guarantor of a petition or request for
liquidation, reorganization, arrangement, adjudication as a bankrupt, relief as
a debtor, or other relief under the bankruptcy, insolvency, or similar laws of
the United States of America or any state or territory thereof or any foreign
jurisdiction now or hereafter in effect; (ii) making by Maker or Guarantor of a
general assignment for the benefit of creditors; (iii) consent by Maker or
Guarantor to the appointment of a receiver or trustee, including, without
limitation, a "custodian," as defined in the Federal Bankruptcy Code, for Maker
or Guarantor or any substantial part of Maker's or Guarantor's assets; or (iv)
execution by Maker or Guarantor of a consent to any proceeding of the type
referred to in clause (i) above, or filing or commencement of any proceeding for
the dissolution or liquidation of, or winding up the affairs of, Maker or
Guarantor.
(d) (i) The appointment of a receiver, trustee, custodian, or officer
performing similar functions, including, without limitation, a "custodian," as
defined in the Federal Bankruptcy Code, for Maker or Guarantor or any
substantial part of Maker's or Guarantor's
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assets; or the filing against Maker or Guarantor of a request or petition for
liquidation, reorganization, arrangement, adjudication as a bankrupt, or other
relief under the bankruptcy, insolvency, or similar laws of the United States of
America, any state or territory thereof, or any foreign jurisdiction now or
hereafter in effect; or if any proceeding for the dissolution or liquidation of,
or winding up the affairs of, Maker or Guarantor shall be instituted; and (ii)
such appointment shall not be vacated, or such petition or proceeding shall not
be dismissed, within one hundred twenty (120) days after such appointment,
filing, or institution.
(e) Failure by Maker or Guarantor to pay, when due, (or, if permitted
by the terms of any applicable documentation, within any applicable grace
period) any indebtedness owing by Maker or Guarantor to any person or entity in
an amount in excess of $1,000,000, in the case of Maker, and $3,000,000, in the
case of Guarantor, whether such indebtedness shall become due by scheduled
maturity, by required prepayment, by acceleration, by demand, or otherwise, or
failure by Maker or Guarantor to perform any term, covenant, or agreement on its
part to be performed under any agreement or instrument (other than a Transaction
Document) evidencing or securing or relating to any indebtedness owing by Maker
or Guarantor when required to be performed if as a result of such failure the
maturity of such indebtedness in an amount in excess of $1,000,000, in the case
of Maker, and $3,000,000, in the case of Guarantor, has been accelerated,
without such acceleration having been rescinded or annulled for thirty (30)
days.
(f) Any judgment or judgments against Maker or Guarantor (other than
any judgment for which such party is fully insured) in an amount in excess of
$1,000,000, in the case of Maker, and $3,000,000, in the case of Guarantor,
shall remain unpaid, undischarged, unbonded or undismissed for a period of
thirty (30) days after such judgment shall become final and unappealable.
(g) If Maker shall cease to be a majority-owned subsidiary of Vector
Group Ltd., a Delaware corporation, directly or indirectly through one or more
other majority-owned subsidiaries, unless Maker shall have been merged with
Vector Group Ltd.
2.2 NOTICE BY MAKER
Maker shall notify Payee in writing within five days after the
occurrence of any Event of Default of which Maker acquires knowledge.
2.3 REMEDIES
Upon the occurrence of an Event of Default hereunder (unless all Events
of Default have been cured or waived by Payee), Payee may, at its option, (i) by
written notice to Maker, declare the entire unpaid principal balance of this
Note, together with all accrued interest thereon, immediately due and payable
regardless of any prior forbearance, and (ii) exercise any and all rights and
remedies available to it under applicable law, including, without limitation,
the right to collect from Maker all sums due under this Note. Maker shall pay
all reasonable costs and expenses incurred by or on behalf of Payee in
connection with Payee's exercise of any or all of its rights and remedies under
this Note, including, without limitation, reasonable attorneys' fees.
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2.4 DEFINITIONS
The following terms used in this Section 2 shall have the following
meanings:
"Federal Bankruptcy Code" means Title 11 of the United States Code,
entitled "Bankruptcy," as amended, or any successor federal bankruptcy law.
"Guarantor" shall mean Vector Group Ltd., a Delaware corporation,
including its successors and assigns in interest.
"Promissory Notes" shall have the meaning assigned to such term in
Section 1.01 of the Agreement.
"Transaction Documents" shall mean the Agreement and all documents,
contracts, agreements, assignments, and certifications executed by the parties
in connection with the Agreement.
3. MISCELLANEOUS
3.1 WAIVER
The rights and remedies of Payee under this Note shall be cumulative
and not alternative. No waiver by Payee of any right or remedy under this Note
shall be effective unless in a writing signed by Payee. Neither the failure nor
any delay in exercising any right, power or privilege under this Note will
operate as a waiver of such right, power or privilege and no single or partial
exercise of any such right, power or privilege by Payee will preclude any other
or further exercise of such right, power or privilege or the exercise of any
other right, power or privilege. To the maximum extent permitted by applicable
law, (a) no claim or right of Payee arising out of this Note can be discharged
by Payee, in whole or in part, by a waiver or renunciation of the claim or right
unless in a writing, signed by Payee; (b) no waiver that may be given by Payee
will be applicable except in the specific instance for which it is given; and
(c) no notice to or demand on Maker will be deemed to be a waiver of any
obligation of Maker or of the right of Payee to take further action without
notice or demand as provided in this Note. Maker hereby waives presentment,
demand, protest and notice of dishonor and protest.
3.2 NOTICES
Any notice required or permitted to be given hereunder shall be given
in accordance with Section 11.08 of the Agreement.
3.3 SEVERABILITY
If any provision in this Note is held invalid or unenforceable by any
court of competent jurisdiction, the other provisions of this Note will remain
in full force and effect. Any provision of this Note held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
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3.4 GOVERNING LAW
This Note will be governed by the laws of the State of New York without
regard to conflicts of laws principles that would require the application of any
other law. The provisions of Section 11.10 (Consent to Jurisdiction) of the
Agreement shall apply to this Note as if fully set forth herein.
3.5 PARTIES IN INTEREST
This Note shall not be assigned or transferred by Payee without the
express prior written consent of Maker, except the Payee may assign this Note to
a family trust of Payee provided such assignment shall not adversely affect, and
such assignee shall acknowledge in writing, Maker's rights under Section 1.4
hereof. Subject to the preceding sentence, this Note will be binding in all
respects upon Maker and inure to the benefit of Payee and its successor and
assigns.
3.6 NO RECOURSE AGAINST OTHERS
A director, officer, employee or stockholder, as such, of Maker shall
not have liability for any obligations of Maker under this Note or for any claim
based on, in respect of or by reason of such obligations or their creation. By
accepting this Note, Payee shall waive and release all such liability. The
waiver and release shall be part of the consideration for the issue of this
Note.
3.7 NO JURY TRIAL
Maker hereby waives all right to trial by jury in any action,
proceeding or counterclaim arising out of this Note or any transaction relating
thereto and all right to plead as a defense any statute of limitations or other
similar law or equitable doctrine.
3.8 SECTION HEADINGS, CONSTRUCTION
The headings of Sections in this Note are provided for convenience only
and will not affect its construction or interpretation. All references to
"Section" or "Sections" refer to the corresponding Section or Sections of this
Note unless otherwise specified.
All words used in this Note will be construed to be of such gender or
number as the circumstances require. Unless otherwise expressly provided, the
words "hereof" and "hereunder" and similar references refer to this Note in its
entirety and not to any specific section or subsection hereof, the words
"including" or "includes" do not limit the preceding words or terms and the word
"or" is used in the inclusive sense.
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IN WITNESS WHEREOF, Maker has executed and delivered this Note as of
the date first stated above.
VGR ACQUISITION INC.
By:
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Name (print):
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Title:
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