Exhibit 10.4


 


EXECUTION COPY


 


PROMISSORY NOTE


 


$15,000,000.00


 


January 19, 2006


 


CGI Holding Corporation


5 Revere Drive


Suite 510


Northbrook, Illinois 60062


(Hereinafter
referred to as “Borrower”)


 


Wachovia Bank, National Association


301 South Tryon Street


Charlotte, North Carolina 28202


(Hereinafter referred
to as “Bank”)


 


Borrower promises to
pay to the order of Bank, in lawful money of the United States of America, at
its office indicated above or wherever else Bank may specify, the sum of
Fifteen Million and No/100 Dollars ($15,000,000.00) or such sum as may
be advanced and outstanding from time to time, with interest on the unpaid
principal balance at the rate and on the terms provided in this Promissory Note
(including all renewals, extensions or modifications hereof, this “Note”).


 


LOAN AGREEMENT.  This
Note is subject to the provisions of that certain Loan Agreement between Bank
and Borrower of even date herewith, as modified from time to time.


 


LINE OF
CREDIT.  Borrower may borrow, repay and
reborrow, and, upon the request of Borrower, Bank shall advance and readvance
under this Note from time to time until the maturity hereof (each an “Advance”
and together the “Advances”), so long as the total principal balance
outstanding under this Note,
plus the aggregate undrawn and
unexpired amount of the then outstanding Letters of Credit, plus the aggregate
amount of of unreimbursed drawings under all Letters of Credit at any one time
does not exceed the principal amount stated on the face of this Note, at any one time
does not exceed the principal amount stated on the face of this Note, subject to the limitations described in any loan
agreement to which this Note is subject. 
Bank’s obligation to make Advances under this Note
shall terminate if Borrower is in Default.


 


Borrower shall
subscribe to Bank’s cash management services and the terms of such service
shall control the manner in which funds are transferred between the applicable
demand deposit account and the line of credit for credit or debit to the line
of credit.


 


AVAILABILITY.  The aggregate principal of Advances under
this Note shall not exceed 1.75 times the 12 month trailing EBITDA of Borrower,
as calculated quarterly by Bank for the preceding Calculation Period (as
defined in the Loan Agreement), and with respect to any Partial Term Subsidiary
(as defined in the Loan Agreement), shall include EBITDA generated by the
Partial Term Subsidiary, including its predecessor entity (if any), during the
entirety of the Calculation Period; provided that (i) Bank shall
have received: (a) audited financial statements


 

















 


for such Partial Term
Subsidiary for each fiscal quarter during the applicable Calculation Period, (b) audited
financial statements as
of the end of a prior fiscal year that
include such Partial Term Subsidiary’s operations for the applicable
Calculation Period or (c) unaudited financial statements reflecting such
Partial Term Subsidiary’s operations for the applicable Calculation Period
that: (i) are certified as true and accurate by the Borrower and (ii) have been reviewed and approved by Bank in
its reasonable discretion.


 


USE OF
PROCEEDS.  Borrower shall use the proceeds of the
loan(s) evidenced by this Note for the commercial purposes of Borrower, solely
as follows: (a) for working capital purposes, (b) Permitted
Acquisitions (as defined in the Loan Agreement) and (c) to retire the
existing line of credit between Bank and
Borrower dated as of February 4, 2005 in the principal amount of
$3,000,000.00 (as modified on December 1, 2005 to increase the current
principal amount of such existing line of credit to $7,500,000.00) and


 


SECURITY. 
Borrower and Guarantors have granted Bank a security interest in the collateral
described in the Loan Documents, including, but not limited to, personal
property collateral described in that certain Security Agreement of even date
herewith.


 


INTEREST
RATE.  Interest shall accrue on the
unpaid principal balance of this Note from the date hereof at the LIBOR Market
Index Rate plus 2.10%, as that rate may change from day to day in accordance
with changes in the LIBOR Market Index Rate (“Interest Rate”).  “LIBOR Market Index Rate”, for any day, means
the rate for 1 month U.S. dollar deposits as reported on Telerate page 3750
as of 11:00 a.m., London time, the second London business day before the
relevant interest period begins, or if such day is not a London business day,
then the immediately preceding London business day (or if not so reported, then
as determined by Bank from another recognized source or interbank quotation).


 


DEFAULT
RATE.  In addition to all other rights
contained in this Note, if a Default (as defined herein) occurs and as long as
a Default continues, all outstanding Obligations, other than Obligations under any swap agreements (as defined in 11
U.S.C. § 101, as in effect from time to time) between Borrower and Bank or
its affiliates, shall bear interest at the
Interest Rate plus 3% (“Default Rate”). 
The Default Rate shall also apply from acceleration until the
Obligations or any judgment thereon is paid in full.


 


INTEREST
AND FEE(S) COMPUTATION (ACTUAL/360).  Interest and fees, if any, shall be computed
on the basis of a 360-day year for the actual number of days in the applicable
period (“Actual/360 Computation”).  The
Actual/360 Computation determines the annual effective interest yield by taking
the stated (nominal) rate for a year’s period and then dividing said rate by
360 to determine the daily periodic rate to be applied for each day in the
applicable period.  Application of the
Actual/360 Computation produces an annualized effective rate exceeding the
nominal rate.


 


REPAYMENT
TERMS.  This Note shall be due and payable
in consecutive monthly payments of
accrued interest only, commencing on February 19, 2006, and continuing on the same day of each month thereafter until
fully paid.  In any event, all principal
and accrued interest shall be due and payable on January 19, 2009.


 


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AVAILABILITY FEE.  Borrower shall pay to Bank quarterly an
availability fee equal to 0.15% per annum on the difference between (i) the
face amount of this Note and (ii) the outstanding principal balance of
this Note, for each day during the preceding calendar quarter or portion
thereof, commencing on March 31, 2006 and continuing on the same day of
each quarter thereafter, with a final payment due and payable on the date that
all principal and accrued interest is paid in full.


 


APPLICATION
OF PAYMENTS.  Monies received
by Bank from any source for application toward payment of the Obligations shall
be applied to accrued interest and then to principal.  If a Default occurs, monies
may be applied to the Obligations in any manner or order deemed appropriate by
Bank.


 


If any payment received
by Bank under this Note or other Loan Documents is rescinded, avoided or for
any reason returned by Bank because of any adverse claim or threatened action,
the returned payment shall remain payable as an obligation of all persons
liable under this Note or other Loan Documents as though such payment had not
been made.


 


DEFINITIONS.  Loan Documents.  The term “Loan Documents,” as used in this
Note and the other Loan Documents, refers to all documents executed in
connection with or related to the loan evidenced by this Note, the $2,500,000
term promissory note executed on the date hereof (the “Term Note”) and any
prior notes which evidence all or any portion of the loan evidenced by this
Note, and any letters of credit issued pursuant to any loan agreement to which
this Note is subject, any applications for such letters of credit and any other
documents executed in connection therewith or related thereto, and may include, without limitation, a loan agreement, this
Note, the Term Note, guaranty agreements, security agreements, security
instruments, financing statements, mortgage instruments, any renewals or
modifications, whenever any of the foregoing are executed, but does not include
swap agreements (as defined in 11 U.S.C. § 101, as in effect from time to
time).  Obligations.  The term “Obligations”, as used in this Note
and the other Loan Documents, refers to any and all indebtedness and other
obligations under this Note, the Term Note, all other obligations under any
other Loan Documents, and all obligations under any swap agreements (as defined
in 11 U.S.C. § 101, as in effect from time to time) between Borrower
and Bank, or its affiliates, whenever executed.  Certain Other Terms.  All terms that are used but not otherwise
defined in any of the Loan Documents shall have the definitions provided in the
Uniform Commercial Code.


 


LATE
CHARGE.  If any payments are not timely
made, Borrower shall also pay to Bank a late charge equal to 4% of each payment past due for 15 or more
days.


 


Acceptance by Bank of
any late payment without an accompanying late charge shall not be deemed a
waiver of Bank’s right to collect such late charge or to collect a late charge
for any subsequent late payment received.


 


ATTORNEYS’
FEES AND OTHER COLLECTION COSTS.  Borrower
shall pay all of Bank’s reasonable expenses incurred to enforce or collect any
of the Obligations including, without limitation, reasonable arbitration,
paralegals’, attorneys’ and experts’ fees and expenses,


 


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whether incurred
without the commencement of a suit, in any trial, arbitration, or
administrative proceeding, or in any appellate or bankruptcy proceeding.


 


USURY.  If at any time the effective interest rate
under this Note would, but for this paragraph, exceed the maximum lawful rate,
the effective interest rate under this Note shall be the maximum lawful rate,
and any amount received by Bank in excess of such rate shall be applied to
principal and then to fees and expenses, or, if no such amounts are owing,
returned to Borrower.


 


GRACE/CURE
PERIOD.  Grace Period.  The failure of timely payment of the
Obligations shall not be a Default until 5 days after such payment is due.  Cure Period.  Except as provided below, any Default, other
than non-payment, may be cured within 30 days after written notice thereof is
mailed to Borrower by Bank. Borrower’s right to cure shall be applicable only
to curable defaults and shall not apply, without limitation, to Defaults based
upon False Warranty or Cessation; Bankruptcy set forth below.  Borrower shall have the right to cure a
Default only once during any 12 month period. 
Bank shall not exercise its remedies to collect the Obligations except
as Bank reasonably deems necessary to protect its interest in collateral
securing the Obligations during a cure period.


 


DEFAULT.  If any of the following occurs and is not
cured within the applicable cure period, a default (“Default”) under this Note
shall exist:  Nonpayment;
Nonperformance.  The failure
of timely payment or performance of the Obligations or Default under this Note
or any other Loan Documents.  Loan Document Default.  A
default under any Loan Document.  Breach.  Any
breach of any agreement contained or referred to in this Note or any other Loan
Document.  False Warranty.  A warranty or representation made in the Loan
Documents or furnished to Bank in connection with the loan evidenced by this
Note is materially false when made.  Cross Default. At Bank’s option, any default in payment or
performance of any obligation under any other loans, contracts or agreements of
Borrower or any Guarantor, any general partner of or the holder(s) of the
majority ownership interests of Borrower with Bank or its affiliates which
default is not cured within any applicable cure period, unless, but only as
long as, the existence of any such default is being contested by the Borrower or such Guarantor in good faith by
appropriate proceedings and adequate reserves in respect thereof have been
established on the books of the Borrower or such Guarantor to the extent
required by GAAP.  Cessation; Bankruptcy.  The death of, appointment of a guardian for,
dissolution or termination of existence of (subject to the provisions set forth in
clause (iv) of the subparagraph entitled “Material Capital Structure or Business Alteration” below), loss of good standing status by (unless such loss would not have a material
adverse effect upon the operations or financial condition of the Borrower), appointment of a
receiver for, assignment for the benefit of creditors of, or commencement of
any bankruptcy or insolvency proceeding by or against Borrower or any
Guarantor, or any general partner of or the holder(s) of the majority ownership
interests of Borrower, or any party to the Loan Documents.  Material Capital Structure or Business
Alteration.  Without prior
written consent of Bank, (i) a material alteration in the kind or type of
Borrower’s business or that of any Guarantor; (ii) the sale of
substantially all of the business or assets of Borrower or any Guarantor, or a
material portion (10% or more) of such business or assets if such a sale is
outside the ordinary course of business of Borrower or any Guarantor, or more
than 50% of the outstanding stock or voting power of or in any such entity in a
single


 


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transaction or a series
of transactions; (iii) any acquisition that does not constitute a
Permitted Acquisition or (iv) should any Guarantor enter into any merger
or consolidation; provided that any Guarantor may merge with any other
Guarantor so long as the surviving entity is a Guarantor.


 


REMEDIES UPON DEFAULT.  If a
Default occurs under this Note or any Loan Documents, Bank may at any time
thereafter, take the following actions:  Bank Lien.  Foreclose its security interest or lien
against Borrower’s and Guarantors’ accounts without notice.  Acceleration Upon Default.  Accelerate the maturity of this Note and, at
Bank’s option, any or all other Obligations, other than Obligations under any
swap agreements (as defined in 11 U.S.C. § 101, as in effect from time to
time) between Borrower and Bank, or its affiliates, which shall be due in
accordance with and governed by the provisions of said swap agreements;
whereupon this Note and the accelerated Obligations shall be immediately due
and payable; provided, however, if the Default is based upon a bankruptcy or
insolvency proceeding commenced by or against Borrower or endorser of this
Note, all Obligations (other than Obligations under any swap agreement as
referenced above) shall automatically and immediately be due and payable.  Cumulative.  Exercise any rights and remedies as provided
under the Note and other Loan Documents, or as provided by law or equity.


 


WAIVERS AND
AMENDMENTS.  No waivers, amendments or
modifications of this Note and other Loan Documents shall be valid unless in
writing and signed by an officer of Bank. 
No waiver by Bank of any Default shall operate as a waiver of any
other Default or the same Default on a future occasion.  Neither the failure nor any delay on the part
of Bank in exercising any right, power, or remedy under this Note and other
Loan Documents shall operate as a waiver thereof, nor shall a single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or remedy.


 


Except to the extent otherwise provided by
the Loan Documents or prohibited by law, each Borrower and each other person
liable under this Note waives presentment, protest, notice of dishonor, demand for payment, notice of intention to accelerate maturity, notice
of acceleration of maturity, notice of sale and all other notices of any
kind.  Further, each agrees that Bank may
(i) extend, modify or renew
this Note or make a novation of the loan evidenced by this Note, and/or (ii) grant
releases, compromises or indulgences with respect to any collateral securing
this Note, or with respect to Borrower or other person liable under this Note
or any other Loan Documents, all without notice to or consent of Borrower and
other such person, and without affecting the liability of Borrower and other
such person; provided, Bank may not extend, modify or renew this Note or make a
novation of the loan evidenced by this Note without the consent of Borrower
which increases the burdens of Borrower without the consent of Borrower.


 


MISCELLANEOUS
PROVISIONS.  Assignment.  This Note and the other Loan Documents shall
inure to the benefit of and be binding upon the parties and their respective
heirs, legal representatives, successors and assigns.  Bank’s interests in and rights under this
Note and the other Loan Documents are freely assignable, in whole or in part,
by Bank.  In addition, nothing in this
Note or any of the other Loan Documents shall prohibit Bank from pledging or
assigning this Note or any of the other Loan Documents or any interest therein
to any Federal Reserve Bank.  Borrower
shall not assign its rights and interest hereunder without the prior written


 


5

















 


consent of Bank, and
any attempt by Borrower to assign without Bank’s prior written consent is null
and void.  Any assignment shall not
release Borrower from the Obligations.  Applicable Law; Conflict Between Documents.  This Note
and, unless otherwise provided in any other Loan Document, the other Loan
Documents shall be governed by and construed  under the laws of the state named in Bank’s address on the first page hereof without regard to that state’s conflict of laws
principles.  If the terms of this Note
should conflict with the terms of any loan agreement, the terms of this Note
shall control.  Security
Interest.  Except as
prohibited by law, Borrower and Guarantors grant Bank a security interest in
the collateral described in the Security Agreement of even date herewith.  Swap Agreements.  All
swap agreements (as defined in 11 U.S.C. § 101, as in effect from time to time), if any, between Borrower and Bank
or its affiliates are independent agreements governed by the written provisions
of said swap agreements, which will remain in full force and effect, unaffected
by any repayment, prepayment, acceleration, reduction, increase or change in
the terms of this Note, except as otherwise expressly provided in said written
swap agreements, and any payoff statement from Bank relating to this Note shall
not apply to said swap agreements unless expressly referred to in such payoff
statement.  Jurisdiction.  Borrower irrevocably agrees to non-exclusive
personal jurisdiction in the state named in Bank’s address on the first page hereof.  Severability.  If any
provision of this Note or of the other Loan Documents shall be prohibited or
invalid under applicable law, such provision shall be ineffective but only to
the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Note or other
such document.  Notices.  Any notices to Borrower shall be sufficiently
given, if in writing and mailed, hand delivered or sent via telecopy (or
other facsimile device), recognized overnight courier service or certified mail to the Borrower’s address shown above or such
other address as provided hereunder, and to Bank, if in writing and, hand
delivered or sent via telecopy (or other facsimile device), recognized
overnight courier service or certified mail
to Bank’s office address shown above or
such other address as Bank may specify in writing from time to time.  Notices to Bank must include the mail
code.  In the event that Borrower changes Borrower’s address at any time prior
to the date the Obligations are paid in full, Borrower agrees to promptly give
written notice of said change of address by registered or certified mail,
return receipt requested, all charges prepaid.


 


Plural;
Captions.  All references in the Loan
Documents to Borrower, person, document or other nouns of reference mean both
the singular and plural form, as the case may be, and the term “person” shall
mean any individual, person or entity. 
The captions contained in the Loan Documents are inserted for
convenience only and shall not affect the meaning or interpretation of the Loan
Documents.  Advances.  Bank may, in its sole discretion and if
requested by Borrower, make other advances which shall be deemed to be advances
under this Note, even though the stated principal amount of this Note may be
exceeded as a result thereof.  Posting of Payments. 
All payments received during normal banking hours after 2:00 p.m.
local time at the office of Bank first shown above shall be deemed received at
the opening of the next banking day.  Joint and Several Obligations.  Each
entity executing this Note is jointly and severally obligated.  Fees and Taxes. 
Borrower shall promptly pay all documentary, intangible recordation
and/or similar taxes on this transaction whether assessed at closing or arising
from time to time.  LIMITATION ON LIABILITY; WAIVER OF PUNITIVE DAMAGES. EACH
OF THE PARTIES HERETO, INCLUDING BANK BY ACCEPTANCE HEREOF, AGREES THAT IN ANY
JUDICIAL, MEDIATION OR ARBITRATION PROCEEDING OR ANY CLAIM OR


 


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CONTROVERSY BETWEEN OR AMONG THEM THAT MAY ARISE
OUT OF OR BE IN ANY WAY CONNECTED WITH THIS AGREEMENT, THE LOAN DOCUMENTS OR
ANY OTHER AGREEMENT OR DOCUMENT BETWEEN OR AMONG THEM OR THE OBLIGATIONS
EVIDENCED HEREBY OR RELATED HERETO, IN NO EVENT SHALL ANY PARTY HAVE A REMEDY
OF, OR BE LIABLE TO THE OTHER FOR, (1) INDIRECT, SPECIAL OR CONSEQUENTIAL
DAMAGES OR (2) PUNITIVE OR EXEMPLARY DAMAGES.   EACH OF THE PARTIES HEREBY EXPRESSLY WAIVES
ANY RIGHT OR CLAIM TO PUNITIVE OR EXEMPLARY DAMAGES THEY MAY HAVE OR WHICH
MAY ARISE IN THE FUTURE IN CONNECTION WITH ANY SUCH PROCEEDING, CLAIM OR
CONTROVERSY, WHETHER THE SAME IS RESOLVED BY ARBITRATION, MEDIATION, JUDICIALLY
OR OTHERWISE.  Patriot Act Notice.  To
help fight the funding of terrorism and money laundering activities, Federal
law requires all financial institutions to obtain, verify, and record
information that identifies each person who opens an account.  For purposes of this section, account shall
be understood to include loan accounts.  Final Agreement. 
This Note and the other Loan Documents represent the final
agreement between the parties and may not be contradicted by evidence of prior,
contemporaneous or subsequent oral agreements of the parties.  There are no unwritten oral agreements
between the parties.


 


ARBITRATION.  Upon demand of any party hereto, whether made
before or after institution of any judicial proceeding, any claim or
controversy arising out of or relating to the Loan Documents between parties
hereto (a “Dispute”) shall be resolved by binding arbitration conducted under
and governed by the Commercial Financial Disputes Arbitration Rules (the “Arbitration
Rules”) of the American Arbitration Association (the “AAA”) and the Federal
Arbitration Act.  Disputes may include,
without limitation, tort claims, counterclaims, a dispute as to whether a
matter is subject to arbitration, claims brought as class actions, or claims
arising from documents executed in the future. 
A judgment upon the award may be entered in any court having
jurisdiction. Notwithstanding the foregoing, this arbitration provision does
not apply to disputes under or related to swap agreements.  Special Rules.  All arbitration hearings shall be conducted
in the city named in the address of Bank first stated above.  A hearing shall begin within 90 days of
demand for arbitration and all hearings shall conclude within 120 days of
demand for arbitration.  These time
limitations may not be extended unless a party shows cause for extension and
then for no more than a total of 60 days. 
The expedited procedures set forth in Rule 51 et seq. of the
Arbitration Rules shall be applicable to claims of less than
$1,000,000.00.  Arbitrators shall be
licensed attorneys selected from the Commercial Financial Dispute Arbitration
Panel of the AAA.  The parties do not
waive applicable Federal or state substantive law except as provided
herein.  Preservation
and Limitation of Remedies. 
Notwithstanding the preceding binding arbitration provisions, the
parties agree to preserve, without diminution, certain remedies that any party
may exercise before or after an arbitration proceeding is brought.  The parties shall have the right to proceed
in any court of proper jurisdiction or by self-help to exercise or prosecute
the following remedies, as applicable: (i) all rights to foreclose against
any real or personal property or other security by exercising a power of sale
or under applicable law by judicial foreclosure including a proceeding to
confirm the sale; (ii) all rights of self-help including peaceful
occupation of real property and collection of rents, set-off, and peaceful
possession of personal property; (iii) obtaining provisional or ancillary
remedies including injunctive relief, sequestration, garnishment, attachment,
appointment of receiver and filing an


 


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involuntary bankruptcy
proceeding; and (iv) when applicable, a judgment by confession of
judgment.  Any claim or controversy with
regard to any party’s entitlement to such remedies is a Dispute.  Waiver of Jury Trial.  THE PARTIES ACKNOWLEDGE THAT BY AGREEING TO
BINDING ARBITRATION THEY HAVE IRREVOCABLY WAIVED ANY RIGHT THEY MAY HAVE
TO JURY TRIAL WITH REGARD TO A DISPUTE AS TO WHICH BINDING ARBITRATION HAS BEEN
DEMANDED.


 


DISCLOSURE OF INFORMATION;
CONFIDENTIALITY.  Bank shall hold all non-public information
with respect to Borrower and its subsidiaries obtained pursuant to the Loan
Documents in accordance with its customary procedures for handling confidential
information; provided, that Bank may disclose any such information to
the extent such disclosure is (i) required by law or requested or required
pursuant to any legal process, (ii) requested by, or required to be
disclosed to, any regulatory agency or authority, (iii) used in any suit,
action or proceeding for the purpose of defending itself, reducing its
liability or protecting any of its claims, rights, remedies or interests under
or in connection with the Loan Documents or (iv) which had been publicly
disclosed other than as a result of a disclosure by Bank prohibited by this
Agreement; provided  futher, Bank shall notify Borrower of any
potential disclosure pursuant to (i), (ii) or (iii) above and
Borrower may defend against the disclosures set forth in (i), (ii) or (iii) above.


 


 


[Signature Page Follows]


 


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IN WITNESS
WHEREOF, Borrower, on the day and year first above written, has caused this Note
to be executed under seal.


 


 


	
  [CORPORATE SEAL]

  	
  CGI HOLDING CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gerard M. Jacobs

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Gerard M. Jacobs

  	
   

  
	
   

  	
   

  	
  Title:

  	
  CEO

  	
   

  



 


 


[Promissory Note – CGI Holding Corporation]