EXHIBIT 10.9
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NOTE AGREEMENT
Dated as of November __, 1998
Between
SPECIALTY PRODUCTS & INSULATION CO.,
And
IREX CORPORATION
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TABLE OF CONTENTS
Page
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ARTICLE I - DEFINITIONS....................................................................................... 1
Section 1.1 Definitions............................................................................ 1
ARTICLE II - THE NOTES........................................................................................ 6
Section 2.1 Form and Dating........................................................................ 6
Section 2.2 Execution.............................................................................. 6
Section 2.3 Registrar and Paying Agent............................................................. 6
Section 2.4 Transfer and Exchange.................................................................. 7
Section 2.5 Replacement Securities................................................................. 7
Section 2.6 Outstanding Securities................................................................. 8
Section 2.7 Treasury Notes......................................................................... 8
Section 2.8 Cancellation........................................................................... 8
Section 2.9 Deposit of Moneys...................................................................... 8
Section 2.10 Restrictive Legends.................................................................... 8
Section 2.11 Persons Deemed Owners.................................................................. 9
Section 2.12 Record Date............................................................................ 9
ARTICLE III - ISSUANCE AND SALE OF NOTES..................................................................... 9
Section 3.1 Issuance of Notes..................................................................... 9
Section 3.2 Closing............................................................................... 9
ARTICLE IV - REDEMPTION...................................................................................... 9
Section 4.1 Notices to Holders.................................................................... 9
Section 4.2 Selection of Notes To Be Redeemed..................................................... 10
Section 4.3 Notice of Redemption.................................................................. 10
Section 4.4 Effect of Notice of Redemption........................................................ 11
Section 4.5 Deposit of Redemption Price........................................................... 11
Section 4.6 Securities Redeemed in Part........................................................... 11
ARTICLE V - REPRESENTATIONS OF THE COMPANY................................................................... 12
Section 5.1 Representations of the Company........................................................ 12
Section 5.2 Representations of Purchaser.......................................................... 14
ARTICLE VI - COVENANTS....................................................................................... 15
Section 6.1 Payment of Notes...................................................................... 15
Section 6.2 Reports............................................................................... 16
Section 6.3 Limitation on Dividends............................................................... 16
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Section 6.4 Leverage.............................................................................. 16
Section 6.5 Limitation on Affiliate Transactions.................................................. 17
Section 6.6 Change of Control..................................................................... 17
Section 6.7 Further Instruments and Acts.......................................................... 18
Section 6.8 Taxes................................................................................. 18
Section 6.9 Stay, Extension and Usury Laws........................................................ 18
Section 6.10 Corporate Existence................................................................... 19
ARTICLE VII - CONDITIONS PRECEDENT.......................................................................... 19
Section 7.1 Conditions to Issuance and Sale of Notes.............................................. 19
ARTICLE VIII - DEFAULTS AND REMEDIES........................................................................ 20
Section 8.1 Events of Default..................................................................... 20
Section 8.2 Acceleration.......................................................................... 22
Section 8.3 Other Remedies........................................................................ 22
Section 8.4 Waiver of Past Defaults............................................................... 22
Section 8.5 Rights of Holders to Receive Payment.................................................. 22
ARTICLE IX - SUBORDINATION.................................................................................. 22
Section 9.1 Securities Subordinated to Senior Indebtedness........................................ 22
Section 9.2 No Payment on Notes in Certain Circumstances.......................................... 23
Section 9.3 Notes Subordinated to Prior Payment of All Senior Indebtedness
on Dissolution, Liquidation or Reorganization of the Company.......................... 24
Section 9.4 Payee to Be Subrogated to Rights of Holders of Senior Indebtedness.................... 25
Section 9.5 Obligations of the Company Unconditional.............................................. 26
Section 9.6 Subordination Rights Not Impaired by Acts or Omissions of the
Company or Holders of Senior Indebtedness............................................. 27
Section 9.7 Article IX Not to Prevent Events of Default........................................... 27
[ARTICLE X - INDENTURE...................................................................................... 27
Section 10.1 Indenture............................................................................. 27
ARTICLE XI - AMENDMENTS..................................................................................... 27
Section 11.1 Without Consent of Holders............................................................ 27
Section 11.2 With Consent of Holders............................................................... 27
Section 11.3 Revocation and Effect of Consents and Waivers......................................... 29
ARTICLE XII - MISCELLANEOUS................................................................................. 29
Section 12.1 Governing Law......................................................................... 29
Section 12.2 Jurisdiction; Agents for Service of Process........................................... 29
Section 12.3 Captions.............................................................................. 30
Section 12.4 Notices............................................................................... 30
Section 12.5 Parties in Interest................................................................... 30
Section 12.6 Counterparts.......................................................................... 30
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Section 12.7 Entire Agreement...................................................................... 30
Section 12.8 Severability.......................................................................... 30
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NOTE AGREEMENT
THIS NOTE AGREEMENT (this "Agreement"), dated as of November __, 1998,
is between SPECIALTY PRODUCTS & INSULATION CO., a Pennsylvania corporation (the
"Company") and IREX CORPORATION, a Pennsylvania corporation ("Purchaser").
W I T N E S S E T H :
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WHEREAS, Purchaser, the Company and Evercore Capital Partners L.P.,
Evercore Capital Partners (NQ) L.P. and Evercore Capital Offshore Partners L.P.
(collectively, "Evercore") are party to that certain Stock Subscription
Agreement, dated as of [October __, 1998] (the "Subscription Agreement"); and
WHEREAS, the execution and delivery of this Agreement is a condition
to the obligations of each of Purchaser, the Company and Evercore under the
Subscription Agreement; and
WHEREAS, the Company wishes to distribute to Purchaser, as its sole
shareholder, a dividend of $3,500,000 in aggregate principal amount of its
Adjustable Rate Junior Subordinated Pay-in-Kind Notes due 2007; and
WHEREAS, the Company, Purchaser and Evercore wish to set forth the
terms of such Notes herein.
NOW, THEREFORE, IT IS AGREED:
ARTICLE I
DEFINITIONS
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Section 1.1 Definitions. When used in this Agreement, the following
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terms shall have the respective meanings specified therefor below (such meanings
to be equally applicable to both the singular and plural forms of the terms
defined).
"Additional Notes" shall mean any Notes issued in lieu of cash
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interest on the Notes.
"Adjusted Consolidated EBITDA" means, with respect to any period of
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time, the sum of (i) Consolidated EBITDA, (ii) with respect to any Related
Business acquired by the Company, the EBITDA of such Related Business for such
period of time or such shorter period, as appropriate, which begins on the first
day of the relevant period of time and ends on the last day of the full fiscal
quarter preceding the date of the acquisition of such Related Business and (iii)
the Pro Forma Adjustments.
"Affiliate" of any Person shall mean any Person directly or indirectly
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controlling, controlled by, or under common control with, such Person; provided
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that, for the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlled by" and "under common control
with"), as used with respect to any Person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such Person, whether through the ownership of voting securities
or partnership interests, by contract or otherwise.
"Affiliate Transaction" shall have the meaning assigned to such term
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in Section 6.5.
"Agent" shall mean the Paying Agent, the Registrar, and any co-paying
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agent or co-registrar.
"Agreement" shall have the meaning assigned to such term in the
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preamble hereto.
"Bankruptcy Event" shall have the meaning assigned to such term in
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Section 9.3.
"Bankruptcy Law" shall mean ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code, as amended,
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or any similar United States federal or state law relating to bankruptcy,
insolvency, receivership, winding-up, liquidation, reorganization or relief of
debtors or any amendment to, succession to or change in any such law.
A "business day" shall mean any day, other than a Saturday, Sunday or
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a day on which banks located in New York, New York shall be authorized or
required by law to close.
"Change of Control" shall mean the occurrence of any of the following
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events: (a) any sale, lease, exchange or other transfer (collectively, a
"Transfer") (in one transaction or a series of related transactions) of all or
substantially all of the assets of the Company and its subsidiaries; or (b) the
acquisition by any Person or group of related or affiliated Persons (other than
Evercore and its Affiliates) of the power, directly or indirectly, to vote or
direct the voting of securities having more than 35% of the ordinary voting
power for the election of directors of the Company or of any direct or indirect
holding company thereof; provided that no Change of Control shall be deemed to
occur pursuant to this clause (b), so long as Evercore and its Affiliates own an
amount of securities representing a greater portion of such ordinary voting
power than such Person or group of related or affiliated Persons.
"Closing" shall have the meaning assigned to such term in Section 3.2.
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"Closing Date" shall have the meaning assigned to such term in Section
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3.2.
"Commission" shall mean the United States Securities and Exchange
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Commission or any other Federal agency administering the Securities Act of 1933,
as amended, the Exchange Act of 1934, as amended, and other Federal securities
laws.
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"Company" shall have the meaning assigned to such term in the preamble
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hereto.
"Condition" of any Person shall mean the business, assets,
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liabilities, operations, results of operations or condition (financial or
otherwise) of such Person.
"Consolidated EBITDA" shall mean, with respect to the Company and its
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subsidiaries for any period, EBITDA for the Company and its subsidiaries
determined in accordance with U.S. generally accepted accounting principles for
the period in question; provided, that the Consolidated EBITDA of the Company
for each of the four fiscal quarters immediately preceding the Closing Date
shall be deemed to be the amount set forth on Schedule I attached hereto.
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"Consolidated Indebtedness" shall mean the aggregate Indebtedness of
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the Company and its subsidiaries on a consolidated basis, determined in
accordance with generally accepted accounting principals.
"Credit Agreement" shall mean [to come]
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"Custodian" shall have the meaning assigned to such term in Section
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8.1.
"Default" shall mean any event that is, or after notice or passage of
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time or both, would be, an Event of Default.
"EBITDA" shall mean, with respect to any Person for any period, the
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sum, of (a) net income (or net loss), (b) interest expense, (c) income tax
expense, (d) depreciation expense, (e) amortization expense, and (f)
extraordinary or unusual losses deducted in calculating net income, minus
extraordinary or unusual gains included in calculating net income, in each case
for such Person determined in accordance with U.S. generally accepted accounting
principles for the period in question.
"Event of Default" shall have the meaning assigned to such term in
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Section 8.1.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
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amended, and the rules and regulations promulgated thereunder.
"Holder" shall mean the Purchaser and any transferee of any Note
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pursuant to the terms of this Agreement.
"Indebtedness" shall mean, as to any Person, without duplication, (i)
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all indebtedness (including principal, interest, fees penalties and charges) of
such Person for borrowed money or for the deferred purchase price of property or
services evidenced by notes or other written obligations, (ii) the face amount
of all letters of credit issued for the account of such Person and all drafts
drawn thereunder, (iii) the aggregate amount required to be capitalized under
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leases with respect to which such Person is the lessee, (iv) Indebtedness of
other Persons assumed or guaranteed by such Person and (v) renewals, extensions
and refundings of such Indebtedness.
"Interest Payment Date" shall mean [March 31] and [September 30] of
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each year.
"Interest Rate" shall mean 10 1/2 % per annum.
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"Maturity Date" shall mean [September 30, 2002].
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"Net Funded Indebtedness" shall mean all Indebtedness of the Company
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and its subsidiaries on a consolidated basis under the Credit Agreement minus
all cash and cash equivalents of the Company and its subsidiaries on a
consolidated basis.
"Normalized Working Capital" shall mean, with respect to any Person as
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of any date, the average level of net working capital of such Person during the
four full fiscal quarters immediately preceding such determination date.
"Notes" shall mean the Adjustable Rate Junior Subordinated Pay-in-Kind
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Notes issued by the Company pursuant to this Agreement and shall include any
Additional Notes issued in respect thereof.
"Paying Agent" shall have the meaning assigned to such term in Section
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2.3.
"Payment Blockage Period" shall have the meaning assigned to such term
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in Section 9.2.
"Payment Default" shall have the meaning assigned to such term in
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Section 9.2.
"Payment Notice" shall have the meaning assigned to such term in
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Section 9.2.
"Person" shall mean and include an individual, a partnership, a joint
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venture, a corporation, a limited liability company, a limited liability
partnership, a trust, an incorporated organization and a government or any
department or agency thereof.
"Private Placement Legend" shall have the meaning assigned to such
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term in Section 3.10.
"Pro Forma Adjustments" means (i) any adjustments certified by the
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chief financial officer of the Company that would, in the reasonable
determination of the Company, satisfy the requirements of Rule 11-02(a) of
Regulation S-X of the Securities Act of 1933, as amended, if included in a
registration statement filed with the Commission and (ii) any other operating
expense reductions reasonably expected to result from the acquisition of a
Related Business, if such reductions are (1) set forth in reasonable detail in a
plan approved by and set forth in resolutions adopted by the Board of Directors
of the Company, and (2) limited to operating expenses specified in such plan
(and if any reductions are set forth in a range, the lowest amount
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of such range) that would otherwise have resulted in the payment of cash within
twelve months after the date of the consummation of such transaction, net of any
operating expenses (other than extraordinary items, non-recurring or temporary
charges and other, similar one-time expenses) reasonably expected to be incurred
to implement such plan and that are to be paid in cash during such twelve-month
period, certified by the chief financial officer of the Company.
"Purchaser" shall have the meaning assigned to such term in the
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preamble hereto.
"Record Date" shall mean [March 15] and [September 15] of each year.
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"Redemption Date" when used with respect to any Note, means the date
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for the redemption of such Note pursuant to this Agreement and the notes by a
notice delivered pursuant to the terms of Section 4.1 of this Agreement.
"Registrar" shall have the meaning assigned to such term in Section
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2.3.
"Related Business" shall mean the business of (a) distributing and/or
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fabricating mechanical insulation, architectural/acoustical products and related
specialty products to commercial and industrial end-users, (b) offering
customized fabrication, export and other value-added services related to such
products or (c) any other complementary business which is approved by the
Company's Board of Directors in its reasonable discretion.
"Restricted Security" shall have the meaning assigned to such term in
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Rule 144(a)(3) under the Securities Act of 1933, as amended.
"Senior Indebtedness" shall mean any Indebtedness of the Company
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(including, but not limited to, (x) any Indebtedness under the Credit Agreement
and any related fees and other obligations thereunder and (y) any interest
accruing subsequent to the filing of a petition for bankruptcy at the rate
provided for in the documentation with respect thereto, whether or not such
interest is an allowed claim under applicable law), whether outstanding on the
date of this Agreement or the issue date of any Note or hereafter created,
incurred or assumed, unless, in the case of any particular Indebtedness, the
instrument creating or evidencing the same or pursuant to which the same is
outstanding expressly provides that such Indebtedness shall not be senior in
right of payment to the Notes. Notwithstanding the foregoing, Senior
Indebtedness shall not include any of the following amounts (whether or not
constituting Indebtedness as defined in this Agreement), (i) any Indebtedness of
the Company to a subsidiary or Affiliate of the Company, (ii) Indebtedness to,
or guaranteed by the Company on behalf of, any director, officer or employee of
the Company or any subsidiary (including, without limitation, amounts owed for
compensation), (iii) Indebtedness and other amounts owing to trade creditors
incurred in connection with obtaining goods, materials or services, (iv) any
liability for federal, state, local or other taxes owed or owing by the Company
and (v) any Indebtedness which is, by its express terms, subordinated in right
of payment to any other Indebtedness of the Company; provided, that, with
respect to the obligation of the Company in respect of any Note, the obligation
of the Company in respect of all other Notes shall be pari passu.
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"Subscription Agreement" shall have the meaning assigned to such term
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in the first recital hereto.
"Subsequent PIK Election" shall have the meaning assigned to such
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terms in Section 6.1.
"subsidiary" shall have the meaning assigned to such term in Section
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7.1.
ARTICLE II
THE NOTES
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Section 2.1 Form and Dating. (a) The Notes (and any Additional Notes)
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shall be substantially in the form of Exhibit A hereto. The securities may have
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notations, legends or endorsements required by applicable law, rule, regulation
or usage. The Company shall approve the form of the Notes and any notation,
legend or endorsement on them. Each Note shall be dated the date of its
issuance.
(b) The terms and provisions contained in the forms of the
Notes annexed hereto as Exhibit A, shall constitute, and are hereby expressly
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made, a part of this Agreement and, to the extent applicable, the Company and
the Purchaser and each other Holder, by their execution and delivery of this
Agreement and/or their acceptance of any Notes, expressly agree to such terms
and provisions and to be bound thereby.
Section 2.2 Execution. (a) Two officers of the Company (one of whom
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shall be the Chief Executive Officer, President or any Vice-President of the
Company and the other of whom shall be a Secretary or Assistant Secretary of the
Company) shall sign (each of whom shall, in each case, have been duly authorized
by all requisite corporate actions) the Notes for the Company by manual or
facsimile signature.
(b) The Notes shall be issuable in fully registered form
only, without coupons, in denominations of $1,000 and any integral multiple
thereof, except that Additional Notes may be issued in denominations which are
not integral multiples of $1,000.
Section 2.3 Registrar and Paying Agent. (a) The Company shall maintain
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an office or agency where (i) Notes may be presented for registration of
transfer or for exchange ("Registrar"), (ii) Notes may be presented for payment
("Paying Agent") and (iii) notices and demands to or upon the Company in respect
of the Notes and this Agreement may be served. The Registrar shall keep a
register of the Notes and of their transfer and exchange. The Company may
appoint one or more co-registrars and one or more additional paying agents. The
term "Paying Agent" includes any additional paying agent. The Company may change
any Paying Agent, Registrar or co-registrar without prior notice to any Holder.
The Company shall notify the Holders of the name and address of any Agent not a
party to this Agreement. If the Company fails to (or chooses not to) appoint or
maintain another entity as Registrar or Paying Agent, the
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Company shall act as such. The Company may act as Paying Agent, Registrar or
co-registrar. The Company shall enter into an appropriate agency agreement with
any Agent not a party to this Agreement. The agreement shall implement the
provisions of this Agreement that relate to such Agent. The Company shall
notify the Holders of the name and address of any such Agent.
(b) The Company shall serve as the initial Paying Agent and
Registrar of the Notes.
(c) Any of the Registrar, the Paying Agent or any other
agent may resign upon 30 days' notice to the Company. The office of the Paying
Agent and Registrar for purposes of this Section 2.3 shall initially be at the
offices of the Company, as set forth in Section 12.5.
Section 2.4 Transfer and Exchange. (a) No Notes may be sold,
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transferred or conveyed by the Holder thereof to any Person who is not an
Affiliate of Purchaser without the express written consent of the Board of
Directors of the Company.
(b) Where Notes are presented to the Registrar or a co-
registrar with a request to register the transfer thereof or exchange them for
an equal principal amount of Notes of other denominations, the Registrar shall
register the transfer or make the exchange; provided, that any Note presented or
surrendered for registration of transfer or exchange shall be duly endorsed or
accompanied by a written instruction of transfer in form satisfactory to the
Registrar duly executed by the Holder thereof or his attorney duly authorized in
writing. To permit registrations of transfer and exchanges, the Company shall
issue Notes at the Registrar's request.
(c) The Company and the Registrar shall not be required (i)
to issue, to register the transfer of or to exchange Notes during a period
beginning at the opening of business on a business day 15 days before the day of
any selection of Notes for redemption pursuant to Article VI and ending at the
close of business on the day of selection, (ii) to register the transfer of or
exchange any Note so selected for redemption in whole or in part, except the
unredeemed portion of any Note being redeemed in part or (iii) to register the
transfer or exchange of a Note between the Record Date and the next succeeding
Interest Payment Date.
(d) No service charge shall be made for any registration of
a transfer or exchange (except as otherwise expressly permitted herein).
Section 2.5 Replacement Securities. (a) If any mutilated Note is
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surrendered to the Registrar or the Company, or the Registrar or the Company
receives evidence to its satisfaction of the destruction, loss or theft of any
Note, the Company shall issue and authenticate a replacement Note. If required
by the Company, an indemnity bond must be supplied by the Holder that is
sufficient in the reasonable judgment of the Company to protect the Company or
any Agent from any loss which any of them may suffer if a Note is replaced. The
Company may charge a Holder for reasonable out-of-pocket expenses in replacing a
Note, including fees and expenses of counsel.
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(b) Every replacement Note is an additional obligation of
the Company and shall be entitled to the benefits of this Agreement.
Section 2.6 Outstanding Securities. (a) The Notes outstanding at any
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time are all the Notes issued by the Company except for those cancelled by the
Company, those delivered to the Registrar for cancellation and those described
in this Section as not outstanding.
(b) If a Security is replaced pursuant to Section 2.5, it
ceases to be outstanding unless and until the Company receives proof
satisfactory to it that the replaced Note is held by a bona fide purchaser.
(c) If the principal amount of any Note is considered paid
under Section 6.1, it ceases to be outstanding and interest on it ceases to
accrue.
(d) Subject to Section 2.7, a Note does not cease to be
outstanding because the Company or an Affiliate of the Company holds the Note.
Section 2.7 Treasury Notes. In determining whether the Holders of the
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required principal amount of Notes have concurred in any direction, waiver or
consent, Notes owned by the Company, any of its subsidiaries or any of their
respective controlled Affiliates shall be considered as though not outstanding.
Section 2.8 Cancellation. The Company and Paying Agent shall forward
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to the Registrar any Notes surrendered to them for registration of transfer,
exchange or payment. The Registrar shall cancel all Notes, if not already
cancelled, surrendered for registration of transfer, exchange, payment,
replacement or cancellation.
Section 2.9 Deposit of Moneys. Prior to 11:00 a.m. New York City time
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on each Interest Payment Date and on the Maturity Date, the Company shall have
deposited with the Paying Agent in trust for the Holders in immediately
available funds money (or, subject to Section 6.1 of this Agreement, with
respect to the payment of interest only, at the Company's option, Additional
Notes) sufficient to make cash payments, if any, due on such Interest Payment
Date or on the Maturity Date, as the case may be, in a timely manner which
permits the Paying Agent to remit payment to the Holders such Interest Payment
Date or on the Maturity Date, as the case may be.
Section 2.10 Restrictive Legends. (a) Each Note that constitutes a
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Restricted Security shall bear the following legend (the "Private Placement
Legend"), on the face thereof unless otherwise agreed by the Company and the
Holder thereof:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE
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SECURITIES ACT OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
THEREOF.
(b) General. By its acceptance of any Note bearing the
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Private Placement Legend, each Holder of such a Note acknowledges the
restrictions on transfer of such Note set forth in this Agreement and in the
Private Placement Legend and agrees that it will transfer such Security only as
provided in this Agreement.
Section 2.11 Persons Deemed Owners. Prior to due presentment of a Note
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for registration of transfer, the Company, any Paying Agent, any Registrar and
any co-registrar may deem and treat the Person in whose name any Note shall be
registered upon the register of Notes kept by the Registrar as the absolute
owner of such Note (whether or not such Note shall be overdue and
notwithstanding any notation of the ownership or other writing thereon made by
anyone other than the Company, any Registrar or any co-registrar) for the
purpose of receiving payments of principal of or interest on such Note and for
all other purposes; and none of the Company, any Paying Agent, any Registrar or
any co-registrar shall be affected by any notice to the contrary.
Section 2.12 Record Date. The record date for purposes of determining
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the identity of Holders entitled to vote or consent to any action by vote or
consent authorized or permitted under this Agreement shall be 30 days prior to
the first solicitation of such consent.
ARTICLE III
ISSUANCE AND SALE OF NOTES
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Section 3.1 Issuance of Notes. Subject to the terms and conditions set
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forth in this Agreement, the Company agrees to issue to Purchaser, and Purchaser
agrees to accept, on the Closing Date the Notes, such Notes to be issued in the
names and denominations specified by or on behalf of each Purchaser in a notice
to be delivered to the Company no later than the business day prior to the
Closing Date.
Section 3.2 Closing. The issuance referred to in Section 3.1 (the
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"Closing") shall take place at 10:00 a.m. New York City time at the offices of
White & Case LLP on [November __,] 1998, or at such other time and date (not
later than [January 31, 1999]) as the parties hereto shall designate in writing.
Such date is herein referred to as the "Closing Date."
ARTICLE IV
REDEMPTION
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Section 4.1 Notices to Holders. (a) If the Company elects to redeem
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Notes pursuant to paragraph 5 of the Notes, it shall notify the Holders in
writing of the Redemption Date and the principal amount of Holders to be
redeemed.
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(b) The Company shall give each notice to the Holders
provided for in this Section at least 30 days but no more than 60 days before
the Redemption Date unless each Holder consents to a shorter period. Such notice
shall be accompanied by a certificate executed by an officer of the Company to
the effect that such redemption will comply with the conditions set forth in
this Agreement and in the Notes.
Section 4.2 Selection of Notes To Be Redeemed. In the case of any
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partial redemption of the Notes, selection of the Notes for redemption will be
made by the Company on a pro rata basis. Notes may be redeemed in part in
multiples of $1,000 principal amount only. If any Note is to be redeemed in part
only, the notice of redemption that relates to such Note shall state the portion
of the principal amount thereof to be redeemed. A new Note in a principal amount
equal to the unredeemed portion thereof will be issued in the name of the Holder
thereof upon cancellation of the original Note. On and after any redemption
date, interest will cease to accrue on the Notes or part thereof called for
redemption as long as the Company has deposited with the Paying Agent in trust
for the benefit of the Holders funds in satisfaction of the redemption price
pursuant to this Agreement. Provisions of this Agreement that apply to Notes
called for redemption also apply to portions of Notes called for redemption.
Section 4.3 Notice of Redemption. At least 30 days but not more than
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60 days before a date for redemption of Notes, the Company shall mail a notice
of redemption by first-class mail to each Holder of Notes to be redeemed, at
such Holder's registered address. The notice shall identify the Notes to be
redeemed and shall state:
(1) the Redemption Date;
(2) the redemption price and the amount of accrued
interest, if any, to be paid;
(3) the name and address of the Paying Agent;
(4) that Notes called for redemption must be
surrendered to the Paying Agent to collect the redemption price;
(5) if fewer than all the Notes are to be redeemed,
the identification of the particular Notes (or portion thereof) to be
redeemed, as well as the aggregate principal amount of Notes to be redeemed
and the aggregate principal amount of Notes to be outstanding after such
partial redemption;
(6) that, unless the Company defaults in making such
redemption payment or the Paying Agent is prohibited from making such
payment pursuant to the terms of this Agreement, interest on Notes (or
portion thereof) called for redemption ceases to accrue on and after the
Redemption Date;
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(7) if any Note is being redeemed in part, the portion
of the principal amount of such Note to be redeemed and that, after the
redemption date upon surrender of such Note, a new Note or Notes in
principal amount equal to the unredeemed portion shall be issued; and
(8) the paragraph of the Notes and/or Section of this
Agreement pursuant to which the Notes called for redemption are being
redeemed.
Section 4.4 Effect of Notice of Redemption. Once notice of redemption
------------------------------
is mailed, Notes called for redemption become due and payable on the designated
Redemption Date and at the redemption price stated in the notice. Upon surrender
to the Paying Agent, such Notes shall be paid at the redemption price stated in
the notice, plus accrued interest to the designated Redemption Date; provided,
that if any Redemption Date is after a regular Record Date and on or prior to
the Interest Payment Date, the accrued interest shall be payable to the Holder
of the redeemed Notes registered on the relevant Record Date. Failure to give
notice or any defect in the notice to any Holder shall not affect the validity
of the notice to any other Holder.
Section 4.5 Deposit of Redemption Price. (a) Prior to 11:00 a.m., New
---------------------------
York City time, on any Redemption Date, the Company shall deposit with the
Paying Agent in trust for the benefit of the Holders money sufficient to pay the
redemption price of and accrued interest on all Notes to be redeemed on such
Redemption Date.
(b) Except as set forth in the last sentence of this
paragraph, on and after any Redemption Date, interest ceases to accrue on the
Notes or the portions of Notes called for redemption. If a Note is redeemed on
or after an interest Record Date but on or prior to the related Interest Payment
Date, then any accrued and unpaid interest shall be paid to the Person in whose
name such Note was registered at the close of business on such Record Date. If
any Note called for redemption shall not be so paid upon surrender for
redemption because of the failure of the Company to comply with the preceding
paragraph, interest shall be paid on the unpaid principal, from the Redemption
Date until such principal is paid and, to the extent lawful, on any interest not
paid on such unpaid principal, in each case at the rate provided in the Notes
and in Section 6.1.
Section 4.6 Securities Redeemed in Part. Upon surrender of a Note that
---------------------------
is redeemed in part, the Company shall execute for and in the name of the Holder
(at the Company's expense), a new Note equal in a principal amount to the
unredeemed portion of the Note surrendered.
-11-
ARTICLE V
REPRESENTATIONS OF THE COMPANY
------------------------------
Section 5.1 Representations of the Company. The Company hereby
------------------------------
represents, warrants and agrees as follows:
(a) Authorization and Validity; Enforceability. (i) The
------------------------------------------
Company has the requisite corporate power and authority to execute and deliver
this Agreement and each Note issued hereunder and to perform its obligations
hereunder and thereunder. The execution, delivery and performance of this
Agreement and each Note issued hereunder by the Company and the performance by
it of its obligations hereunder and thereunder have been, and will be, duly
authorized and approved by its Board of Directors and no other corporate action
on the part of the Company is necessary to authorize the execution, delivery and
performance of this Agreement and each Note issued hereunder by the Company, as
the case may be.
(ii) This Agreement and each Note issued hereunder by
the Company has been duly executed and delivered by the Company and, assuming
the due execution and delivery of this Agreement by the other parties hereto,
this Agreement and each Note issued hereunder by the Company constitutes, and
will constitute, the valid and binding obligation of the Company, as the case
may be, enforceable against it in accordance with their respective terms,
except to the extent that their enforceability may be subject to applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditor's rights generally and to general equitable principles.
(b) Existence and Good Standing. The Company is a
---------------------------
corporation duly organized, validly existing and in good standing under the laws
of the Commonwealth of Pennsylvania. The Company has the power to own, lease and
operate its property and to carry on its business as now being conducted. The
Company is duly qualified to do business and is in good standing in each
jurisdiction in which the character or location of the properties owned, leased
or operated by the Company or the nature of the business conducted by the
Company makes such qualification necessary, except for such jurisdictions where
the failure to be so qualified or licensed and in good standing would not have a
material adverse effect on the Condition of the Company and its subsidiaries,
taken as a whole.
(c) Subsidiaries and Investments. (i) Each Person in
----------------------------
which the Company owns, directly or indirectly, any equity security (a
"subsidiary") is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, and has all
requisite power to own, lease and operate its property and to carry on its
business as now being conducted.
(ii) Each subsidiary is duly qualified to do business
and is in good standing in each jurisdiction in which the character or location
of the properties owned, leased or operated by such subsidiary or the nature of
the business conducted by such subsidiary make such
-12-
qualification necessary, except for such jurisdiction where the failure to be so
qualified or licensed and in good standing would not have a material adverse
effect of the Condition of the Company and its subsidiaries, taken as a whole.
(iii) There are no restrictions of any kind which
prevent or restrict the payment of dividends by any of the Company's
subsidiaries.
(d) Consents and Approvals; No Violations. The execution
-------------------------------------
and delivery of this Agreement by the Company, the execution, delivery and
issuance of the Notes and the consummation by the Company of the transactions
contemplated hereby (including, but not limited to, the execution, delivery and
issuance of any Additional Notes) will not: (1) violate any provision of the
certificate of incorporation, by-laws or partnership agreement (or other
organizational document) of the Company or any of its subsidiaries; (2) violate
any statute, ordinance, rule, regulation, order or decree of any court or of any
governmental or regulatory body, agency or authority applicable to the Company
or any of its subsidiaries or by which any of their respective properties or
assets may be bound; (3) require the Company or any of its subsidiaries to make
or obtain any filing with, or permit, consent or approval of, or give any notice
to, any governmental or regulatory body, agency or authority; or (4) result in a
violation or breach of, conflict with, constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
cancellation, payment or acceleration) under, or result in the creation of any
Lien upon any of the properties or assets of the Company or any of its
subsidiaries under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, franchise, permit, agreement, lease,
franchise agreement or other instrument or obligation to which the Company or
any of its subsidiaries is a party, or by which the Company or any of its
subsidiaries or any of their respective properties or assets is bound except in
the case of clauses (3) and (4) above, for such violations, filings, permits,
consents, approvals, notices, breaches or conflicts which would not have a
material adverse effect on the Condition of the Company and its subsidiaries.
(e) Litigation. There is no action, suit, proceeding at
----------
law or in equity, arbitration or administrative or other proceeding by or before
(or to the best knowledge of the Company any investigation by) any governmental
or other instrumentality or agency, pending, or, to the best knowledge of the
Company, threatened, against or affecting the Company or any of its
subsidiaries, or any of their properties or rights which would materially
adversely affect the right or ability of the Company or any of its subsidiaries
to carry on their respective business as now conducted, or to own their
respective assets, or which would materially adversely affect the Condition of
the Company and its subsidiaries, taken as a whole; and the Company does not
know of any valid basis for any such action, proceeding or investigation.
Neither the Company nor any of its subsidiaries is subject to any judgment,
order or decree entered in any lawsuit or proceeding which would have a material
adverse effect on the Condition of the Company and its subsidiaries, taken as a
whole.
-13-
(f) Compliance with Laws. Each of the Company and its
--------------------
subsidiaries is in compliance in all material respects with all applicable laws,
statutes, ordinances, regulations, orders, judgments and decrees of any
government or political subdivision thereof, whether Federal, state, or local
and whether domestic or foreign, or any agency or instrumentality thereof, or
any court or arbitrator, and has not received any notice that any violation of
the foregoing is being or may be alleged.
(g) Investment Company Act. Neither the Company nor any
----------------------
of its subsidiaries is an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
Section 5.2 Representations of Purchaser. Purchaser warrants and
----------------------------
agrees as follows:
(a) Existence and Good Standing of Purchaser; Power and
---------------------------------------------------
Authority. Purchaser is a corporation duly organized, validly existing and in
---------
good standing under the laws of the Commonwealth of Pennsylvania. Purchaser has
the corporate power and authority to enter into, execute and deliver this
Agreement and to perform its obligations hereunder. The execution and delivery
of this Agreement by Purchaser and the performance by Purchaser of its
obligations hereunder has been duly authorized and approved by all required
corporate action of Purchaser and no other corporate action on the part of
Purchaser is necessary to authorize the execution, delivery and performance of
this Agreement. This Agreement has been duly executed and delivered by Purchaser
and, assuming the due execution and delivery hereof by each other party hereto,
this Agreement constitutes a valid and binding obligation of Purchaser,
enforceable against Purchaser in accordance with its terms, except to the extent
that its enforceability may be subject to applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws effecting the enforcement of
creditors' rights generally and to general equitable principles.
(b) Consents and Approvals; No Violations. The execution
-------------------------------------
and delivery of this Agreement by Purchaser and the consummation by Purchaser of
the transactions contemplated hereby will not: (1) violate any provision of the
Purchaser's Articles of Incorporation or By-laws; (2) violate any statute,
ordinance, rule, regulation, order or decree of any court or of any governmental
or regulatory body, agency or authority applicable to such Purchaser or by which
any of its properties or assets may be bound; (3) require Purchaser to make any
filing with or obtain any permit, consent or approval of or give any notice to,
any governmental or regulatory body, agency or authority; or (4) result in a
violation or breach of, conflict with, constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
cancellation, payment or acceleration) under, or result in the creation of any
Lien upon any of the properties or assets of Purchaser under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license,
franchise, permit, agreement, lease, franchise agreement or other instrument or
obligation to which Purchaser is a party, or by which any of its properties or
assets is bound except in the case of clauses (3) and (4) above for such
violations, filings, permits, consents, approvals, notices, breaches or
conflicts
-14-
which could not have a material adverse effect on the ability of Purchaser to
consummate the transactions contemplated hereby or to perform its obligations
hereunder.
(c) Acquisition for Investment. Purchaser will acquire
--------------------------
the Notes for its own account for investment purposes only, and such notes are
not being purchased for subdivision, fractionalization, resale or distribution
in a transaction that would violate the Securities Act or Exchange Act or any
state "blue sky" laws. Purchaser has no contract, undertaking, agreement or
arrangement with any other Purchaser to sell, transfer or pledge to such other
Person or anyone else the Notes that Purchaser is to purchase hereunder or any
part thereof in a transaction that would violate the Securities Act or Exchange
Act. Notwithstanding the foregoing, the disposition of Purchaser's property
shall at all times remain within the sole control of Purchaser.
(d) Accredited Investor. Purchaser is an "accredited
-------------------
investor" (as such term is defined in Rule 501 promulgated under the Securities
Act).
(e) Restricted Securities. Purchaser understands that the
---------------------
Notes acquiring hereunder are characterized as "restricted securities" under the
federal securities laws inasmuch as they are being acquired from the Company in
a transaction not involving a public offering and that under such laws and
applicable regulations such Notes may not be resold without registration under
the Securities Act, except in certain limited instances. In this connection,
Purchaser represents that it is familiar with Rule 144 promulgated by the
Commission, as presently in effect, and understands the resale limitations
imposed thereby and by the Securities Act.
ARTICLE VI
COVENANTS
---------
Section 6.1 Payment of Notes. (a) The Company shall promptly pay the
----------------
principal of, premium, if any, and interest on the Notes on the dates and in the
manner provided in the Notes and in this Agreement. Principal, premium, if any,
and interest shall be considered paid on the date due if on such date the Paying
Agent holds in trust for the Holders money sufficient to pay all principal and
interest then due and the Paying Agent is not prohibited from paying such money
to the Holders on that date pursuant to the terms of this Agreement. Interest
will be computed on the basis of a 360 day year comprised of twelve 30 day
months. Interest on Notes (and any Additional Notes) shall be payable at the
rate of 10 1/2% per annum.
(b) The Company shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue principal at the
rate specified therefor in the relevant Note, and it shall pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law) on
overdue installments of interest (without regard to any applicable grace period)
at the same rate to the extent lawful.
-15-
(c) On each Interest Payment Date, the Company may, at its
option and in its sole discretion, in lieu of the payment of interest in cash on
the Notes, pay interest on all outstanding Notes in whole, but not in part,
through the issuance of Additional Notes in an aggregate principal amount equal
to the amount of interest that would be payable with respect to such Notes, if
such interest were paid in cash. The Company shall notify the Holders in writing
of its election to pay interest through the issuance of Additional Notes not
less than 10 nor more than 45 days prior to the record date for an Interest
Payment Date on which Additional Notes will be issued. On each such Interest
Payment Date, the Company shall issue and deliver Additional Notes to each
Holder on the relevant record date in the aggregate principal amount required to
pay such interest. Each Additional Note is an additional obligation of the
Company and shall be governed by, and entitled to the benefits of, and shall be
subject to the terms of, this Agreement and shall be pari passu with and subject
to the same terms (including the Interest Rate from time to time payable
thereon) as the Notes with respect to which such Additional Notes were issued
(except, as the case may be, with respect to the issuance date and aggregate
principal amount). If at any time after the Closing Date, the Company elects to
pay interest in respect of the Notes in cash, the Company may thereafter
subsequently elect, in accordance with this paragraph, to pay interest on the
Notes in whole, but not in part, in Additional Notes (a "Subsequent PIK
Election"); provided that the Company shall not be entitled to make more than
three Subsequent PIK Elections with respect to the Notes.
Section 6.2 Reports. (a) The Company shall provide to the Holders of
-------
the Notes, within 15 days after it files them with the Commission, copies of the
quarterly and annual reports and of the information, documents and other reports
(or copies of such portions of any of the foregoing as the Commission may by
rules and regulations prescribe) which the Company files with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act.
(b) In the event that the Company is not required to file
such reports with the Commission pursuant to the Exchange Act, the Company will
nevertheless deliver such Exchange Act information to the Holders within 15 days
after it would have been required to file it with the Commission.
Section 6.3 Limitation on Dividends. The Company shall not, directly or
-----------------------
indirectly, declare or pay any dividend or make any distribution on or in
respect of its capital stock (including any payment in connection with any
merger or consolidation involving the Company) except dividends or distributions
payable in its capital stock or in options, warrants or other rights to purchase
such capital stock if there has occurred and is continuing a Default or Event of
Default in respect of any Notes.
Section 6.4 Leverage. The Company and its subsidiaries shall maintain
--------
a pro forma ratio of Consolidated Indebtedness to Adjusted Consolidated EBITDA
of the Company and its subsidiaries (after giving effect to all acquisitions of
Related Businesses during such periods) for the immediately preceding four full
fiscal quarters of not more than 4.00:1.00 as of the end of each fiscal quarter.
-16-
Section 6.5 Limitation on Affiliate Transactions. (a) The Company will
------------------------------------
not, and will not permit any of its subsidiaries to, directly or indirectly,
enter into or conduct any transaction or series of related transactions
(including the purchase, sale, lease or exchange of any property or the
rendering of any service) with or for the benefit of any Affiliate of the
Company, other than a wholly-owned subsidiary (an "Affiliate Transaction")
unless: (i) the terms of such Affiliate Transaction are no less favorable to the
Company or such subsidiary, as the case may be, than those that could be
obtained at the time of such transaction in arm's length dealings with a Person
who is not such an Affiliate; (ii) in the event such Affiliate Transaction
involves an aggregate amount in excess of $1,000,000, the terms of such
transaction have been approved by a majority of the members of the Board of
Directors of the Company and by a majority of the disinterested members of such
Board, if any (and such majority or majorities, as the case may be, determines
that such Affiliate Transaction satisfies the criteria in (i) above); and (iii)
in the event such Affiliate Transaction involves an aggregate amount in excess
of $5,000,000, the Company has received a written opinion from an independent
investment banking firm of nationally recognized standing that such Affiliate
Transaction is fair to the Company or such subsidiary, as the case may be, from
a financial point of view.
(b) The foregoing paragraph (a) shall not apply to (i) any
dividend or other distribution permitted to be made pursuant to the covenant
described under Section 6.3, (ii) any issuance of securities, or other payments,
awards or grants in cash, securities or otherwise pursuant to, or the funding
of, employment arrangements, or any stock options and stock ownership plans for
the benefit of employees, officers and directors, consultants and advisors
approved by the Board of Directors of the Company, (iii) loans or advances to
employees in the ordinary course of business of the Company or any of its
subsidiaries in aggregate amount outstanding not to exceed $50,000 to any
employee or $500,000 in the aggregate at any time, (iv) any transaction between
wholly-owned subsidiaries, (v) indemnification agreements with, and the payment
of fees and indemnities to, directors, officers and employees of the Company and
its subsidiaries, in each case in the ordinary course of business, (vi)
transactions pursuant to agreements in existence on the Closing Date, (vii) any
employment, non-competition or confidentiality agreements entered into by the
Company or any of its subsidiaries with its employees in the ordinary course of
business, and (viii) the issuance of capital stock of the Company, and (ix) any
reasonable and customary investment banking fees, transaction fees or other
similar fees paid to Evercore Advisors, Inc. or its Affiliates which such fees
have been approved by a majority of the directors of the Company not affiliated
with Evercore.
Section 6.6 Change of Control. (a) Upon the occurrence of a Change of
-----------------
Control, each Holder will have the right to require the Company to repurchase
all or any part of such Holder's Notes at a purchase price in cash equal to 100%
of the principal amount thereof plus accrued and unpaid interest, if any, to the
date of repurchase (subject to the right of Holders of record on the relevant
Record Date to receive interest due on the relevant Interest Payment Date).
-17-
(b) Within 60 days following any Change of Control, unless the
Company has mailed a redemption notice with respect to all the outstanding Notes
in connection with such Change of Control, the Company shall mail a notice to
each Holder stating:
(i) that a Change of Control has occurred and that such
Holder has the right to require the Company to purchase such Holder's Notes at a
purchase price in cash equal to 100% of the principal amount thereof plus
accrued and unpaid interest, if any to the date of purchase (subject to the
right Holders' Notes of record on a record date to receive interest on the
relevant Interest Payment Date).
(ii) the repurchase date (which shall be no earlier than 30
days nor later than 60 days form the date such notice is mailed); and
(iii) the procedures determined by the Company, consistent
with this Agreement, that a Holder must follow in order to have its Notes
repurchased.
(c) Holders electing to have a Note repurchased will be required
to surrender the Note, to the Company at the address specified in the notice at
least 50 business days prior to the repurchase date. Holders will be entitled to
withdraw their election if the Company receives not later than three business
days prior to the repurchase date, a telegram, telex, facsimile transmission or
letter setting forth the name of the Holder, the principal amount of the Note
which was delivered for repurchase by the Holder and a statement that such
Holder is withdrawing his election to have such Note purchased.
(d) On the repurchase date, all Notes repurchased by the Company
under this Section 6.6 shall be cancelled by the Company, and the Company shall
pay the repurchase price plus accrued and unpaid interest, if any, to the
Holders entitled thereto.
Section 6.7 Further Instruments and Acts. Upon request of the Holders, the
----------------------------
Company will execute and deliver such further instruments and do such further
acts as may be reasonably necessary or proper to carry out more effectively the
purpose of this Agreement.
Section 6.8 Taxes. The Company shall pay, prior to delinquency, all
-----
material taxes, assessments, and governmental levies; provided, however, that
there shall not be required to be paid or discharged any such tax, assessment or
charge, the amount, applicability or validity of which is being contested in
good faith by appropriate proceedings and for which adequate provision has been
made or for which adequate reserves, to the extent required under generally
accepted accounting principles, have been taken.
Section 6.9 Stay, Extension and Usury Laws. The Company covenants (to the
------------------------------
extent that it may lawfully do so) that it shall not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay, extension or usury law wherever enacted, now or at any time hereafter
in force, that may affect the covenants or the performance of this Agreement
(including, but not limited to, the payment of the principal of or interest on
the
-18-
Notes); and the Company (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
shall not, by resort to any such law, hinder, delay or impede the execution of
any power herein granted to the Holders, but shall suffer and permit the
execution of every such power as though no such law has been enacted.
Section 6.10 Corporate Existence. The Company shall do or cause to be done
-------------------
all things necessary to preserve and keep in full force and effect its corporate
existence, and the corporate existence of each subsidiary, in accordance with
the respective organizational documents (as the same may be amended from time to
time) of each subsidiary and the rights (charter and statutory), licenses and
franchises of the Company and its subsidiaries; provided, however, that the
Company shall not be required to preserve any such right, license or franchise,
or the corporate, partnership or other existence of any subsidiary, if the Board
of Directors of the Company shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company and its
subsidiaries, taken as a whole, and that the loss thereof is not adverse in any
material respect to the Holders.
ARTICLE VII
CONDITIONS PRECEDENT
--------------------
Section 7.1 Conditions to Issuance and Sale of Notes. The obligations of
----------------------------------------
the Purchaser to purchase the Notes is subject to the satisfaction of the
following conditions:
(a) Truth of Representations and Warranties. The
---------------------------------------
representations and warranties of the Company contained in this Agreement and in
the Subscription Agreement shall be true and correct in all material respects
(except to the extent such representations and warranties contain a
"materiality", "material adverse effect" or similar qualification, in which case
they shall be true and correct in all respects) on and as of the Closing Date,
and the Company each shall have delivered to Purchaser a certificate, dated the
Closing Date, to such effect.
(b) Performance of Agreements. All of the agreements of the
-------------------------
Company to be performed prior to the Closing Date pursuant to the terms of this
Agreement shall have been duly performed in all material respects, and the
Company shall have delivered to the Purchaser a certificate, dated the Closing
Date, to such effect.
(c) No Litigation Threatened. No action or proceedings shall
------------------------
have been instituted or threatened before a court or other government body or by
any public authority to restrain or prohibit any of the transactions
contemplated hereby, and the Company shall have delivered to Purchaser a
certificate, dated the Closing Date, to such effect.
(d) No Default. On the Closing Date there shall exist no
----------
Default or Event of Default with respect to this Agreement or the Notes and the
Company shall have delivered to the Purchaser a certificate, dated the Closing
Date, to such effect.
(e)
-19-
(e) Subscription Agreement. The transactions contemplated to
----------------------
be consummated by all parties other than Purchaser under the Subscription
Agreement shall have been consummated on or prior to the Closing Date and each
condition to the performance of Purchaser's obligations under the Subscription
Agreement shall have been waived or satisfied in full.
ARTICLE VIII
DEFAULTS AND REMEDIES
---------------------
Section 8.1 Events of Default. An "Event of Default" will occur under this
Agreement and the Notes if:
(i) there shall be a default in the payment of any
interest on any Note when it becomes due and payable and such default shall
continue for a period of 30 days;
(ii) there shall be a default in the payment of the
principal of (or premium, if any, on) any Note on the Maturity Date, upon
optional redemption, upon required repurchase, upon declaration or otherwise;
(iii) the failure by the Company or any of its
subsidiaries to comply for 30 days after receiving notice of such noncompliance
with any of its obligations under Article IV (in each case, other than a failure
to purchase Notes, which shall constitute an Event of Default under clause (ii)
above);
(iv) Indebtedness of the Company or any subsidiary in
excess of [$_________]/1/ is not paid within any applicable grace period after
its stated maturity, upon mandatory or optional redemption or prepayment, upon
required repayment or otherwise, or is accelerated by the holders thereof
because of a default under the terms of such Indebtedness and such default shall
not have been cured or such acceleration rescinded after a 10-day period;
(v) the Company or any subsidiary pursuant to or
within the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief
against it in an involuntary case;
________________
/1/ This amount will track the amount in the Credit Facility cross default.
-20-
(C) consents to the appointment of a Custodian
for it or for any substantial part of its property;
(D) makes a general assignment for the benefit of
its creditors;
(E) consents to or acquiesces in the institution
of a bankruptcy or an insolvency proceeding against it; or
(F) takes any corporate action to authorize or
effect any of the foregoing; or takes any comparable action under any foreign
laws relating to insolvency;
(vi) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against the Company or any
subsidiary in an involuntary case;
(B) appoints a Custodian of the Company or any
subsidiary or for any substantial part of the property of the Company or any of
its subsidiaries; or
(C) orders the winding up or liquidation of the
Company or any subsidiary; or any similar relief is granted under any foreign
laws and in each case the order, decree or relief remains unstayed and in effect
for 60 days; or
(vii) any judgment or decree for the payment of money in
excess of [$______]/2/ to the extent not covered by insurance) is rendered
against the Comopany or a subsidiary and such judgment becomes final and non-
appealable.
The foregoing will constitute Events of Default whatever the
reason for any such Event of Default and whether it is voluntary or involuntary
or is effected by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any administrative or
governmental body.
The term "Custodian" means any receiver, trustee, assignee,
liquidator, custodian or similar official under any Bankruptcy Law.
________________
/2/ This amount will track the judgment default in the Credit Facility.
-21-
Section 8.2 Acceleration. If an Event of Default (other than an Event of
------------
Default specified in Section 8.1(v) or (vi)) occurs and is continuing, the
Holders of at least 25% in principal amount of all outstanding Notes by notice
to the Company may declare the principal of and premium and accrued and unpaid
interest, if any, on all the Notes to be due and payable. Upon such declaration,
such principal and premium and accrued and unpaid interest shall be due and
payable immediately. If an Event of Default specified in Section 8.1(v) or (vi)
occurs and is continuing, the principal of and premium and accrued and unpaid
interest on all the Notes will become and be immediately due and payable without
any declaration or other act on the part of the Holders. The Holders of a
majority in principal amount of all outstanding, voting as a single class, may
rescind an acceleration and its consequences if the rescission would not
conflict with any judgment or decree and if all existing Events of Default have
been cured or waived except nonpayment of principal or interest that has become
due solely because of acceleration. No such rescission shall affect any
subsequent Default or Event of Default or impair any right consequent thereto.
Section 8.3 Other Remedies. If an Event of Default occurs and is
--------------
continuing, the Holders may pursue any available remedy to collect the payment
of principal of or interest on the Notes or to enforce the performance of any
provision of the Notes or this Agreement. A delay or omission by any Holder in
exercising any right or remedy accruing upon an Event of Default shall not
impair the right or remedy or constitute a waiver of or acquiescence in the
Event of Default. No remedy is exclusive of any other remedy. All available
remedies are cumulative to the extent permitted by law.
Section 8.4 Waiver of Past Defaults. The Holders of a majority in
-----------------------
principal amount of all outstanding Notes may waive an existing Default or Event
of Default and its consequences except (i) a Default or Event of Default in the
payment of the principal of, premium, if any, or interest on a Note or (ii) a
Default or Event of Default in respect of a provision that under Section 11.2
cannot be amended without the consent of each Holder affected. When a Default or
Event of Default is waived, it is deemed cured, but no such waiver shall extend
to any subsequent or other Default or Event of Default or impair any consequent
right.
Section 8.5 Rights of Holders to Receive Payment. Notwithstanding any
------------------------------------
other provision of this Agreement, right of any Holder to receive payment of
principal of and interest on the Notes held by such Holder, on or after the
respective due dates expressed in the Notes, or to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of such Holder.
ARTICLE IX
SUBORDINATION
-------------
Section 9.1 Securities Subordinated to Senior Indebtedness.
----------------------------------------------
Notwithstanding any other provision contained herein, each of the Company, for
itself and its successors, and each Holder
-22-
and its successors and assigns, by the acceptance of any Note, agrees that the
payment of the principal of and interest on and all other claims with respect to
such Note is subordinated, to the extent and in the manner provided in this
Article XI, to the prior payment in full of all Senior Indebtedness.
The provisions of this Article IX shall constitute a continuing offer
to all Persons who, in reliance upon such provisions, become holders of, or
continue to hold, Senior Indebtedness, and such provisions are made for the
benefit of the holders of Senior Indebtedness and shall be directly enforceable
by such holders.
Section 9.2 No Payment on Notes in Certain Circumstances. (a) No payment
--------------------------------------------
shall be made by the Company on account of the principal or interest (except, if
otherwise permissible under the terms of any Note, in the form of Additional
Notes) on any Note or to acquire any Note for cash or property, or on account of
the redemption provisions of this Note, (A) upon the maturity of any Senior
Indebtedness by lapse of time, acceleration (unless waived) or otherwise, unless
and until all principal of and interest on (including any post-petition
interest) such Senior Indebtedness and all other obligations in respect thereof
shall first be paid in full or such payment is duly provided for or (B) upon an
event of default in payment of any principal of, premium, if any, or interest on
any Senior Indebtedness when the same become due and payable, whether at
maturity or at a date fixed for prepayment or by declaration or otherwise (a
"Payment Default"), unless and until such Payment Default has been cured or
waived or otherwise has ceased to exist.
(b) Upon the occurrence of an event of default (other than a
Payment Default) with respect to any Senior Indebtedness, as such event of
default is defined in the instrument under which it is outstanding, permitting
the holders (or any requisite percentage thereof) to accelerate the maturity
thereof or demand payment upon written notice of such event of default which has
been delivered by a holder (or the requisite percentage thereof) of such Senior
Indebtedness or by an appropriate trustee, agent or representative for an issue
of Senior Indebtedness (a "Payment Notice"), then, unless and until such event
of default shall have been cured or waived or shall have otherwise ceased to
exist, no payment shall be made by the Company on account of the principal of or
interest (except, if otherwise permissible under the terms of any Note, in the
form of Additional Notes) on any Note or to acquire or repurchase any Note for
cash or property, or on account of the redemption provisions of this Note, in
any such case. Notwithstanding the foregoing, unless (i) the Senior Indebtedness
in respect of which such event of default exists has been declared due and
payable in its entirety within 89 days after the Payment Notice is delivered as
set forth, above (the "Payment Blockage Period"), and (ii) such declaration has
not been rescinded or waived, subject to paragraph (a) of this Section 9.2, the
Company shall be required to pay all sums not paid to a Holder during the
Payment Blockage Period due to the foregoing prohibitions and to resume all
other payments as and when due on any Note. Any number of Payment Notices may be
given; provided, that (A) not more than one Payment Notice shall be given within
a period of any 365 consecutive days and (B) no event of default that existed
upon the date of such Payment Notice or the commencement of such Payment
Blockage Period (whether or not such event of default is on the same issue of
Senior
-23-
Indebtedness) shall be made the basis for the commencement of any other Payment
Blockage Period.
(c) In furtherance of the provisions of this Section 9.2, if,
notwithstanding the foregoing provisions of this Section 9.2, any payment or
distribution of assets of the Company on account of principal of or interest on
any Note or to acquire for cash, property or securities, or on account of the
redemption provisions of any Note shall be made by the Company and received by
any Holder at a time when such payment or distribution was prohibited by the
provisions of this Section 9.2, then, unless such payment or distribution is no
longer prohibited by this Section 9.2, such payment or distribution shall be
received and held in trust by such Holder for the benefit of the holders of
Senior Indebtedness of the Company, and shall be paid or delivered by such
Holder (subject to such contractual and legal priorities as may then exist among
the holders of Senior Indebtedness) to the holders of Senior Indebtedness of the
Company remaining unpaid or unprovided for or their representatives, or to the
trustee or trustees under any indenture pursuant to which any instruments
evidencing any of such Senior Indebtedness of the Company may have been issued,
ratably according to the aggregate amounts on account of the Senior Indebtedness
of the Company held or represented by each, to the extent necessary to enable
payment in full (except as such payment otherwise shall have been provided for)
of all Senior Indebtedness of the Company remaining unpaid, after giving effect
to all concurrent payments and distributions and all provisions therefor to or
for the holders of such Senior Indebtedness, but only to the extent that as to
any holder of such Senior Indebtedness, as promptly as practical after learning
that such prohibited payment has been received by a Holder, such holder (or a
representative thereof) notifies such Holder of the amounts then due and owing
on such Senior Indebtedness, if any, held by such holder and only the amounts
specified in such notices to such Holder shall be paid to the holders of such
Senior Indebtedness.
Section 9.3 Notes Subordinated to Prior Payment of All Senior Indebtedness
------------------------------------------------------------
on Dissolution, Liquidation or Reorganization of the Company. (a) Upon any
------------------------------------------------------------
distribution of assets of the Company upon any dissolution, winding up,
liquidation or reorganization of the Company (whether in bankruptcy, insolvency
or receivership proceedings or upon any assignment for the benefit of creditors
or otherwise) (each a "Bankruptcy Event"):
(i) the holders of all Senior Indebtedness shall first be
entitled to receive payment in full of the principal and interest due or become
due thereon and other amounts due on or in connection therewith before any
Holder is entitled top receive any payment on account of the principal of or
interest on, or any other claims with respect to, this Note
(ii) any payment or distribution of assets of the Company of
any kind or character, whether in cash, property or securities, to which a
Holder would be entitled except for the provisions of this Article IX shall be
paid by the liquidating trustee or agent or other person making such a payment
or distribution, directly to the holders of Senior Indebtedness or their
representative, to the extent necessary to make payment in full satisfactory to
the holders
-24-
of all Senior Indebtedness remaining unpaid, after giving effect to any
concurrent payment or distribution or provision therefor to the holders of such
Senior Indebtedness; and
(iii) notwithstanding the foregoing, if the holders of
Senior Indebtedness are required to disgorge, following a Bankruptcy Event, the
proceeds of any assets of the Company which are subject to such Bankruptcy
Event, and which proceeds were received by holders of Senior Indebtedness prior
to such Bankruptcy Event, due to a finding that the receipt of such proceeds was
preferential pursuant to the provisions of ▇▇▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Bankruptcy Code, as amended or any similar provision of any applicable
Bankruptcy Law (a "Preference"), then the holders of Senior Indebtedness or
their representatives shall be entitled to recoup the amount of such Preference
from any and all payments or distributions of assets of the Company previously
made to or to be made to a Holder.
(b) If, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, shall be received by any Holder on account of principal
of or interest on or any other claim with respect to any Note before all Senior
Indebtedness is paid in full, satisfactory to the holders of all Senior
Indebtedness remaining unpaid, such payment or distribution shall be received
and held in trust by such Holder for the benefit of the holders of the Senior
Indebtedness and shall be paid or delivered (subject to such contractual and
legal priorities as may then exist among the holders of such Senior
Indebtedness) by such Holder to the holders of the Senior Indebtedness remaining
unpaid or unprovided for or their representatives, or to the trustee or trustees
under any indenture pursuant to which any instruments evidencing any of such
Senior Indebtedness may have been issued, ratably according to the aggregate
amounts on account of the Senior Indebtedness held or represented by each, to
the extent necessary to enable payment in full of all Senior Indebtedness
remaining unpaid or unprovided for, after giving effect to all concurrent
payments and distributions and all provisions therefor to or for the holders of
such Senior Indebtedness as promptly and practical after learning that such
prohibited payment has been received by such Holder, such holder (or
representative thereof) notifies such Holder of the amounts then due and owing
on such Senior Indebtedness if any, held by such holder and only the amounts
specified in such notices to such Holder shall be paid to the holders of such
Senior Indebtedness.
(c) The Company shall give prompt written notice to such Holders
of any dissolution, winding up, liquidation or reorganization of the Company or
assignment for the benefit of creditors by the Company.
Section 9.4 Payee to Be Subrogated to Rights of Holders of Senior
-----------------------------------------------------
Indebtedness. (a) Subject to the payment in full of all Senior Indebtedness,
------------
each Holder shall be subrogated to the rights of the holders of Senior
Indebtedness to receive payments or distributions of assets of the Company
applicable to the Senior Indebtedness until all amounts owing on the Notes shall
be paid in full, and for the purpose of such subrogation no such payments or
distributions to the holders of Senior Indebtedness by or on behalf of the
Company or by or on behalf of the Holders by virtue of this Article IX, which
otherwise would have been made to the Holders shall, as
-25-
between the Company, the Holders and the Company's creditors other than the
holders of Senior Indebtedness, be deemed to be payment by the Company to or on
account of the Senior Indebtedness, it being understood that the provisions of
this Article IX are and are intended solely for the purpose of defining the
relative rights of the Holders, on the one hand, and the holders of Senior
Indebtedness, on the other hand.
(b) If any payment or distribution to which any Holder would
otherwise have been entitled but for the provisions of this Article IX shall
have been applied, pursuant to the provisions of this Article IX, to the payment
of amounts payable under Senior Indebtedness of the Company, then Holder shall
be entitled to receive from the holders of such Senior Indebtedness any payments
or distributions received by such holders of Senior Indebtedness, in excess of
the amount sufficient to pay all amounts payable under or in respect of such
Senior Indebtedness in full.
Section 9.5 Obligations of the Company Unconditional. Nothing contained in
----------------------------------------
this Article IX or elsewhere in this Agreement or in any Note is intended to or
shall impair, as between the Company and the Holders, the obligation of the
Company, which is absolute and unconditional, to pay to the Holders the
principal of and interest on the Notes as and when the same shall become due and
payable in accordance with its terms, or is intended to or shall affect the
relative rights of the Holders and creditors of the Company other than the
holders of Senior Indebtedness, nor shall anything herein or therein prevent the
Holders from exercising all remedies otherwise permitted by applicable law upon
the occurrence of a Default or Event of Default under this Agreement or any
Note, subject to the rights, if any, under this Article IX of the holders of
Senior Indebtedness in respect of cash, property or securities of the Company
received upon the exercise of any such remedy. Upon any payment or distribution
of assets of the Company referred to in this Article IX, the Holders shall be
entitled to rely upon the delivery to it of any order or decree made by any
court of competent jurisdiction in which such dissolution, winding up,
liquidation or reorganization proceedings are pending, or a certificate of the
liquidating trustee or agent or other person making any distribution to the
Holders for the purpose of ascertaining the Persons entitled to participate in
such distribution, the holders of the Senior Indebtedness and other Indebtedness
of the Company, the amount thereof or payable thereon, the amount or amounts
paid or distributed thereon and all other facts pertinent thereto or to this
Article IX.
Section 9.6 Subordination Rights Not Impaired by Acts or Omissions of the
-------------------------------------------------------------
Company or Holders of Senior Indebtedness. No right of any present or future
-----------------------------------------
holders of any Senior Indebtedness to enforce subordination as provided herein
shall at any time in any way be prejudiced or impaired by any act or failure to
act on the part of the Company or by any act or failure to act, in good faith,
by any such holder, or by any noncompliance by the Company with the terms of
this Agreement or the Note regardless of any knowledge thereof which any such
holder may have or be otherwise charged with. The holders of Senior Indebtedness
may extend, renew, modify or amend the terms of the Senior Indebtedness or any
security therefor and release, sell or exchange such security and otherwise deal
freely with the Company, all without affecting the liabilities and obligations
of the Holders.
-26-
Section 9.7 Article IX Not to Prevent Events of Default. The failure to
-------------------------------------------
make a payment on account of principal of or interest on any Note reason of any
provision of this Article IX shall not be construed as preventing the occurrence
of an Event of Default under Section 10.1; provided, that all Senior
Indebtedness then or thereafter due or declared to be due shall first be paid in
full before the Holders are entitled to receive any payment from the Company of
principal of, or interest on or any other claim or amount with respect to this
Note or with respect to any purchase, acquisition or redemption of the Notes.
[ARTICLE X
INDENTURE
---------
Section 10.1 Indenture. The Company hereby acknowledges and agrees that,
---------
subject to the provisions of Section 2.4(a) hereof, the Purchaser (or any
subsequent Holder) may resell the Notes or a portion hereof in or outside the
United States. If the Notes or any portion thereof is sold by the Purchaser, the
Company hereby agrees to amend this Agreement and Notes and to enter into a note
purchase agreement, fiscal agency agreement and/or indenture, in each case at
such time as may be reasonably requested by the Purchaser and on such terms and
conditions as may be reasonably acceptable to the Purchaser.]
ARTICLE XI
AMENDMENTS
----------
Section 11.1 Without Consent of Holders. (a) The Company may amend this
---------------------------
Agreement or the Notes without notice to or consent of any Holder:
(1) to provide security for the Notes;
(2) to add to the covenants of the Company for the benefit of
the Holders or to surrender any right or power herein conferred upon the
Company;
(3) to make any change that does not adversely affect the rights
of any Holder; or
(4) to surrender any right or power conferred upon the Company.
(b) After an amendment under this Section becomes effective, the
Company shall mail to the Holders a notice briefly describing such amendment.
However, the failure to give such notice to all Holders, or any defect therein,
shall not impair or affect the validity of an amendment under this Section.
Section 11.2 With Consent of Holders. (a) The Company may amend this
-----------------------
Agreement or the Notes with the consent of the Holders of at least a majority in
outstanding principal amount of
-27-
all outstanding Notes and any existing Default and its consequences (including,
without limitation, an acceleration of the Notes) or compliance with any
provision of this Agreement or the Notes may be waived with the consent of the
Holders of a majority in principal amount of all outstanding Notes.
Furthermore, subject to Section 8.4 or 8.5, the Holders of a majority in
aggregate principal amount of all outstanding Notes may waive compliance in a
particular instance by the Company with any provision of this Agreement or the
Notes. However, without the consent of each Holder of a Note then outstanding,
an amendment may not:
(1) reduce the amount of Notes whose Holders must consent to an
amendment, supplement or waiver;
(2) reduce the rate of or extend the time for payment of
interest on any Note;
(3) reduce the principal of or change the Maturity Date of any
Note;
(4) reduce the premium payable upon the repurchase of any Note
or change the time at which any Note may or shall be redeemed or
repurchased in accordance with this Agreement;
(5) make any Note payable in money other than that stated in the
Note;
(6) modify or affect in any manner adverse to the Holders, the
terms and conditions of the obligation of the Company for the due and
punctual payment of the principal of or interest on Notes or to institute
suit for the enforcement of any payment on or with respect to the Notes;
(7) waive a Default or Event of Default in the payment of
principal of, premium, if any, or interest on, or redemption payment with
respect to, any Note (excluding any principal or interest due solely as a
result of the occurrence of a declaration of an Event of Default); or
(8) make any change in Section 8.4 or 8.5 or the third sentence
of this Section;
(9) amend, change or modify in any material respect the
obligation of the Company to make and consummate an offer pursuant to
Section 6.5 of this Agreement in the event of a Change of Control or modify
any of the provisions or definitions with respect thereto;
-28-
(10) modify or change any provision of this Agreement or the
related definitions affecting the ranking of the Notes in a manner which
adversely affects the Holders; or
(11) make any change in the amendment provisions which require
each Holder's consent or in the waiver provisions.
(b) It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent approves the substance thereof.
(c) After an amendment under this Section becomes effective, the
Company shall mail to all Holders a notice briefly describing such amendment.
The failure to give such notice to all Holders, or any defect therein, shall not
impair or affect the validity of an amendment under this Section.
Section 11.3 Revocation and Effect of Consents and Waivers. (a) A consent
---------------------------------------------
to an amendment or a waiver by a Holder of a Note shall bind the Holder and
every subsequent Holder of that Note or portion of the Note that evidences the
same debt as the consenting Holder's Note, even if notation of the consent or
waiver is not made on the Note. After an amendment or waiver becomes effective,
it shall bind every Holder.
(b) The Company shall fix a record date for the purpose of
determining the Holders entitled to give their consent or take any other action
described above or required or permitted to be taken pursuant to this Agreement.
Upon the fixing of a record date, then those Persons who were Holders at such
record date (or their duly designated proxies), and only those Persons, shall be
entitled to give such consent or to revoke any consent previously given or to
take any such action, whether or not such Persons continue to be Holders after
such record date. No such consent shall become valid or effective more than 120
days after such record date.
ARTICLE XII
MISCELLANEOUS
-------------
Section 12.1 Governing Law. The interpretation and construction of this
-------------
Agreement, and all matters relating hereto, shall be governed by the laws of the
State of New York applicable to agreements executed and to be performed solely
within such State.
Section 12.2 Jurisdiction; Agents for Service of Process. Any judicial
-------------------------------------------
proceeding brought against any of the parties to this Agreement on any dispute
arising out of this Agreement or any matter related hereto may be brought in the
courts of the State of New York, or in the United States District Court for the
Southern District of New York, and, by execution and delivery of this Agreement,
each of the parties to this Agreement accepts the exclusive jurisdiction of such
courts, and irrevocably agrees to be bound by any judgment rendered thereby in
-29-
connection with this Agreement. The prevailing party or parties in any such
litigation shall be entitled to receive from the losing party or parties all
costs and expenses, including reasonable counsel fees, incurred by the
prevailing party or parties.
Section 12.3 Captions. The Article and Section captions used herein are
--------
for reference purposes only, and shall not in any way affect the meaning or
interpretation of this Agreement.
Section 12.4 Notices. Any notice or other communication required or
-------
permitted under this Agreement shall be sufficiently given if delivered in
person or sent by telecopy or by registered or certified mail, postage prepaid,
addressed as follows: if to the Company, to Specialty Products & Insulation Co.,
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
(Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇) Attention: Mr. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, with a copy to its
counsel, Dechert, Price & ▇▇▇▇▇▇, 4000 ▇▇▇▇ Atlantic Tower, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq., (Fax
No.: (▇▇▇) ▇▇▇-▇▇▇▇); and if to Purchaser at the address set forth on Exhibit A
---------
attached hereto, or such other address or number as shall be furnished in
writing by any such party, and such notice or communication shall be deemed to
have been given as of the date so delivered, sent by telecopier or mailed.
Section 12.5 Parties in Interest. This Agreement may not be transferred,
-------------------
assigned, pledged or hypothecated by any party hereto, other than by operation
of law. This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective heirs, executors, administrators,
successors and permitted assigns.
Section 12.6 Counterparts. This Agreement may be executed in two or more
------------
counterparts, all of which taken together shall constitute one instrument.
Section 12.7 Entire Agreement. This Agreement, including the other
----------------
documents referred to herein which form a part hereof, contains the entire
understanding of the parties hereto with respect to the subject matter contained
herein and therein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
Section 12.8 Severability. In case any provision in this Agreement shall
------------
be held invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions hereof will not in any way be
affected or impaired thereby.
[Signature Pages Follow]
-30-
IN WITNESS WHEREOF, the Company and each Purchaser has caused its
corporate name to be hereunto subscribed by its officer thereunto duly
authorized, all as of the day and year first above written.
SPECIALTY PRODUCTS & INSULATION CO.
By:______________________________________
Name:
Title:
IREX CORPORATION
By:______________________________________
Name:
Title:
-31-
EXHIBIT A
---------
[Form of Note]
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS THEREOF.
Dated: November __, 1998
No._____ $3,500,000
SPECIALTY PRODUCTS & INSULATION CO.
10.5% Junior Subordinated Pay-in-Kind Notes due 2002
SPECIALTY PRODUCTS & INSULATION CO., a Pennsylvania corporation (the "Company"),
for value received, promises to pay Irex Corporation, or its registered assigns,
the principal sum of Three Million Five Hundred Thousand Dollars ($3,500,000) on
September 30, 2002.
This is the Note described in that certain Note Purchase Agreement,
dated November ___, 1988, by and among the Company (the "Agreement").
Capitalized terms used herein have the meanings assigned to them in the
Agreement unless otherwise indicated.
1. Interest. The Company promises to pay interest on the unpaid
principal amount of this Note at the rate and in the manner specified below.
The Company shall pay, in cash, interest on the principal amount of this Note at
the rate per annum of 10.5%; provided, however, that subject to the last two
sentences of this paragraph on each Interest Payment Date, the Company may, at
its option and in its sole discretion, in lieu of the payment of interest due in
cash on this Note, pay interest on this Note through the issuance of Additional
Notes in an aggregate principal amount equal to the amount of interest that
would be payable with respect to this Note, if such interest were paid in cash.
The Company shall notify the Holders in writing of its election to pay interest
on this Note through the issuance of Additional Notes not less than 10 nor more
than 45 days prior to the record date for the Interest Payment Date on which
Additional Notes will be issued. Additional Notes shall be governed by, and
entitled to the benefits of, the Agreement and shall be subject to the terms of
the Agreement and shall be subject to the same terms (including the Interest
Rate from time to time payable thereon) as this Note (except, as the case may
be, with respect to the issuance date and aggregate principal amount). The
Company will pay interest semiannually in arrears on March 31 and September 30
of each year (each an "Interest Payment Date"), commencing March 31, 1999, or if
any such day is not a business day on the next succeeding business day.
Interest will be computed on the basis of a 360-day year consisting of twelve
30-day months. Interest shall accrue from the most recent Interest Payment
Exhibit A
---------
Page 2
------
Date to which interest has been paid or, if no interest has been paid, from the
date of the original issuance of the Notes. To the extent lawful, the Company
shall pay interest on overdue principal at the rate of 2% per annum in excess of
the then applicable interest rate on the Notes; it shall pay interest on overdue
installments of interest (without regard to any applicable grace periods) at the
same rate to the extent lawful. In the event that the Company elects in respect
of any Interest Payment Date to pay interest through the issuance of Additional
Notes, interest on this Note shall be paid in Additional Notes. Interest in
respect of this Note will be payable initially in Additional Notes. If at any
time after the Closing Date, the Company elects to pay interest in respect of
the Notes in cash, the Company may thereafter subsequently elect, in accordance
with this paragraph, to pay interest on the Notes in whole, but not in part, in
Additional Notes (a "Subsequent PIK Election"); provided that the Company shall
--------
not be entitled to make more than three Subsequent PIK Elections with respect to
the Notes.
2. Method of Payment. The Company shall pay interest on the Notes
(except defaulted interest) to the Persons who are registered Holders of Notes
at the close of business on the Record Date immediately preceding the Interest
Payment Date, even if such Notes are canceled after such Record Date and on or
before such Interest Payment Date. Holders must surrender Securities to a
Paying Agent to collect principal payments. The Company shall pay principal,
premium, if any, and interest in money of the United States that at the time of
payment is legal tender for payment of public and private debts ("U.S. Legal
Tender"). However, the Company may pay principal, premium, if any, and interest
by its check payable in such U.S. Legal Tender. The Company may deliver any
such interest payment to the Paying Agent or to a Holder at the Holder's
registered address.
3. Paying Agent and Registrar. Initially, the Company will act as
Paying Agent and Registrar. The Company may change any Paying Agent, Registrar
or co-registrar without prior notice to any Holder.
4. Note Agreement. The Company issued the Note pursuant to the
Agreement. The terms of the Notes include those stated in the Agreement. The
Notes are subject to all such terms, and Holders are referred to the Agreement
for a statement of such terms. The terms of the Agreement shall govern any
inconsistencies between the Agreement and this Note. The Notes and the
Additional Notes are treated as a single class of securities under the
Agreement. The terms of the Notes include those stated in the Agreement.
5. Optional Redemption. The Notes will be redeemable, at the
Company's option, in whole or in part, at any time upon not less than 30 nor
more than 60 days' prior notice mailed by first-class mail to each holder's
registered address, at a redemption price equal to 100% of the principal amount
hereof, plus accrued and unpaid interest to the redemption date (subject to the
right of holders of record on the relevant record date to receive interest due
on the relevant interest payment date):
Exhibit A
---------
Page 3
------
6. Repurchase at Option of Holder. Section 6.6 of the Agreement
provides that upon the occurrence of a Change of Control (as defined in the
Agreement), and subject to the further limitations contained therein, the
Company will make an offer to purchase the Notes in accordance with procedures
set forth in the Agreement.
7. Selection and Notice of Redemption. In the case of any partial
redemption, selection of the Notes for redemption will be made by the Company in
compliance with the requirements of Section 6.02 of the Agreement. Securities
may be redeemed in part in multiples of $1,000 principal amount only. Notice of
redemption will be sent, by first class mail, postage prepaid, at least 30 days
but not more than 60 days prior to the date fixed for redemption to each holder
whose Notes are to be redeemed at the last address for such holder then shown on
the registry books. If any Note is to be redeemed in part only, the notice of
redemption that relates to such Note shall state the portion of the principal
amount thereof to be redeemed. A new Note in principal amount equal to the
unredeemed portion thereof will be issued in the name of the holder thereof upon
cancellation of the original Note. On and after any redemption date, interest
will cease to accrue on the Notes or part thereof called for redemption as long
as the Company has deposited with the Paying Agent in trust for the Holders
funds in satisfaction of the redemption price pursuant to the Agreement.
8. Subordination. The Company's payment of the principal of and
interest on the Notes is subordinated and subject to the prior payment in full
of the Company's Senior Indebtedness as more fully set forth in the Agreement.
Each Holder of Notes by its acceptance hereof covenants and agrees that all
payments of the principal and interest on the Notes by the Company shall be
subordinated in accordance with Article IX of the Agreement and each Holder
accepts and agrees to be bound by such provisions.
9. Denominations, Transfer, Exchange. The Notes (other than
Additional Notes) are in registered form without coupons in denominations of
$1,000 and integral multiples of $1,000. The transfer of Notes may be registered
and Notes may be exchanged as provided in the Agreement. The Registrar and the
Company may require a Holder among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Agreement. The Registrar need not exchange or register
the transfer of any Note or portion of a Note selected for redemption. Also, it
need not exchange or register the transfer of any Notes during a period
beginning at the opening of business on a business day 15 days before the day of
any selection of Notes to be redeemed and ending at the close of business on the
day of selection or during the period between a Record Date and the
corresponding Interest Payment Date.
10. Persons Deemed Owners. Prior to due presentment to the Registrar
or the Company for registration of the transfer of this Note, the Company and,
any Agent may deem and treat the Person in whose name this Note is registered as
its absolute owner for the purpose of receiving payment of principal of,
premium, if any, and interest on this Note and for all other purposes
whatsoever, whether or not this Note is overdue, and neither the Company nor any
Exhibit A
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Agent shall be affected by notice to the contrary. The registered Holder shall
be treated as its owner for all purposes.
11. Amendments and Waivers. Subject to certain exceptions provided in
the Agreement, the Agreement or the Notes may be amended with the written
consent of the Holders of a majority in principal amount of all outstanding
tranches of the Notes, voting as a single class, and any existing Default or
Event of Default (except a payment default) may be waived with the consent of
the Holders of a majority in principal amount of all outstanding tranches of the
Notes, voting as a single class. Without the consent of any Holder, the
Agreement or the Notes may be amended to, among other things, cure any
ambiguity, defect or inconsistency, or to make any change that does not
adversely affect in any material respect the rights of any Holder.
12. Defaults and Remedies. If an Event of Default occurs and is
continuing, the Holders of at least 25% in principal amount of all outstanding
tranches of the Notes, voting as a single class, by notice to the Company may
declare the principal of and accrued and unpaid interest, if any, on all the
Notes to be due and payable. Upon such a declaration, such principal and
accrued and unpaid interest shall be due and payable immediately. If an Event
of Default relating to certain events of bankruptcy, insolvency or
reorganization of the Company occurs and is continuing, the principal of and
accrued and unpaid interest on all the Notes will become and be immediately due
and payable without any declaration or other act on the part of any holders.
Under certain circumstances, the holders of a majority in principal amount of
all outstanding Notes, voting as a single class, may rescind any such
acceleration with respect to the Notes and its consequences.
13. Restrictive Covenants. The Agreement imposes certain limitations
on the ability of the Company and its subsidiaries to, among other things, incur
additional Indebtedness, pay dividends or make certain other restricted
payments, consummate certain asset sales, enter into certain transactions with
affiliates, incur liens, create restrictions on the ability of a subsidiary to
pay dividends or make certain payments, sell or issue preferred stock of
subsidiaries to third parties, merge or consolidate with any other person or
sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of the assets of the Company. Such limitations are subject to
a number of important qualifications and exceptions provided for in the
Agreement.
14. Governing Law. The Laws of the State of New York shall govern
this Note, without regard to principles of conflict of laws.
Exhibit A
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The Company will furnish to any Holder upon written request and
without charge a copy of the Agreement. Request may be made to the Company at:
Specialty Products & Insulation Co., ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Corporate Secretary.
SPECIALTY PRODUCTS & INSULATION CO.
By______________________________________
Name:
Title:
By______________________________________
Name:
Title:
