ex10_1.htm


    
      

    

    Exhibit
10.1


    TERM LOAN
NOTE

    


    
      	 
      	 
      
	
              $32,000,000.00

            	
              May
      30, 2008

            
	 
      	
              Indianapolis,
      Indiana

            


    

    


    1.         Agreement
to Pay.  FOR VALUE RECEIVED, FORTUNE INDUSTRIES, INC., an
Indiana corporation (“Borrower”), hereby promises to
pay to the order of CARTER M.
FORTUNE, his successors and assigns (“Lender”), the principal sum of
Thirty-Two Million Dollars and No Cents ($32,000,000.00) (“Loan”) at the place and in the
manner hereinafter provided, together with interest thereon at the rate or rates
described below, and any and all other amounts which may be due and payable
hereunder from time to time without relief from valuation or appraisement
laws.

     

    2.         Interest
Rate.   Interest shall accrue on the outstanding principal
balance of this Note from the date hereof through the maturity date at the rate
of one (1) year LIBOR plus one and three-quarters percent
(1.75%).  The initial interest rate shall be established on the date
of execution of this Note and shall be adjusted on June 1, 2009 and June 1, 2010
to reflect changes to the one (1) year LIBOR.

     

    3.         Payment
Terms.

     

    3.1           Principal and
Interest.  Payments of principal and interest due under this
Note, if not sooner declared to be due in accordance with the provisions hereof,
shall be made as follows:

     

    (a)           Commencing
on June 5, 2008 and on the fifth day of each calendar month thereafter, all
accrued interest shall be due and payable.

    


    (b)           On
June 5, 2009 and June 5, 2010, a principal payment in the amount of One Million
Two Hundred Eighty Thousand Dollars ($1,280,000.00) shall be due and
payable.  Notwithstanding the prior sentence, Borrower shall not be
obligated to make such principal payments if the payment would cause Borrower to
breach any covenants then in place with Borrower’s current institutional
lenders.

     

    (c)           The
unpaid principal balance of this Note, if not sooner paid or declared to be due
in accordance with the terms hereof, together with all accrued and unpaid
interest thereon and any other amounts due and payable hereunder or under any
other Loan Document (as hereinafter defined), shall be due and payable in full
on May 5, 2011.  For clarity, the payment of the amounts described in
the prior sentence shall be due and payable regardless of whether such payment
would cause Borrower to breach any covenants then in place with Borrower’s
current institutional lenders.

     

    3.2           Application of
Payments.  Prior to the occurrence of an Event of Default, all
payments and prepayments on account of the indebtedness evidenced by this Note
shall be applied as follows: (a) first, to fees, expenses, costs and other
similar amounts then due and payable to Lender, including, without limitation
any prepayment premium, exit fee or late charges due hereunder, (b) second,
to accrued and unpaid interest on the principal balance of this Note,
(c) third, to the payment of principal due in the month in which the
payment or prepayment is made, (d) fourth, to any escrows, impounds or
other amounts which may then be due and payable under the Loan Documents,
(e) fifth, to any other amounts then due Lender hereunder or under any of
the Loan Documents, and (f) last, to the unpaid principal balance of this
Note.  Any prepayment on account of the indebtedness evidenced by this
Note shall not extend or postpone the due date or reduce the amount of any
subsequent payment of interest due hereunder.  After an Event of
Default has occurred and is continuing, payments may be applied by Lender to
amounts owed hereunder and under the Loan Documents in such order as Lender
shall determine, in its sole discretion.

     

    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

     

    3.3           Method of
Payments.  All payments of principal and interest hereunder
shall be paid by automatic debit, wire transfer, check or in coin or currency
which, at the time or times of payment, is the legal tender for public and
private debts in the United States of America and shall be made at such place as
Lender or the legal holder or holders of this Note may from time to time appoint
in the payment invoice or otherwise in writing, and in the absence of such
appointment, then at the offices of Lender at  6402 Corporate Drive,
Indianapolis, Indiana 46278.  Payment made by check shall be deemed
paid on the date Lender receives such check; provided, however, that if such
check is subsequently returned to Lender unpaid due to insufficient funds or
otherwise, the payment shall not be deemed to have been made and shall continue
to bear interest until collected.  Notwithstanding the foregoing, the
final payment due under this Note must be made by wire transfer or other final
funds.  If requested by Borrower, interest, principal payments and any
fees and expenses owed Lender from time to time will be deducted by Lender
automatically on the due date from Borrower’s account with Lender, as designated
in writing by Borrower.  Borrower will maintain sufficient funds in
the account on the dates Lender enters debits authorized by this
Note.  If there are insufficient funds in the account on the date
Lender enters any debit authorized by this Note, the debit will be
reversed.  Borrower may terminate this direct debit arrangement at any
time by sending written notice to Lender at the address specified in the Loan
Documents.

     

    3.4           Late Charge.  If any
payment of interest or principal due hereunder is not made within ten days after
such payment is due in accordance with the terms hereof, then, in addition to
the payment of the amount so due, Borrower shall pay to Lender a “late charge”
of the greater of: (i) five cents for each whole dollar so overdue or (ii)
Twenty-Five Dollars ($25.00) to defray part of the cost of collection and
handling such late payment.  Borrower agrees that the damages to be
sustained by the holder hereof for the detriment caused by any late payment are
extremely difficult and impractical to ascertain, and that the amount of five
cents for each one dollar due is a reasonable estimate of such damages, does not
constitute interest, and is not a penalty.

    


    4.         Security.  This
Note is secured by a Guaranty, Security Agreement and Stock Pledge Agreement
(the Note, Guaranty, Security Agreement, Stock Pledge Agreement and any other
document now or hereafter given to evidence or secure payment of this Note or
delivered to induce Lender to disburse the proceeds of the Loan, as such
documents may hereafter be amended, restated or replaced from time to time, are
hereinafter collectively referred to as the “Loan
Documents”).  Reference is hereby made to the Loan Documents
(which are incorporated herein by reference as fully and with the same effect as
if set forth herein at length) for a statement of the covenants and agreements
contained therein, a statement of the rights, remedies, and security afforded
thereby, and all matters therein contained.  Borrower acknowledges
that the receipt of an executed copy of the Guaranty, Security Agreement and
Stock Pledge Agreement is a condition precedent to the Lender’s acceptance of
this Note and Lender’s agreement to disburse the proceeds of the
Loan.

     

    
      
        
           


        

        
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    5.         Guarantee
Fees.  In order to obtain the Guaranty, Borrower agrees to pay
guarantee fees to John F. Fisbeck in an amount equal to 1.88% of the outstanding
loan balance per annum.  The guarantee fees shall be paid monthly
beginning on June 5, 2008.  The amount of the guarantee fees shall be
fixed annually based upon the outstanding loan balance existing on the date of
execution of this Note, June 1, 2009 and June 1, 2010.  For example,
guarantee fees in the amount of $50,133.33 per month shall be paid during the
first twelve (12) months that the Loan is outstanding.  If for any
reason the Guaranty is terminated, the payment of the guarantee fees shall
promptly cease.

     

    6.         Events of
Default. The occurrence of any one or more of the following events shall
constitute an “Event of
Default” under this Note:

     

    6.1           the
failure by Borrower to pay (i) any installment of principal or interest
payable pursuant to this Note within ten (10) days of the date when due, or
(ii) any other amount payable to Lender under this Note or any of the other
Loan Documents within ten (10) days of when any such payment is due in
accordance with the terms hereof or thereof; or

     

    6.2           the
occurrence of any “Event of Default” under any of the Loan
Documents.

     

    7.         Remedies.  At
the election of the holder hereof, and without notice, the principal balance
remaining unpaid under this Note, and all unpaid interest accrued thereon and
any other amounts due hereunder, shall be and become immediately due and payable
in full upon the occur­rence of any Event of Default.  Failure to
exercise this option shall not constitute a waiver of the right to exercise same
in the event of any subsequent Event of Default.  No holder hereof
shall, by any act of omission or commission, be deemed to waive any of its
rights, remedies or powers hereunder or otherwise unless such waiver is in
writing and signed by the holder hereof, and then only to the extent
specifically set forth therein.  The rights, remedies and powers of
the holder hereof, as provided in this Note and in all of the other Loan
Documents are cumulative and concurrent, and may be pursued singly, successively
or together against Borrower, any guarantor thereof, the security given at any
time to secure the repayment hereof, all at the sole discretion of the holder
hereof.  If any suit or action is instituted or attorneys are employed
to collect this Note or any part hereof, Borrower promises and agrees to pay all
costs of collection, including reasonable attorneys’ fees and court
costs.

     

    
      
        
           


        

        
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    8.         Covenants
and Waivers.  Borrower and all others who now or may at any
time become liable for all or any part of the obligations evidenced hereby,
expressly agree hereby to be jointly and severally bound, and jointly and
severally:  (i) waive and renounce any and all homestead,
redemption and exemption rights and the benefit of all valuation and
appraisement privileges against the indebtedness evidenced by this Note or by
any extension or renewal hereof; (ii) waive presentment and demand for
payment, notices of nonpayment and of dishonor, protest of dishonor, and notice
of protest; (iii) except as expressly provided in the Loan Documents, waive
any and all notices in connection with the delivery and acceptance hereof and
all other notices in connection with the performance, default, or enforcement of
the payment hereof or hereunder; (iv) waive any and all lack of diligence
and delays in the enforcement of the payment hereof; (v) agree that the
liability of Borrower, guarantor, endorser or obligor shall be unconditional and
without regard to the liability of any other person or entity for the payment
hereof, and shall not in any manner be affected by any indulgence or forbearance
granted or consented to by Lender to any of them with respect hereto;
(vi) consent to any and all extensions of time, renewals, waivers, or
modifications that may be granted by Lender with respect to the payment or other
provisions hereof, and to the release of any security at any time given for the
payment hereof, or any part thereof, with or without substitution, and to the
release of any person or entity liable for the payment hereof; and
(vii) consent to the addition of any and all other makers, endorsers,
guarantors, and other obligors for the payment hereof, and to the acceptance of
any and all other security for the payment hereof, and agree that the addition
of any such makers, endorsers, guarantors or other obligors, or security shall
not affect the liability of Borrower, any guarantor and all others now liable
for all or any part of the obligations evidenced hereby.  This
provision is a material inducement for Lender making the Loan to
Borrower.

     

    9.         Other
General Agreements.

     

    9.1           The
Loan is a business loan and is not being made for personal, family or household
purposes.  Borrower agrees that the Loan evidenced by this Note is an
exempted transaction under the Truth In Lending Act, 15 U.S.C.,
Section 1601, et seq.

     

    9.2           Time
is of the essence hereof.

     

    9.3           This
Note is governed and controlled as to validity, enforcement, interpretation,
construction, effect and in all other respects by the statutes, laws and
decisions of the State of Indiana.  This Note may not be changed or
amended orally but only by an instrument in writing signed by the party against
whom enforcement of the change or amendment is sought.

     

    9.4           This
Note has been made and delivered at Indianapolis, Indiana and all funds
disbursed to or for the benefit of Borrower will be disbursed in Indianapolis,
Indiana.

     

    9.5           The
obligations and liabilities of Borrower under this Note shall be binding upon
and enforceable against Borrower and its successors and assigns.  This
Note shall inure to the benefit of and may be enforced by Lender and its
successors and assigns.

     

    
      
        
           


        

        
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    9.6           If
any provision of this Note is deemed to be invalid by reason of the operation of
law, or by reason of the interpretation placed thereon by any administrative
agency or any court, Borrower and Lender shall negotiate an equitable adjustment
in the provisions of the same in order to effect, to the maximum extent
permitted by law, the purpose of this and the validity and enforceability of the
remaining provisions, or portions or applications thereof, shall not be affected
thereby and shall remain in full force and effect.

     

    9.7           If
the interest provisions herein or in any of the Loan Documents shall result, at
any time during the Loan, in an effective rate of interest which, for any month,
exceeds the limit of usury or other laws applicable to the Loan, all sums in
excess of those lawfully collectible as interest of the period in question
shall, without further agreement or notice between or by any party hereto, be
applied upon principal immediately upon receipt of such monies by Lender, with
the same force and effect as though the payer has specifically designated such
extra sums to be so applied to principal and Lender had agreed to accept such
extra payment(s) as a premium-free prepayment.  Notwithstanding the
foregoing, however, Lender may at any time and from time to time elect by notice
in writing to Borrower to reduce or limit the collection to such sums which,
when added to the said first-stated interest, shall not result in any payments
toward principal in accordance with the requirements of the preceding
sentence.  In no event shall any agreed to or actual exaction as
consideration for this Loan transcend the limits imposed or provided by the law
applicable to this transaction or the makers hereof in the jurisdiction in which
the Collateral is located for the use or detention of money or for forbearance
in seeking its collection.

     

    9.8           Lender
may at any time assign its rights in this Note and the Loan Documents, or any
part thereof and transfer its rights in any or all of the Collateral, and Lender
thereafter shall be relieved from all liability with respect to such
Collateral.  In addition, Lender may at any time sell one or more
participations in the Note.  Borrower may not assign its interest in
this Note, or any other agreement with Lender or any portion thereof, either
voluntarily or by operation of law, without the prior written consent of
Lender.

     

    9.9           Capitalized
terms not defined herein shall have the same meaning given to them in the Loan
Documents.

     

    10.         Notices.  All
notices required under this Note will be in writing and will be transmitted in
the manner and to the addresses or facsimile numbers required by the Loan
Documents, or to such other addresses or facsimile numbers as Lender and
Borrower may specify from time to time in writing.

     

    11.         Consent
to Jurisdiction.  TO INDUCE LENDER TO
ACCEPT THIS NOTE, BORROWER IRREVOCABLY AGREES THAT, SUBJECT TO LENDER’S SOLE AND
ABSOLUTE ELECTION, ALL ACTIONS OR PROCEEDINGS IN ANY WAY ARISING OUT OF OR
RELATED TO THIS NOTE WILL BE LITIGATED IN COURTS HAVING SITUS IN INDIANAPOLIS,
INDIANA.  BORROWER HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF
ANY COURT LOCATED WITHIN INDIANAPOLIS, INDIANA, WAIVES PERSONAL SERVICE OF
PROCESS UPON BORROWER, AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE
BY REGISTERED MAIL DIRECTED TO BORROWER AT THE ADDRESS STATED IN THE LOAN
DOCUMENTS AND SERVICE SO MADE WILL BE DEEMED TO BE COMPLETED UPON ACTUAL
RECEIPT.

     

    
      
        
           


        

        
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    12.         Waiver of
Jury Trial.  BORROWER AND LENDER (BY
ACCEPTANCE OF THIS NOTE), HAVING BEEN REPRESENTED BY COUNSEL, EACH KNOWINGLY AND
VOLUNTARILY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY RIGHTS (a) UNDER THIS NOTE OR ANY RELATED AGREEMENT
OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY
IN THE FUTURE BE DELIVERED IN CONNECTION WITH THIS NOTE OR (b) ARISING FROM
ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH THIS NOTE, AND AGREES THAT
ANY SUCH ACTION OR PROCEEDING WILL BE TRIED BEFORE A COURT AND NOT BEFORE A
JURY.  BORROWER AGREES THAT IT WILL NOT ASSERT ANY CLAIM AGAINST
LENDER ON ANY THEORY OF LIABILITY FOR SPECIAL, INDIRECT, CONSEQUENTIAL,
INCIDENTAL OR PUNITIVE DAMAGES.

     

    IN WITNESS WHEREOF, Borrower
has executed and delivered this Note as of the day and year first written
above.

     

    
      	 	BORROWER:
	 	 
	 
      	
              Fortune
      Industries, Inc.,

            
	 
      	
              an
      Indiana corporation

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
              By:

            	
              /s/ John F. Fisbeck

            
	 
      	
              Printed:

            	
              John F. Fisbeck

            
	 
      	
              Title:

            	
              Chief Executive
  Officer

            


    

    


    Acknowledged:

    


    
      	
              /s/ Carter M. Fortune

            	 
      
	
              Carter
      M. Fortune

            	 
      
	 
      	 
      
	 
      	 
      
	
              /s/ John F. Fisbeck

            	 
      
	
              John
      F. Fisbeck

            	 
      


    

     

     

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