EXHIBIT 10.7
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HAMPSHIRE GROUP, LIMITED
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AMENDMENT NO. 3 TO NOTE PURCHASE AGREEMENTS
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DATED AS OF AUGUST 19, 2003
$15,000,000 SENIOR SECURED NOTES DUE JANUARY 2, 2008
Hampshire Group, Limited
$15,000,000 Senior Secured Notes Due January 2, 2008
AMENDMENT NO. 3 TO NOTE PURCHASE AGREEMENTS
As of August 19, 2003
To each of the Current Noteholders
Named in Annex 1 hereto:
Ladies and Gentlemen:
HAMPSHIRE GROUP, LIMITED, a Delaware corporation (together with any
successors and assigns, the "Company"), HAMPSHIRE DESIGNERS, INC., a Delaware
corporation, and each of HAMPSHIRE INVESTMENTS, LIMITED, a Delaware corporation
(together with its permitted successors, "HIL"), GLAMOURETTE FASHION ▇▇▇▇▇,
INC., a Delaware corporation, and ITEM EYES, INC., a Delaware corporation (the
foregoing Persons other than the Company being referred to herein individually
as a "Guarantor" and collectively as the "Guarantors"; the Company and the
Guarantors (other than HIL) being referred to herein individually as an
"Obligor" and collectively as the "Obligors"), hereby agree, jointly and
severally, with each of you as follows:
1. PRIOR ISSUANCE OF NOTES, ETC.
The Company issued and sold $15,000,000 in aggregate principal amount of
its Adjustable Rate Senior Secured Notes (formerly called 7.05% Senior Secured
Notes) due January 2, 2008 (as may be amended, restated or otherwise modified
from time to time, the "Notes", such term to include any such notes issued in
substitution therefor pursuant to Section 14 of any of the Note Purchase
Agreements) pursuant to the separate Note Purchase Agreements, each dated as of
May 15, 1998, among the Company, the Guarantors and the purchasers named in
Schedule A thereto (the "Original Note Purchase Agreements"). The Original Note
Purchase Agreements were amended by Amendment No. 1 to Note Purchase Agreements
dated as of May 15, 1998 and Other Financing Documents, which amendment was
dated as of September 5, 2000 ("Amendment No. 1") and by Amendment No. 2 to Note
Purchase Agreements, which amendment was dated as of March 31, 2002 ("Amendment
No. 2", and the Original Note Purchase Agreements as amended by Amendment No. 1
and Amendment No. 2 and as in effect immediately prior to giving effect to the
amendments provided for by this Amendment No. 3 to Note Purchase Agreements
(this "Agreement") are referred to herein as the "Existing Note Purchase
Agreements" and, as may be amended pursuant to this Agreement and as may be
further amended, restated or otherwise modified from time to time, the "Note
Purchase Agreements"). The register kept by the Company for the registration and
transfer of the Notes indicates that each of the Persons named in Annex 1 hereto
(collectively, the "Current Noteholders") is currently a holder of the aggregate
principal amount of the Notes indicated in such Annex.
2. REQUEST FOR AMENDMENTS, CONSENT AND RELEASE.
The Company requests that each of the Current Noteholders (a) agree to the
amendments (the "Amendments") to the Existing Note Purchase Agreements set forth
in Exhibit A hereto, (b) consent (the "Consent") to the execution and delivery
by the Company and the Guarantors of that certain Credit Agreement and Guaranty
(the "HSBC Credit Agreement") dated as of the date hereof among the Company and
the Guarantors and HSBC Bank USA, as agent and lender, and the other lenders
party thereto and substantially in the form of Exhibit B hereto to the extent
that such consent is required by the terms of the Existing Note Purchase
Agreements and the other Financing Documents and (c) release (the "Release") the
assignments to the Collateral Agent of benefits due under life insurance
policies which the Company maintains upon the lives of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and
▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
3. WARRANTIES AND REPRESENTATIONS.
To induce the Current Noteholders to enter into this Agreement and to agree
to the Amendments, the Consent and the Release, the Company warrants and
represents as follows (it being agreed, however, that nothing in this Section 3
shall affect any of the warranties and representations previously made by the
Company in or pursuant to the Existing Note Purchase Agreements, and that all of
such other warranties and representations, as well as the warranties and
representations in this Section 3, shall survive the effectiveness of the
Amendments, the Consent and the Release).
3.1. Organization; Power and Authority.
Each Obligor and HIL is a corporation, duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation, and each
is duly qualified as a foreign corporation and is in good standing (to the
extent such concept is recognized) in each jurisdiction in which such
qualification is required by law, other than those jurisdictions as to which the
failure to be so qualified or in good standing could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. Each
Obligor and HIL has the corporate power and authority to own or hold under lease
the properties it purports to own or hold under lease, to transact the business
it transacts and proposes to transact, to execute and deliver this Agreement and
to perform the provisions hereof.
3.2. Authorization, etc.
This Agreement has been duly authorized by all necessary corporate action
on the part of the Company and each of the Guarantors, and this Agreement
constitutes and, upon execution and delivery thereof, will constitute, a legal,
valid and binding obligation of the Company and each of the Guarantors
enforceable against the Company and each of the Guarantors in accordance with
its terms, except as such enforceability may be limited by (i) applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or
other similar laws affecting the enforcement of creditors' rights generally and
(ii) general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
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3.3. No Material Adverse Change.
Since the date of the most recent audited financial statements of the
Company delivered to the Current Noteholders, there has been no change in the
business operations, profits, financial condition, properties or business
prospects of the Company except changes that, in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
3.4. Full Disclosure.
Neither the financial statements and other certificates previously provided
to the Current Noteholders pursuant to the provisions of the Existing Note
Purchase Agreements nor the statements made in this Agreement nor any other
written statements furnished by or on behalf of the Company to the Current
Noteholders in connection with the proposal and negotiation of the Amendments,
the Consent or the Release, taken as a whole, contain any untrue statement of a
material fact or omit a material fact necessary to make the statements contained
therein and herein not misleading. There is no fact relating to any event or
circumstance that has occurred or arisen since the date of the Closing that the
Company has not disclosed to the Current Noteholders in writing that has had or,
so far as the Company can now reasonably foresee, could reasonably be expected
to have, a Material Adverse Effect.
3.5. Intent.
Neither the Company nor any Guarantor is entering into the transactions
contemplated by this Agreement and the HSBC Credit Agreement with any intent to
hinder, delay or defraud either current creditors or future creditors of the
Company or any Guarantor.
3.6. No Defaults.
No event has occurred and no condition exists that, upon the execution and
delivery of this Agreement and the effectiveness of the Amendments, the Consent
and the Release, would constitute a Default or an Event of Default.
3.7. Guaranties of Subsidiaries.
There is no Subsidiary that, in accordance with Section 10.7 of the
Existing Note Purchase Agreements, should have become a Guarantor under the Note
Purchase Agreements, but has not executed and delivered the requisite documents,
as required by such Section, to become a Guarantor under the Note Purchase
Agreements. All Subsidiaries are listed on the signature pages hereto.
3.8. HSBC Credit Agreement.
The Company has delivered to each of the Current Noteholders a true and
correct copy of the HSBC Credit Agreement. Each of the representations and
warranties contained in Article VII of the HSBC Credit Agreement are true and
correct as of the date hereof.
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4. AMENDMENTs; CONSENT; RELEASE.
4.1. Amendment to Existing Note Purchase Agreements; Consent; Release.
Subject to Section 4.2 of this Agreement, the Current Noteholders and the
Company hereby agree to each of the Amendments, the Consent and the Release.
4.2. Effectiveness of the Amendments, the Consent and the Release.
The Amendments, the Consent and the Release contemplated by Section 4.1
shall, in accordance with Section 18.1 of the Existing Note Purchase Agreements,
become effective as of the date first written above (the date of such
effectiveness is herein referred to as the "Effective Date"), if at all, at such
time as the Company and the Current Noteholders shall have indicated their
written consent to the Amendments, the Consent and the Release by executing and
delivering the applicable counterparts of this Agreement. It is understood that
any Current Noteholder may withhold its consent for any reason or for no reason,
and that, without limitation of the foregoing, any Current Noteholder hereby
makes the granting of its consent contingent upon satisfaction of each of the
following conditions:
(a) each of the Current Noteholders shall have received true and
correct copies of the fully executed HSBC Credit Agreement substantially in
the form of Exhibit B hereto;
(b) that certain Intercreditor Agreement dated as of the date hereof
among HSBC Bank USA, each of the other lenders under the HSBC Credit
Agreement and the Current Noteholders and acknowledged and agreed to by the
Obligors shall have been fully executed and delivered substantially in the
form of Exhibit C hereto;
(c) each of the representations and warranties set forth in Section 3
hereof shall be true and correct as of the Effective Date;
(d) each of the conditions precedent set forth in Section 6.01 of the
HSBC Credit Agreement shall have been fully satisfied;
(e) the Company shall have paid the fees and disbursements of special
counsel to the Current Noteholders reflected on a statement delivered in
connection with the execution and delivery of this Agreement to the
Company; and
(f) each of the Current Noteholders shall have received any additional
information, certification or other item as such Current Noteholder shall
have reasonably requested on or before the Effective Date.
4.3. No Other Amendments; Confirmation.
Except as expressly provided herein, (a) no terms or provisions of any
agreement are modified or changed by this Agreement, (b) the terms of this
Agreement shall not operate as a waiver by any Current Noteholder of, or
otherwise prejudice any Current Noteholder's rights, remedies or powers under,
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the Existing Note Purchase Agreements or any other Financing Document or under
any applicable law, and (c) the terms and provisions of the Existing Note
Purchase Agreements and each other Financing Document shall continue in full
force and effect.
5. DEFINED TERMS.
Capitalized terms used herein and not otherwise defined herein shall have
the meanings ascribed to them in the Existing Note Purchase Agreements.
6. EXPENSES.
Whether or not any of the Amendments, the Consent or the Release becomes
effective, the Company will promptly (and in any event within thirty (30) days
of receiving any statement or invoice therefor) pay all fees, expenses and costs
relating to this Agreement, including, but not limited to, (a) the reasonable
cost of reproducing this Agreement and the other documents delivered in
connection herewith and (b) the reasonable fees and disbursements of the Current
Noteholders' special counsel, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP, incurred in connection with
the preparation, negotiation and delivery of this Agreement. This Section 6
shall not be construed to limit the Company's obligations under Section 16.1 of
the Note Purchase Agreements.
7. MISCELLANEOUS.
7.1. Part of Note Purchase Agreements, Future References, etc.
This Agreement shall be construed in connection with and as a part of each
of the Existing Note Purchase Agreements and, except as expressly amended by
this Agreement, all terms, conditions and covenants contained in the Existing
Note Purchase Agreements and the other Financing Documents are hereby ratified
and shall be and remain in full force and effect. Any and all notices, requests,
certificates and other instruments executed and delivered after the execution
and delivery of this Agreement may refer to the Note Purchase Agreements without
making specific reference to this Agreement, but nevertheless all such
references shall include this Agreement unless the context otherwise requires.
7.2. Governing Law.
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, UNITED STATES OF AMERICA,
EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRE
THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE.
7.3. Duplicate Originals, Execution in Counterpart.
Two (2) or more duplicate originals hereof may be signed by the parties,
each of which shall be an original but all of which together shall constitute
one and the same instrument. This Agreement may be executed in one or more
counterparts and shall become effective at the time provided in Section 4.2
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hereof, and each set of counterparts that, collectively, show execution by the
Company and each consenting Current Noteholder shall constitute one duplicate
original. Delivery of a facsimile of an executed signature page hereto shall be
effective as delivery of an original.
7.4. Binding Effect.
This Agreement shall be binding upon and shall inure to the benefit of the
Company and the Current Noteholders and their respective successors and assigns.
[Remainder of page intentionally left blank. Next page is signature page.]
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If this Agreement is satisfactory to you, please so indicate by signing the
applicable acceptance on a counterpart hereof and returning such counterpart to
the Company, whereupon this Agreement shall become binding among you, the
Obligors and HIL in accordance with its terms.
Very truly yours,
HAMPSHIRE GROUP, LIMITED
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Treasurer
Accepted:
PHOENIX LIFE INSURANCE COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Executive Vice President and Chief Investment Officer
THE OHIO NATIONAL LIFE INSURANCE COMPANY
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇ ▇. ▇▇▇▇▇▇
Title: Investment Vice President, Private Placements
[Signature Page to Amendment No. 3 to Note Purchase Agreements]
Each undersigned Guarantor hereby consents to the Amendments and confirms
its obligations as Guarantor under the Note Purchase Agreements:
HAMPSHIRE DESIGNERS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
HAMPSHIRE INVESTMENTS, LIMITED
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Treasurer
GLAMOURETTE FASHION ▇▇▇▇▇, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Treasurer
ITEM-EYES, INC.
(formerly VINTAGE III, INC.)
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
[Signature Page to Amendment No. 3 to Note Purchase Agreements]
ANNEX 1
CURRENT NOTEHOLDERS AND PRINCIPAL AMOUNTS
Aggregate Principal
Name of Current Noteholder Amount of Notes Held
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Phoenix Life Insurance Company $5,625,000
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The Ohio National Life Insurance Company $2,812,500
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Annex 1-1
EXHIBIT A
AMENDMENTS
1. Section 10.2 of the each of the Existing Note Purchase Agreements is
hereby amended and restated in its entirety to read as follows:
10.2 Insurance.
The Company will and will cause each of its Restricted
Subsidiaries to, maintain, with financially sound and reputable
insurers, insurance with respect to their respective properties and
businesses against such casualties and contingencies, of such types,
on such terms and in such amounts (including deductibles) as is
customary in the case of entities of established reputations engaged
in the same or a similar business and similarly situated, provided
that nothing in this Section 10.2 shall affect or reduce the
obligations of the Company under section 3D of the Security Agreements
with respect to the Collateral.
2. Section 11.1 of the each of the Existing Note Purchase Agreements is
hereby amended and restated in its entirety to read as follows:
11.1 Transactions with Affiliates.
The Company will not and will not permit any Restricted
Subsidiary to enter into directly or indirectly any Material
transaction or Material group of related transactions (including,
without limitation, the purchase, lease, sale or exchange of
properties of any kind or the rendering of any service) with any
Affiliate (other than the Company or a Restricted Subsidiary), except
in the ordinary course and pursuant to the reasonable requirements of
the Company's or such Restricted Subsidiary's business and upon fair
and reasonable terms no less favorable to the Company or such
Restricted Subsidiary than would be obtainable in a comparable
arm's-length transaction with a Person not an Affiliate and except
that (a) the Company may make loans and provide equity capital to HIL
from time to time pursuant to the reasonable requirements of HIL's and
the Company's businesses, upon such terms as the Board of Directors
have determined, in good faith, are appropriate and in the best
interests of HIL and the Company and so long as the making of such
loans and provision of equity capital comply with the terms of Section
11.10(a) and (b) the Company may incur and have outstanding HIL
Subordinated Debt.
3. Section 11.3 of the each of the Existing Note Purchase Agreements is
hereby amended and restated in its entirety to read as follows:
Exhibit A-1
11.3 Consolidated Adjusted Tangible Net Worth.
The Company will not at any time permit Consolidated Adjusted
Tangible Net Worth, determined as of the end of the fiscal quarter of
the Company then most recently ended, to be less than the sum of
(a) $56,000,000, plus
(b) the sum of the Fiscal Year Net Worth Increase Amounts
for all fiscal years of the Company the last day of which
occurred during the period beginning January 1, 2003 and ending
at such time.
As used in Section 11.3, "Fiscal Year Net Worth Increase
Amount" means, for any fiscal year of the Company, the greater of
(i) 50% of Consolidated Adjusted Net Income for such fiscal
year and
(ii) $0.
4. Section 11.9(a)(iii) of the each of the Existing Note Purchase
Agreements is hereby amended and restated in its entirety to read as follows:
(iii) (A) such Transfer is subject to Section 11.2 and satisfies the
requirements thereof or (B) the property that is the subject of such
Transfer constitutes solely the capital stock or other equity interests of
HIL so long as HIL has no Subsidiaries which are Restricted Subsidiaries at
the time of such Transfer; or
5. Section 11.10 of each of the Existing Note Purchase Agreements is hereby
amended and restated in its entirety to read as follows:
11.10 Restricted Payments and Restricted Investments.
(a) Restricted Investments. The Company will not, and will not
permit any Restricted Subsidiary to, make any Restricted Investment
other than (a) Restricted Investments existing and outstanding on June
30, 2003 (which the Company represents were valued at $29,844,169 as
of such date); and (b) Restricted Investments in HIL so long as (i)
the aggregate cost of such Restricted Investments in HIL then
outstanding does not exceed $40,000,000 at any time and (ii) at the
time of each such Restricted Investment, HIL is a Wholly-Owned
Subsidiary.
(b) Restricted Payments. The Company will not, and will not
permit any Restricted Subsidiary to, declare or make any Restricted
Payment, other than, (a) so long as no Default or Event of Default
exists and is continuing, on or after August 31, 2003, the Company may
repurchase its own stock (which upon such purchase shall be held as
treasury stock) in an aggregate amount not to exceed $1,500,000 and
(b) redemption of up to 800,000 shares of the common stock of the
Company in exchange for the capital stock or assets of HIL so long as
(i) no Default or Event of Default exists and is continuing
immediately before and/or after the consummation of such redemption
Exhibit A-2
and exchange and (ii) the Company shall have received (and promptly
delivered a copy to each of the holders) from a recognized investment
bank or other similar financial institution a customary form fairness
opinion with respect to the fairness of such redemption and exchange
in relation to the interests of the Company.
6. Schedule B of the Existing Note Purchase Agreements is hereby amended by
amending and restating the following terms in their entirety to read as follows:
Consolidated Funded Debt -- means, at any time, the aggregate amount
of all Funded Debt of the Company and the Restricted Subsidiaries
determined on a consolidated basis in accordance with GAAP (including,
without limitation, any HIL Subordinated Debt).
Credit Agreement -- means that certain Credit Agreement and Guaranty,
dated as of August 15, 2003, among the Company, the Guarantors, HSBC Bank
USA, as agent and lender, and the other lenders party thereto.
7. Schedule B of the Existing Note Purchase Agreements is hereby amended by
adding the following new term in the appropriate alphabetical order to read as
follows:
HIL Subordinated Debt - means Debt of the Company owing to HIL so long
as (a) the aggregate principal amount of such Debt does not exceed
$10,000,000 at any time, (b) HIL is a Subsidiary of the Company at all
times during which the principal of or any other amount owing under such
Debt is outstanding and (c) such Debt is fully subordinated to the payment
and performance obligations of the Company under this Agreement and the
other Financing Documents on the terms and conditions set forth in Exhibit
11.1 hereto or on terms and conditions otherwise acceptable to the holders
of all of the Notes.
8. Schedule B of the Existing Note Purchase Agreements is hereby amended by
deleting therefrom the term "Key-Person Policy".
9. The Existing Note Purchase Agreements are hereby amended by adding a new
Exhibit 11.1 thereto to be in the form of Exhibit D hereto.
Exhibit A-3
EXHIBIT B
[HSBC CREDIT AGREEMENT]
Exhibit B-1
EXHIBIT C
[INTERCREDITOR AGREEMENT]
Exhibit C-1
EXHIBIT D
Exhibit 11.1
Form of Subordination Provisions
Each instrument, document or agreement representing HIL Subordinated Debt
shall contain the following provisions regarding subordination:
The holder of this instrument (the "Subordinated Holder") by
acceptance of this instrument agrees that the indebtedness evidenced by
this instrument (whether for principal, interest, premium, fees, expenses
or otherwise), and any renewals or extensions thereof, shall at all times
and in all respects be subordinate and junior in right of payment to all
Senior Debt (as defined below). As used herein, the term "Senior Debt"
shall mean all indebtedness evidenced by each of the Adjustable Rate Senior
Secured Notes (formerly called 7.05% Senior Secured Notes), dated May 15,
1998 in favor of the holder named therein or any assignee or successor
thereof as may be amended, modified or restated from time to time
(collectively, the "Notes") in each case issued by Hampshire Group, Limited
(the "Company") under and pursuant to the terms of the Company's Note
Purchase Agreements (as amended by that certain Amendment No. 1 to Note
Purchase Agreements dated as of May 15, 1998 and Other Financing Documents,
dated as of September 5, 2000, that certain Amendment No. 2 to Note
Purchase Agreements, dated as of March 31, 2002, and that certain Amendment
No. 3 to Note Purchase Agreements, dated as of August 19, 2003, and as may
be further amended, modified or restated from time to time, collectively,
the "Note Purchase Agreement"), dated as of May 15, 1998, with Phoenix Life
Insurance Company and The Ohio National Life Insurance Company and
including all principal, "Make-Whole Amount" (as such term is defined in
the Note Purchase Agreement), fees, costs, expenses, and interest
(including all interest accruing after the commencement of any bankruptcy
or insolvency proceeding of the Company, whether or not permitted as an
allowed claim in such proceeding) in respect of the Notes, and all other
amounts now or hereafter owed by the Company to any holder of the Notes
pursuant to the terms of the Note Purchase Agreement or any other
"Financing Document" (as such term is defined in the Note Purchase
Agreement) or otherwise in connection therewith (including, without
limitation, fees, premiums, costs and expenses), and all renewals,
extensions, refinancings and refundings of any of such indebtedness.
Without limiting the effect of the foregoing, "subordinate" and
"junior" as used herein shall include within their meanings the following:
that
(a) notwithstanding anything else to the contrary contained in
this instrument or otherwise, so long as any Senior Debt is
outstanding:
Exhibit D-1
(i) this instrument shall not be secured by any lien or
security interest on property of the Company, any "Guarantor" (as
such term is defined in the Note Purchase Agreement) or any other
direct or indirect subsidiary of the Company; and
(ii) no payments or prepayments of principal, interest,
costs, fees, expenses or any other amounts shall be due or
payable on or in respect of this instrument and the Company shall
not make any such payments or prepayments, at any time
(A) after the occurrence of a "Default" or an "Event of
Default" (as such terms are defined in the Note Purchase
Agreement), or if the effect of such payment was to create a
Default or an Event of Default, unless such Default or Event
of Default shall have been cured or waived or shall have
ceased to exist and at least one hundred eighty (180) days
shall have elapsed since the date such Default or Event of
Default shall have been cured or waived or shall have ceased
to exist, or
(B) after any such payment would be prohibited by the
terms of any of the Note Purchase Agreement;
(b) in the event of any dissolution, winding up,
liquidation, arrangement, reorganization, adjustment,
protection, relief or composition of the Company, or any of
its debts, whether voluntary or involuntary, in any
bankruptcy, insolvency, arrangement, reorganization,
receivership, relief or other similar case or proceeding
under any federal or state bankruptcy or similar law or upon
an assignment for the benefit of creditors or any other
marshaling of the assets and liabilities of the Company,
then all principal, Make-Whole Amount, if any, and interest
to the date of payment on all Senior Debt (including,
without limitation, interest thereon accruing after the
commencement of any such case or proceedings whether or not
permitted as an allowed claim in such case or proceedings)
shall first be finally and indefeasibly paid in full in cash
before any payment (regardless of the form thereof) on
account of principal, or premium, if any, or interest or
other amount is made upon the indebtedness evidenced by this
instrument and in such case or proceedings any payment or
distribution of any kind or character, whether in cash or
property or securities, that may be payable or deliverable
in respect of this instrument shall be paid or delivered
directly to the holders of Senior Debt for application, on a
ratable basis, in payment thereof, unless and until all
principal, Make-Whole Amount, if any, fees, costs, expenses
and interest to the date of payment on all such Senior Debt
shall have been finally and indefeasibly paid and satisfied
in full (including, without limitation, interest thereon
accruing after the commencement of any such case or
proceedings, whether or not allowed as a claim in such case
or proceedings) in cash;
Exhibit D-2
(c) in the event that any Senior Debt shall become and
be due and payable before its expressed maturity for any
reason (and by way of confirmation of clause (a) above), the
Subordinated Holder shall be entitled to payment only after
there shall first have been finally and indefeasibly paid in
full in cash the Senior Debt outstanding at such time
(including, without limitation, principal, interest,
Make-Whole Amount, fees, costs, expenses and other amounts
due in respect thereof); and
(d) unless final and indefeasible payment in full in
cash shall have first been made on all Senior Debt
(including, without limitation, principal, interest,
Make-Whole Amount, fees, costs, expenses and other amounts
due in respect thereof), the Subordinated Holder shall not
(i) institute any suit or make any demand for payment
in respect of this instrument (and if any such suit or
demand shall have been commenced or made, it shall
immediately be suspended or withdrawn),
(ii) accelerate this instrument or otherwise implement
or exercise any remedy it may have in respect of this
instrument, or
(iii) institute against the Company, any Guarantor or
any other direct or indirect subsidiary of the Company, any
bankruptcy, reorganization, arrangement, insolvency or
liquidation case or proceedings, or any other case or
proceedings under any United States federal or state
bankruptcy or similar law.
In the event that, notwithstanding the provisions of this instrument
prohibiting such payment or distribution, the Subordinated Holder shall receive
or retain in violation of such provisions any payment or distribution of any
kind or character (including, without limitation, any collateral), whether in
cash, property or securities, including any such payment or distribution that
may be payable or deliverable by reason of the payment of any other indebtedness
of the Company subordinated to the indebtedness evidenced by this instrument,
before all Senior Debt is finally and indefeasibly paid in full in cash, then
and in such event such payment or distribution shall be received and held by the
Subordinated Holder in trust for the benefit of the holders of Senior Debt, and
shall be paid over or delivered, in the same form as so received (with any
necessary endorsements), forthwith to the holders of Senior Debt, ratably in
accordance with their respective interests, for application to the payment or
prepayment in full of all Senior Debt remaining unpaid, to the extent necessary
to pay all Senior Debt in full, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Debt.
In the event that the Subordinated Holder does not file, within thirty (30)
days before the expiration of the time for such filing, a proof of claim or
other appropriate proof of debt in any insolvency or bankruptcy case or
proceedings involving the Company, the holders of at least fifty-one percent
Exhibit D-3
(51%) in aggregate outstanding principal amount of the Senior Debt (or any
trustee acting on their behalf) are hereby irrevocably authorized and empowered
to file such proof of claim for or on behalf of the Subordinated Holder and to
take any necessary action to collect any amounts due in respect of such claim in
such case or proceeding. The holders of Senior Debt shall have the right, at
their option, to vote any claim or claims in respect of this instrument in
connection with any insolvency or bankruptcy case or proceedings involving the
Company.
The Subordinated Holder shall be subrogated to the rights of the holders of
Senior Debt at the time outstanding to receive payments and distributions of
cash, property and securities applicable to the Senior Debt under these
subordination provisions until all amounts payable for or on account of this
instrument shall be paid in full; provided, however, that no payment or
distribution to any holder of Senior Debt pursuant to these subordination
provisions shall entitle the Subordinated Holder to exercise any rights of
subrogation in respect thereof until all Senior Debt shall have been finally and
indefeasibly paid in full in cash. For purposes of such subrogation, no payments
or distributions to the holders of Senior Debt of any cash, property or
securities to which the Subordinated Holder would be entitled except for these
subordination provisions, shall, as among the Company, its creditors other than
holders of Senior Debt and the Subordinated Holder, be deemed to be a payment or
distribution by the Company to or on account of Senior Debt.
No right of any present or future holder of any Senior Debt to enforce its
rights under the subordination provisions of this instrument 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 non-compliance by the Company with the terms, provisions and covenants
of this instrument or of any other instrument or document, regardless of any
knowledge thereof any such holder may have or be otherwise charged with. Without
in any way limiting the generality of the foregoing sentence, the holders of
Senior Debt (or any trustee or other person acting on their behalf, including,
without limitation, the "Collateral Agent" (as such term is defined in the Note
Purchase Agreement)) may, at any time and from time to time, without the consent
of or notice to the Subordinated Holder, without incurring responsibility to the
Subordinated Holder and without impairing or releasing the subordination
provided in this instrument or the obligations hereunder of the Subordinated
Holder to the holders of Senior Debt, do any one or more of the following:
(1) change the manner, place or terms of payment or extend the time of
payment of, or renew or alter, all or any of the Senior Debt, or otherwise
amend or supplement in any manner any Senior Debt or any instrument
evidencing the same or the Note Purchase Agreement or any other agreement
under which Senior Debt is outstanding;
(2) sell, exchange, release, not perfect or otherwise deal with any
property pledged, assigned or mortgaged to secure, or otherwise securing,
Senior Debt;
Exhibit D-4
(3) release or substitute any Guarantor or any other guarantor of any
of the Senior Debt;
(4) as holders of Senior Debt, exercise or refrain from exercising any
rights against the Company, any Guarantor, any direct or indirect
subsidiary of the Company or any other person; and
(5) apply or cause to be applied any sums from time to time received
to the payment of the Senior Debt.
The Subordinated Holder, by its acceptance hereof, shall be
conclusively presumed to have agreed that
(A) all holders of Senior Debt, in determining to acquire and
retain Senior Debt, have relied upon the subordination of this
instrument to the Senior Debt, and
(B) promptly upon request of any holder of Senior Debt, the
Subordinated Holder shall execute and deliver to such holder of Senior
Debt a written instrument by which such Subordinated Holder confirms
and agrees that this instrument is subordinate and junior in right of
payment to such Senior Debt on the terms and conditions provided
herein and take such other action as may be reasonably requested to
protect the rights of the holders of Senior Debt.
The foregoing subordination provisions are solely for the purpose of
defining the relative rights of the holders of Senior Debt on the one hand, and
the Subordinated Holder on the other hand, and nothing herein shall impair, as
between the Company and the Subordinated Holder, the obligation of the Company,
which is unconditional and absolute, to pay to the Subordinated Holder the
principal and interest on this instrument in accordance with its terms.
For the avoidance of doubt, any payment on or in respect of the Senior Debt
other than in cash recovered or received by any holder of Senior Debt shall be
treated as having not been paid for the purposes of this instrument.
The Company agrees, and the Subordinated Holder by accepting this
instrument agrees, to the subordination and other provisions herein contained
and each of the Company and the Subordinated Holder agrees that none of the
terms or provisions of this instrument may be amended, modified or restated
except as expressly permitted by, or in accordance with any waiver or consent
granted pursuant to, the Note Purchase Agreement.
The Company and the Subordinated Holder acknowledge and agree that a
violation of any of the terms of this instrument by either the Company or the
Subordinated Holder will cause the holders of the Senior Debt irreparable injury
for which adequate remedy at law is not available. Therefore, the Company and
Exhibit D-5
the Subordinated Holder agree that the holders of Senior Debt shall be entitled
to an injunction, restraining order or other equitable relief from any court of
competent jurisdiction, restraining the Company or the Subordinated Holder from
committing any violations of the provisions of this instrument.
The Company and the Subordinated Holder hereby waive notice of (i)
acceptance of this instrument and (ii) the occurrence of a Default or Event of
Default under the Note Purchase Agreement and generally, all demands and notices
of every kind in connection with the Note Purchase Agreement.
EACH OF THE HOLDERS OF SENIOR DEBT MAY ENFORCE ANY CLAIM ARISING OUT OF
THIS INSTRUMENT IN ANY STATE OR FEDERAL COURT HAVING SUBJECT MATTER JURISDICTION
AND LOCATED IN ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇. FOR THE PURPOSE OF ANY
ACTION OR PROCEEDING INSTITUTED WITH RESPECT TO ANY SUCH CLAIM, THE COMPANY AND
THE SUBORDINATED HOLDER HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF SUCH
COURTS. THE COMPANY AND THE SUBORDINATED HOLDER IRREVOCABLY CONSENT TO THE
SERVICE OF PROCESS OUT OF SAID COURTS BY MAILING A COPY THEREOF, BY REGISTERED
MAIL, POSTAGE PREPAID, TO THE SUBORDINATED HOLDER AND AGREE THAT SUCH SERVICE,
TO THE FULLEST EXTENT BY LAW, (I) SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE
SERVICE OF PROCESS UPON IT IN ANY SUCH SUIT, ACTION OR PROCEEDING AND (II) SHALL
BE TAKEN AND HELD TO BE VALID PERSONAL SERVICE UPON AND PERSONAL DELIVERY TO IT.
NOTHING HEREIN CONTAINED SHALL AFFECT THE RIGHT OF ANY OF THE HOLDERS OF SENIOR
DEBT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR PRECLUDE ANY OF
THE HOLDERS OF SENIOR DEBT FROM BRINGING AN ACTION OR PROCEEDING IN RESPECT
HEREOF IN ANY OTHER COUNTRY, STATE OR PLACE HAVING JURISDICTION OVER SUCH
ACTION. EACH OF THE COMPANY AND THE SUBORDINATED HOLDER HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE
OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT LOCATED IN ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇ AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH
COURT HAS BEEN BROUGHT IN ANY INCONVENIENT FORUM.
Exhibit D-6