EXHIBIT 3
THE SECURITY REPRESENTED HEREBY HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR
APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND SUCH STATE SECURITIES
LAWS, OR AN EXEMPTION FROM REGISTRATION THEREUNDER.
FORM OF SENIOR
SUBORDINATED PROMISSORY NOTE
$[ ] Elkhart,
Indiana
FOR VALUE RECEIVED, PATRICK
INDUSTRIES, INC., an Indiana corporation (hereinafter referred to as the “Borrower”), hereby promises to pay to the
order of ,
and its successors and assigns (hereinafter referred to as “Holder”), in the manner hereinafter
provided, the principal sum of [ ] DOLLARS
($[ ]), as it may be increased herein, in
immediately available funds and in lawful money of the United States of
America, together with interest thereon, all in accordance with the provisions
hereinafter specified. This Note is one
of $[ ]
in aggregate principal amount of Senior Subordinated Promissory
Notes (each a “Note” and collectively, the “Notes”) issued
pursuant to the Securities Purchase Agreement dated April 10, 2007, among the
Borrower and the original purchasers of the Notes (the “Purchase
Agreement”), and is subject to the provisions set forth therein.
1. Accrual of Interest. Interest shall accrue on the outstanding
principal amount hereof (including any PIK Interest, as hereafter defined) at
(i) a rate equal to nine and one-half percent (9.50%) per annum for the period
beginning on the date hereof and ending on the first anniversary of the date
hereof (the “Initial Period”) and (ii) a rate
equal to thirteen and one-half percent (13.50%) per annum for the period following
the Initial Period. Interest shall be
calculated hereunder on the basis of the actual number of days elapsed.
2. Payment
of Interest. Commencing on December
31, 2007, the Borrower shall pay interest on this Note semi-annually in arrears
on each June 30 and December 31 of each calendar year and on the Maturity Date
(as hereafter defined), or if any such day is not a business day, on the next
succeeding business day (each an “Interest Payment Date”),
to Holder. Interest payable on this Note
shall be paid on each Interest Payment Date, at the election of the Borrower,
(i) in cash or (ii) in kind, in which event, the amount of the principal
outstanding under this Note shall be increased by the amount of such interest
payment (“PIK Interest”) on such Interest Payment
Date and interest shall then accrue on the increased principal amount. During the continuance of an Event of
Default, notwithstanding anything else to the contrary contained in this Note,
interest payable on the outstanding principal hereunder, including any PIK
Interest, shall bear interest at the then applicable interest rate set forth in
Section 1 plus two percent (2%) per annum and such interest shall be payable
upon demand.
3. Scheduled
Principal Payments. The Borrower
shall make payments of principal to Holder as follows: (i) on the first
anniversary of this Note, the sum of $[ ],
which
represents 10% of original principal amount of this
Note, (ii) on the second anniversary of this Note, the sum of $[ ],
which represents 40% of original principal amount of this Note, and (iii) on [ ],
2010 (the “Maturity Date”), a final payment
of the sum of the outstanding principal balance of this Note, including the
amount of any PIK Interest, together with accrued and unpaid interest thereon,
and all other obligations and indebtedness owing hereunder, if not sooner paid.
4. Prepayment. This Note may be prepaid in whole or in part
at any time without premium or penalty.
Any prepayment of principal shall be accompanied by payment of any
interest, if any, accrued and unpaid through the date of such prepayment.
5. Manner
and Application of Payments. All amounts payable hereunder shall be
payable to Holder by wire transfer of immediately available funds. Payments hereunder shall be applied first to
interest and then to principal outstanding hereunder, except that if Holder has
incurred any cost or expense in connection with the enforcement or collection
of the obligations of the Borrower hereunder, Holder shall have the option of
applying any monies received from the Borrower to payment of such costs or
expenses plus interest thereon before applying any of such monies to any
interest or principal then due.
6. No
Security. This
Note is an unsecured obligation of the Borrower and no collateral accompanies
the obligations hereunder.
7. Subordination. [The indebtedness of the Borrower evidenced
by this Note, including the principal and interest, is subordinated and junior
in right of payment to the Senior Debt (as hereafter defined), whether such
obligations are outstanding at this date or are hereafter incurred, but will be
senior in right of payment to any additional indebtedness of Borrower. For purposes of this Note, “Senior Debt” shall mean [Define]. [Senior Debtholder will require
specific subordination language.]
8. Treatment
of Notes. Each Note issued pursuant
to the Purchase Agreement or subsequently issued in replacement thereof shall
rank pari passu with each other
as to the payment of principal and interest.
Further, the Notes and any notes subsequently issued in replacement
thereof shall rank senior as to the payment of principal and interest with all
present and future indebtedness for money borrowed of the Borrower other than
the Senior Debt.
9. Events
of Default. Each of the following
acts, events or circumstances shall constitute an Event of Default (each an “Event of Default”) hereunder:
(i) the Borrower shall
default in the payment when due (in accordance with the terms of the Notes) of
any principal, including PIK Interest, interest or other amounts owing
hereunder or under any other Note, and such default is not cured within three
(3) business days of the due date;
(ii) any representation
or warranty made by the Borrower in the Purchase Agreement to shall have been
false or misleading in any material respect on the date as of which such
representation or warranty was made;
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(iii) the Borrower shall
fail to perform or observe any material agreement, covenant or obligation
arising under any provision hereof, under any other Note or the Purchase
Agreement for more than thirty (30) days following receipt by the Borrower of a
notice from Holder indicating any such violation;
(iv) any default by the
Borrower under the terms of the Senior Debt, which results in the acceleration
of the Senior Debt;
(v) (a) the Borrower
shall commence a voluntary case concerning itself under any bankruptcy,
insolvency or similar laws or statutes (including Title 11 of the United
States Code, as amended, supplemented or replaced) (collectively, the “Bankruptcy Code”); or (b) an involuntary
case is commenced against the Borrower and is not dismissed within ninety (90)
days; or (c) a custodian (as defined in the Bankruptcy Code) is appointed for,
or takes charge of, all or substantially all of the property of the Borrower or
the Borrower commences any other proceedings under any reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or
liquidation or similar law of any jurisdiction whether now or hereafter in
effect relating to the Borrower or there is commenced against the Borrower any
such proceeding; or (d) any order of relief or other order approving any such
case or proceeding is entered; or (e) the Borrower is adjudicated insolvent or
bankrupt; or (f) the Borrower makes a general assignment for the benefit of
creditors; or (g) the Borrower shall call a meeting of its creditors with a
view to arranging a composition or adjustment of its debts; or (h) the Borrower
shall by any act or failure to act consent to, approve of or acquiesce in any
of the foregoing; and
(vi) this Note or any
other Note shall cease to be in full force and effect, or shall cease to
provide the rights, powers and privileges purported to be created hereby.
Upon the occurrence of
any Event of Default described in the immediately preceding paragraph, the
unpaid principal amount of and any and all accrued interest on this Note and
all other obligations of the Borrower to Holder shall automatically become
immediately due and payable, with all additional interest from time to time
accrued thereon.
10. Remedies; Cumulative Rights. In addition
to the rights provided under Section 8, Holder shall also have any other rights
that Holder may have been afforded under any contract or agreement at any time,
including the Purchase Agreement, and any other rights that Holder may have
pursuant to applicable law. No delay on
the part of Holder in the exercise of any power or right under this Note or
under any other instrument executed pursuant hereto shall operate as a waiver
thereof, nor shall a single or partial exercise of any power or right preclude
other or further exercise thereof or the exercise of any other power or right.
No extensions of time of
the payment of this Note or any other modification, amendment or forbearance
made by agreement with any person now or hereafter liable for the payment of
this Note shall operate to release, discharge, modify, change or affect the
liability of any co-borrower, endorser, guarantor or any other person with regard
to this Note, either in part or in whole.
No failure on the part of Holder or any holder hereof to exercise any
right or remedy hereunder, whether before or after the occurrence of a default,
shall constitute a waiver thereof, and no waiver of any past default shall
constitute a waiver of any future default or of any other default.
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No failure to accelerate
the debt evidenced hereby by reason of an Event of Default hereunder or
acceptance of a past due installment, or indulgence granted from time to time
shall be construed to be a waiver of the right to insist upon prompt payment
thereafter, or to impose late payment charges, or shall be deemed to be a
novation of this Note or any reinstatement of the debt evidenced hereby, or a
waiver of such right of acceleration or any other right, or be construed so as
to preclude the exercise of any right which Holder or any holder hereof may
have, whether by the laws of the State of Indiana, by agreement or otherwise,
and none of the foregoing shall operate to release, change or affect the
liability of the Borrower of this Note, and the Borrower hereby expressly
waives (to the extent allowed by law) the benefit of any statute or rule of law
or equity which would produce a result contrary to or in conflict with the
foregoing.
11. Waivers. Except for the notices expressly required by
the terms of this Note (which rights to notice are not waived by the Borrower),
the Borrower, for itself and its successors and assigns, hereby forever waives
presentment, protest and demand, notice of protest, demand, dishonor and
non-payment of this Note, and all other notices in connection with the
delivery, acceptance, performance, default or enforcement of the payment of
this Note, and waives and renounces (to the extent allowed by law), all rights
to the benefits of any statute of limitations and any moratorium, appraisement,
and exemption now allowed or which may hereby be provided by any federal or
state statute or decisions against the enforcement and collection of the obligations
evidenced by this Note and any and all amendments, substitutions, extensions,
renewals, increases, and modifications hereof.
12. Attorneys’
Fees. The Borrower agrees to pay all
reasonable costs and expenses of collection and enforcement of this Note when
incurred, including Holder’s reasonable attorneys’ fees and legal and court
costs, including any incurred on appeal or in connection with bankruptcy or
insolvency, whether or not any lawsuit or proceeding is ever filed with respect
hereto.
13. Severability;
Invalidity. The Borrower and Holder
intend and believe that each provision in this Note comports with all
applicable local, state and federal laws and judicial decisions. However, if any provisions, provision, or
portion of any provision in this Note is found by a court of competent
jurisdiction to be in violation of any applicable local, state or federal
ordinance, statute, law, or administrative or judicial decision, or public
policy, and if such court would declare such portion, provision or provisions
of this Note to be illegal, invalid, unlawful, void or unenforceable as
written, then it is the intent of all parties hereto that such portion,
provision or provisions shall be given force and effect to the fullest possible
extent they are legal, valid and enforceable, and the remainder of this Note
shall be construed as if such illegal, invalid, unlawful, void or unenforceable
portion, provision or provisions were severable and not contained herein, and
the rights, obligations and interest of the Borrower and Holder hereof under
the remainder of this Note shall continue in full force and effect.
14. Usury. All terms, conditions and agreements herein
are expressly limited so that in no contingency or event whatsoever, whether by
acceleration of maturity of the unpaid principal balance hereof, or otherwise,
shall the amount paid or agreed to be paid to the holders hereof for the use,
forbearance or detention of the money advanced hereunder exceed the highest
lawful rate permissible under applicable laws.
If, from any circumstances whatsoever, fulfillment of any provision
hereof shall involve transcending the limit of validity prescribed by law which
a court
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of competent jurisdiction may deem applicable hereto,
then ipso facto, the obligation
to be fulfilled shall be reduced to the limit of such validity, and if under
any circumstances the holder hereof shall ever receive as interest an amount
which would exceed the highest lawful rate, such amount which would be
excessive interest shall be applied to reduction of the unpaid principal
balance due hereunder and not to the payment of interest.
15. Assignment. The Borrower may not transfer, assign or
delegate any of its rights or obligations hereunder. This Note shall accrue to the benefit of
Holder and its successors and shall be binding upon the undersigned and its
successors. Holder shall have the right,
without the consent of the Borrower, to transfer or assign, in whole or in
part, its rights and interests in and to this Note, and, as used herein, the
term “Holder” shall mean and include such
successors and assigns.
16. Notices. Any notices required or permitted to be given
under the terms of this Note shall be sent or delivered personally or by
courier (including a recognized, receipted overnight delivery service) or by
facsimile (with a copy sent by a recognized, receipted overnight delivery
service) and shall be effective upon receipt, if delivered personally or by
courier (including a recognized overnight delivery service) or by facsimile, in
each case addressed to a party. The
addresses for such communications shall be:
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If to the
Borrower:
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Patrick
Industries, Inc.
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107 West
Franklin Street
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Elkhart, Indiana
46516
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Telephone: (574)
294-7511
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Facsimile: (574)
522-5213
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Attention: Andy
Nemeth
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If to Holder:
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Tontine Capital
Partners, L.P.
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55 Railroad
Avenue, 1st Floor
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Greenwich,
Connecticut 06830
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Attention: Mr.
Jeffrey L. Gendell
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Telephone: (203)
769-2000
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Facsimile: (203)
769-2010
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Each
party shall provide notice to the other party of any change in address.
17. Amendment. The provisions of this Note may be amended
only by a written instrument signed by the Borrower and Holder.
18. Governing
Law. THIS NOTE AND THE RIGHTS AND
OBLIGATIONS OF ALL PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED UNDER
THE LAWS OF THE STATE OF INDIANA.
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19. Jurisdiction;
Waiver of Jury Trial. ALL ACTIONS OR
PROCEEDINGS ARISING IN CONNECTION WITH THIS NOTE SHALL BE FILED, TRIED AND
LITIGATED IN THE STATE AND FEDERAL COURTS LOCATED IN INDIANA. THE BORROWER WAIVES ITS RIGHT TO A JURY TRIAL
OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS NOTE,
INCLUDING CONTRACT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. THE BORROWER HAS
REVIEWED THIS WAIVER AND KNOWINGLY AND VOLUNTARILY WAIVES THE AFORESAID TRIAL
RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS
NOTE MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
[Signature page follows]
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EXECUTED AND DELIVERED at Elkhart, Indiana as of the date written
below.
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PATRICK INDUSTRIES, INC.
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Dated as of [ ],
2007
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By:
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Name:
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Title:
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