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Exhibit 10.26
PROMISSORY NOTE
$543,053 October 2, 1998
For value received, Robert A. Peterson (the "BORROWER"), promises to pay to
NSP HOLDINGS L.L.C., a Delaware limited liability company (together with its
successors and assigns, the "LENDER"), the principal sum of $543,053 (as such
amount may be increased in accordance with SECTION 2.3) payable on such dates
and in such amounts as are set forth herein.
This Note shall not bear interest. As security for the obligations and
liabilities of the Borrower hereunder, the Borrower has executed a Pledge
Agreement in favor of the Lender whereby the Borrower has granted to the Company
a pledge of certain of the Class A Common Units and Class C Common Units of the
Company (the "CLASS C UNITS") from time to time held by the Borrower (the
"PLEDGED UNITS").
SECTION 1. DEFINITIONS
SECTION 1.1. CERTAIN DEFINITIONS. The following terms when used in this
Note shall have the following meanings (such definitions to be equally
applicable to the singular and plural forms thereof):
"BORROWER" shall have the meaning set forth in the first sentence hereof.
"BUSINESS DAY" shall mean any day of the year on which the Lender is
officially open for business at its principal place of business.
"CAUSE" shall mean, in the context of termination of the employment of
Borrower, if (i) Borrower willfully engages in conduct which is or would
reasonably be expected to be materially and demonstrably injurious to the
Company (or any of its subsidiaries), (ii) Borrower willfully engages in an act
or acts of dishonesty resulting in material personal gain to Borrower at the
expense of the Company (or any of its subsidiaries), (iii) Borrower is convicted
of a felony, or (iv) Borrower engages in an act or acts of gross malfeasance in
connection with his employment with the Company (or any of its subsidiaries).
"DOLLARS" and the sign "$" shall mean lawful money of the United States of
America.
"EVENT OF DEFAULT" shall have the meaning set forth in SECTION 6.1.
"LENDER" shall have the meaning set forth in the first sentence hereof.
"LIEN" shall mean any security interest, mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other), claim
or other priority or preferential arrangement of any kind or mature whatsoever.
"LIMITED LIABILITY COMPANY AGREEMENT" means the Limited Liability Company
Agreement of the Lender, as amended and restated from time to time.
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"LOAN" shall mean the unpaid principal amount of this Note from time to
time outstanding.
"MATURITY DATE" shall mean the earlier of (i) December 31, 2011; (ii) the
Sale of the Company (as defined in the Limited Liability Company Agreement);
(iii) the liquidation, dissolution or winding-up of the Lender; (iv) a Public
Sale (as defined in the Limited Liability Company Agreement); or (v) the date
the maturity hereof is accelerated by the Lender in accordance with the
provisions of this Note.
"NOTE" shall mean this promissory note, as amended, modified or restated in
whole or in part from time to time.
"OBLIGATIONS" shall mean all obligations of the Borrower to Lender
howsoever created, arising or evidenced, whether direct or indirect, joint or
several, absolute or contingent, or now or hereafter existing, or due or to
become due, which arise out of or in connection with this Note, including,
without limitation, all costs incurred by Lender in connection with the
enforcement of this Note.
"PERSON" shall mean an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.
"SUPPLEMENTAL BONUS" shall mean the supplemental bonus defined in the
resolution of the Managers of Norcross Safety Products L.L.C., a Delaware
limited liability company ("NORCROSS"), dated August 31, 1998.
"UNMATURED EVENT OF DEFAULT" shall mean an event or condition which, with
the giving of notice or the passage of time or both, would become an Event of
Default.
SECTION 2. INTEREST; IMPUTED INTEREST; TAX MATTERS
SECTION 2.1. INTEREST. This Note shall not bear interest.
SECTION 2.2. PAYMENTS TO BORROWER FOR IMPUTED INTEREST. Lender shall
make such payments to Borrower as are necessary from time to time to offset the
effect of income taxes payable by Borrower resulting from the application of
imputed interest on this Note.
SECTION 2.3. PAYMENTS TO BORROWER FOR TAXES. Lender shall loan to the
Borrower such amounts necessary to pay the Borrower's income tax liability on
the income associated with the Borrower's exercise of options in Norcross during
the period August 1, 1998 to October 2, 1998. The amount of such loan made by
the Lender to the Borrower will be added to the outstanding principal of this
Note as of the date of such payment.
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SECTION 3. PAYMENTS
SECTION 3.1. APPLICATION OF PAYMENTS. All payments made by the Borrower
hereunder shall be applied by Lender to the outstanding principal under this
Note.
SECTION 3.2. MAKING OF PAYMENTS. Payment hereon shall be made by the
Borrower to Lender in immediately available funds, at Lender's office at 1136
2nd Street, Rock Island, IL 61201, or at such other address as the holder hereof
shall designate in writing, not later than 2:00 P.M., Chicago time, on the date
due; and funds received after that hour shall be deemed to have been received by
Lender on the next following Business Day.
SECTION 3.3. PRINCIPAL PAYMENTS. The principal amount of this Note shall
be payable: (a) from time to time in an amount equal to 40% of any Supplemental
Bonus received by the Borrower; PROVIDED, that no such payment shall be due if
no Supplemental Bonus is paid in such year and (b) subject to SECTIONS 7.9 AND
7.10 hereof, on the Maturity Date in the amount necessary to pay in full all
amounts outstanding under this Note.
SECTION 3.4. VOLUNTARY PREPAYMENTS. The Borrower may from time to time
prepay the outstanding principal amount under this Note in whole or in part.
SECTION 4. REPRESENTATIONS AND WARRANTIES
The Borrower hereby represents and warrants to the Lender that:
SECTION 4.1. NO CONFLICT. The execution, delivery and performance by the
Borrower of each loan document executed in connection herewith to which he is a
party does not and will not: (a) contravene or conflict with any provision of
any law, statute, rule or regulation presently in effect having applicability to
the Borrower; or (b) contravene or conflict with, result in a breach of or
constitute a default under any agreement or instrument binding on the Borrower.
SECTION 4.2. LEGAL ENFORCEABLE NOTE. Each loan document executed in
connection herewith to which the Borrower is a party is the legal, valid, and
binding obligation of the Borrower enforceable in accordance with its terms
except to the extent that such enforcement may be limited by applicable
bankruptcy, insolvency, and other similar laws affecting creditors' rights
generally.
SECTION 4.3. NO DEFAULTS ON OUTSTANDING JUDGMENTS OR ORDERS. The
Borrower is not in default with respect to any judgment, writ, injunction,
decree, rule, or regulation of any court, arbitrator, or federal, state,
municipal, or other governmental authority, commission, board, bureau, agency,
or instrumentality, domestic or foreign.
SECTION 4.4. TAXES. The Borrower has filed all tax returns (federal,
state, and local) required to be filed and have paid all taxes, assessments, and
governmental charges and levies thereon to be due, including interest and
penalties.
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SECTION 5. COVENANTS
So long as any obligations shall remain unpaid or outstanding:
SECTION 5.1. COMPLIANCE WITH LAWS. The Borrower shall comply in all
material respects with applicable laws, rules, regulations, and orders, such
compliance to include, without limitation, paying before the same become
delinquent all taxes, assessments, and governmental charges imposed upon it or
upon its property, except to the extent the validity thereof is being contested
in good faith and by appropriate proceedings.
SECTION 5.2. USE OF PROCEEDS. The Borrower shall use the proceeds of the
Loan to purchase Class C Units of the Lender.
SECTION 5.3. LIENS. The Borrower shall not create or suffer to exist any
Lien (other than in favor of the Lender) (a) on any Supplemental Bonus which may
be due or payable in the future to the Borrower from the Lender or (b) on any
Class C Units purchased with proceeds of the Loan.
SECTION 6. EVENTS OF DEFAULT
SECTION 6.1. EVENTS OF DEFAULT. If any one or more of the following
events (each an "EVENT OF DEFAULT") shall occur:
(a) Subject to SECTION 7.10 hereof, the Borrower fails to make any
payment hereunder when and as due and such failure shall continue for ten
(10) Business Days;
(b) Any representation, warranty, or other writing furnished by or on
behalf of the Borrower to the Lender is false or misleading in any material
respect on the date as of which the facts therein set forth are stated or
certified;
(c) The Borrower becomes insolvent, generally fails or is unable to
pay his debts as they mature, makes a general assignment for the benefit of
his creditors, or suspends the transaction of all or a substantial portion
of his usual business;
(d) The Borrower fails to comply with any provisions of this Note and
such failure shall continue for thirty (30) Business Days; or
(e) The termination of the Borrower's employment for Cause.
SECTION 6.2. EFFECT OF EVENT OF DEFAULT. If any Event of Default
described in SECTION 6.1(c) shall occur all obligations shall become immediately
due and payable, all without notice of any kind or other action on the part of
the Lender; and, in the case of any other Event of Default, the Lender may
declare all Obligations to be due and payable upon ten (10) days written notice
thereof from the Lender to the Borrower, whereupon all Obligations shall become
immediately due and payable, all without presentment, demand, protest or notice
of any kind.
SECTION 6.3. WAIVER OF EVENTS OF DEFAULT. Lender may, at any time and
from time to time, waive any Event of Default or Unmatured Event of Default
which shall be for such period
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and subject to such conditions as shall be specified by Lender. In the case of
any such waiver, Lender and the Borrower shall be restored to their former
position and rights under this Note, respectively, and any Event of Default or
Unmatured Event of Default so waived shall be deemed to be cured and not
continuing; but no such waiver shall extend to or impair any right consequent
thereon or to any subsequent or other Event of Default or Unmatured Event of
Default.
SECTION 6.4. OTHER RIGHTS. No failure to exercise, and no delay in
exercising on the part of Lender of, any right, power or privilege hereunder
shall preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies of Lender herein
provided are cumulative and not exclusive of any rights or remedies provided by
law.
SECTION 7. MISCELLANEOUS
SECTION 7.1. AMENDMENTS, ETC. No amendment, modification, termination or
waiver of any provision of this Note, and no consent to any departure by the
Borrower herefrom, shall in any event be effective unless the same shall be in
writing and signed by Lender, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.
SECTION 7.2. BINDING EFFECT; SUCCESSORS AND ASSIGNS. This Note and the
terms, covenants and conditions hereof shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns,
except that the Borrower shall not have the right to assign or transfer this
Note or its rights or obligations hereunder or any interest herein without the
prior written consent of Lender.
SECTION 7.3. GOVERNING LAW. This Note shall be a contract made under and
governed by, and construed in accordance with, the laws of the State of
Illinois, without regard to conflict of laws principles. All obligations of the
Borrower and rights of Lender expressed herein shall be in addition to and not
in limitation of those provided by applicable law.
SECTION 7.4. WAIVER; COSTS AND EXPENSES. The Borrower hereby waives
presentment and demand for payment, notice of dishonor, protest and notice of
protest of this Note and to perform and comply with each of the terms, covenants
and provisions contained in this Note on the part of the Borrower to be observed
or performed. No extension of time for payment of amounts due under this Note,
and no alteration, amendment or waiver of any provision of this Note made by
agreement between Lender and any other Person or party shall release, discharge,
modify, change or affect the liability of the Borrower under this Note.
SECTION 7.5. NOTICES. All notices and other communications provided to
any party hereto under this Note shall be in writing (including telex or
facsimile) and addressed or delivered to such party at its address set forth
herein:
If to the Lender: NSP Holdings L.L.C.
2211 York Road, Suite 215
Oak Brook, Illinois 60523-1887
Attention: David F. Myers, Jr.
Telecopy No.: (630) 572-8518
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If to the Borrower: Robert A. Peterson
11571 Burr Oak Lane
Burr Ridge, IL 60525
Telephone: (630) 662-0113
or at such other address as may be designated by such party from time to time in
a notice complying with the terms of this Section. Any notice, if mailed and
properly addressed with postage prepaid, shall be deemed given three (3)
Business Days after being sent; any notice, if transmitted by telex or
facsimile, shall be deemed given when transmitted (answerback confirmed in the
case of telexes and receipt confirmed in the case of facsimiles).
SECTION 7.6. SEVERABILITY. Wherever possible, each provision of this
Note shall be interpreted in such manner as to be effective and valid under
applicable law. Any provision of this Note which is prohibited by, unenforceable
or invalid in any jurisdiction shall, as to such jurisdiction, be ineffective
only to the extent of such prohibition, unenforceability or invalidity, without
invalidating the remainder of such provisions of this Note or affecting the
validity or enforceability of such provision in any other jurisdiction.
SECTION 7.7. CAPTIONS. Section captions used in this Note are for
convenience of reference only and shall not affect the construction of this
Note.
SECTION 7.8. COUNTERPARTS. This Note may be executed in any number of
counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute but one and the same Note. The Borrower
hereby acknowledges receipt of a true, correct and complete counterpart of this
Note.
SECTION 7.9. APPLICATION OF CERTAIN PROCEEDS. Notwithstanding any other
provision herein, all distributions (other than tax distributions) to be made
to, and proceeds receivable by, the Borrower in respect of the Borrower's Class
C Units whether now owned or hereafter acquired (whether in connection with a
redemption or purchase of such Class C Units by the Lender or any of its members
(including in connection with the purchase of the Borrower's Class C Units
pursuant to the Limited Liability Company Agreement), a sale of such Class C
Units to any other party, or otherwise) shall be applied to the repayment of
amounts outstanding under this Note.
SECTION 7.10. RECOURSE. As security for the obligations and liabilities
of Borrower hereunder, Borrower has executed a pledge agreement, dated of even
date herewith (the "PLEDGE AGREEMENT"). Notwithstanding anything herein to the
contrary, except as set forth in the Pledge Agreement and herein, the amounts
owing to the Lender hereunder shall be non-recourse to the Borrower.
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IN WITNESS WHEREOF, the parties hereto have caused this Note to be executed
as of the day and year first given above.
Robert A. Peterson
/s/ Robert A. Peterson
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NSP HOLDINGS L.L.C.
By: /s/ David Myers
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Name: David Myers
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Title: EXECUTIVE VICE PRESIDENT
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