EXHIBIT 10.2
SECURED PROMISSORY NOTE
$300,000.00 Dated: December 22, 2000
FOR VALUE RECEIVED, FORT ORANGE PAPER COMPANY, INC., a New York
corporation with an address at 1900 River Road, Castleton-on-Hudson, New York
12033 ("Maker"), promises to pay to the order of RELM WIRELESS CORPORATION, a
Nevada corporation with an address at 7100 Technology Drive, West Melbourne,
Florida 32904 ("Payee"), the principal sum of THREE HUNDRED THOUSAND DOLLARS
($300,000.00), lawful money of the United States of America, together with
interest accrued thereon, at the rate and on the terms set forth below:
1. PAYMENT OF INTEREST AND PRINCIPAL.
(a) PAYMENT OF INTEREST. Interest on the unpaid principal sum
shall commence to accrue from the date hereof until the date when all amounts
due hereunder have been paid in full and shall be payable in arrears in semi
annual installments commencing July 1, 2001. Interest shall be calculated at an
annual rate equal to the highest publicly announced "reference", "prime" or
"base" interest rate of Chase Manhattan Bank (the "Prime Rate") (which is now
nine and one-half percent per annum) plus two and three-quarters percent
(2.75%), provided, however, that if any payment of principal or interest is not
paid when due, and regardless of whether an Event of Default has been declared,
interest on the unpaid principal sum of this Note at the rate of one hundred
(100) basis points over the interest rate then in effect shall accrue from and
after the date when such payment is due until the date when paid in full. The
rate of interest hereunder shall be deemed to automatically change, without
notice to Maker, effective the date of any such change.
(b) PAYMENT OF PRINCIPAL. The unpaid principal balance under
this Note, together with all other amounts due under this Note, shall be paid as
follows: Seventy Five Thousand Dollars ($75,000) on January 1, 2003 (the
"Principal Payment Date") and on the first anniversary of the Principal Payment
Date and Fifty Thousand Dollars ($50,000) on the second, third and fourth
anniversary of the Principal Payment Date.
(c) PREPAYMENT. Maker shall have the right to prepay at any
time and from time to time, without penalty or premium, all or any portion of
the outstanding principal of the Note. All prepayments of outstanding principal
of the Note shall be applied first to accrued interest, and second to unpaid
principal due thereunder.
(d) MANDATORY PREPAYMENT. Maker shall pay the unpaid principal
balance under this Note, together with all charges, fees and accrued and unpaid
interest hereunder, in connection with a Sale of the Maker. Where
(i) "Sale of the Maker" means (a) the consolidation or merger of the
Maker or any Successor Entity into any Person not under the Control of
John P. Hay, Jr. and/or one or more Permitted Family Transferees, (b)
the voluntary sale or transfer of all or substantially all of the
assets of Maker or any Successor Entity in one or more related
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transactions to, any Person, other than John P. Hay, Jr. and/or one or
more Permitted Family Transferees or (c) any voluntary change in
Control of the Maker or any Successor Entity;
(ii) "Control" with respect to the Maker or any Successor Entity means
John P. Hay, Jr.'s ownership (or in the case of Permitted Family
Transfers, control), of more than fifty percent (50%) of the voting
Equity Interest of that Person on a fully diluted basis calculated
assuming the exercise of all options and warrants and assuming the
conversion of any Equity Interest convertible into voting Equity
Interest which as of the date in question have an exercise price equal
to or less than the fair market value of such interest to be acquired;
(iii) "Equity Interest" means capital stock, warrants, options,
convertible securities or notes, other rights to acquire capital stock,
stock appreciation rights, phantom stock rights, profit participation
rights (other than reasonable employee bonuses based upon
profitability), and other rights and interest in any share of the
equity of an entity, of any kind;
(iv) "Permitted Family Transfers" means transfers of Equity Interests
by John P. Hay, Jr. to members of his immediate family, or to trusts
for the beneficial interest of John P. Hay, Jr. or members of his
immediate family, or to entities or partnerships the sole owners and
beneficiaries of which are John P. Hay, Jr. and members of his
immediate family, provided, however, that in each case John P. Hay, Jr.
at all times retains full and unencumbered voting control with respect
to such transferred Equity Interests;
(v) "Person" means any individual, corporation, partnership, joint
venture, association, limited liability company, joint stock company,
trust, unincorporated organization or government or any agency or
political subdivision; and
(vi)"Successor Entity" means John P. Hay, Jr. and/or any Person under
the control of John P. Hay, Jr. and/or one or more Permitted Family
Transferees which have (i) consolidated with or into which the Maker
has been merged and (ii) purchased all or substantially all of the
assets of Maker in one or more related transactions.
(e) PLACE OF PAYMENT. Maker shall make all payments to Payee
at the address of Payee as set forth on the first page of this Note or to such
other place or places as Payee, from time to time, shall designate in writing to
Maker.
2. SECURITY AND GUARANTY AGREEMENTS. All of Maker's obligations under
this Note are secured by a lien and security interest in the Collateral, as such
term is defined in the Security Agreement dated June 16, 1997 between Maker and
Payee (the "Security Agreement"), as modified by that certain Loan Modification
Agreement dated of even date herewith between the Maker and Payee, the terms of
which are incorporated herein by reference. The security interest in the
Collateral shall be second in priority and perfection only to the security
interest granted by Maker to Milberg Factors, Inc. (the "Senior Lender") to
secure Maker's obligations under the Security Agreement (Accounts
Receivable-Financing) dated June 16, 1997 between the Senior
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Lender and the Maker, as modified by that certain Loan Modification Agreement
among the Senior Lender and the Maker, among others dated of even date herewith
and a term loan from the Senior Lender to the Maker as evidenced by a certain
promissory note dated of even date herewith from the Maker to the Senior Lender
in the amount of $300,000 (collectively the "Senior Loan"). The security
interest in the Collateral shall be discharged upon indefeasible payment in full
of the indebtedness of the Maker to the Payee under the Note and that certain
promissory note dated of even date herewith from the Maker to the Payee in the
amount of $600,000. As additional security for the Maker's obligations to Payee
under this Note, John P. Hay, Jr., the sole stockholder of Maker (the
"Stockholder"), executed and delivered to Payee his Guaranty dated as of June
16, 1997 as modified by the Loan Modification Agreement (the "Guaranty"), the
terms of which are incorporated herein by reference, pursuant to which the
Stockholder has unconditionally guaranteed the punctual payment and performance
by Maker of all of Maker's obligations hereunder.
3. EVENTS OF DEFAULT; REMEDIES.
(a) EVENTS OF DEFAULT. The following shall constitute events
of default ("Events of Default"):
(i) Maker fails to pay when due any principal,
interest or other sums due hereunder and shall not have remedied such failure
within five (5) days after the date when due.
(ii) Maker defaults in the observance or performance
of any condition or covenant contained in this Note, the Security Agreement or
the Purchase Agreement dated as of May 12, 1997 between Maker and Payee (the
"Purchase Agreement") and Maker shall not have remedied the default within
thirty (30) days after receipt of written notice of such default has been given
by Payee to Maker; provided, however, that if Maker has the ability to cure such
default, but such default cannot reasonably be cured by Maker within such thirty
(30) day period, an Event of Default shall not be deemed to occur until the
passage of an additional thirty (30) days following the initial thirty (30) day
period so long as Maker shall continuously and diligently in good faith pursue
such cure during such additional thirty (30) days; provided, further, however,
that if the default has not been cured by the end of such thirty (30) days, the
Event of Default shall be deemed to have occurred at the end of such thirty (30)
days. (The Security Agreement, Guaranty and Purchase Agreement are sometimes
herein collectively called the "Other Documents").
(iii) Stockholder defaults in the observance or
performance of any condition or covenant contained in the Guaranty, and
Stockholder shall not have remedied the default within thirty (30) days after
receipt of written notice of such default has been given by Payee to
Stockholder; provided, however, that if Stockholder has the ability to cure such
default, but such default cannot reasonably be cured by Stockholder within such
thirty (30) day period, an Event of Default shall not be deemed to occur until
the passage of an additional thirty (30) days following the initial thirty (30)
day period so long as Stockholder shall continuously and diligently in good
faith pursue such cure during such additional thirty (30) days; provided,
further, however, that if the default has not been cured by the end of such
thirty (30) days, the Event of Default shall be deemed to have occurred at the
end of such thirty (30) days.
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(iv) The breach by Maker or Stockholder of any
warranty or any misrepresentation contained in this Note or the Other Documents,
and such breach or misrepresentation shall not have been remedied within thirty
(30) days after receipt of written notice of such breach has been given by Payee
to Maker.
(v) The occurrence of an Event of Default, as such
term is defined in any of the Other Documents, by Maker or Stockholder after the
lapse of all grace and cure periods; provided, however, that if an Event of
Default under this Clause (v) shall also be an Event of Default under Clauses
(iii) or (iv) above, then an Event of Default under this clause (v) shall not be
deemed to occur until the passage of all applicable grace periods available to
Maker under clauses (iii) or (iv).
(vi) A dissolution or liquidation of Maker shall have
been declared.
(vii) If Maker shall make an assignment for the
benefit of creditors, or file a voluntary petition under the Bankruptcy Code, as
amended, or any other federal or sate insolvency law, or apply for or consent to
the appointment of a receiver, trustee or custodian of all or part of its
property.
(viii) If Maker shall file an answer admitting the
jurisdiction of the court and the material allegations of an involuntary
petition filed against it under the Bankruptcy Code, as amended, or any other
federal or state insolvency law, or shall fail to have such petition dismissed
within sixty (60) days after its filing.
(ix) If an Order for relief shall be entered
following the filing of an involuntary petition against Maker under the
Bankruptcy Code, as amended, or any other federal or state insolvency law, or if
an Order shall be entered appointing a receiver, trustee or custodian of all or
parts of its property.
(x) The occurrence of an Event of Default under the
Senior Loan, as defined in the Security Agreement.
(xi) If Maker shall amend or otherwise modify the
Senior Loan without the prior written consent of Payee and which amendment or
modification would increase the amount of indebtedness which could be borrowed
by Maker thereunder to an amount in excess of Eight Million Dollars
($8,000,000.00).
(b) REMEDIES. If an Event of Default shall occur and be
continuing then, in the sole discretion of Payee and without further notice to
Maker, the unpaid principal amount and the accrued interest hereunder at the
applicable rate specified above until full payment of all amounts due hereunder,
and all other sums due by Maker under this Note shall become immediately due and
payable without presentment, demand, protest or other requirements of any kind,
all of which are hereby expressly waived by Maker. Without limiting the
foregoing, the obligations of the Maker to Payee shall automatically accelerate
and be due and payable in full upon the occurrence of an Event of Default
outlined in section (3)(a)(vii), (viii) and (ix), hereof. In
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addition, in each case, Payee may recover all costs of suit and other expenses
incurred by Payee (including reasonable attorneys' fees) in connection with the
collection of any sums due hereunder. In addition to any other remedies
available to it, but subject to the terms and provisions of that certain Standby
Creditor's Agreement dated of even date herewith by and between the New York
Business Development Corporation, Maker and Payee (the "Standby Agreement"), the
Payee may exercise its rights under the Other Documents. The remedies set forth
herein shall be in addition to, and not in lieu of, any other additional rights
or remedies Payee may have at law or in equity, subject to the terms and
provisions of the Standby Agreement.
4. RIGHTS CUMULATIVE. Subject to the terms and provisions of the
Standby Agreement, the remedies of Payee as provided in this Note shall be
cumulative and concurrent; may be pursued singly, successively or together at
the sole discretion of Payee, may be exercised as often as occasion for their
exercise shall occur; and in no event shall the failure to exercise any such
right or remedy be construed as a waiver or release of it.
5. CONTROLLING LAW. This Note and all questions relating to its
validity, interpretation or performance and enforcement shall be governed by and
construed in accordance with the laws of the State of New York.
6. NOTICES. Any notices or other communications required to be
delivered hereunder shall be sent or delivered in accordance with the provision
for giving notice under the Security Agreement.
7. BINDING NATURE OF NOTE. This Note shall be binding upon Maker, and
it successors and assigns, and shall inure to the benefit of Payee, and its
successors and assigns.
8. MODIFICATION. This Note may not be modified or amended other than by
an agreement in writing signed by Maker and Payee.
IN WITNESS WHEREOF, Maker, intending to be legally bound, has caused
its duly authorized representative to execute and deliver this Note on the date
first written above.
FORT ORANGE PAPER COMPANY, INC.
f/k/a Fort Orange Acquisition Co., Inc.
By: /s/ JOHN P. HAY, JR.
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Title: President
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