GRID PROMISSORY DEMAND NOTE
December 19, 2000 $7,000,000
A. TERMS OF LOANS
FOR VALUE RECEIVED, on demand as permitted herein, LOISLAW.COM, INC., a
corporation formed under the laws of the State of Delaware (the "BORROWER"),
with offices at 105 North 28th Street, Van Buren, Arkansas 72956, promises to
pay to the order of WOLTERS KLUWER U.S. CORPORATION, a Delaware corporation (the
"LENDER"), at its offices at c/o Wolters Kluwer United States Inc., 161 North
Clark Street, 48th Floor, Chicago, Illinois 60601-3221, or at such other place
as the Lender may designate in writing, the principal sum of the lesser of (A)
SEVEN MILLION DOLLARS ($7,000,000), or (B) the principal amount of loans (the
"LOANS") outstanding hereunder, as conclusively evidenced on the grid attached
hereto as Schedule I.
1. INTEREST; PREPAYMENT. (a) Borrower will pay interest on the unpaid
principal amount hereof, computed on the basis of the actual number of days
elapsed in a 360-day year, at a rate per annum which shall be equal to nine and
one-half percent (9.5%) per annum.
(b) Borrower will pay interest, at the rate described above, on
demand, and if no demand is made, monthly on the last Business
Day ("BUSINESS DAY" shall mean any day other than Saturday,
Sunday, or any other day on which commercial banks located in
the State of Arkansas or in the State of New York are required
or authorized by law to be closed for business) of each month
in each year, commencing December 29, 2000, at maturity
(whether by acceleration or otherwise) and upon the making of
any prepayment, as hereinafter provided. In addition, Borrower
will pay interest on any overdue installment of principal for
the period for which overdue, on demand, at a rate equal to
eleven and one-half percent (11.5%) per annum. In no event
shall interest exceed the maximum legal rate permitted by law.
All payments, including insufficient payments, shall be
credited, regardless of their designation by Borrower, first
to collection expenses due hereunder, then to outstanding late
charges, then to interest due and payable but not yet paid,
and the remainder, if any, to principal. All payments by
Borrower or any endorser of this Note on account of principal,
interest or fees hereunder shall be made in lawful money of
the United States of America, in immediately available funds.
(c) The Loans may be prepaid by the Borrower, in whole or in part,
at any time without penalty or premium.
2. ADVANCES; SCHEDULE I. The Loans in the aggregate shall not exceed
five million ($5,000,000) dollars prior to April 19, 2001, or seven million
($7,000,000) dollars on or after
April 19, 2001. The Lender will advance the principal amount of each Loan to the
Borrower within two Business Days after receipt from the Borrower of a request
therefor specifying the amount of the Loan requested, which requests may be made
by the Borrower at any time prior to the date on which the Lender has made
demand for repayment of the Loans in accordance with Section 3 hereof. The
Lender is hereby authorized by Borrower to enter and record on Schedule I
attached hereto the amount of each Loan made under this Note and each payment of
principal thereon without any further authorization on the part of Borrower or
any endorser or guarantor of this Note. To the extent interest is not paid when
due, the Lender is authorized and directed to enter the amount of such interest
as a Loan on Schedule I. The entry of a Loan on said schedule shall be prima
facie and presumptive evidence of the entered Loan and its conditions. The
Lender's failure to make an entry, however, shall not limit or otherwise affect
the obligations of Borrower or any endorser or guarantor of this Note.
3. LOANS DUE ON DEMAND. Notwithstanding any terms in this Note to the
contrary, the enumeration in this Note of specific obligations of Borrower to
the Lender and/or conditions to the availability of funds under this Note shall
not be construed to qualify, define, or otherwise limit the Lender's right,
power, or ability, at any time, under applicable law, to demand the payment of
all Loans outstanding under this Note within five Business Days of written
notice of such demand to the Borrower, PROVIDED, HOWEVER, that Lender shall not
make demand prior to the earlier to occur of (x) the termination of the
Agreement and Plan of Merger by and among Wolters Kluwer U.S. Corporation, a
Delaware corporation, LL Acquisition Corp., a Delaware corporation, and Borrower
(the "MERGER AGREEMENT"), dated as of December 19, 2000, or (y) the consummation
of the transactions contemplated thereby; and PROVIDED FURTHER, that in the
event that the Merger Agreement is terminated by Wolters Kluwer U.S. Corporation
or LL Acquisition Corp. other than as permitted by the terms of the Merger
Agreement or in the event any material provision of the Merger Agreement is
breached by Wolters Kluwer U.S. Corporation or LL Acquisition Corp., then
following such termination or material breach the Lender shall not make demand
prior to June 19, 2001 hereunder absent the occurrence of an Event of Default
(other than an Event of Default under Section 8(a)(i) hereof).
4. SECURITY INTEREST. This Note is secured by the liens granted by the
Borrower to the Lender pursuant to that certain Security Agreement dated as of
the date hereof between the Borrower and the Lender, in the collateral described
therein.
5. USE OF PROCEEDS. Borrower will not, directly or indirectly, use any
proceeds of Loans hereunder for the purpose of purchasing or carrying any margin
stock within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System or to extend credit to any person for the purpose of
purchasing or carrying any such margin stock, or for any purpose which violates,
or is inconsistent with, any of Regulations T, U or X of such Board of
Governors.
B. REPRESENTATIONS AND WARRANTIES
6. Borrower represents and warrants to the Lender that:
(a) Borrower is a corporation duly incorporated, validly existing,
and in good
2
standing under the laws of the jurisdiction of its incorporation, has the
corporate power and authority to own its assets and to transact the business in
which it is now engaged or proposes to be engaged, is duly qualified as a
foreign corporation and is in good standing under the laws of each other
jurisdiction in which such qualification is required, except where the failure
to so qualify or be in good standing would not have a material adverse effect on
the assets, liabilities, financial condition or results of operations of the
Company (a "Material Adverse Effect")
(b) Borrower has full power and authority to execute and deliver
this Note and to incur the obligations provided for herein, all of which have
been duly authorized by all proper and necessary corporate action. No consent or
approval of stockholders or of any governmental or administrative authority,
instrumentality, or agency is required as a condition to the validity of the
Note.
(c) The Note is legal, valid, and contains binding obligations of
Borrower enforceable against Borrower in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, moratorium or other
similar laws relating to creditors' rights generally and except that the
availability of equitable remedies, including specific performance, is subject
to the discretion of the court before which any proceeding therefor may be
brought.
(d) Borrower is not in default in the performance, observance or
fulfillment of any the obligations, covenants, or conditions contained in any
agreement or instrument to which it is a party, except where such default would
not have a Material Adverse Effect.
(e) There is no pending or threatened action or proceeding against
or affecting Borrower before any court, governmental agency, or arbitrator which
is reasonably likely to , in any one case or in the aggregate, have a Material
Adverse Effect or materially and adversely affect the ability of Borrower to
perform its obligations under this Note.
(f) Borrower has no Subsidiaries (as defined below), and will notify
the Lender promptly upon the formation thereof.
C. PERFECTION OF LIEN
7. So long as this Note remains unpaid or the Lender shall have any
commitments hereunder, Borrower shall cause the Lender to have a perfected first
and prior security interest in all of the accounts and general intangible assets
of the Borrower and the proceeds thereof, and the Borrower shall take all
actions requested by Lender necessary or appropriate to accomplish the same.
D. EVENTS OF DEFAULT
8. If any of the following events shall occur and be continuing:
(a) Borrower shall fail to make any payment of (i) principal
outstanding hereunder on demand as demand is permitted hereunder, or (ii)
following three (3) Business
3
Days' written notice, interest on this Note or any fee provided for herein on
demand as demand is permitted hereunder;
(b) Borrower shall default in the performance or observance of any
covenant or agreement contained herein following five days' written notice
thereof;
(c) any representation or warranty made by or on behalf of Borrower
in this Note, the Merger Agreement or in any other certificate, agreement,
instrument, or statement delivered to the Lender by or on behalf of Borrower
shall at any time prove to have been incorrect when made in any material
respect;
(d) any judgment against Borrower or any attachment, levy or
execution against any of its properties for any material amount shall remain
unpaid, or shall not be released, discharged, dismissed, stayed or fully bonded
for a period of sixty (60) days or more after its entry, issue or levy, as the
case may be;
(e) Borrower shall make an assignment for the benefit of creditors,
or a trustee, receiver or liquidator shall be appointed for Borrower or for any
of their property, or
(f) the commencement of any proceedings by Borrower under any
bankruptcy, reorganization, arrangement of debt, insolvency, readjustment of
debt, receivership, liquidation or dissolution law or statute (including, if
Borrower is a partnership, its dissolution pursuant to any agreement or
statute), or the commencement of any such proceedings without the consent of
Borrower and such proceedings shall continue undischarged for a period of sixty
(60) days;
(each of the foregoing to constitute an "EVENT OF DEFAULT") then, and in any
such event, the Lender may declare the entire unpaid principal amount of this
Note and all interest and fees accrued and unpaid hereon to be immediately due
and payable, whereupon the same shall become and be forthwith due and payable,
without presentment, demand, protest or notice of any kind, all of which are
hereby expressly waived by Borrower.
BORROWER HEREBY AFFIRMS, ACKNOWLEDGES AND RATIFIES THAT, SUBJECT SOLELY TO
THE PROVISOS STATED IN SECTION 3 HEREOF, ALL AMOUNTS DUE UNDER THIS NOTE ARE
PAYABLE ON DEMAND, WHICH DEMAND MAY BE MADE AT ANY TIME BY THE LENDER IN ITS
SOLE DISCRETION IRRESPECTIVE OF WHETHER AN EVENT OF DEFAULT HAS OCCURRED.
9. DEFINITION OF SUBSIDIARY. For purposes of this Note, the term
"SUBSIDIARY" shall mean and include any corporation of which more than 50% of
the outstanding shares of capital stock having ordinary voting power to elect a
majority of the Board of Directors of such corporation (irrespective of whether
or not at the time capital stock of any other class or classes of such
corporation shall or might have voting power upon the occurrence of any
contingency) is
4
at the time, directly or indirectly, owned by Borrower or by one or more other
Subsidiaries.
E. MISCELLANEOUS
10. GOVERNING LAW. This Note shall be governed by, and construed in
accordance with, the laws of the State of Delaware, without regard to its rules
on conflicts of laws.
11. NOTICES, ETC. All notices and other communications provided for
under this Note shall be in writing (including telegraphic, telex, and facsimile
transmissions) and mailed or transmitted or delivered, if to Borrower, at
Borrower's address indicated in the Lender's records as of the date of such
notice, with a copy to Novakov Davis & Munck, 900 Three Galleria Tower, 13155
Noel Road, Dallas, Texas 75240, Attention: Kenn W. Webb, Esq. and to Akin, Gump,
Strauss, Hauer & Feld, L.L.P., 1700 Pacific Avenue, Suite 4100, Dallas, Texas
75201, Attention: Michael E. Dillard, P.C., and if to the Lender, at its address
at c/o Wolters Kluwer United States Inc., 161 North Clark Street, 48th Floor,
Chicago, Illinois 60601-3221, Attention: Bruce C. Lenz, with a copy to Pryor
Cashman Sherman & Flynn LLP, 410 Park Avenue, 10th Floor, New York, New York
10022, Attention: Arnold J. Schaab, Esq. or, as to each party, at such other
address as shall be designated by such party in a written notice to the other
party complying as to delivery with the terms of this paragraph. Except as
otherwise provided in this Note, all such notices and communications shall be
effective either on receipt if delivered by hand, or three (3) Business Days
following deposit, postage fully paid, in the mails by certified mail.
12. NO WAIVER. No failure or delay on the part of the Lender in
exercising any right, power, or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any such right, power, or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power, or remedy hereunder. The rights and remedies provided herein
are cumulative, and are not exclusive of any other rights, powers, privileges,
or remedies, now or hereafter existing, at law or in equity or otherwise.
13. COSTS AND EXPENSES. Borrower shall reimburse the Lender for all
costs and expenses incurred by the Lender and shall pay the reasonable fees and
disbursements of counsel to the Lender in connection with enforcement of the
Lender's rights hereunder. Borrower shall also pay any and all taxes (other than
taxes on or measured by net income of the holder of this Note) incurred or
payable in connection with the execution and delivery of this Note.
14. AMENDMENTS. No amendment, modification, or waiver of any provision
of this Note nor consent to any departure by Borrower therefrom shall be
effective unless the same shall be in writing and signed by the Lender and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given.
15. SUCCESSORS AND ASSIGNS. This Note shall be binding upon Borrower and
its heirs, legal representatives, successors and permitted assigns and the terms
hereof shall inure to the benefit of the Lender and its successors and permitted
assigns, including subsequent holders hereof. Notwithstanding the foregoing,
neither party shall assign its rights or obligations under
5
this Note without the consent of the other party.
16. SEVERABILITY. The provisions of this Note are severable, and if any
provision shall be held invalid or unenforceable in whole or in part in any
jurisdiction, then such invalidity or unenforceability shall not in any manner
affect such provision in any other jurisdiction or any other provision of this
Note in any jurisdiction.
17. ENTIRE AGREEMENT. This Note sets forth the entire agreement of
Borrower and the Lender with respect to this Note and may be modified only by a
written instrument executed by Borrower and the Lender.
18. HEADINGS. The headings herein are for convenience only and shall not
limit or define the meaning of the provisions of this Note.
19. JURISDICTION; SERVICE OF PROCESS. Borrower agrees that in any action
or proceeding brought on or in connection with this Note (i) the District Court
of the State of Illiniois for the County of Cook, or (in a case involving
diversity of citizenship) the United States District Court having jurisdiction
of said County of Cook, shall have jurisdiction of any such action or
proceeding, (ii) service of any summons and complaint or other process in any
such action or proceeding may be made by the Lender upon Borrower by registered
or certified mail directed to Borrower at its address referenced in paragraph 11
above, Borrower hereby waiving personal service thereof, and (iii) within thirty
(30) days after such mailing Borrower shall appear or answer to any summons and
complaint or other process, and should Borrower fail to appear to answer within
said thirty (30) day period, it shall be deemed in default and judgment may be
entered by the Lender against Borrower for the amount as demanded in any summons
or complaint or other process so served.
20. WAIVER OF THE RIGHT TO TRIAL BY JURY. BORROWER HEREBY IRREVOCABLY
WAIVES THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM, OR
COUNTERCLAIM, WHETHER IN CONTRACT OR TORT, AT LAW OR IN EQUITY, IN ANY MANNER
CONNECTED WITH THIS NOTE OR ANY TRANSACTIONS HEREUNDER.
[REMAINDER OF PAGE INTENTIONALLY BLANK; SIGNATURE PAGE FOLLOWS]
6
IN WITNESS WHEREOF, Borrower has caused this Note to be executed and
delivered as of the day and year and at the place first above written.
BORROWER:
LOISLAW.COM, INC.
By: /s/ Kyle D. Parker
--------------------------------
Name: Kyle D. Parker
Title: Chairman and Chief Executive
Officer
7
SCHEDULE I TO NOTE
Borrower: Loislaw.com, Inc. Date of Note: December 19, 2000
Grid Promissory Demand Note - Loislaw.com Inc. and Wolters Kluwer U.S. Corporation
Was this helpful?