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EXHIBIT 4.4
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LOAN AGREEMENT
between
SUNLINK HEALTHCARE CORP., as Borrower,
ITS SUBSIDIARIES, as Guarantors
and
NHS, INC., as Lender
Dated as of January 31, 2001
Relating to:
$17,000,000 Aggregate Principal Amount of
8.5% Senior Subordinated Notes due 2006
and
$2,000,000 Senior Subordinated Zero Coupon Note
due 2004
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TABLE OF CONTENTS
Page
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SECTION 1 DEFINITIONS AND ACCOUNTING TERMS............................................................1
1.01. Definitions...............................................................................1
1.02. Computation of Time Periods..............................................................20
1.03. Accounting Terms.........................................................................20
SECTION 2 AUTHORIZATION AND ISSUANCE OF NOTES........................................................20
2.01. Authorization of Issuance................................................................20
2.02. Closing..................................................................................21
SECTION 3 CONDITIONS TO CLOSING......................................................................21
3.01. Representations and Warranties...........................................................21
3.02. Performance; No Default under Other Agreements...........................................21
3.03. Compliance Certificates..................................................................21
(a) Officers' Certificate....................................................................21
(b) Secretary's Certificate..................................................................21
3.04. Opinions of Counsel......................................................................21
3.05. Proceedings and Documents................................................................22
3.06. Transaction Documents in Force and Effect; Information...................................22
(a) Transaction Documents....................................................................22
(b) Accuracy of Information..................................................................22
3.07. No Violation; No Legal Constraints; Consents, Authorizations and Filings, etc............22
SECTION 4 REPRESENTATIONS AND WARRANTIES OF THE COMPANY..............................................23
4.01. Due Incorporation; Power and Authority...................................................23
4.02. Formation of the Company.................................................................23
4.03. Subsidiaries.............................................................................23
4.04. Due Authorization, Execution and Delivery................................................23
(a) Agreement................................................................................23
(b) Notes....................................................................................23
(c) Subsidiary Guarantees....................................................................24
(d) Other Transaction Documents..............................................................24
4.05. Non-Contravention; Authorizations and Approvals..........................................24
4.06. No Actions or Proceedings................................................................25
4.07. Private Offering; No Integration or General Solicitation.................................25
4.08. Status Under Certain Statutes............................................................25
4.09. Affiliate Transactions...................................................................25
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SECTION 5 REPRESENTATIONS OF THE LENDER..............................................................26
5.01. Acquisition for Investment...............................................................26
SECTION 6 COVENANTS TO PROVIDE INFORMATION...........................................................26
6.01. Future Reports to Noteholders............................................................26
(a) Quarterly Statements.....................................................................26
(b) Annual Statements........................................................................27
(c) Authorized Financial Officer Certificates................................................28
(d) Intentionally Omitted....................................................................28
(e) Other Information........................................................................28
(f) Notice of Default or Event of Default or Litigation......................................28
(g) Intentionally Omitted....................................................................28
(h) Changes to Indebtedness..................................................................28
(i) Original Issue Discount Information......................................................28
SECTION 7 OTHER AFFIRMATIVE COVENANTS................................................................29
7.01. Payment of Principal, Premium and Interest...............................................29
7.02. Preservation of Corporate Existence and Franchises.......................................29
7.03. Maintenance of Properties................................................................29
7.04. Taxes....................................................................................29
(a) Payment of Taxes.........................................................................29
(b) Tax Returns..............................................................................30
7.05. Books, Records and Access................................................................30
7.06. Compliance with Law and Material Contracts...............................................30
7.07. Insurance................................................................................30
7.08. Offer to Repurchase Upon Change of Control...............................................30
7.09. Offer to Purchase by Application of Excess Proceeds......................................32
7.10. Further Assurances.......................................................................33
7.11. Sales of Non-Essential Real Property.....................................................33
SECTION 8 NEGATIVE COVENANTS.........................................................................34
8.01. Stay, Extension and Usury Laws...........................................................34
8.02. Restricted Payments......................................................................34
8.03. Dividend and Other Payment Restrictions Affecting Subsidiaries...........................35
8.04. Incurrence of Indebtedness...............................................................36
8.05. Asset Sales; Working Capital Facility Clawback...........................................37
8.06. Transactions with Affiliates.............................................................38
8.07. Intentionally Omitted....................................................................38
8.08. Limitation on Liens......................................................................39
8.09. Limitation on Issuances and Sales of Capital Stock of Subsidiaries.......................39
8.10. Limitation on Certain Senior Indebtedness................................................39
8.11. Merger, Consolidation, or Sale of Assets.................................................39
8.12. Successor Company Substituted............................................................40
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8.13. Additional Subsidiary Guarantees.........................................................40
8.14. Conduct of Business......................................................................40
8.15. Intentionally Omitted....................................................................40
8.16. Public Disclosures.......................................................................40
8.17. Capital Expenditures.....................................................................40
SECTION 9 COLLATERAL.................................................................................41
9.01. Grant of Lien on Collateral..............................................................41
9.02. Subordination, Release and Re-Grant......................................................41
SECTION 10 THE NOTES.................................................................................43
10.01. Form and Execution.......................................................................43
10.02. Terms of the Notes.......................................................................43
(a) Stated Maturity..........................................................................43
(b) Interest.................................................................................44
10.03. Denominations............................................................................44
10.04. Form of Legend for the Notes.............................................................44
10.05. Payments and Computations................................................................44
10.06. Registration, Registration of Transfer and Exchange......................................44
(a) Security Register........................................................................44
(b) Registration of Transfer.................................................................45
(c) Exchange.................................................................................45
(d) Effect of Registration of Transfer or Exchange...........................................45
(e) Requirements; Charges....................................................................45
(f) Certain Limitations......................................................................45
10.07. Mutilated, Destroyed, Lost and Stolen Notes..............................................45
10.08. Persons Deemed Owners....................................................................46
10.09. Cancellation.............................................................................46
10.10. Home Office Payment......................................................................46
SECTION 11 EVENTS OF DEFAULT.........................................................................47
11.01. Events of Default........................................................................47
11.02. Remedies.................................................................................49
11.03. Waiver of Past Defaults..................................................................50
SECTION 12 REDEMPTION................................................................................50
12.01. Right of Redemption......................................................................50
12.02. Partial Redemptions......................................................................50
12.03. Notice of Redemption.....................................................................51
12.04. Deposit of Redemption Price..............................................................51
12.05. Notes Payable on Redemption Date.........................................................51
12.06. Notes Redeemed in Part...................................................................51
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SECTION 13 SUBORDINATION OF NOTES....................................................................52
13.01. Obligations Subordinate to Senior Indebtedness...........................................52
13.02. Payment Over of Proceeds Upon Dissolution, Etc...........................................52
13.03. No Payment When Senior Indebtedness in Default...........................................53
13.04. Payment Permitted If No Default..........................................................54
13.05. Subrogation to Rights of Holders of Senior Indebtedness..................................54
13.06. Provisions Solely to Define Relative Rights..............................................55
13.07. No Waiver of Subordination Provisions....................................................55
13.08. Reliance on Judicial Order or Certificate of Liquidating Agent...........................56
13.09. Reliance by Holders of Senior Indebtedness on Subordination Provisions...................56
13.10. Authority to Act for Lender..............................................................56
13.11. Intercreditor Arrangements in Bankruptcy.................................................57
13.12. Collateral Subordination.................................................................58
SECTION 14 SUBSIDIARY GUARANTEES.....................................................................59
14.01. Subsidiary Guarantees....................................................................59
14.02. Execution and Delivery of Subsidiary Guarantees..........................................60
14.03. Guarantors May Consolidate, Etc. On Certain Terms........................................60
14.04. Releases of Subsidiary Guarantees........................................................61
14.05. Guarantees Subordinate to Guarantor Senior Indebtedness..................................61
14.06. Payment Over of Proceeds Upon Dissolution, Etc...........................................62
14.07. No Payment When Guarantor Senior Indebtedness in Default.................................63
14.08. Payment Permitted If No Default..........................................................64
14.09. Subrogation to Rights of Holders of Guarantor Senior Indebtedness........................64
14.10. Provisions Solely to Define Relative Rights..............................................64
14.11. No Waiver of Subordination Provisions....................................................65
14.12. Reliance on Judicial Order or Certificate of Liquidating Agent...........................65
14.13. Reliance by Holders of Guarantor Senior Indebtedness on Subordination Provisions.........65
14.14. Limitation on Guarantor Liability........................................................66
SECTION 15 FEES, EXPENSES, INDEMNIFICATION AND TERMINATION...........................................66
15.01. Fees and Expenses........................................................................66
15.02. Indemnification..........................................................................67
15.03. Survival.................................................................................67
15.04. Termination..............................................................................67
SECTION 16 MISCELLANEOUS.............................................................................68
16.01. Notices..................................................................................68
16.02. Benefit of Agreement; Assignments and Participations.....................................68
16.03. No Waiver; Remedies Cumulative...........................................................69
16.04. Amendments, Waivers and Consents.........................................................69
16.05. Counterparts.............................................................................69
16.06. Reproduction.............................................................................70
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16.07. Headings.................................................................................70
16.08. Governing Law; No Jury Trial.............................................................70
16.09. Arbitration..............................................................................70
16.10. Severability.............................................................................71
16.11. Entirety.................................................................................71
16.12. Survival of Representations and Warranties...............................................71
16.13. Incorporation............................................................................71
EXHIBITS
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Exhibit 3.03(a) - Officer's Certificate
Exhibit 3.03(b) - Secretary's Certificate
Exhibit 3.04(a) - Opinions of Counsel
Exhibit A - Form of Balloon Note
Exhibit B - Form of Zero Coupon Note
Exhibit C - Form of Pledge Agreement
Exhibit D - Form of Security Agreement
Exhibit E - Form of Subsidiary Guarantee
Exhibit F - Form of Supplemental Agreement
SCHEDULES
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Schedule 1.1 - Acquired Companies
Schedule 1.2 - Acquired Subsidiaries
Schedule 1.3 - Applicable Capital Expenditure Limit
Schedule 4.06 - No Actions or Proceedings
Schedule 8.06 - Transaction with Affiliates
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LOAN AGREEMENT
LOAN AGREEMENT dated as of January 31, 2001, by and between Sunlink
Healthcare Corp., a Delaware corporation (the "Company"), all its Subsidiaries,
and NHS, Inc., a Delaware corporation (the "Lender").
RECITALS
WHEREAS, the Company and the Lender entered into that certain Stock
Acquisition Agreement, dated as of January 31, 2001 (the "Stock Purchase
Agreement"), pursuant to which, among other things, the Lender agreed to sell to
the Company, and the Company agreed to purchase from the Lender, all of the
outstanding capital stock of the Acquired Companies (as defined below);
WHEREAS, pursuant to the Stock Purchase Agreement, the Company agreed
to issue to the Lender the Original Balloon Note and the Zero Coupon Note (each
as defined below) as part of the purchase price for the stock to be sold to it
thereunder;
WHEREAS, simultaneously with the execution of this Agreement, the
closing of the transactions contemplated by the Stock Purchase Agreement is
occurring and the parties to this Agreement are, as required by the Stock
Purchase Agreement, entering into this Agreement in connection with the issuance
to the Lender of the Original Balloon Note and the Zero Coupon Note;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1
DEFINITIONS AND ACCOUNTING TERMS
1.01. Definitions.
As used herein, the following terms shall have the meanings specified
herein unless the context otherwise requires:
"Acquired Business" means the business of the Acquired Companies.
"Acquired Companies" means the corporations listed on Schedule 1.1 to
this Agreement.
"Acquired Subsidiaries" means the corporations listed on Schedule 1.2
to this Agreement.
"Acquisition Indebtedness" means the following types of Indebtedness:
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(i) Indebtedness assumed in connection with an Asset
Acquisition;
(ii) Indebtedness of any Person that would become a
Subsidiary in connection with a Permitted
Acquisition;
(iii) Indebtedness incurred otherwise in order to finance,
or in connection with, a Permitted Acquisition.
"Additional Balloon Notes" means additional Balloon Notes issued by the
Company in lieu of cash payments of interest on the Balloon Notes in accordance
with the terms of the Balloon Notes.
"Adjusted EBITDA" means, for any period, EBITDA on a consolidated basis
for such period after giving effect to all Asset Acquisitions or Stock
Acquisitions consummated prior to the end of such period and the Asset
Acquisition or Stock Acquisition with respect to which the calculation of
Adjusted EBITDA is being prepared on a pro forma basis (as if all such
acquisitions were made on the first day of such period).
"Affiliate" means with respect to any specified Person: (i) any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person; (ii) any other Person that
owns, directly or indirectly, 20% or more of such specified Person's Capital
Stock or any officer or director of any such specified Person or other Person
or, with respect to any natural Person, any person having a relationship with
such Person by blood, marriage or adoption no more remote than first cousin; or
(iii) any other Person 20% or more of the Voting Stock of which is beneficially
owned or held directly or indirectly by such specified Person.
"Agreement" means this Agreement as it may from time to time be amended
or supplemented.
"Applicable Capital Expenditure Limit" means the amounts set forth on
Schedule 1.3 to this Agreement.
"Applicable Law" means all applicable laws, statutes, treaties, rules,
codes (including building codes), ordinances, regulations, certificates, orders
and licenses of, and official interpretations having the force of law by, any
Governmental Authority and judgments, decrees, injunctions, writs, permits, or
orders of any Governmental Authority (including ERISA, any Environmental Law and
any laws pertaining to health or safety) applicable to the Company, any of its
Subsidiaries or any of their property or operations.
"Asset Acquisition" means a purchase, lease or other acquisition of (a)
all or substantially all of the assets of any Person, (b) a division or business
of any Person or (c) assets that are substantial in relation to the Company and
its Subsidiaries taken as a whole.
"Asset Sale" means, except as provided in the next sentence, (A) any
sale, issuance, conveyance, transfer, lease or other disposition (including,
without limitation, by way of merger, consolidation or Sale and Leaseback
Transaction) (collectively, a "transfer"), directly or indirectly, in one or a
series of related transactions, of: (i) any Capital Stock of any Subsidiary;
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(ii) all or substantially all of the properties and assets of any division or
line of business of the Company or its Subsidiaries (including, without
limitation, any hospital owned or operated by the Company or any of its
Subsidiaries); or (iii) any other properties or assets of the Company or any
Subsidiary (including, without limitation, any hospital owned or operated by the
Company or any of its Subsidiaries) other than in the ordinary course of
business, or (B) any public offering of any debt or equity securities issued by
the Company or any of its Subsidiaries. For the purposes of this definition, the
term "Asset Sale" shall not include any transfer of properties and assets (a)
that is governed by the provisions described under Section 8.11; (b) that is by
the Company to any Subsidiary that is a Guarantor, or by any Subsidiary to the
Company or any Subsidiary that is a Guarantor in accordance with the terms of
this Agreement, (c) that is of obsolete or worn out equipment, inventory or
other assets in the ordinary course of business, (d) the Fair Market Value of
which does not exceed $100,000 per year, (e) consists of the sale of Capital
Stock of a Subsidiary that does not result in a "Change of Control" in such
Subsidiary (such defined term being used for purposes of this definition only as
if all references therein to the Company were instead to the applicable
Subsidiary), or (f) Non-Essential Real Property.
"Asset Sale Offer" is defined in Section 7.09(a).
"Asset Sale Offer Payment Date" is defined in Section 7.09(b).
"Assignment, Assumption and Indemnification Agreement" has the meaning
set forth in the Stock Purchase Agreement.
"Average Life to Stated Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding aggregate principal amount of such Indebtedness into (b) the sum of
the total of the products obtained by multiplying (i) the amount of each then
remaining installment, sinking fund, serial maturity or other required payment
of principal, including payment at final maturity, in respect thereof, by (ii)
the number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
"Authorized Financial Officer" of any Person means the chief financial
officer, chief accounting officer or controller of such Person.
"Balloon Note" means any 8.5% Senior Subordinated Note Due 2006 to be
issued by the Company to the Lender or any Noteholder under this Agreement,
which note shall be in substantially the form annexed to this Agreement as
Exhibit A.
"Bankruptcy Law" means Title 11 of the United States Code or any
similar federal or state bankruptcy, insolvency, reorganization or other law for
the relief of debtors.
"Board of Directors" means the Board of Directors of the Company or a
Subsidiary of the Company, as the case may be, or any authorized committee of
such Board of Directors.
"Bridge Lenders" means Fulcrum Advisory LLC, Geneva Associates Merchant
Banking Partners I, L.L.C., and Cimco, L.L.C., and each of their respective
successors and assigns, and Fulcrum Advisory LLC in its capacity as agent for
such Persons, and its successors and assigns in such capacity.
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"Bridge Loan Documents" means the Loan Agreement dated of even date
herewith among the Company, the Lenders party thereto from time to time and
Fulcrum Advisory LLC, as agent for such Lenders, and each agreement and other
document executed in connection therewith from time to time (as such agreements
and other documents may be amended, supplemented, restated, extended, or
otherwise modified from time to time).
"Business Day" means any day other than a Legal Holiday.
"Capital Expenditure" means, for any period, with respect to any
Person, any expenditure by such Person for the acquisition or leasing of fixed
or capital assets or additions to equipment (including replacements, capitalized
repairs and improvements) which are required to be capitalized under GAAP
consistently applied.
"Capital Stock" means, (i) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated and whether or not voting) of corporate stock, including
each class of common stock and preferred stock of such Person; (ii) with respect
to any Person that is not a corporation, any and all partnership, membership or
other equity interests of such Person; and (iii) any rights, warrants or options
exchangeable for or convertible into any of the foregoing.
"Capitalized Lease Obligation" means any obligation under a lease of
(or other agreement conveying the right to use) any property (whether real,
personal or mixed) that is required to be classified and accounted for as a
capital lease obligation under GAAP, and, for the purpose of this Agreement, the
amount of such obligation at any date shall be the capitalized amount thereof at
such date, determined in accordance with GAAP consistently applied.
"Cash Equivalents" means, at any time, (i) any evidence of Indebtedness
with a maturity of not more than one year issued or directly and fully
guaranteed or insured by the United States or any agency or instrumentality
thereof (provided that the full faith and credit of the United States is pledged
in support thereof); (ii) certificates of deposit or acceptances with a maturity
of not more than one year of any financial institution that is a member of the
Federal Reserve System having combined capital and surplus and undivided profits
of not less than $500,000,000; (iii) commercial paper with a maturity of not
more than one year issued by a corporation that is not an Affiliate of the
Company organized under the laws of any state of the United States or the
District of Columbia and rated at least A-1 by Standard & Poor's Corporation or
at least P-1 by ▇▇▇▇▇'▇ Investors Service, Inc.; and (iv) repurchase obligations
with a term of not more than seven days for underlying securities of the types
described in clauses (i) and (ii) above entered into with any financial
institution meeting the qualifications specified in clause (ii) above.
"Change of Control" means the occurrence of any of the following events
(whether or not approved by the Board of Directors of the Company): (i) any
"person" or "group" (as such terms are used in Sections 13(d) and 4(d) of the
Exchange Act), other than the Parent, is or becomes the "beneficial owner" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a Person
shall be deemed to have "beneficial ownership" of all securities that such
Person has the right to acquire, whether such right is exercisable immediately
or only after the passage of time), of 50% or more of the total voting power of
the then outstanding Voting Stock of the Company;
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provided, however, that any "person" or "group" (as such terms are used in
Sections 13(d) and 4(d) of the Exchange Act) being or becoming the "beneficial
owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that
a Person shall be deemed to have "beneficial ownership" of all securities that
such Person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), of 50% or more of the total
voting power of the then outstanding Voting Stock of the Parent, excluding the
effect of any change in beneficial ownership caused by the sale of equity
securities (A) offered to the public and registered under the Securities Act or
(B) sold in transactions exempt from registration to Persons who, after giving
effect to such change, individually or as member of a group acting in concert,
do not control the Company, shall not in and of itself be a Change of Control
for purposes of this definition; (ii) during any period of two consecutive
years, individuals who at the beginning of such period constituted the Board of
Directors of the Company (together with any new directors whose election to such
board or whose nomination for election by the stockholders of the Company was
approved by a vote of more than 50% of the directors then still in office who
were either directors at the beginning of such period or whose election or
nomination for election was previously so approved), cease for any reason to
constitute a majority of such Board of Directors then in office; (iii) the
Company consolidates with or merges with or into any Person or sells, assigns,
conveys, transfers, leases or otherwise disposes of all or substantially all of
its direct or indirect assets to any Person, or any corporation consolidates
with or merges into or with the Company, in any such event pursuant to a
transaction in which the outstanding Voting Stock of the Company is changed into
or exchanged for cash, securities or other property, other than any such
transaction where (A) no "person" or "group," other than the Parent, owns
immediately after such transaction, directly or indirectly, 50% or more of the
total voting power of the then outstanding Voting Stock of the surviving
corporation and (B) the holders of the Voting Stock of the Company immediately
prior to such transaction own, directly or indirectly, not less than a majority
of the total voting power of the then outstanding Voting Stock of the surviving
corporation immediately after such transaction; or (iv) any order, judgment or
decree shall be entered against the Company decreeing the dissolution or split
up of the Company and such order shall remain undischarged or unstayed for a
period in excess of sixty days.
"Change of Control Offer" is defined in Section 7.08(a).
"Change of Control Payment" is defined in Section 7.08(a).
"Change of Control Payment Date" is defined in Section 7.08(b).
"Closing Time" is defined in Section 2.02.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the rules and regulations promulgated thereunder from time to time.
"Collateral" is defined in Section 9.01(a).
"Commission" means the Securities and Exchange Commission, as from time
to time constituted, created under the Exchange Act or, if at any time after the
execution of this
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Agreement such Commission is not existing and performing the duties now assigned
to it under the Exchange Act, the body performing such duties at such time.
"Company" shall have the meaning assigned in the preamble to this
Agreement and its successors and permitted assigns.
"Consolidated" or "consolidated" (including the correlative term
"consolidation") or on a "consolidated basis", when used with reference to any
financial term in this Agreement (but not when used with respect to any Tax
Return or tax liability), means the aggregate for two or more Persons of the
amounts signified by such term for all such Persons, with inter-company items
eliminated and, with respect to net income or earnings, after eliminating the
portion of net income or earnings properly attributable to minority interests,
if any, in the capital stock of any such Person or attributable to shares of
preferred stock of any such Person not owned by any other such Person, in
accordance with GAAP.
"Consolidated Interest Expense" means, for any period, with respect to
any Person, the total interest expense of that Person for such period, plus, to
the extent not included in such total interest expense, and to the extent
incurred by the Company or its Subsidiaries during such period, (a) interest
expense attributable to capital leases, (b) amortization of debt discount and
debt issuance cost, including commitment fees, (c) capitalized interest, (d)
non-cash interest expense (other than with respect to the Notes), (e)
commissions, discounts and other fees and charges owed with respect to letters
of credit and banker's acceptance financing, (f) net costs associated with
Hedging Obligations (including amortization of fees), (g) interest incurred in
connection with investments in discontinued operations and (h) interest accruing
on Indebtedness of any other Person to the extent such interest is guaranteed by
the Company or any Subsidiary of the Company.
"Consolidated Net Income" shall mean, with respect to any Person, for
any period, net income or loss of that Person for such period, as determined on
a consolidated basis in accordance with GAAP, provided that there shall in any
event be excluded (a) the income (or loss) of any Person accrued prior to the
date it becomes a Subsidiary or is merged into or consolidated with the Company
or any Subsidiary or the date that person's assets are acquired by the Company
or any Subsidiary, (b) any gain or loss realized upon any Asset Sale, provided
that any tax benefit or tax liability resulting therefrom shall also be excluded
in calculating such Consolidated Net Income, (c) any extraordinary gain or loss,
provided that any tax benefit or tax liability resulting therefrom shall also be
excluded in calculating such Consolidated Net Income, (d) the cumulative effect
of a change in accounting principles and (e) any non-cash compensation expense
realized for grants of performance shares, stock options or other stock awards
to officers, directors and employees of the Company or the Subsidiaries of the
Company.
"Consolidated Net Worth" with respect to any Person means the equity of
the holders of Capital Stock of such Person and its Subsidiaries (excluding any
Redeemable Capital Stock), as reflected in a balance sheet of such Person
determined on a consolidated basis.
"Contract" is defined in Section 4.05.
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"control" (including, without limitation, the terms "controlling",
"controlled by" and "under common control with") means the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of securities, by contract,
or otherwise.
"Custodian" means any custodian, receiver, trustee, assignee,
liquidator, sequestrator or similar official under any Bankruptcy Law.
"Default" means any event, act or condition that is, or with the giving
of notice, lapse of time or both would constitute an Event of Default.
"Designated Senior Indebtedness" means (x) all Senior Indebtedness owed
to any Bridge Lender, and (y) all Senior Indebtedness of the Company or any
Guarantor which both (i) either (A) at the time of determination is in an amount
equal to or in excess of $2,500,000 or (B) at the time of determination is in an
amount equal to or in excess of $750,000 if at any time during its term it was
in an amount equal to or in excess of $2,500,000 (it being agreed that for
purposes of the measurements under this clause (i), any revolving credit
facility shall be deemed to be in the amount that is available for drawdown at
the time of such measurement), and (ii) is specifically designated in the
instrument governing such Senior Indebtedness as "Designated Senior
Indebtedness" by the Company or such Guarantor, as the case may be.
"Disclosure Schedule" means all numbered Schedules to this Agreement.
"EBITDA " means, for any period, an amount equal to, for the applicable
Person, (a) the sum of Consolidated Net Income for such period, plus, without
duplication and to the extent deducted from revenues in determining Consolidated
Net Income for such period: (i) the provision for taxes based on income or
profits or utilized in computing net loss, (ii) Consolidated Interest Expense,
(iii) depreciation, (iv) amortization, (v) any other non-cash charges (other
than any such non-cash charges to the extent that it represents an accrual of or
reserve for cash expenditures in any future period), and (vi) non-recurring
costs associated with Asset Acquisitions and/or Stock Acquisitions minus (b) all
non-cash gains included in Consolidated Net Income for such period (other than
any such non-cash gains to the extent that it will result in the receipt of cash
payments in any future period).
"Enforceability Exceptions" means, with respect to any specified
obligation, any limitations on the enforceability of such obligation due to
bankruptcy, insolvency, reorganization, moratorium, and other similar laws of
general applicability relating to or affecting creditors' rights or general
equity principles (other than, in any such case, any Federal or state laws
relating to fraudulent transfers).
"Environmental Law" means any federal, state, local or foreign statute,
law, ordinance, rule, regulation, code, order, writ, judgment, injunction,
decree or judicial or written agency interpretation, policy or guidance that has
the force and effect of law relating to pollution or protection of the
environment, public health and safety or natural resources, including, without
limitation, those relating to the use, handling, transportation, treatment,
storage, disposal, release or discharge of Hazardous Materials.
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"ERISA" means the Employee Retirement Income Security Act of 1974, as
the same may be amended from time to time.
"Event of Default" is defined in Section 11.01.
"Excess Proceeds" is defined in Section 8.05(b).
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated by the Commission thereunder.
"Fair Market Value" means, with respect to any asset or property, the
price which could be negotiated in an arm's-length transaction, for cash,
between an informed and willing seller under no compulsion to sell and an
informed and willing buyer under no compulsion to buy. Fair Market Value shall
be determined by the Board of Directors of the Company or the applicable
Subsidiary of the Company acting in good faith evidenced by a board resolution
thereof delivered to the Noteholders.
"GAAP" means, at any date of determination, generally accepted
accounting principles in effect in the United States which are applicable at the
date of determination and which are consistently applied for all applicable
periods.
"Governmental Authority" means (a) the government of the United States
or any State or other political subdivision thereof, (b) any government or
political subdivision of any other jurisdiction in which the Company or any
Subsidiary conducts all or any part of its business, or which asserts
jurisdiction over any properties of the Company or any Subsidiary or (c) any
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to, any such government.
"guarantee" means, as applied to any obligation, (i) a guarantee (other
than by endorsement of negotiable instruments for collection in the ordinary
course of business), direct or indirect, in any manner, of any part or all of
such obligation and (ii) an agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way the payment or
performance (or payment of damages in the event of non-performance) of all or
any part of such obligation, including, without limiting the foregoing, the
payment of amounts drawn down by letters of credit. A guarantee shall include,
without limitation, any agreement to maintain or preserve any other Person's
financial condition or to cause any other Person to achieve certain levels of
operating results.
"Guarantee Payment" is defined in Section 14.06.
"Guarantor Payment Blockage Period" is defined in Section 14.07.
"Guarantor Proceeding" is defined in Section 14.06.
"Guarantor Senior Non-Payment Default" is defined in Section 14.07.
"Guarantor Senior Payment Default" is defined in Section 14.07.
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"Guarantors" means any Subsidiary which becomes a guarantor of the
Notes, including any Person that executes or is required after the Closing Time
to execute a guarantee of the Notes pursuant to Section 8.13 until a successor
replaces such party pursuant to the applicable provisions of this Agreement and,
thereafter, shall mean such successor.
"Hedging Obligations" means, with respect to any Person, the net
payment obligations of such Person under (a) Interest Rate Agreements and (b)
other agreements or arrangements entered into in order to protect such Person
against fluctuations in commodity prices, interest rates or currency exchange
rates.
"Incur" is defined in Section 8.04(a).
"Indebtedness" means, with respect to any Person, without duplication,
(a) all obligations of such Person for borrowed money or with respect to
deposits or advances of any kind, (b) all obligations of such person evidenced
by bonds, debentures, notes or similar instruments, (c) all obligations of such
person upon which interest charges are customarily paid, (d) all obligations of
such person under conditional sale or other title retention agreements relating
to property or assets purchased by such Person, (e) all obligations of such
person issued or assumed as the deferred purchase price of property or services
(excluding trade accounts payable and accrued obligations incurred in the
ordinary course of business), (f) all Indebtedness of others secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien on property owned or acquired by such
Person, whether or not the obligations secured thereby have been assumed (the
amount of any such Indebtedness being deemed to equal the Fair Market Value of
such property), (g) all guarantees by such Person of Indebtedness of others (the
amount of any such Indebtedness being deemed to equal the maximum amount for
which such Person could be liable), (h) all Capitalized Lease Obligations of
such Person, (i) all net Hedging Obligations of such Person and (j) all
obligations of such Person as an account party in respect of letters of credit
and banker's acceptances (other than trade letters of credit). The Indebtedness
of any Person shall include the Indebtedness of any partnership in which such
person is a general partner.
"Indemnified Person" is defined in Section 15.02.
"Institutional Investor" means (a) any original Lender of a Note and
any transferee that is an Affiliate of any original Lender, (b) any holder of a
Note holding more than 25% of the aggregate principal amount of the Notes then
outstanding, and (c) any bank, trust company, savings and loan association or
other financial institution, any pension plan, any investment company or
investment fund, any insurance company, any broker or dealer, or any other
similar financial institution or entity, regardless of legal form organized
under the laws of the United States or a State thereof, with capital and surplus
in excess of $50,000,000.
"Interest Payment Date" with respect to any Balloon Note, has the
meaning set forth in Exhibit A to this Agreement, and with respect to any Zero
Coupon Note, has the meaning set forth in Exhibit B to this Agreement.
"Interest Rate Agreements" means one or more of the following
agreements which shall be entered into by one or more financial institutions:
obligations of any Person pursuant to any
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arrangement with any other Person whereby, directly or indirectly, such Person
is entitled to receive from time to time periodic payments calculated by
applying either a floating or a fixed rate of interest on a stated notional
amount in exchange for periodic payments made by such Person calculated by
applying a fixed or a floating rate of interest on the same notional amount or
any other arrangement involving payments by or to such Person based upon
fluctuations in interest rates (including, without limitation, interest rate
swaps, caps, floors, collars and similar agreements) and/or other types of
interest rate hedging agreements from time to time.
"Investment" means, with respect to any Person, any direct or indirect
advance, loan or other extension of credit (including by means of a guarantee)
or capital contribution to (by means of any transfer of cash or other property
to others or any payment for property or services for the account or use of
others or otherwise), or any purchase or acquisition by such Person of any
Capital Stock, bonds, notes, debentures or other securities or evidences of
Indebtedness issued by any other Person and all other items that would be
classified as investments on a balance sheet prepared in accordance with GAAP.
Investments shall exclude extensions of trade credit on commercially reasonable
terms in accordance with normal trade practices. Any Hedging Obligation or
similar agreement shall constitute an Investment.
"Junior Creditors" is defined in Section 13.01.
"Junior Indebtedness" is defined in Section 13.01.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in The City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If any payment date in
respect of the Notes is a Legal Holiday at a place of payment, payment may be
made at that place on the next succeeding day that is not a Legal Holiday, and
no interest shall accrue for the intervening period.
"Lien" means any mortgage or deed of trust, charge, pledge, lien
(statutory or other), security interest, hypothecation, assignment for security,
claim, deposit arrangement, or preference or priority or other encumbrance upon
or with respect to any property of any kind (including any conditional sale,
capital lease or other title retention agreement, any leases in the nature
thereof, and any agreement to give any security interest), of any nature
whatsoever, whether real, personal or mixed, movable or immovable, now owned or
hereafter acquired. A Person shall be deemed to own subject to a Lien any
property which it has acquired or holds subject to the interest of a vendor or
lessor under any conditional sale agreement, capital lease or other title
retention agreement.
"Material Adverse Effect" means a material adverse effect on (a) the
business, operations, affairs, condition (financial or otherwise), assets,
property, or results of operations of the Company and its Subsidiaries taken as
a whole, (b) the ability of the Company or any Subsidiary to perform any of its
material obligations under any of the Transaction Documents, or (c) the validity
or enforceability (i) of any Security Document or (ii) against the Company or
any Subsidiary of any material obligation under the Transaction Documents.
"Material Contracts" means any agreements, contracts or arrangements
between the Company or its Subsidiaries, on the one hand, and any third parties,
on the other, that are
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material to the business, operations, affairs, condition (financial or
otherwise), properties, assets, prospects or results of operations of the
Company and its Subsidiaries, taken as a whole.
"Maturity," when used with respect to any Note, means the date on which
the principal of such Note becomes due and payable as therein or herein
provided, whether at the Stated Maturity or by declaration of acceleration, call
for redemption or otherwise (including in connection with any offer to purchase
that this Agreement requires the Company to make).
"Multiemployer Plan" means a multiemployer plan as defined in Section
4001 (a)(3) of ERISA.
"Net Cash Proceeds" means (a) with respect to any Asset Sale by any
Person, the proceeds thereof (without duplication) in the form of cash or Cash
Equivalents including payments in respect of deferred payment obligations when
received in the form of cash or Cash Equivalents (except to the extent that such
obligations are financed or sold with recourse to the Company or any Subsidiary)
net of (i) brokerage commissions and other reasonable fees and expenses
(including fees and expenses of legal counsel and investment bankers) related to
such Asset Sale, (ii) provisions for all taxes payable as a result of such Asset
Sale, (iii) payments made to retire Indebtedness where payment of such
Indebtedness is secured by the assets or properties the subject of such Asset
Sale, (iv) amounts required to be paid to any Person (other than the Company or
any Subsidiary) owning a beneficial interest in or having a Lien on the assets
subject to the Asset Sale and (v) appropriate amounts to be provided by the
Company or any Subsidiary, as the case may be, as a reserve, in accordance with
GAAP, against any liabilities associated with such Asset Sale and retained by
the Company or any Subsidiary, as the case may be, after such Asset Sale,
including, without limitation, pension and other post-employment benefit
liabilities, liabilities related to environmental matters and liabilities under
any indemnification obligations associated with such Asset Sale (provided that
the amount of any such reserves shall be deemed to constitute Net Cash Proceeds
at the time such reserves shall have been released or are not otherwise required
to be retained as a reserve) and (b) with respect to any issuance or sale of
Capital Stock or Subordinated Indebtedness, the proceeds of such issuance or
sale in the form of cash or Cash Equivalents including payments in respect of
deferred payment obligations when received in the form of, or stock or other
assets when disposed of for, cash or Cash Equivalents (except to the extent that
such obligations are financed or sold with recourse to the Company or any
Subsidiary), net of attorney's fees, accountant's fees and brokerage,
consultation, underwriting and other fees and expenses actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result thereof.
"New Senior Indebtedness" is defined in Section 9.02(b).
"Non-Essential Real Property" means real property of the Company or any
Subsidiary that (i) is not itself, or a part of, any building that is a hospital
or the land immediately under any such building or a parking facility for any
such building (unless, in the case of any such parking facility,
contemporaneously with the applicable Asset Sale, such parking facility is
replaced or a binding agreement is entered into for its replacement within 30
days of the applicable Asset Sale), (ii) the loss of use of which by the Company
and its Subsidiaries in the ordinary course would not have a material adverse
affect on the operations of any hospital or the Companies and
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its Subsidiaries taken as a whole, and (iii) that is not material to the Company
and its Subsidiaries taken as a whole.
"Noteholder" means a Person in whose name a Note is registered on the
Security Register; provided, however, that for the purposes of Section 13 and
Section 14 hereof, "Noteholder" includes any obligee with respect to any Note or
any Indebtedness evidenced thereby, whether or not registered on the Security
Register.
"Notes" means the Zero Coupon Note and any Balloon Note issued in
accordance with this Agreement or any such Note.
"Notes Payment" is defined in Section 13.02.
"Notice of Default" is defined in Section 11.01(c).
"Objecting Senior Lender" is defined in Section 9.02(b).
"Obligations" means the principal of, and premium and interest, on the
Notes and all other liabilities or other obligations of the Company or any other
Guarantor to the Noteholders under the Notes, this Agreement and the other
Transaction Documents.
"Offer Amount" is defined in Section 7.09(b).
"Officer" means, with respect to any Person, the President, Chief
Executive Officer, Chief Financial Officer or the Controller of such Person.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Officers of such Person; provided, however, that every
Officers' Certificate with respect to compliance with a covenant or condition
provided for in this Agreement shall include (i) a statement that the Officers
making or giving such Officers' Certificate have read such condition and any
definitions or other provisions contained in this Agreement relating thereto and
(ii) a statement as to whether, in the opinion of the signers, such conditions
have been complied with.
"Original Balloon Note" means the Balloon Note to be issued by the
Company to the Lender on the date of this Agreement in the original principal
amount of $17,000,000 as the same may be amended or reissued from time to time
in accordance with this Agreement.
"Original Zero Coupon Note" means the Zero Coupon Note to be issued by
the Company to the Lender on the date of this Agreement in the amount of
$2,000,000 as the same may be amended or reissued from time to time in
accordance with this Agreement.
"outstanding," when used with respect to the Notes, means, as of the
date of determination, all Notes theretofore executed and delivered under this
Agreement, except:
(i) Notes theretofore canceled by the Company or
delivered to the Company for cancellation;
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(ii) Notes for whose payment or redemption money in the
necessary amount has been theretofore set aside by the Company with a
third party in trust for the holders of such Notes; provided that if
such Notes are to be redeemed, notice of such redemption has been duly
given as provided in this Agreement; and
(iii) Notes which have been issued pursuant to Section
10.08 or in exchange for or in lieu of which other Notes have been
executed and delivered pursuant to this Agreement, other than any such
Notes in respect of which there shall have been presented to the
Company proof satisfactory to it that such Notes are held by a bona
fide purchaser in whose hands such Notes are valid obligations of the
Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of the outstanding Notes have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Notes owned by
the Company or any other obligor upon the Notes or any Affiliate of the Company
or of such other obligor shall be disregarded and deemed not to be outstanding.
Notes so owned which have been pledged in good faith may be regarded as
outstanding if the pledgee establishes to the reasonable satisfaction of the
Required Holders the pledgee's right so to act with respect to such Notes and
that the pledgee is not the Company or any other obligor upon the Notes or any
Affiliate of the Company or of such other obligor.
"Parent" means ▇▇▇▇ International Corp., a Delaware corporation.
"Payment Blockage Period" is defined in Section 13.03.
"Payment Default" is defined in Section 11.01(f).
"Permits" means all licenses, permits, certificates of need, approvals
and authorizations from all Governmental Authorities required to lawfully
conduct the business of the Company and its Subsidiaries.
"Permitted Acquisition" means an Asset Acquisition or a Stock
Acquisition which in either case satisfies each of the following conditions:
(a) the Lender and each Noteholder shall receive at least
30 days prior written notice of such proposed Permitted Acquisition,
which notice shall include a description in reasonable detail of such
proposed Permitted Acquisition including, without limitation, financial
statements of the Target (or to the extent reasonably feasible, the
division, assets or business proposed to be acquired), a brief
description of the business rationale of such acquisition, and a
certification on behalf of the Company that such proposed acquisition
constitutes a Permitted Acquisition together with the applicable
calculations substantiating such certification;
(b) with respect to any single acquisition or series of
related acquisitions, at least 75% of the revenues of the subject of
such acquisition or series of related acquisitions for the four fiscal
quarters most recently ended shall be attributable to operations
located in the United States;
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(c) in the case of an Asset Acquisition, such assets
shall comprise a healthcare provider business (or assets of such a
business) or a business (or assets of such a business) which is a
related or complementary to the business of the Company and its
Subsidiaries; and in the case of a Stock Acquisition, the business of
the Target shall be the provision of healthcare, or which is a related
or complementary business to that of the Company and its Subsidiaries;
provided, however, that no such acquisition would require the Lender or
any Noteholder to obtain regulatory or third party approvals in
connection with the exercise of its rights and remedies under this
Agreement or the Notes other than approvals required for the exercise
of such rights and remedies with respect to the Company prior to such
Permitted Acquisition;
(d) in the case of a Stock Acquisition, after giving
effect thereto, the Target will either be merged with and into the
Company, or shall be a Wholly Owned Subsidiary of the Company;
provided, however, that management and pre-acquisition holders of the
Equity Interests of the Target may own up to 49% in the aggregate of
the Equity Interests of such Subsidiary following such Permitted
Acquisition;
(e) in the case of a Stock Acquisition, such Permitted
Acquisition shall be consensual and shall have been approved by the
Target's board of directors;
(f) no additional Indebtedness, guarantees, or other
liabilities shall be incurred, assumed or otherwise be reflected on a
consolidated balance sheet of the Company after giving effect to such
Permitted Acquisition, except (i) Indebtedness and operating leases
permitted under Section 8.04, (ii) ordinary course trade payables and
accrued expenses and reserves of the Target and (iii) accrued
acquisition expenses of the Company related to the Permitted
Acquisition;
(g) the sum of all amounts paid or payable in connection
with all Permitted Acquisitions (including all transaction costs and
all Indebtedness and guarantees and other contingent obligations
incurred or assumed in connection therewith (whether or not reflected
on a consolidated balance sheet of the Company) after giving effect to
the Permitted Acquisition) shall not exceed the following amount in the
aggregate:
(x) from the date of the first issuance of the
Notes until the expiration of the PIK
Period, $5,000,000; provided, however, that
with respect to any such proposed Permitted
Acquisition, all Acquisition Indebtedness
shall qualify as Senior Indebtedness under
clause (i) of the definition thereof and
shall be applied against the basket set
forth in clause (i) of that definition;
(y) if the PIK Period expires prior to January
1, 2003, then from the date of the first
issuance of the Notes until January 1, 2003,
a cumulative total of $10,000,000; provided,
however, that with respect to any proposed
Permitted Acquisition, the Permitted
Acquisition Test Ratios are satisfied;
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(z) from January 1, 2003 until the indefeasible
payment in full in cash of the entire
principal amount of the Notes and all
accrued interest thereon, an additional
$25,000,000; provided, however, that with
respect to any proposed Permitted
Acquisition, the Permitted Acquisition Test
Ratios are satisfied;
(h) the business and assets acquired in such Permitted
Acquisition shall be free and clear of all Liens (other than Liens
permitted under Section 8.08);
(i) at the time of such Permitted Acquisition and after
giving effect thereto, (A) no Default of the type referenced in Section
11.01(a), (b) or (h) or Event of Default shall have occurred and be
continuing or (B) there shall have not occurred and be continuing a
default under Sections 7.08, 7.09, 8.02, 8.04(a), 8.05, 8.09(b) or
8.13.
Notwithstanding the immediately preceding clauses (a) through (i), an
Asset Acquisition or a Stock Acquisition will be deemed a Permitted Acquisition
if approved in writing by the Lender or the Required Holders.
"Permitted Acquisition Test Ratio" means with respect to any given
proposed Permitted Acquisition that:
(a) the ratio of all Acquisition Indebtedness that is
Senior Indebtedness and is to be incurred in connection with or as a
result of such proposed Permitted Acquisition to EBITDA generated by
the subject of such proposed Permitted Acquisition shall not be more
than 3.5:1; and
(b) the ratio of Adjusted EBITDA for the Company and its
consolidated Subsidiaries for the twelve-month period ending on the
anticipated date of the proposed Permitted Acquisition, on a pro forma
basis after giving effect to such proposed Permitted Acquisition, to
Consolidated Interest Expense for the same period, on a pro forma basis
after giving effect to such proposed Permitted Acquisition, shall not
be less than 2.5:1; and
(c) if the Average Life to Stated Maturity of any
Acquisition Indebtedness to be incurred in connection with the proposed
Permitted Acquisition shall be less than the Average to Stated Maturity
of the Notes, then immediately after giving effect to the proposed
acquisition, the total Indebtedness of the Companies and its
Subsidiaries on a consolidated basis divided by the sum of the total
Indebtedness of the Companies and its Subsidiaries on a consolidated
basis and Consolidated Net Worth of the Company and its Subsidiaries
shall not be greater than 0.75.
"Permitted Indebtedness" is defined in Section 8.04(b)
"Permitted Investments" means (a) any Investment by the Company or any
Subsidiary of the Company in the Company or in a Wholly Owned Subsidiary of the
Company that is a Guarantor; (b) any Investment in cash and Cash Equivalents;
(c) any Investment by the Company or any Subsidiary of the Company in a Person,
if as a result of such Investment (i) such Person becomes a Subsidiary of the
Company and a Guarantor or (ii) such Person is merged,
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consolidated or amalgamated with or into, or transfers or conveys all or
substantially all of its assets to, or is liquidated into, the Company or a
Subsidiary of the Company that is a Guarantor; (d) any Investment made as a
result of the receipt of non-cash consideration from an Asset Sale that was made
pursuant to and in compliance with the provisions of Section 8.05 hereof; (e)
loans and advances to employees and officers of the Company and its Subsidiaries
in the ordinary course of business not to exceed $50,000 at any one time
outstanding; (f) investments in securities of trade creditors or customers
received pursuant to any plan of reorganization or similar arrangement upon the
bankruptcy or insolvency of such trade creditors or customers; (g) Investments
represented by Hedging Obligations; (h) Investments existing at the Closing Time
after giving effect to the Transaction; and (i) Investments in Permitted
Acquisitions to the extent not otherwise permitted by clauses (a), (c) or (e)
above.
"Permitted Liens" means (i) Liens securing Senior Indebtedness or Liens
securing the Notes and the Subsidiary Guarantees; (ii) Liens in favor of the
Company; (iii) Liens on property of a Person existing at the time such Person is
merged into or consolidated with the Company or any Subsidiary of the Company;
provided, however, that such Liens were in existence prior to the contemplation
of such merger or consolidation and do not extend to any assets other than those
of the Person merged into or consolidated with the Company; (iv) Liens on
property existing at the time of acquisition thereof by the Company or any
Subsidiary of the Company; provided, however, that such Liens were in existence
prior to the contemplation of such acquisition; (v) Liens existing on the date
of this Agreement; (vi) Liens incurred in the ordinary course of business of the
Company or any Subsidiary of the Company with respect to obligations that do not
exceed $5.0 million at any one time outstanding and that (A) are not incurred in
connection with the borrowing of money or the obtaining of advances or credit
(other than trade credit in the ordinary course of business) and (B) do not in
the aggregate materially detract from the value of the property or materially
impair the use thereof in the operation of business by the Company or such
Subsidiary; and (vii) Liens securing Indebtedness incurred to refinance
outstanding Indebtedness; provided, however, that any such Lien does not extend
to or cover any property or assets than the property and assets securing the
Indebtedness so refinanced.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"PIK Period" means the period commencing on the date that the Original
Balloon Note is first issued and ending upon the earlier to occur of: (i) at
12:01 am on February 1, 2003 and (ii) the payment in cash in full of the entire
outstanding principal amount of all Additional Balloon Notes and all accrued but
unpaid interest thereon.
"Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 307 of ERISA, and in respect of which the Company or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"Pledge Agreement" means the Pledge Agreement in the form annexed
hereto as Exhibit C, pursuant to which, among other things, the Company and each
Subsidiary pledges
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to the Lender, as security for the performance of the Obligations, all the
outstanding Capital Stock of any Subsidiary owned by it.
"Predecessor Note" of any particular Note means every previous Note
evidencing all or a portion of the same debt as that evidenced by such
particular Note.
"Proceeding" is defined in Section 13.02.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
"PUHCA" is defined in Section 4.08.
"Purchase Money Obligation" means Indebtedness of a Person incurred in
the normal course of business of such Person for the purpose of financing all or
any part of the purchase price, or the cost of installation, construction or
improvement of any property.
"Qualified Capital Stock" of any Person means any and all Capital Stock
of such Person other than Redeemable Capital Stock.
"Redeemable Capital Stock" means any class or series of Capital Stock
to the extent that, either by its terms, by the terms of any security into which
it is convertible or exchangeable, or by contract or otherwise, is or upon the
happening of an event or passage of time would be, required to be redeemed prior
to any Stated Maturity of the principal of any of the Notes or is redeemable at
the option of the holder thereof at any time prior to any such Stated Maturity,
or is convertible into or exchangeable for debt securities at any time prior to
any such Stated Maturity.
"Redemption Date," when used with respect to any Note to be redeemed,
means the date fixed for such redemption by or pursuant to this Agreement.
"Redemption Price," when used with respect to any Note to be redeemed,
means the price at which it is to be redeemed pursuant to this Agreement.
"Regular Record Date" is defined in Section 10.05.
"Required Holders" means Noteholders holding more than 51% of the
aggregate principal amount of outstanding Notes.
"Restricted Payments" is defined in Section 8.02.
"Rule 144" means Rule 144 under the Securities Act (or any successor
provision), as it may be amended from time to time.
"Securities Act" mean the Securities Act of 1933, as amended, and the
rules and regulations promulgated by the Commission thereunder.
"Security Agreement" means the Security Agreement in the form annexed
hereto as Exhibit D, pursuant to which, among other things, the Company and each
Subsidiary grants the
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Lender a security interest in all its assets and properties, as security for the
performance of the Obligations.
"Security Document" means agreement, instrument or other document
executed and delivered pursuant to this Agreement in connection with the
granting or perfection of the security interests to be granted pursuant to
Section 9 of this Agreement.
"Security Register" has the meaning given to such term in Section
10.06(a).
"Senior Indebtedness" means, with respect to the Company or any
Guarantor, the principal of, premium, if any, interest on and any other amount
payable with respect to any Indebtedness of the Company or such Guarantor, as
the case may be, that is owing to a Person who is not the Company, its
Subsidiaries or any of their respective Affiliates and either (i) is in an
aggregate amount (when added to the amount of all other Senior Indebtedness
qualifying as such under this clause (i) for the Company and all Guarantors) of
not more than $15,000,000, is owed to one or more banks, insurance companies,
mutual funds or other financial or lending institutions that make loans to
Persons such as the Company and its Subsidiaries in the ordinary course of their
business under or in connection with any credit arrangement (including, without
limitation, the Bridge Lenders), secured by the assets of the Company or such
Guarantor, identified in the documentation of such credit arrangement as "Senior
Indebtedness," and is not Acquisition Indebtedness (other than Acquisition
Indebtedness of the type referred to in sub-clause (x) of clause (g) of the
definition of Permitted Acquisition), or (ii) is Acquisition Indebtedness
incurred in connection with or as a result of a Permitted Acquisition other than
(A) Acquisition Indebtedness of the type referred to in sub-clause (x) of clause
(g) of the definition of Permitted Acquisition and (B) Acquisition Indebtedness
that would qualify as Subordinated Indebtedness and is expressly stated in the
instrument evidencing the same to be Subordinated Indebtedness, as such
Indebtedness, in the case of clause (i) or (ii), may be amended, supplemented,
modified, refinanced or replaced from time to time; provided, however, no
Acquisition Indebtedness that is amended, supplemented, modified, refinanced or
replaced with the effect that the principal thereof is increased, to the extent
of such increase in principal, shall continue to be Senior Indebtedness unless,
at and as of the time of such amendment, supplement, modification, refinancing
or replacement, the Permitted Acquisition Test Ratios are satisfied with respect
to the Permitted Acquisition to which such Acquisition Indebtedness relates.
Without in any way affecting the foregoing, the following shall not constitute
Senior Indebtedness: (i) Indebtedness evidenced by the Notes or the Subsidiary
Guarantees, (ii) Indebtedness that is subordinate or junior in right of payment
to any Indebtedness of the Company or any Guarantor, (iii) Indebtedness which,
when incurred and without respect to any election under Section 1111(b) of ▇▇▇▇▇
▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code, is without recourse to the Company or any Guarantor,
(iv) Indebtedness which is represented by Redeemable Capital Stock, (v)
Indebtedness for goods, materials or services purchased in the ordinary course
of business or Indebtedness consisting of trade payables or other current
liabilities (other than any current liabilities owing under this Agreement or
the current portion of any long-term Indebtedness which would constitute Senior
Indebtedness but for the operation of this clause (v)), (vi) Indebtedness of or
amounts owed by the Company or any Guarantor for compensation to employees or
for services rendered to the Company or such Guarantor, (vii) any liability for
federal, state, local or other taxes owned or owing by the Company or any
Guarantor, (viii) Indebtedness of the Company or any Guarantor to a Subsidiary
of the Company, and
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(ix) that portion of any Indebtedness which at the time of issuance is issued in
violation of this Agreement.
"Senior Non-Payment Default" is defined in Section 13.03.
"Senior Payment Default" is defined in Section 13.03.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date hereof.
"Stated Maturity" means, with respect to any Note or any installment of
interest thereon, the dates specified in such Note as the fixed date on which
the principal of such Note or such installment of interest is due and payable,
and when used with respect to any other Indebtedness, means the date specified
in the instrument governing such Indebtedness as the fixed date on which the
principal of such Indebtedness or any installment of interest is due and
payable.
"Stock Acquisition" means an acquisition of Capital Stock in any
Person.
"Stock Purchase Agreement" has the meaning set forth in the recitals to
this Agreement.
"Stock Purchase Closing" means the "Closing", which for purposes of
this definition only shall have the meaning set forth in the Stock Purchase
Agreement.
"Subordinated Indebtedness" means, with respect to the Company,
Indebtedness of the Company which is expressly subordinated in right of payment
to the Notes or, with respect to any Subsidiary, Indebtedness of such Subsidiary
which is expressly subordinated in right of payment to the Subsidiary Guarantee
of such Subsidiary, and in each case, on terms no less favorable to the holders
of Notes as the Notes are subordinated to permitted Senior Indebtedness pursuant
to Section 13 this Agreement; provided, however, that Indebtedness that (i)
provides for a maturity that is earlier than the day after the maturity of the
Balloon Notes and/or (ii) requires any payment to be made in respect of the
principal thereof at any time prior to the day after the maturity of the Balloon
Notes, shall not qualify as Subordinated Indebtedness.
"Subsidiary" means, with respect to any Person, (a) any corporation of
which the outstanding shares of Voting Capital Stock having at least a majority
of the votes entitled to be cast in the election of directors shall at the time
be owned, directly or indirectly, by such Person, (b) any other Person of which
at least a majority of the shares of voting Capital Stock are at the time,
directly or indirectly, owned by such first named Person or (c) an Affiliates
controlled by such Person, directly or indirectly.
"Subsidiary Guarantees" means all guarantees in substantially the form
annexed to this Agreement as Exhibit E to be issued pursuant to this Agreement.
"Successor Company" is defined in Section 8.11.
"Target" means the issuer of the Capital Stock which is the subject of
a proposed Permitted Acquisition.
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"Tax Returns" means all reports and returns required to be filed on,
before or after the Closing Time with respect to the Taxes of the Company
including, without limitation, consolidated federal income tax returns of the
Company.
"Taxes" means all federal, state, local or foreign income, gross
receipts, windfall profits, severance, property, production, sales, use,
license, excise, franchise, employment, withholding or similar taxes imposed on
the income, properties or operations of the Company and its Subsidiaries,
together with any interest, additions or penalties with respect thereto and any
interest in respect of such additions or penalties.
"Transaction Documents" means collectively, this Agreement, the Notes,
the Security Agreement, the Pledge Agreement, Stock Purchase Agreement, the
Assignment, Assumption and Indemnification Agreement and all agreements,
certificates, instruments, financial and other statements and other documents
made or delivered in connection herewith and therewith.
"Transactions" means the transactions contemplated by the Transaction
Documents.
"Voting Stock" means any class or classes of Capital Stock pursuant to
which the holders thereof have the general voting power under ordinary
circumstances to elect at least a majority of the Board of Directors, managers
or trustees of any Person (irrespective of whether or not, at the time, stock of
any other class or classes shall have, or might have, voting power by reason of
the happening of any contingency).
"Wholly Owned Subsidiary" means any Subsidiary of which 100% of the
outstanding Capital Stock is owned by the Company and/or another Wholly Owned
Subsidiary.
"Zero Coupon Note" means any Zero Coupon Senior Subordinated Note Due
2004 to be issued by the Company to the Lender under this Agreement, which note
shall be in substantially the form annexed to this Agreement as Exhibit B.
1.02. Computation of Time Periods.
For purposes of computation of periods of time hereunder, the word
"from" means "from and including" and the words "to" and "until" each mean "to
but excluding."
1.03. Accounting Terms.
Accounting terms used but not otherwise defined herein shall have the
meanings provided, and be construed in accordance with, GAAP.
SECTION 2
AUTHORIZATION AND ISSUANCE OF NOTES
2.01. Authorization of Issuance.
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The Company has authorized (i) the issuance of $17.0 million aggregate
principal amount of the Balloon Notes for original issuance hereunder and an
additional aggregate principal amount of the Notes to be issued as Additional
Balloon Notes through December 31, 2002, if necessary, and (ii) the issuance of
a Original Zero Coupon Note in the face amount of $2,000,000.
2.02. Closing.
The issuance of the Original Zero Coupon Note and the Original Balloon
Note pursuant to this Agreement shall occur at the offices of Proskauer Rose
LLP, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇, simultaneously with, and as part
of, the Stock Purchase Closing (such time and date being herein called the
"Closing Time"). At the Closing Time, the Company will deliver to the Lender the
Zero Coupon Note and the Original Balloon Note dated the Closing Time and
registered in the Lender's name.
SECTION 3
CONDITIONS TO CLOSING
The Lender's obligation to consummate the transactions contemplated
herein at the Closing Time is subject to the satisfaction or waiver by the
Lender prior to or at the Closing Time of each of the conditions specified below
in this Section 3:
3.01. Representations and Warranties.
Each of the representations and warranties of the Company in this
Agreement and in each of the other Transaction Documents shall be true and
correct in all material respects when made and at and as of the Closing Time as
if made on and as of the Closing Time.
3.02. Performance; No Default under Other Agreements.
The Company shall have performed and complied in all material respects
with all agreements and conditions contained in this Agreement and each of the
other Transaction Documents required to be performed or complied with by it
prior to or at the Closing Time, and after giving effect to the issuance of the
Notes and the other Transactions no Default or Event of Default shall have
occurred and be continuing and no default or event of default shall have
occurred and be continuing under any of the other Transaction Documents.
3.03. Compliance Certificates.
(a) Officers' Certificate.
The Company shall have delivered to the Lender an Officers'
Certificate, dated the Closing Time, in the form of Exhibit 3.03(a) hereto,
certifying that the conditions specified in this Section 3 have been fulfilled.
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(b) Secretary's Certificate.
The Company shall have delivered to the Lender a certificate in the
form of Exhibit 3.03(b) hereto certifying as to the Company's certificate of
incorporation, bylaws and resolutions attached thereto, and the incumbency and
signatures of certain officers of the Company.
3.04. Opinions of Counsel.
The Lender shall have received the favorable opinions in form and
substance satisfactory to it, dated the Closing Time, from (i) ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇, LLP, substantially in the form set forth in Exhibit 3.04(a) and as to
such other matters as the Lender may reasonably request.
3.05. Proceedings and Documents.
All corporate and other proceedings in connection with the Transactions
and the other transactions contemplated by this Agreement and the other
Transaction Documents, and all documents and instruments incident to such
transactions and the terms thereof, shall be reasonably satisfactory to the
Lender and Proskauer Rose LLP, counsel for the Lender, and the Lender and
Proskauer Rose LLP, shall have received all such counterpart originals or
certified or other copies of such documents as it or they may reasonably
request.
3.06. Transaction Documents in Force and Effect; Information.
(a) Transaction Documents.
The Lender shall have received true and correct copies of all
Transaction Documents and (i) such documents (A) shall have been duly executed
and delivered by the parties thereto, (B) shall be in form and substance
reasonably satisfactory to the Lender and (C) shall be valid and legally binding
obligations of the parties thereto enforceable against each of them in
accordance with its respective terms, subject to the Enforceability Exceptions
and (ii) there shall have been no material amendments, alterations,
modifications or waivers of any provision thereof since the date of this
Agreement.
(b) Accuracy of Information.
Except for any financial projections concerning the Acquired Business
that have been prepared by the Company and its representatives, all information
furnished by the Company and its representatives to the Lender on or prior to
the Closing Time with respect to the business, operations, affairs, condition
(financial or otherwise), assets, property, prospects or results of operations
of the Company shall be accurate and complete in all material respects.
3.07. No Violation; No Legal Constraints; Consents, Authorizations
and Filings, etc.
(a) The consummation by the Company of the Transactions shall not
contravene, violate or conflict with any Applicable Law, except for violations
which, individually or in the aggregate, do not and would not have a Material
Adverse Effect.
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(b) All consents, authorizations and filings, if any, required in
connection with the execution, delivery and performance by the Company of the
Transaction Documents to which it is a party shall have been obtained or made
and shall be in full force and effect, except for such consents, authorizations
and filings the failure of which to obtain or make, individually or in the
aggregate, do not and would not have a Material Adverse Effect.
(c) There shall be no inquiry, injunction, restraining order,
action, suit or proceeding pending or entered or any statute or rule proposed,
enacted or promulgated by any Governmental Authority or any other Person which,
in the opinion of the Lender, (i) individually or in the aggregate, has had or
would reasonably be expected to have a Material Adverse Effect or which seeks to
enjoin or seek damages against the Company or Lender as a result of the
Transactions, including the issuance of the Note, or (ii) relates to any of the
Transactions and has or will have a Material Adverse Effect on the Lender or
(iii) alleges liability on the part of the Lender in connection with this
Agreement, any other Transaction Documents or the Transactions or any of the
other transactions contemplated hereby or thereby or (iv) would bar the issuance
of the Notes in accordance with the terms of this Agreement and the other
Transaction Documents.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Lender as of the date hereof
that:
4.01. Due Incorporation; Power and Authority.
The Company (a) is a corporation duly incorporated, validly existing
and in good standing under the laws of its jurisdiction of incorporation, (b) is
duly qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required, other
than any failures to so qualify or to be in good standing which, individually or
in the aggregate, have not had and would not have a Material Adverse Effect, (c)
has all requisite corporate power and authority to own, lease and operate its
properties and to conduct its businesses as they are currently conducted, and
(d) has all requisite corporate power and authority to enter into and perform
its obligations under each of the Transaction Documents to which it is a party.
4.02. Formation of the Company.
The Company is a Wholly Owned Subsidiary of the Parent, formed solely
for the purpose of entering into and consummating the Transactions. The Company
has not prior to the Closing Time had any operations, assets or liabilities of
any nature whatsoever except (a) as arise in connection with the Stock Purchase
Agreement, (b) under agreements between the Company and certain consultants,
accountants and counsel for consulting, accounting and legal services in
connection with the transactions contemplated hereby and (c) agreements
terminable at will for various due diligence consulting activities.
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4.03. Subsidiaries.
As of the Closing Time, assuming the accuracy of the representations
and warranties of the Lender contained in the Stock Purchase Agreement, all
outstanding Capital Stock of the Acquired Companies and the Acquired
Subsidiaries is owned beneficially and of record by the Company, an Acquired
Company or an Acquired Subsidiary, free and clear of any Lien.
4.04. Due Authorization, Execution and Delivery.
(a) Agreement.
This Agreement has been duly authorized, executed and delivered by the
Company and its Subsidiaries and constitutes a valid and legally binding
obligation of the Company and its Subsidiaries, enforceable against each of them
in accordance with its terms, subject to the Enforceability Exceptions.
(b) Notes.
The Notes to be issued to the Lender by the Company are in the form
contemplated by this Agreement, have been duly authorized for issuance pursuant
to this Agreement and, when issued and delivered by the Company at the Closing
Time as provided herein, will have been duly executed, issued and delivered by
the Company, and will constitute valid and legally binding obligations of the
Company, enforceable against it in accordance with their terms, subject to the
Enforceability Exceptions.
(c) Subsidiary Guarantees.
The Subsidiary Guarantees to be issued by the Subsidiaries of the
Company pursuant to this Agreement are in the form contemplated by this
Agreement, have been duly authorized for execution and delivery pursuant to this
Agreement and, when executed and delivered by such Subsidiaries at the Closing
Time as provided herein, will have been duly executed and delivered by them, and
will constitute their valid and legally binding obligations, enforceable against
each of them in accordance with their terms, subject to the Enforceability
Exceptions.
(d) Other Transaction Documents.
Each Transaction Document (other than those referred to in paragraphs
(a) through (c) of this Section 4.04) (i) has been duly authorized, executed and
delivered by each of the Company and its Subsidiaries that is a party thereto
and (ii) constitutes its valid and legally binding obligation, enforceable
against it in accordance with its terms, subject to the Enforceability
Exceptions.
4.05. Non-Contravention; Authorizations and Approvals.
The Company is not (i) in violation of its certificate of incorporation
or bylaws (or comparable constituent or governing documents) or (ii) in default
(or, with the giving of notice, lapse of time or both, would the Company be in
default) under any note, bond, mortgage, indenture, deed of trust, loan or
credit agreement, license, franchise, Permit, lease, contract or
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other agreement, instrument, commitment or obligation to which the Company is a
party or by which the Company or any of its properties or assets is bound, or
under which the Company or any of its properties or assets is entitled to a
benefit (each, a "Contract"), except for any such defaults that, (x) existed on
the part of any Subsidiary of the Company acquired by the Company from the
Lender at the time of such acquisition or (y) individually or in the aggregate,
have not had and would not have a Material Adverse Effect. None of (a) the
execution and delivery by the Company of any of the Transaction Documents to
which it is a party, (b) the performance by the Company of its obligations
thereunder, (c) the consummation of the transactions contemplated thereby or (d)
the issuance and delivery of the Notes hereunder will: (i) violate, conflict
with or result in a breach of any provisions of the certificate of incorporation
or bylaws (or comparable constituent or governing documents) of the Company;
(ii) violate, conflict with, result in a breach of any provision of, constitute
a default (or an event which, with notice, lapse of time or both, would
constitute a default) under, result in the termination or in a right of
termination of, accelerate the performance required by or benefit obtainable
under, result in the triggering of any payment or other obligations (including
any repurchase or repayment obligations) pursuant to, result in the creation of
any Lien upon any of the properties of the Company under, or result in there
being declared void, voidable, subject to withdrawal, or without further binding
effect, any of the terms, conditions or provisions of any Contract, except for
any such violations, conflicts, breaches, defaults, accelerations, terminations
or other matters which, (A) result from Contracts to which any Subsidiary of the
Company was a party on the date such Subsidiary was acquired by the Company from
the Lender or (B) individually or in the aggregate, have not had and would not
have a Material Adverse Effect; (iii) require any consent, approval or
authorization of, or declaration, filing or registration with, any Governmental
Authority, except for those consents, approvals, authorizations, declarations,
filings or registrations which have been obtained or made or the failure of
which to obtain or make, individually or in the aggregate, have not had and
would not have a Material Adverse Effect; or (iv) violate any Applicable Laws
applicable to the Company, or any of its respective properties or assets, except
for violations which, individually or in the aggregate, have not had and would
not have a Material Adverse Effect.
4.06. No Actions or Proceedings.
Except as set forth in Schedule 4.06, there are no legal or
governmental actions, suits or proceedings pending or, to the best of the
Company's knowledge, threatened against or affecting the Company, any of its
directors or officers (in their capacities as such) or any of its properties or
assets which, individually or in the aggregate, has had or would have a Material
Adverse Effect or have or would prohibit, delay or materially restrict the
consummation of any of the Transactions or the other transactions contemplated
by this Agreement and the other Transaction Documents, except any such actions,
suits or proceedings with respect to any Subsidiary of the Company which existed
on the date such Subsidiary was acquired by the Company from Lender. No
Governmental Authority has notified the Company of an intention to conduct any
audit, investigation or other review with respect to the Company, except for
those investigations or reviews which, (i) with respect to any Subsidiary of the
Company acquired from the Lender, existed at the time of acquisition of such
Subsidiary or (ii) individually or in the aggregate, have not had or would not
have a Material Adverse Effect.
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4.07. Private Offering; No Integration or General Solicitation.
(a) Subject to compliance by the Lender with the representations
and warranties set forth in Section 5 hereof and with the procedures set forth
in Section 10 hereof, it is not necessary in connection with the issuance of the
Notes to the Lender and to any Person to whom the Lender sells any of such Notes
in the manner contemplated by this Agreement to register the Notes under the
Securities Act.
(b) The Company has not, directly or indirectly, offered, sold or
solicited any offer to buy and will not, directly or indirectly, offer, sell or
solicit any offer to buy, any security of a type or in a manner which would be
integrated with the sale of the Notes and require the Notes to be registered
under the Securities Act. None of the Company, its Affiliates or any person
acting on its or any of their behalf (other than the Lender, as to whom the
Company makes no representation or warranty) has engaged or will engage in any
form of general solicitation or general advertising (within the meaning of Rule
502(c) under the Securities Act) in connection with the issuance of the Notes.
4.08. Status Under Certain Statutes.
The Company is not or, after the consummation of the other transactions
contemplated by the Transaction Documents, will not be (a) subject to regulation
under the Public Utility Holding Company Act of 1935, as amended ("PUHCA") the
Federal Power Act or the Interstate Commerce Act, each as amended, (b) an
"investment company" registered or required to be registered under the
Investment Company Act of 1940, as amended, or controlled by such a company, or
(c) a "holding company," or a "subsidiary company" of a "holding company," or an
"affiliate" of a "holding company" or of a "subsidiary" or a "holding company,"
within the meaning of PUHCA.
4.09. Affiliate Transactions.
Except with respect to transactions occurring at or after the Closing
Time, as permitted by Section 8.06 hereof: (a) there is no Indebtedness between
the Company, on the one hand, and any Affiliate of the Company or any officer,
stockholder, director of the Company or such Affiliate, on the other, (b) the
Company does not beneficially own, directly or indirectly, any investment in or
issued by any Affiliate of the Company or any officer, stockholder, director of
the Company or such Affiliate, and (c) to the best of the knowledge of the
Company, no such Person has any direct or indirect ownership interest in any, or
is a, Person with which the Company competes or has a business relationship.
SECTION 5
REPRESENTATIONS OF THE LENDER
The Lender represents and warrants to the Company as of the date hereof
and as of the Closing Time as follows:
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5.01. Acquisition for Investment.
(a) The Lender is acquiring the Notes for its own account, for
investment and not with a view to any distribution thereof within the meaning of
the Securities Act.
(b) The Lender understands that (i) the Notes have not been
registered under the Securities Act and are being issued by the Company in
transactions exempt from the registration requirements of the Securities Act and
(ii) the Notes may not be offered or sold except pursuant to an effective
registration statement under the Securities Act or pursuant to an applicable
exemption from registration under the Securities Act.
(c) The Lender further understands that the exemption from
registration afforded by Rule 144 (the provisions of which are known to the
Lender) promulgated under the Securities Act depends on the satisfaction of
various conditions, and that, if applicable, Rule 144 may afford the basis for
sales only in limited amounts.
SECTION 6
COVENANTS TO PROVIDE INFORMATION
The Company covenants and agrees for the benefit of the Lender and each
Noteholder that until the principal amount of (and premium, if any, on) all the
Notes, and all interest shall have been paid in full:
6.01. Future Reports to Noteholders.
The Company shall deliver to the Lender and each Noteholder:
(a) Quarterly Statements.
As soon as available, but in any event sixty (60) days after the end of
each quarter of the Company, as applicable, duplicate copies of:
(A) consolidated and consolidating
balance sheets of the Company and its Subsidiaries as
at the end of such quarter, and
(B) consolidated and consolidating
statements of income and stockholders' equity of the
Company and its Subsidiaries, for such quarter and,
in addition, statements of cash flows, in each case
for the portion of the fiscal year ending with such
quarter,
in each case prepared in accordance with GAAP applicable to periodic financial
statements generally, and fairly presenting in accordance with GAAP, in all
material respects, the financial position of the Persons being reported on and
their results of operations and cash flows, subject to changes resulting from
normal year-end adjustments and the absence of certain footnotes, and
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accompanied by a certificate of the Authorized Financial Officer of the Company
to the foregoing effect.
(b) Annual Statements.
As soon as available, but in any event within ninety (90) days after
the end of each fiscal year of the Company, duplicate copies of:
(i) consolidated and consolidating balance
sheets of the Company and its Subsidiaries as at the end of
such year,
(ii) consolidated and consolidating statements of
income, stockholders' equity and cash flows of the Company and
its Subsidiaries for such year,
in each case prepared in accordance with GAAP, fairly presenting in
accordance with GAAP, in all material respects, the financial position
of the Persons being reported on and their results of operations and
cash flows accompanied by:
(A) an opinion thereon of independent
certified public accountants of recognized national
standing, which opinion shall state that such
financial statements (other than consolidating
statements) present fairly, in all material respects,
the financial position of the Persons being reported
upon and their results of operations and cash flows
and have been prepared in conformity with GAAP, and
that the examination of such accountants in
connection with such financial statements (other than
consolidating statements) has been made in accordance
with generally accepted auditing standards in the
United States, and that such audit provides a
reasonable basis for such opinion in the
circumstances,
(B) a certificate of the Authorized
Financial Officer of the Company, that he is not
aware of any Default or Event of Default specified in
Section 11 or, if he is aware of any such Default or
Event of Default, specifying the nature thereof, and
(C) a certificate of the Authorized
Financial Officer of the Company and the Parent
stating that such financial statements have been
prepared in accordance with GAAP applicable to
periodic financial statements generally and fairly
present, in all material respects, the financial
position of the Persons being reported on and their
results of operations and cash flows.
(c) Authorized Financial Officer Certificates.
Concurrently with the delivery of the financial statements referred to
in subsections (a) and (b) of this Section 6.01, a certificate of the Chief
Executive Officer or Chief Legal Officer and the Chief Financial Officer or
Chief Accounting Officer of the Company (i) stating that, to the best of such
Officers' actual knowledge, each of the Company and its respective Subsidiaries
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has observed or performed in all material respects all of its covenants and
other agreements, and satisfied in all material respects every condition,
contained in this Agreement and the other Transaction Documents to be observed,
performed or satisfied by it, and in the case of the certificate delivered to
the Lenders and the Noteholders, that neither such Officer has obtained
knowledge of any Default or Event of Default except as specified in such
Officers' Certificate, and (ii) in the case of the certificate delivered to the
Lenders and the Noteholders, showing in detail as of the end of the related
fiscal period the figures and calculations supporting such statement in respect
of Section 8.06 of this Agreement.
(d) Intentionally Omitted.
(e) Other Information.
Promptly upon their becoming available, copies of all financial
statements, reports, notices and proxy statements sent to its securityholders or
made available generally by the Company or any of its Subsidiaries and all
regular and periodic reports and all registration statements and final
prospectuses, if any, filed by the Company or any of its Subsidiaries with any
securities exchange or with the Commission or any Governmental Authority
succeeding to any of its functions and, promptly upon request, such additional
financial and other information as the Lender and any other Noteholder may from
time to time reasonably request.
(f) Notice of Default or Event of Default or Litigation.
Promptly, but in any event within three (3) Business Days, after the
Authorized Financial Officer, Chief Executive Officer or Chief Operating Officer
of the Company becomes aware of the existence of any Default or Event of Default
or any litigation involving the Company or any of its Subsidiaries in an amount
stated to be more than $500,000 in excess of applicable insurance coverage, a
written notice thereof to the Lenders and the Noteholders specifying the nature
and existence thereof and what action the Company is taking or proposes to take
with respect thereto.
(g) Intentionally Omitted.
(h) Changes to Indebtedness.
Promptly thereafter, written notice to the Lenders and the Noteholders
of any proposed extension, renewal, refinancing or modification of any
indebtedness exceeding $750,000 of the Company or any of its Subsidiaries.
(i) Original Issue Discount Information.
All original issue discount information requested to in writing by
Lender relating to the Notes as may be required by applicable law.
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SECTION 7
OTHER AFFIRMATIVE COVENANTS
The Company further covenants and agrees for the benefit of the Lender
and each Noteholder that until the principal amount of (and premium, if any, on)
all the Notes, and all interest and other obligations hereunder in respect
thereof, shall have been paid in full:
7.01. Payment of Principal, Premium and Interest.
The Company shall duly and punctually pay the principal of (and
premium, if any, on) and all interest on the Notes in accordance with the terms
of the Notes and this Agreement. The Company shall pay interest on overdue
principal (including post-petition interest on a proceeding under any Bankruptcy
Law), and interest on overdue interest to the extent lawful, at the rate
specified in the Notes.
7.02. Preservation of Corporate Existence and Franchises.
Subject to Section 8 hereof, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect (a) its
corporate existence, and the corporate, partnership or other existence of each
of its Subsidiaries, if any, in accordance with the respective organizational
documents (as the same may be amended from time to time) of the Company or any
such Subsidiary and (b) 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 of its Subsidiaries if
the loss thereof would not result in a Material Adverse Effect.
7.03. Maintenance of Properties.
The Company shall cause all property material to the conduct of its
business or the business of any of its Subsidiaries to be maintained and kept in
good condition, repair and working order and shall cause to be made all
necessary repairs, renewals, replacements and improvements thereof, all as in
the judgment of the Company may be necessary so that the business carried on in
connection therewith may properly and advantageously be conducted at all times;
provided, however, that the foregoing shall not prevent the Company from
discontinuing the operation or maintenance of any of such properties if such
discontinuance would not result in a Material Adverse Effect.
7.04. Taxes.
(a) Payment of Taxes.
The Company shall pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (i) all Taxes, assessments and
governmental charges levied or imposed upon the Company or any of its
Subsidiaries or upon the income, profits or property of the Company or any of
its Subsidiaries, and (ii) all lawful claims for labor, materials and supplies
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which, if unpaid, might by law become a lien upon the property of the Company or
any of its Subsidiaries; provided, however, that the Company shall not be
required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim whose amount, applicability or validity is being
contested in good faith by appropriate proceedings provided that any appropriate
reserves therefor are established in the Company's consolidated financial
statements in accordance with GAAP.
(b) Tax Returns.
The Company and Tax Subsidiaries shall timely file or cause to be filed
when due (after applicable extensions, if any) all Tax Returns that are required
to be filed by or with respect to the Company for taxable years ending after the
Closing Time and shall pay any Taxes due shown on such Tax Returns.
7.05. Books, Records and Access.
The Company and its Subsidiaries shall keep complete and accurate books
and records of their transactions in accordance with good accounting practices
on the basis of GAAP applied on a consistent basis (including the establishment
and maintenance of appropriate reserves). The Company shall, and shall cause its
Subsidiaries to, subject to compliance with Applicable Laws and confidentiality
obligations to third parties, give the Lender and each Noteholder and their
authorized representatives reasonable access during normal business hours to all
contracts, books, records, personnel, offices and other facilities and
properties of the Company and its Subsidiaries, to the extent available to the
Company after the Company uses reasonable efforts to obtain them, permit the
Lender and each Noteholder to make such copies and inspections thereof on a
confidential basis as such the Lender and each Noteholder may reasonably request
and furnish each of them with such financial and operating data and other
information with respect to the business and properties of the Company and its
Subsidiaries as it (and any such sales or placement agent or underwriter) may
from time to time reasonably request.
7.06. Compliance with Law and Material Contracts.
The Company shall, and shall cause each of its Subsidiaries to, comply
with all Applicable Laws and the Transaction Documents and to use commercially
reasonable efforts to comply with all other Material Contracts (unless, in the
good faith judgment of the Company's board of directors, it is not in the
Company's best interest to comply with such other Material Contracts), and shall
obtain and maintain, and shall cause each of its Subsidiaries to obtain and
maintain, all Permits necessary to the ownership of their respective properties
or to the conduct of their respective businesses, in each case to the extent
necessary to ensure that any such non-compliance with Applicable Law or
Transaction Document or any failure to obtain or maintain such Permits,
individually or in the aggregate, would not have a Material Adverse Effect.
7.07. Insurance.
The Company shall, and shall cause its Subsidiaries to, maintain, with
financially sound and reputable insurers, insurance with respect to their
respective properties and business against such casualties and contingencies, of
such types, on such terms and in such amounts (including deductibles,
co-insurance and self-insurance, if adequate reserves are maintained with
respect
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thereto) as is customary in the case of entities of established reputations
engaged in the same or a similar business and similarly situated.
7.08. Offer to Repurchase Upon Change of Control.
(a) Upon the occurrence of a Change of Control, the Company shall
make an offer (a "Change of Control Offer") to each Noteholder to repurchase all
or any part (equal to $1,000 or an integral multiple thereof) of each
Noteholder's Balloon Notes at an offer price in cash equal to 100% of the
principal amount thereof as of the Change of Control Payment Date, plus accrued
and unpaid interest thereon to the Change of Control Payment Date (the "Change
of Control Payment"). The Company shall comply with the requirements of any
applicable securities laws and regulations in connection with the repurchase of
the Balloon Notes as a result of a Change of Control.
(b) Within 10 days following any Change of Control, the Company
shall send, by first-class mail, a notice to each Noteholder stating:
(i) that the Change of Control Offer is being
made pursuant to this Section 7.08 and that all Notes tendered
will be accepted for payment;
(ii) the purchase price and the purchase date,
which shall be at least 10 but no more than 30 days from the
date on which the Company mails notice of the Change of
Control (the "Change of Control Payment Date");
(iii) that any Balloon Notes not tendered will
continue to accrue interest;
(iv) that, unless the Company defaults in the
payment of the Change of Control Payment, all Balloon Notes
accepted for payment pursuant to the Change of Control Offer
shall cease to accrue interest after the Change of Control
Payment Date;
(v) that Noteholders electing to have any
Balloon Notes purchased pursuant to a Change of Control Offer
shall be required to surrender the Balloon Notes, with the
form entitled "Option of Holder to Elect Purchase" on the
reverse of the Balloon Notes completed, to the Company or its
designated agent for such purpose at the address specified in
the notice prior to the close of business on the third
Business Day preceding the Change of Control Payment Date;
(vi) that Noteholders will be entitled to
withdraw their election if the Company or its designated agent
for such purpose receives, not later than the close of
business on the second Business Day preceding the Change of
Control Payment Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the
Noteholder, the principal amount of Balloon Notes delivered
for purchase, and a statement that such Noteholder is
withdrawing his election to have the Balloon Notes purchased;
and
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(vii) that Noteholders whose Balloon Notes are
being purchased only in part will be issued new Balloon Notes
equal in principal amount to the unpurchased portion of the
Balloon Notes surrendered, which unpurchased portion must be
equal to $1,000 in principal amount or an integral multiple
thereof.
(c) On the Change of Control Payment Date, the Company shall: (i)
accept for payment all Balloon Notes or portions thereof properly tendered
pursuant to the Change of Control Offer, (ii) either (A) mail to each Noteholder
so tendered the Change of Control Payment for such Balloon Notes plus all
accrued and unpaid interest to the Change of Control Payment Date, or (B) pay
such amount, by wire transfer of immediately available funds, to any Noteholder
who requests in writing that payment be made in such manner in its completed
"Option of Holder to Elect Purchase" on the reverse side of the applicable
Balloon Note, and (iii) execute and mail (or cause to be transferred by
book-entry) to each Noteholder a new Balloon Note equal in principal amount to
any unpurchased portion of the Balloon Notes surrendered, if any; provided,
however, that each such new Balloon Note shall be in a principal amount of
$100,000 (or an integral multiple thereof) or the amount owing to the holder of
such Balloon Note, whichever is less. The Company shall mail to each Noteholder
the results of the Change of Control Offer on or as soon as practicable after
the Change of Control Payment Date.
(d) The Company shall not be required to make a Change of Control
Offer upon a Change of Control if a third party makes the Change of Control
Offer in a manner, at the times and otherwise in compliance with the
requirements set forth in this Section 7.08 and such third party purchases all
Balloon Notes validly tendered and not withdrawn under such Change of Control
Offer.
7.09. Offer to Purchase by Application of Excess Proceeds.
(a) In the event that, pursuant to Section 8.05 hereof, the
Company shall be required to commence an offer to all Noteholders to purchase
Balloon Notes (an "Asset Sale Offer"), it shall follow the procedures specified
in this Section 7.09. The Company shall comply with the requirements of any
applicable securities laws and regulations in connection with the repurchase of
the Notes pursuant to an Asset Sale Offer.
(b) Within 10 days following each date on which the Company's
obligation to make an Asset Sale Offer is triggered, the Company shall send, by
first-class mail, a notice to each Noteholder stating:
(i) that the Asset Sale Offer is being made
pursuant to this Section 7.09 and Section 8.05;
(ii) that the Company shall purchase the
principal amount of Balloon Notes required to be purchased
pursuant to Section 8.05 (the "Offer Amount"), the purchase
price per Balloon Note and the purchase date, which shall be
at least 10 but no more than 30 days from the date on which
the Company mails notice of the Asset Sale Offer (the "Asset
Sale Offer Payment Date");
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(iii) that any Balloon Notes not tendered will
continue to accrue interest;
(iv) that, unless the Company defaults in payment
of the Offer Amount on the Asset Sale Offer Payment Date, all
Balloon Notes accepted for payment pursuant to the Asset Sale
Offer shall cease to accrue interest after the Asset Sale
Offer Payment Date;
(v) that Noteholders electing to have any
Balloon Notes purchased pursuant to an Asset Sale Offer shall
be required to surrender the Balloon Notes, with the form
entitled "Option of Holder to Elect Purchase" on the reverse
of the Balloon Notes completed, to the Company or its
designated agent for such purpose at the address specified in
the notice prior to the close of business on the third
Business Day preceding the Asset Sale Offer Payment Date;
(vi) that Noteholders will be entitled to
withdraw their election if the Company or its designated agent
for such purpose receives, not later than the close of
business on the second Business Day preceding the Asset Sale
Offer Payment Date, a telegram, telex, facsimile transmission
or letter setting forth the name of the Noteholder, the
principal amount of Balloon Notes delivered for purchase, and
a statement that such Noteholder is withdrawing his election
to have the Balloon Notes purchased;
(vii) that, if the aggregate principal amount of
Balloon Notes surrendered by Noteholders exceeds the Offer
Amount, the Company shall select the Balloon Notes to be
purchased on a pro rata basis (with such adjustments as may be
deemed appropriate by the Company so that only Balloon Notes
in denominations of 100,000 (or integral multiples thereof)
or, if there are outstanding Balloon Notes in a lesser amount,
that amount, shall be purchased); and
(viii) that Noteholders whose Balloon Notes are
being purchased only in part will be issued new Balloon Notes
equal in principal amount to the unpurchased portion of the
Balloon Notes surrendered, which unpurchased portion must be
equal to $1,000 in principal amount or an integral multiple
thereof.
(c) On the Asset Sale Offer Payment Date, the Company shall, to
the extent lawful, (i) accept for payment, on a pro rata basis to the extent
necessary, all Balloon Notes or portions thereof properly tendered pursuant to
the Asset Sale Offer up to the principal amount of Balloon Notes equal to the
Offer Amount, or, if less than the Offer Amount has been tendered, all Balloon
Notes tendered, (ii) either (A) mail to each Noteholder so tendered the purchase
price for such Balloon Notes, plus all accrued and unpaid interest to the Asset
Sale Offer Payment Date or (B) pay such amount, by wire transfer of immediately
available funds, to any Noteholder who requests in writing that payment be made
in such manner in its completed "Option of Holder to Elect Purchase" on the
reverse side of the applicable Balloon Note, and (iii) execute and mail (or
cause to be transferred by book-entry) to each Noteholder a new Balloon Note
equal in principal
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amount to any unpurchased portion of the Balloon Notes surrendered, if any. The
Company shall mail to each Noteholder the results of the Asset Sale Offer on or
as soon as practicable after the Asset Sale Offer Payment Date.
7.10. Further Assurances.
(a) The Company shall, upon the request of the Noteholders,
execute and deliver such further instruments and do such further acts as may be
reasonably necessary or proper to carry out more effectively the provisions of
this Agreement.
7.11. Sales of Non-Essential Real Property.
(a) The Company shall cause all proceeds of any sale, transfer or
other disposition of Non-Essential Real Property to be reserved for use, and
used exclusively, for Capital Expenditures and related expenses on or prior to
the first anniversary of the applicable disposition or subject to a commercially
reasonable binding contractual commitment for such use on or prior to the third
(3rd) anniversary of the applicable disposition. Any such proceeds that are not
so used shall be deemed to be Net Cash Proceeds and, for purposes of Section
8.05, to have been received by the Company on the first anniversary of the
applicable disposition, except that proceeds subject to a commercially
reasonable binding contractual commitment but not used prior to the third (3rd)
anniversary of the applicable disposition shall be deemed to be Net Cash
Proceeds on such third (3rd) anniversary. Without limiting the provisions of
Section 8.05, 100% of all Net Cash Proceeds generated by a sale, transfer or
other disposition of Non-Essential Real Property that are not applied in
accordance with the first sentence of Section 8.05 shall be "Excess Proceeds"
for purposes of Section 8.05.
(b) The Company may use the proceeds of any sale, transfer or
other disposition of Non-Essential Real Property in accordance with Section
7.11(a) without regard to the then Applicable Capital Expenditure Limit.
SECTION 8
NEGATIVE COVENANTS
Each Issuer hereby covenants and agrees for the benefit of the Lender
and each Noteholder that until the principal amount of (and premium, if any, on)
all the Notes, and all interest and other obligations hereunder in respect
thereof, shall have been paid in full:
8.01. Stay, Extension and Usury Laws.
Each Issuer 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 or other
law wherever enacted, now or at any time hereafter in force, that may affect the
covenants or the performance of its obligations under the Notes, the Subsidiary
Guarantees or this Agreement, and each Issuer hereby expressly waives all
benefit or
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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 Noteholders, but shall suffer and permit the execution of every such power
as though no such law has been enacted.
8.02. Restricted Payments.
(a) The Company shall not, and shall not cause or permit any of
its Subsidiaries to, directly or indirectly:
(i) declare or pay any dividend or make any
other distribution or payment on or in respect of Capital
Stock of the Company or any payment to the direct or indirect
holders (in their capacities as such) of Capital Stock of the
Company or any Subsidiary that is not a Wholly-Owned
Subsidiary (other than dividends or distributions payable
solely in shares of Qualified Capital Stock of the Company or
in options, warrants or other rights to acquire shares of such
Qualified Capital Stock);
(ii) purchase, redeem, defease or otherwise
acquire or retire for value, directly or indirectly, the
Company's Capital Stock or any Capital Stock of any Affiliate
of the Company (other than any such Capital Stock owned by the
Company or any Subsidiary of the Company) or options, warrants
or other rights to acquire such Capital Stock, except in any
case out of the proceeds of any concurrent sale or disposition
of Qualified Capital Stock of the Company;
(iii) make any principal payment on, or purchase,
repurchase, redeem, defease, retire or otherwise acquire for
value, prior to any scheduled maturity, scheduled repayment,
scheduled sinking fund payment or other Stated Maturity, any
Indebtedness other than (A) any Senior Indebtedness, (B) any
Subordinated Indebtedness owed to and held by the Company or a
Guarantor, (C) payments of no more than $100,000 per annum in
the aggregate in respect of other Subordinated Indebtedness,
(D) repayments required to be made under any revolving credit
arrangement the primary purpose of which is the cash
management of the Companies and its Subsidiaries (as opposed
to the extension of credit) provided by any financial or other
lending institution which enters into such credit arrangements
with Persons such as the Company and its Subsidiaries in the
ordinary course of its business, (E) deposits without
scheduled maturity or (F) the refinancing of any Subordinated
Indebtedness using solely the proceeds of other Subordinated
Indebtedness obtained contemporaneously with such refinancing;
provided, however, that there shall be no payment, purchase,
repurchase, redemption, defeasance, retirement or other
acquisition made under this 8.02(a)(iii) on account of, or
interest payment made on, any Subordinated Indebtedness held
or owned directly or indirectly by any Affiliate of the
Company; or
(iv) make any Investment in any other Person
(other than any Permitted Investments);
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any of the foregoing actions described in clauses (i) through (iv),
collectively, "Restricted Payments").
8.03. Dividend and Other Payment Restrictions Affecting
Subsidiaries.
Except for the benefit of the Senior Indebtedness or the holders
thereof, the Company shall not, and shall not cause or permit any of its
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective or enter into any agreement with any Person that would
cause to become effective, any consensual encumbrance or restriction of any
kind, on the ability of any Subsidiary of the Company to (a)(i) pay dividends,
in cash or otherwise, or make any other distributions to the Company or any of
its Subsidiaries (A) on or in respect its Capital Stock or (B) with respect to
any other interest or participation in, or measured by, its profits, or (ii) pay
any Indebtedness owed to the Company or any of its Subsidiaries, (b) make any
Investment in the Company or any of its Subsidiaries or (c) transfer any of its
properties or assets to the Company or any of its Subsidiaries, except for such
encumbrances or restrictions existing under or by reason of (i) agreements
entered into with the provider of Senior Indebtedness, (ii) this Agreement, the
Notes, and the Subsidiary Guarantees, (iii) customary non-assignment provisions
in leases, licenses and other agreements entered into in the ordinary course of
business, (iv) Purchase Money Obligations for property acquired in the ordinary
course of business that impose restrictions of the nature described in clause
(c) above on the property so acquired, (v) customary restrictions with respect
to a Subsidiary of the Company pursuant to an agreement that has been entered
into for the sale or disposition of all or substantially all of the Capital
Stock or assets of such Subsidiary; provided, however, that any such restriction
relates only to the Capital Stock or assets being sold pursuant to such
agreement, and (vi) any encumbrance or restriction existing under any agreement
that extends, renews, refinances or replaces the agreements containing the
encumbrances or restrictions in the foregoing clauses (i) through (vi), or in
this clause (vi), provided that the terms and conditions of any such
encumbrances or restrictions are no more restrictive than those under or
pursuant to the agreement so extended, renewed, refinanced or replaced.
8.04. Incurrence of Indebtedness.
(a) The Company shall not, and shall not cause or permit any of
the Subsidiaries to, directly or indirectly, create, incur, assume, issue,
guarantee or in any manner become liable for or with respect to, contingently or
otherwise (in each case, to "incur"), the payment of, any Indebtedness
(including any Acquisition Indebtedness) except for Permitted Indebtedness.
(b) Notwithstanding the foregoing, the Company and, to the extent
specifically set forth below, the Subsidiaries of the Company may incur each and
all of the following (collectively, "Permitted Indebtedness"):
(i) Senior Indebtedness and Subordinated
Indebtedness, except that any Acquisition Indebtedness
incurred in connection with a Permitted Acquisition must
satisfy, at the time of the making of the Permitted
Acquisition, the Permitted Acquisition Test Ratios;
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(ii) Indebtedness of the Company pursuant to the
Notes and Indebtedness of any Subsidiary pursuant to this
Agreement or a Subsidiary Guarantee of the Notes, including
the issuance of Additional Balloon Notes in accordance with
the terms thereof;
(iii) Indebtedness of the Company owing to a
Wholly Owned Subsidiary of the Company for so long as such
Indebtedness is owing to a Wholly Owned Subsidiary of the
Company; provided that any Indebtedness of the Company to any
Wholly Owned Subsidiary of the Company is unsecured and
subordinated, pursuant to a written agreement, to the
Company's obligations under this Agreement and the Notes;
provided, further, that disposition, pledge or transfer of any
such Indebtedness to a Person (other than a disposition,
pledge or transfer to a Wholly Owned Subsidiary of the
Company) shall be deemed to be an incurrence of such
Indebtedness by the Company not permitted by this clause
(iii);
(iv) Indebtedness of a Wholly Owned Subsidiary of
the Company owing to and held by the Company or another Wholly
Owned Subsidiary of the Company which is unsecured; provided
that (a) any disposition, pledge or transfer of any such
Indebtedness to a Person (other than the Company or a Wholly
Owned Subsidiary of the Company) shall be deemed to be an
incurrence of such Indebtedness by the obligor not permitted
by this clause (iv), and (b) any transaction pursuant to which
any Wholly Owned Subsidiary of the Company, which has
Indebtedness owing to the Company or any other Wholly Owned
Subsidiary of the Company, ceases to be a Wholly Owned
Subsidiary of the Company shall be deemed to be the incurrence
of Indebtedness by such Wholly Owned Subsidiary that is not
permitted by this clause (iv);
(v) obligations with respect to surety bonds
obtained by the Company or any of its Subsidiaries in the
ordinary course of business, including to secure their
obligations with respect to applicable worker's compensation
laws and any self insurance;
(vi) Indebtedness of the Company or any of its
Subsidiaries incurred to finance insurance premiums; and
(vii) Hedging Obligations with respect to any
Senior Indebtedness.
8.05. Asset Sales; Working Capital Facility Clawback.
(a) The Company shall not, and shall not cause or permit any
Subsidiary of the Company to, directly or indirectly, consummate an Asset Sale
unless (i) at least 50% of the consideration from such Asset Sale is received in
cash and (ii) the Company or such Subsidiary receives consideration at the time
of such Asset Sale at least equal to the Fair Market Value of the shares or
assets subject to such Asset Sale; provided, however, that the amount of (x) any
liabilities (as shown on the Company's or such Subsidiary's most recent balance
sheet) of the Company or any Subsidiary (other than contingent liabilities and
liabilities that are by their terms
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subordinated to the Notes or any Guarantee thereof) that are assumed by the
transferee of any such assets pursuant to any arrangement releasing the Company
or such Subsidiary from further liability and (y) any notes or other obligations
received by the Company or any such Subsidiary from such transferee that are
promptly converted by the Company or such Subsidiary into cash (to the extent of
the cash received), shall be deemed to be cash for purposes of this provision.
(b) Within 30 days after the receipt of any Net Cash Proceeds from
an Asset Sale, the Company may apply all or any part of such Net Cash Proceeds
to reduce the amount of the then outstanding Senior Indebtedness to the extent
required under the documentation evidencing such Senior Indebtedness. Pending
such application, the Company may temporarily invest such Net Cash Proceeds in
any manner that is not prohibited by this Agreement. Any Net Cash Proceeds from
Asset Sales (irrespective of when such Asset Sale has occurred) that are not
used to reduce Senior Indebtedness as provided in the first sentence of this
paragraph shall constitute "Excess Proceeds"; provided, however, that (A) only
25% of any Excess Proceeds generated by an Asset Sale consisting of the public
offering of any debt or equity securities issued by the Company or any of its
Subsidiaries shall be deemed to be Excess Proceeds for purposes of this Section
8.05, (B) subject to clause (C) of this proviso, only 80% of any Excess Proceeds
generated by an Asset Sale consisting of the transfer of any hospital owned or
operated by the Company or any of its Subsidiaries shall be deemed to be Excess
Proceeds for purposes of this Section 8.05, and (C) only 80% of the excess of
(i) any Excess Proceeds generated by an Asset Sale consisting of the transfer of
the Mountainside Medical Center Nursing Facility over (ii) $1,000,000 shall be
deemed to be Excess Proceeds for purposes of this Section 8.05 only if, and to
the extent that, the first $1,000,000 of such Excess Proceeds are set aside
exclusively for and actually used for the refurbishment or replacement of
Mountainside Medical Center prior to the third anniversary of the Asset Sale
that generated them. At any time and from time to time when the aggregate amount
of Excess Proceeds exceeds $2.0 million, the Company shall make an Asset Sale
Offer pursuant to Section 7.09 hereof to purchase the maximum principal amount
of Balloon Notes that may be purchased out of the Excess Proceeds at an offer
price in cash in an amount equal to 100% of the principal amount thereof, plus
accrued and unpaid interest thereon to the date of purchase, in accordance with
the procedures set forth in Section 7.09 hereof. To the extent that the
aggregate principal amount of Notes tendered pursuant to an Asset Sale Offer is
less than the Excess Proceeds, the Company may use any remaining Excess Proceeds
for general corporate purposes, subject to any other restrictions on such use
contained in this Agreement. If the aggregate principal amount of Notes
surrendered by Noteholders thereof exceeds the amount of Excess Proceeds, the
Company shall select the Notes to be purchased on a pro rata basis. Upon
completion of such offer to purchase, the amount of Excess Proceeds shall be
reset at zero.
(c) At any time and from time to time when the Company or any of
its Subsidiaries shall obtain a working capital facility (excluding renewal of a
working capital facility that previously triggered an Asset Sale as long as the
principal amount thereof has not been increased since then), that does not
constitute Senior Indebtedness, such event shall, for purposes of this Section
8.05 and Section 7.09 be treated as if an Asset Sale had occurred. The Net Cash
Proceeds of such a deemed Asset Sale shall, for purposes of this Section 8.05
and Section 7.09, be equal to 25% of the excess of the aggregate amount
available for drawdown to the Company and/or such Subsidiary on the date that
funds are first available for drawdown under the applicable working capital
facility over $5,000,000.
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8.06. Transactions with Affiliates.
Except as set forth in Schedule 8.06, the Company shall not, and shall
not cause or permit any of its Subsidiaries to, directly or indirectly, conduct
any business or enter into or suffer to exist any transaction or series of
related transactions (including, without limitation, the sale, purchase,
exchange or lease of assets, property or services) with, or for the benefit of,
any Affiliate of the Company or of a Subsidiary (other than the Company or a
Wholly Owned Subsidiary) or any beneficial holder of 10% or more of any class of
Capital Stock of the Company or any officer, director or employee of the Company
or any Subsidiary or any Affiliate unless such transaction or series of related
transactions is entered into in good faith and in writing and such transaction
is on terms that are no less favorable to the Company or such Subsidiary, as the
case may be, than those that would be available in a comparable transaction in
arm's-length dealings with an unrelated third party, and provided, however, that
this Section 8.06 shall not apply to employment and/or indemnification
agreements for the benefit of officers, directors and employees entered into in
the ordinary course of business.
8.07. Intentionally Omitted.
8.08. Limitation on Liens.
The Company shall not, and shall not cause or permit any Subsidiary of
the Company to, directly or indirectly, create, incur, assume, suffer to exist
or affirm any Lien (other than Permitted Liens) of any kind securing any
Subordinated Indebtedness (including any assumption, guarantee or other
liability with respect thereto by any Subsidiary) upon any of its property or
assets (including any intercompany notes), whether owned at the Closing Time or
acquired after the Closing Time, or any proceeds, income or profits therefrom,
or assign or convey any right to receive proceeds, income or profits therefrom,
unless the Notes are directly secured prior or senior thereto, with the same
relative priority as the Notes shall have with respect to such Subordinated
Indebtedness.
8.09. Limitation on Issuances and Sales of Capital Stock of
Subsidiaries.
The Company (a) shall not, and shall not cause or permit any Subsidiary
of the Company to, transfer, convey, sell, lease or otherwise dispose of any
Capital Stock of any Subsidiary of the Company to any Person (other than the
Company or a Wholly Owned Subsidiary of the Company or to an employee, officer
or director under a stock option or stock grant plan), unless the Net Cash
Proceeds from such transfer, conveyance, sale, lease or other disposition are
applied in accordance with the provisions of Section 8.05 hereof; provided,
however, that this clause (a) shall not apply to any pledge of Capital Stock of
any Subsidiary of the Company securing Senior Indebtedness or the Notes, and (b)
shall not, and shall not cause or permit any Subsidiary of the Company to, issue
any Redeemable Capital Stock to any Person.
8.10. Limitation on Certain Senior Indebtedness.
The Company and its Subsidiaries shall not permit any Senior
Indebtedness owing to any Bridge Lender to be in an amount less than $750,000.
8.11. Merger, Consolidation, or Sale of Assets.
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The Company shall not consolidate or merge with or into (whether or not the
Company is the surviving corporation), or directly and/or indirectly through its
Subsidiaries sell, assign, transfer, lease, convey or otherwise dispose of all
or substantially all of the properties and assets of the Company and its
Subsidiaries taken as a whole in one or more related transactions, to any other
Person unless (a) (i) the Company is the surviving corporation or (ii) the
entity or the Person formed by or surviving any such consolidation or merger (if
other than the Company) or to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made (the entity or Person
described in this clause (ii), the "Successor Company") is a corporation
organized or existing under the laws of the United States, any state thereof or
the District of Columbia; (b) the Successor Company assumes all the obligations
of the Company under the Notes and this Agreement pursuant to an amendment or
supplement to this Agreement and each other instrument, document or agreement
entered into by the Company in connection therewith, in each case in a form
reasonably satisfactory to the Required Holders; (c) immediately after such
transaction no Default or Event of Default exists; and (d) the Company or the
Successor Company (i) will have Consolidated Net Worth immediately after the
transaction equal to or greater than the Consolidated Net Worth of the Company
immediately preceding the transaction and (ii) together with its Subsidiaries
will, at the time of such transaction and after giving pro forma effect thereto,
have a ratio of Indebtedness to Adjusted EBITDA on a consolidated basis for the
preceding four full fiscal quarters that is no less than the ratio of
Indebtedness to Adjusted EBITDA for the preceding four full fiscal quarters for
the Company and its Subsidiaries on a consolidated basis.
8.12. Successor Company Substituted.
Upon any consolidation of the Company with, or merger of the Company
into, any other Person or any transfer, conveyance, sale, lease or other
disposition of all or substantially all of the properties and assets of the
Company and its Subsidiaries taken as a whole in one or more related
transactions in accordance with Section 8.11, the Successor Company shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under this Agreement and the Notes with the same effect as if such
Successor Company had been named as the Company herein, and thereafter, except
in the case of a lease, the predecessor Company shall be relieved of all
obligations and covenants under this Agreement and the Notes unless, in the case
of a sale of assets, not all of the assets of the Company and its Subsidiaries
are sold.
8.13. Additional Subsidiary Guarantees.
If the Company or any of its Subsidiaries shall acquire or create
another domestic Subsidiary after the date of this Agreement, then such newly
acquired or created Subsidiary shall execute and deliver to the Noteholders a
Subsidiary Guarantee of the Notes in the form of Exhibit E hereto and a
Supplemental Agreement substantially in the form of Exhibit F hereto pursuant to
which such Subsidiary shall unconditionally guarantee all of the Company's
obligations under the Notes on the terms set forth in Subsidiary Guarantee and
such Supplemental Agreement.
8.14. Conduct of Business.
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The Company and its Subsidiaries shall not engage in any businesses
which are not the same, similar, related or ancillary to the businesses in which
the Company and its Subsidiaries are engaged in at the Closing Time after giving
effect to the Transactions.
8.15. Intentionally Omitted.
8.16. Public Disclosures.
The Company shall not, and shall not permit any of its Subsidiaries to,
disclose the name or identity of any Noteholder or its Affiliates as an investor
in the Company in any press release or other public announcement or in any
document or material filed with any governmental entity, unless such disclosure
is required by applicable law or governmental regulations or by order of a court
of competent jurisdiction, in which case prior to making such disclosure the
Company shall, if practicable in the Company's good faith judgment, give written
notice to such Noteholder describing in reasonable detail the proposed content
of such disclosure and shall permit such Noteholder to review and comment upon
the form and substance of such disclosure. Lender understands that Parent will
file this Agreement and certain of the Transaction Documents with the SEC.
8.17. Capital Expenditures.
The Company shall not, and shall not permit any of its Subsidiaries to,
make any Capital Expenditure if the making of such Capital Expenditure would
result in the then Applicable Capital Expenditure Limit to be exceeded;
provided, however, that nothing in this Section 8.17 shall limit Capital
Expenditures incurred (i) in connection with the refurbishment or replacement of
Mountainside Medical Center, (ii) out of the proceeds of any sale of any assets
excluded from the term "Asset Sale" by clause (e) of the definition thereof, or
(iii) as permitted under Section 7.11(b).
SECTION 9
COLLATERAL
9.01. Grant of Lien on Collateral.
(a) Except as provided in Section 9.02, each of the Company and
any Subsidiary hereby agrees and covenants for the benefit of the Lender and
each Noteholder to grant to the Lender a security interest in, or mortgage on,
all (i) its now or hereafter acquired real property and (ii) all now or
hereafter acquired personal property as to which such security interest may be
perfected by filing a financing statement under the Uniform Commercial Code in
effect in the State of New York or other applicable jurisdiction, whether
tangible or intangible, located within the United States, and (iii) all Capital
Stock now or hereafter owned by it in any Subsidiary (collectively,
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the "Collateral"), as security for the payment and/or performance when due of
all the Obligations.
(b) Concurrently with the execution of this Agreement, the Company
and each of its Subsidiaries have (i) entered into a Pledge Agreement pursuant
to which they have pledged to the Lender all Collateral consisting of Capital
Stock in any Subsidiary and a Security Agreement pursuant to they have granted
the Lender a security interest in all Collateral constituting personal property
as to which the granting of a security interest is governed by the Uniform
Commercial Code as in effect in the State of New York or any other applicable
jurisdiction, and (ii) taken such action as is necessary so that such security
interest shall be a valid perfected security interest in such Collateral.
(c) Subject to Section 9.02, no later than 180 days after the date
of this Agreement, the Company and each of its Subsidiaries shall (i) execute
and deliver to the Lender such documentation as is necessary to grant to Lender
a mortgage in all its real property, and (ii) taken such action as is necessary
so that such security interest shall be a valid, perfected security interest in
such Collateral. All such documentation shall be prepared by the Lender and its
counsel and shall contain terms that are reasonable and customary. Each of the
Company and the Lender shall bear their own legal costs and expenses in
connection with all such mortgages, except that one-half of all recording fees,
filing fees and similar expenses shall be borne by the Company.
9.02. Subordination, Release and Re-Grant.
(a) In addition to the subordination provided in Section 13.12,
the Lender shall from time to time at the request of the Company subordinate its
Lien in the Collateral to any Lien in the Collateral granted to a holder of
Senior Indebtedness in a manner, and pursuant to documentation, that is
reasonable and customary.
(b) In the event that at any time prior to 180 days after the date
of this Agreement, as a condition to provide financing to the Company and/or any
Subsidiary in an amount initially of not less than $2,500,000 that would
otherwise qualify as Senior Indebtedness ("New Senior Indebtedness"), the
proposed lender (an "Objecting Senior Lender") requires that the Liens to be
granted pursuant to Section 9.01 not be granted, then those Liens shall not be
granted if and only for so long as the following conditions are met:
(i) the Lender shall have been provided with
prior written notice (at least 30 days' prior written notice
in the case of any Objecting Senior Lender other than the
Bridge Lenders with respect to the loan evidenced by the
Bridge Loan Documents) of the requirement that such Liens not
be granted and of the time and the place of the closing of the
New Senior Indebtedness,
(ii) prior to the closing (at least 30 days'
prior to the closing in the case of any Objecting Senior
Lender other than the Bridge Lenders with respect to the loan
evidenced by the Bridge Loan Documents) of the financing to be
provided by the Objecting Senior Lender, the Lender shall have
been provided with (A) copies of the final documentation
relating to the New Senior Indebtedness and
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a description of all material terms of the New Senior
Indebtedness, and (B) the statement of the President of the
Company to the effect that the Company has used its reasonable
efforts to procure similar financing from sources that would
not require that such Liens not be granted together with a
description of such efforts; and
(iii) the New Senior Indebtedness shall continue
to qualify as Senior Indebtedness and shall be in an amount of
not less than $2,500,000 initially and thereafter $750,000.
(c) In the event that as a condition to provide New Senior
Indebtedness to the Company and/or any Subsidiary the Objecting Senior Lender
insists on the release by the Lender of its Lien in any or all of the
Collateral, then the Lender shall, simultaneously with the provision to the
Company and/or such Subsidiary of such additional financing, release its Lien to
the extent so required provided that the following conditions are met:
(i) the Lender shall have been provided with at
least 30 days' prior written notice of the requirement that it
release any or all of its Lien and of the time and the place
of the closing of the financing to be provided by the
Objecting Senior Lender, and
(ii) at least 30 days' prior to the date of the
closing of the financing to be provided by the Objecting
Senior Lender, the Lender shall have been provided with (A)
copies of the final documentation relating to the additional
financing to be provided by the Objecting Senior Lender and a
description of all material terms of the financing to be
provided by the Objecting Senior Lender, (B) the statement of
the President of the Company to the effect that the Company
has used its reasonable efforts to procure similar financing
from sources that would not require that the Lien not be
released together with a description of such efforts, and (C)
copies of all documentation pursuant to which the Lender is to
release all or any part of its Lien in the Collateral (all of
which shall be without recourse to the Lender) and
(iii) the New Senior Indebtedness shall continue
to qualify as Senior Indebtedness and shall be in an amount of
not less than $2,500,000 initially and thereafter $750,000.
In the event that either (i) pursuant to Section 9.02(b) the Lender is
not granted the Liens to be granted to it pursuant to Section 9.01, or (ii)
pursuant to Section 9.02(c), the Lender releases its Liens on all or any portion
of the Collateral, then all such Liens shall be granted or re-granted as soon as
reasonably practicable after either (i) the Objecting Senior Lender shall no
longer be providing the New Senior Indebtedness or (ii) the Objecting Senior
Lender no longer objects to the granting of any such Lien.
(d) The Lien of the Lender under any security agreement or
mortgage entered into pursuant to the terms hereof shall, without the necessity
of further action by the Lender, be automatically released from any assets or
property of the Company or any Subsidiary which the
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Company or such Subsidiary sells or otherwise disposes of (i) in the ordinary
course of its business pursuant to a sale, transfer or disposition not otherwise
prohibited by this agreement, (ii) in an Asset Sale permitted by Section 8.05
(iii) in a sale, transfer or disposition not otherwise prohibited by this
Agreement.
SECTION 10
THE NOTES
10.01. Form and Execution.
(a) The Balloon Notes shall be in the form of Exhibit A hereto and
the Zero Coupon Note shall be in the form of Exhibit B hereto. The Notes shall
be executed on behalf of the Company by its President or one of its Vice
Presidents, under its corporate seal reproduced thereon attested by its
Secretary or one of its Assistant Secretaries. The signature of any of these
officers on the Notes may be manual or facsimile.
(b) Notes bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Notes or did
not hold such offices at the date of such Notes.
10.02. Terms of the Notes.
The terms of the Balloon Notes shall be as set forth in Exhibit A and
those of the Zero Coupon Notes shall be as set forth in Exhibit B. Without
limiting the foregoing:
(a) Stated Maturity. The Stated Maturity of the principal of
Balloon Notes shall be as provided in Exhibit A and the Stated Maturity of the
principal of Zero Coupon Notes shall be as provided in Exhibit B.
(b) Interest. The Balloon Notes will bear interest on their
principal amount and overdue interest as provided in Exhibit A and the Zero
Coupon Notes will bear interest on their principal amount and overdue interest
as provided in Exhibit B.
10.03. Denominations.
The Notes shall be issuable only in registered form without coupons.
10.04. Form of Legend for the Notes.
Every Note issued and delivered hereunder shall bear a legend in
substantially the following form:
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THE SECURITY REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
QUALIFIED UNDER ANY STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED, SOLD OR
OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION STATEMENT IS IN EFFECT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
AND APPLICABLE STATE SECURITIES LAWS. THE HOLDER OF THIS SECURITY IS SUBJECT TO
THE TERMS OF THE LOAN AGREEMENT BETWEEN SUNLINK HEALTHCARE CORP. (THE
"COMPANY"), ITS SUBSIDIARIES AND NHS, INC., DATED AS OF JANUARY__, 2001 (THE
"AGREEMENT"). A COPY OF SUCH PURCHASE AGREEMENT IS AVAILABLE AT THE OFFICES OF
THE COMPANY.
10.05. Payments and Computations.
All payments of interest on the Notes shall be paid to the persons in
whose names such Notes are registered on the Security Register at the close of
business on the date fifteen days prior to the related Interest Payment Date
(the "Regular Record Date") and all payments of principal on the Notes shall be
paid to the persons in whose names such Notes are registered on the applicable
Redemption Date or at Maturity, as applicable. Payments of interest or principal
on Notes shall be made, in accordance with this Agreement and subject to
applicable laws and regulations, by check mailed on or before the due date for
such payment to the person entitled thereto at such person's address appearing
on the Security Register or, by wire transfer to such account as any Noteholder
shall designate by written instructions received by the Company no less than 15
days prior to any applicable payment date, which wire instruction shall continue
in effect until such time as the Noteholder otherwise notifies the Company or
such Noteholder no longer is the registered owner of such Note or Notes.
Interest will be computed on the basis of a 360-day year of twelve
30-day months.
10.06. Registration, Registration of Transfer and Exchange.
(a) Security Register.
The Company shall maintain a register (the "Security Register") for the
registration or transfer of the Notes. The name and address of the holder of
each Note, records of any transfers of the Notes and the name and address of any
transferee of a Note shall be entered in the Security Register and the Company
shall, promptly upon receipt thereof, update the Security Register to reflect
all information received from a Noteholder.
(b) Registration of Transfer.
Upon surrender for registration of transfer of any Note at the office
or agency of the Company, the Company shall execute and deliver, in the name of
the designated transferee or transferees, one or more new Notes, of any
authorized denominations and like aggregate principal amount.
(c) Exchange.
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At the option of the Noteholder, Notes may be exchanged for other
Notes, of any authorized denominations of at least $100,000.00 and of like
aggregate principal amount, upon surrender of the Notes to be exchanged at such
office or agency. Whenever any Notes are so surrendered for exchange, the
Company shall execute and deliver the Notes which the holder making the exchange
is entitled to receive.
(d) Effect of Registration of Transfer or Exchange.
All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Company, evidencing the same debt, and
entitled to the same benefits under this Agreement, as the Notes surrendered
upon such registration of transfer or exchange.
(e) Requirements; Charges.
Every Note presented or surrendered for registration of transfer or for
exchange shall (if so required by the Company) be duly endorsed, or be
accompanied by a written instrument of transfer in form satisfactory to the
Company duly executed, by the holder thereof or his attorney duly authorized in
writing. No service charge shall be made for any registration of transfer or
exchange of Notes, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Notes, other than exchanges
pursuant to Section 8.11 not involving any transfer.
(f) Certain Limitations.
If the Notes are to be redeemed in part, the Company shall not be
required (i) to issue, register the transfer of or exchange any Note during a
period beginning at the opening of business 15 days before the day of the
mailing of a notice of redemption of any such Notes selected for redemption
under Section 12.02 and ending at the close of business on the day of such
mailing, or (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.
10.07. Mutilated, Destroyed, Lost and Stolen Notes.
If any mutilated Note is surrendered to the Company, the Company shall
execute and deliver in exchange therefor a new Note of the same principal amount
and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company (a) evidence to its
satisfaction of the destruction, loss or theft of any Note and (b) such security
or indemnity as may be required by them to save each of it and any agent
harmless, then, in the absence of notice that such Note has been acquired by a
bona fide purchaser, the Company shall execute and deliver, in lieu of any such
destroyed, lost or stolen Note, a new Note of a like principal amount and
bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Note has become
or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Note, pay such Note.
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Upon the issuance of any new Note pursuant to this Section, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses connected therewith.
Every new Note issued pursuant to this Section in lieu of any
destroyed, lost or stolen Note shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Note shall be at any time enforceable by anyone, and shall be entitled to
all the benefits of this Agreement equally and proportionately with any and all
other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes.
10.08. Persons Deemed Owners.
Prior to due presentment of a Note for registration of transfer, the
Company and any agent of the Company may treat the Person in whose name such
Note is registered as the owner of such Note for the purpose of receiving
payment of principal of and interest on such Note and for all other purposes
whatsoever, whether or not such Note be overdue and neither the Company nor any
agent of the Company shall be affected by notice to the contrary.
10.09. Cancellation.
All Notes surrendered for payment, redemption, registration of transfer
or exchange shall, if surrendered to any Person other than the Company, be
delivered to the Company and shall be promptly canceled by it. The Company shall
cancel any Notes previously issued and delivered hereunder which the Company may
have reacquired.
10.10. Home Office Payment.
So long as any Noteholder or its nominee shall be the holder of any
Note, and notwithstanding anything contained in this Agreement or such Note to
the contrary, the Company will pay all sums becoming due on such Note for
principal, premium, if any, and interest by such method and at such address as
such Noteholder shall have from time to time specified to the Company in writing
for such purpose, without the presentation or surrender of such Note or the
making of any notation thereon, except that upon written request of the Company
made concurrently with or reasonably promptly after payment or prepayment in
full of any Note, such Noteholder shall surrender such Note for cancellation
reasonably promptly after any such request, to the Company at its principal
executive office. Prior to any sale or other disposition of any Note held by
such Noteholder or its nominee such Noteholder will, at its election, either
endorse thereon the amount of principal paid thereon and the last date to which
interest has been paid thereon or surrender such Note to the Company in exchange
for a new Note or Notes pursuant to Section 10.06. The Company will afford the
benefits of this Section 10.10 to any Institutional Investor that is the direct
or indirect transferee of any Note purchased by such Noteholder under this
Agreement and that has made the same agreement relating to such Note as such
Noteholder made in this Section 10.10.
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SECTION 11
EVENTS OF DEFAULT
11.01. Events of Default.
An Event of Default shall exist upon the occurrence and during the
continuance of any of the following specified events (each an "Event of
Default"):
(a) the Company defaults in the payment when due of interest on
the Notes and such default continues for a period of 10 days (whether or not
such payment is otherwise then permitted by the provisions of Section 13 of this
Agreement);
(b) the Company defaults in the payment when due of principal of
or premium, if any, on the Notes when the same becomes due and payable at its
Maturity (whether or not such payment is otherwise then permitted by the
provisions of Section 13 of this Agreement);
(c) the Company fails to comply with any of the provisions of
Sections 7.08, 7.09, 8.02 through 8.15 (inclusive) and 8.17, and, with respect
to Sections 7.08, 7.09, 8.03 through 8.15 (inclusive) and 8.17 such failure
continues for a period of 20 days after the Company has received a notice of
such failure from any Noteholder, which notice must specify the failure, demand
that it be remedied and state that the notice is a "Notice of Default";
(d) the Company fails to observe or perform any other covenant, or
other agreement in this Agreement or the Notes or any Transaction Document and
such failure continues for a period of 30 days after the Company has received a
notice of such failure from any Noteholder, which notice must specify the
failure, demand that it be remedied and state that the notice is a Notice of
Default;
(e) any representation, warranty, certification or statement made
by or on behalf of the Company or by any officer of the Company in respect of
any Transaction Document or in any statement or certificate at any time given by
or on behalf of any Issuer or by any officer of any Issuer in writing pursuant
hereto or in connection herewith or therewith shall be false in any material
respect on the date as of which made;
(f) a default occurs under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or evidenced
any Indebtedness of the Company or any of its Subsidiaries (or payment of which
is guaranteed by the Company or any of its Subsidiaries), whether such
Indebtedness or guarantee now exists, or is created after the date of this
Agreement, which default constitutes a failure to pay any portion of the
principal of or premium, if any, or interest on such Indebtedness when due and
payable after the expiration of any applicable grace period provided in such
Indebtedness on the date of such default (a "Payment Default") and shall have
resulted in such Indebtedness being accelerated or otherwise becoming or being
declared due and payable prior to its stated maturity and, in each case, the
principal amount of any such Indebtedness, together with the principal amount of
any other such Indebtedness under which there has been a Payment Default or the
maturity of which has been so accelerated, aggregates $500,000 or more;
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(g) a final judgment or final judgments for the payment of money
are entered by a court or courts of competent jurisdiction against the Company
or any of its Subsidiaries and such judgment or judgments remain unpaid and
undischarged for a period (during which execution shall not be effectively
stayed) of 60 consecutive days, provided that the aggregate of all such
undischarged judgments exceeds $500,000 above applicable insurance coverage;
(h) the Company or any of its Subsidiaries or any group of
Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary
pursuant to or within the meaning of Bankruptcy Law:
(i) commences a voluntary case or proceeding,
(ii) consents to the entry of a decree or order for,
relief against it in an involuntary case or proceeding or to the
commencement of any case or proceeding against it,
(iii) consents to the filing of a petition or to the
appointment of or taking possession by a Custodian of it or for all or
any substantial part of its property,
(iv) makes or consents to the making of a general
assignment for the benefit of its creditors,
(v) generally is not paying, or admits in writing that it
is not able to pay, its debts as they become due, or
(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 of
its Significant Subsidiaries or any group of Subsidiaries
that, taken as a whole, would constitute a Significant
Subsidiary, in an involuntary case or proceeding;
(B) appoints a Custodian of the Company or any
of its Significant Subsidiaries or any group of Subsidiaries
that, taken as a whole, would constitute a Significant
Subsidiary, or for all or any substantial part of the property
of the Company or any of its Significant Subsidiaries or any
group of Subsidiaries that, taken as a whole, would constitute
a Significant Subsidiary, or approves as properly filed a
petition seeking reorganization, arrangement, adjustment or
composition of or in respect of any of the foregoing; or
(C) orders the winding up or liquidation of the
Company or any of its Significant Subsidiaries or any group of
Subsidiaries that, taken as a whole, would constitute a
Significant Subsidiary, or adjudges any of them a bankrupt or
insolvent;
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and any such order or decree remains unstayed and in effect
for 60 consecutive days;
(i) any one or more of the following shall occur with respect to
the Subsidiary Guarantee(s) of one or more Subsidiaries that, if taken in the
aggregate as a single entity, would qualify as a "Significant Subsidiary": (i)
such Subsidiary Guarantee shall cease to be in full force and effect and/or (ii)
such Subsidiary Guarantee shall be declared to be null and void and
unenforceable and/or (iii) such Subsidiary Guarantee shall be found to be
invalid and/or (iv) any Subsidiary denies its liability under such Subsidiary
Guarantee (other than by reason of payment or release of a Subsidiary in
accordance with the terms of this Agreement).
Notwithstanding anything in this Section 11 to the contrary, no Default or Event
of Default shall be deemed to have occurred or exist by reason of the failure to
pay any amount due on the Zero Coupon Note which would not otherwise be due and
payable by reason of the Company's right of set-off of the Company's claims
under Article 10 of the Stock Purchase Agreement so long as such claims are made
in good faith and subject to dispute. Upon resolution by agreement, litigation
or arbitration, as the case may be, of any such dispute, any amounts not
previously paid by reason of such dispute shall be paid within ten (10) days
after the Company's claims are finally resolved if and to the extent that such
claims in respect of such unpaid amounts are resolved against the Company,
together with interest at the rate of 8.5% per annum from the date such amount
would have been payable but for the operation of this paragraph.
11.02. Remedies. If an Event of Default (other than an Event of
Default specified in Section 11.01(h)) occurs and is continuing, then and in
every such case the Noteholders of more than 25% in principal amount of the
Notes at the time outstanding may declare the principal amount of all the Notes
to be due and payable immediately, by a notice in writing to the Company, and
upon any such declaration such principal amount and any accrued interest shall
become immediately due and payable. For the avoidance of doubt, if any Payment
Default or acceleration that constitutes an Event of Default under Section
11.01(f) shall have occurred and prior to any acceleration under this Section
11.02 such Payment Default shall have been cured or waived or such acceleration
shall have been rescinded, then from and after such cure, waiver or rescission,
such Event of Default shall no longer be deemed to be continuing. If an Event of
Default specified in Section 11.01(h) occurs and is continuing, the principal
amount of and any accrued interest on the outstanding Notes shall automatically,
and without any declaration or other action on the part of any Noteholder,
become immediately due and payable.
At any time after such a declaration of acceleration has been made and
before a judgment or decree for payment of the money due has been obtained, the
Required Holders, by written notice to the Company, may rescind and annul such
declaration and its consequences if:
(a) the Company has paid a sum sufficient to pay:
(i) all overdue interest on all Notes;
(ii) the principal of (and premium, if any, on)
any Notes which have become due otherwise than by such
declaration of acceleration (including any Notes required to
have been purchased pursuant to an offer to purchase that the
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Company is required to make hereunder) and any interest
thereon at the rate borne by the Notes; and
(iii) to the extent that payment of such interest
is lawful, interest upon overdue interest at the rate provided
therefor in the Notes; and
(b) all Events of Default, other than the nonpayment of the
principal amount of Notes and interest thereon which have become due solely by
such declaration of acceleration, have been cured or waived as provided in
Section 11.03.
11.03. Waiver of Past Defaults. The Required Holders may on behalf of
the Noteholders of all the Notes waive any past default hereunder and its
consequences, except a default:
(a) in the payment of the principal (or premium, if any) or
interest on any Note (including any Note which is required to have been
purchased pursuant to an offer to purchase that the Company is required to make
hereunder), or
(b) in respect of a covenant or provision hereof which under
Section 16.04 cannot be modified or amended without the consent of the Holder of
each outstanding Note directly affected thereby.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Agreement; provided, however, no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.
SECTION 12
REDEMPTION
12.01. Right of Redemption. The Balloon Notes may be redeemed at the
election of the Company at such times, in such amounts and at the Redemption
Price (together with any applicable accrued interest to the Redemption Date)
specified in the form of Balloon Note attached as Exhibit A hereto. The Zero
Coupon Notes may be redeemed at the election of the Company at such times, in
such amounts and at the Redemption Price (together with any applicable accrued
interest to the Redemption Date) specified in the form of Zero Coupon Note
attached as Exhibit B hereto.
12.02. Partial Redemptions. In case the Company elects to redeem less
than all of the Notes, the Company shall redeem the Notes pro rata from each
Noteholder. For all purposes of this Agreement, unless the context otherwise
requires, all provisions relating to the redemption of Notes shall relate, in
the case of any Notes redeemed or to be redeemed only in part, to the portion of
the principal amount of such Notes which has been or is to be redeemed.
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12.03. Notice of Redemption. Notice of redemption shall be given by
first-class mail, postage prepaid, mailed not less than 15 nor more than 60 days
prior to the Redemption Date, to each Noteholder to be redeemed, at his address
appearing in the Security Register.
All notices of redemption shall state:
(a) the Redemption Date,
(b) the Redemption Price,
(c) if less than all the outstanding Balloon Notes or Zero Coupon
Notes, as the case may be, are to be redeemed, the portion of each such Note to
be redeemed,
(d) that on the Redemption Date the Redemption Price will become
due and payable upon each such Note to be redeemed and that interest thereon
will cease to accrue on and after said date, and
(e) the place or places where such Notes are to be surrendered for
payment of the Redemption Price.
Notice of redemption of Notes to be redeemed at the election of the
Company shall be given by the Company and at the expense of the Company.
12.04. Deposit of Redemption Price. Prior to any Redemption Date, the
Company shall segregate and hold in trust an amount of money sufficient to pay
the applicable Redemption Price of, and (except if the Redemption Date shall be
an Interest Payment Date) any applicable accrued interest on, all the Notes
which are to be redeemed on that date.
12.05. Notes Payable on Redemption Date. If notice of redemption
shall have been given as provided above, the Notes so to be redeemed shall, on
the Redemption Date, become due and payable at the Redemption Price therein
specified, and from and after such date (unless the Company shall default in the
payment of the Redemption Price and any applicable accrued interest) such Notes
shall not bear interest. Upon surrender of any such Note for redemption in
accordance with said notice, such Note shall be paid by the Company at the
Redemption Price, together with any applicable accrued interest to the
Redemption Date; provided, however, that installments of interest whose Stated
Maturity is on or prior to the Redemption Date shall be payable to the
Noteholders of such Notes, or one or more Predecessor Notes, registered as such
at the close of business on the relevant Record Dates according to their terms
and the provisions of this Agreement.
If any Note called for redemption shall not be so paid upon surrender
thereof for redemption, the principal shall, until paid, bear interest from the
Redemption Date at the rate provided by the Note.
12.06. Notes Redeemed in Part. Any Note which is to be redeemed only
in part shall be surrendered at the principal offices of the Company (with, if
the Company so requires, due endorsement by, or a written instrument of transfer
in form satisfactory to the Company duly executed by, the Noteholder thereof or
his attorney duly authorized in writing), and the Company
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shall execute and deliver to the Noteholder of such Note without service charge,
a new Note or Notes, of any authorized denomination as requested by such
Noteholder, in aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the Note so surrendered.
SECTION 13
SUBORDINATION OF NOTES
13.01. Obligations Subordinate to Senior Indebtedness. The Company
covenants and agrees, and the Lender, each Noteholder by his acceptance of his
Note, and each of their respective successors and assigns by his acceptance
thereof (collectively, the "Junior Creditors") likewise covenants and agrees,
that, to the extent and in the manner hereinafter set forth in this Section 13,
the payment of the principal of (and premium, if any) and interest on each and
all of the Notes and the payment of all other indebtedness, obligations and
liabilities of the Company under or related to the Stock Purchase Agreement, or
any document executed in connection therewith, to any Junior Creditor (other
than the payment of the cash portion of the Purchase Price (as defined in the
Stock Purchase Agreement) which is being paid to the Lender on the date hereof),
now existing or hereafter arising, regardless of how evidenced or acquired
(collectively, the "Junior Indebtedness") are hereby expressly made subordinate
and subject in right of payment to the prior payment in full of all Senior
Indebtedness of the Company. The provisions of this Section 13 shall continue to
be effective or be reinstated, as the case may be, if at any time any payment of
any of the Senior Indebtedness is rescinded or must otherwise be returned by a
holder of Senior Indebtedness upon any Proceeding or otherwise, all as though
such payment had not been made.
13.02. Payment Over of Proceeds Upon Dissolution, Etc. In the event
of (a) any insolvency or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization or other similar case or proceeding in connection
therewith, relative to the Company or to its creditors, as such, or to its
assets, or (b) any liquidation, dissolution or other winding up of the Company,
whether voluntary or involuntary and whether or not involving insolvency or
bankruptcy, (c) any assignment for the benefit of creditors or any other
marshaling of assets and liabilities of the Company, or (d) any other event
described in Section 11.01(h), then and in any such event specified in clause
(a), (b), (c) or (d) above (each such event, if any, herein sometimes referred
to as a "Proceeding") the holders of Senior Indebtedness shall be entitled to
receive or retain payment in full in cash or Cash Equivalents of all amounts due
or to become due on or in respect of all Senior Indebtedness, before the Junior
Creditors are entitled to receive any payment or distribution of any kind or
character, whether in cash, property or securities, on account of principal of
(or premium, if any) or interest on or other obligations in respect of the Notes
(including any interest accruing on or after the filing of any Proceeding,
whether or not allowed in such Proceeding) or on account of any purchase or
other acquisition of Notes by the Company or any Subsidiary of the Company, or
otherwise on account of any Junior Indebtedness, whether at maturity, by
acceleration or demand for prepayment, or by filing or joining a filing in a
Proceeding (all such payments, distributions, purchases and acquisitions
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herein referred to, individually and collectively, as a "Notes Payment"), and to
that end the holders of Senior Indebtedness shall be entitled to receive, for
application to the payment thereof, any Notes Payment which may be payable or
deliverable in respect of the Notes in any such Proceeding.
In the event that, notwithstanding the foregoing provisions of this
Section 13.02, any Junior Creditor shall have received any Notes Payment before
all Senior Indebtedness is paid in full in cash or Cash Equivalents then and in
such event such Notes Payment shall be paid over or delivered forthwith by the
trustee in bankruptcy or other person making payment or distribution of assets
of the Company for the application to the payment of all Senior Indebtedness
remaining unpaid, to the extent necessary to pay the Senior Indebtedness in full
in cash or Cash Equivalents, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Indebtedness.
For purposes of this Section 13 only, the words "any payment or
distribution of any kind or character, whether in cash, property or securities"
shall not be deemed to include a payment or distribution of stock or securities
of the Company provided for by a plan of reorganization or readjustment
authorized by an order or decree of a court of competent jurisdiction in a
reorganization proceeding under any applicable bankruptcy law or of any other
corporation provided for by such plan of reorganization or readjustment which
stock or securities are subordinated in right of payment to all then outstanding
Senior Indebtedness to substantially the same extent as, or to a greater extent
than, the Notes are so subordinated as provided in this Section 13, if such plan
has been approved by the holders of Designated Senior Indebtedness. The
consolidation of the Company with, or the merger of the Company into, another
Person or the liquidation or dissolution of the Company following the conveyance
or transfer of all or substantially all of its properties and assets as an
entirety to another Person upon the terms and conditions set forth in Section
8.11 shall not be deemed a Proceeding for the purposes of this Section 13.02 if
the Person formed by such consolidation or into which the Company is merged or
the Person which acquires by conveyance or transfer such properties and assets,
as the case may be, shall, as a part of such consolidation, merger, conveyance
or transfer, comply with the conditions set forth in Section 8.11.
13.03. No Payment When Senior Indebtedness in Default. In the event
that any Senior Payment Default (as defined below) shall have occurred and be
continuing, then no Notes Payment shall be made or retained, and no Junior
Creditor shall attempt to collect any Notes Payment, unless and until such
Senior Payment Default shall have been cured or waived or shall have ceased to
exist or all amounts then due and payable in respect of Senior Indebtedness
shall have been paid in full in cash or Cash Equivalents. "Senior Payment
Default" means any default in the payment of any Designated Senior Indebtedness
when due, whether at the due date of any such payment, by declaration of
acceleration or call for redemption, or otherwise.
Upon the occurrence of a Senior Non-Payment Default (as defined below)
and receipt of written notice by the Company of the occurrence of such Senior
Non-Payment Default from any holder of Designated Senior Indebtedness (or any
trustee, agent or other representative for such holder) which is the subject of
such Senior Non-Payment Default, no Notes Payment may be made or retained, and
no Junior Creditor shall attempt to collect any Notes Payment, during a period
(the "Payment Blockage Period") commencing on the date of the receipt by the
Company
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of such notice and ending the earlier of (i) the date on which such Senior
Non-Payment Default shall have been cured or waived or ceased to exist or all
Designated Senior Indebtedness which was the subject of such Senior Non-Payment
Default shall have been paid in full in cash or Cash Equivalents and (ii) the
earlier to occur of (A) the 364th day after the receipt of such notice and (B)
179th day after the date the principal amount of the Notes becomes due and
payable (without regard to any payment accelerations). No Senior Non-Payment
Default that existed or was continuing on the date of the commencement of a
Payment Blockage Period may be made the basis of the commencement of a
subsequent Payment Blockage Period whether or not within a period of 364
consecutive days, unless such Senior Non-Payment Default shall have been cured
for a period of not less than 90 consecutive days. In any event, notwithstanding
the foregoing, no more than one Payment Blockage Period may be commenced during
any 455-day period and there shall be a period of at least 90 days during each
455-day period when no Payment Blockage Period is in effect and no Payment
Blockage Period shall be effective with respect to the exercise of any remedies
if an action or proceeding in arbitration or litigation has been commenced
within such 90-day period. "Senior Non-Payment Default" means the occurrence or
existence and continuance of an event of default with respect to Designated
Senior Indebtedness, other than a Senior Payment Default, that by the terms of
such Designated Senior Indebtedness permits the holders of the Designated Senior
Indebtedness (or a trustee or other agent on behalf of the holders thereof) then
to declare such Designated Senior Indebtedness due and payable prior to the date
on which it would otherwise become due and payable.
The failure to make any payment on the Notes by reason of the
provisions of this Section 13.03 will not be construed as preventing the
occurrence of an Event of Default with respect to the Notes arising from any
such failure to make payment. Upon termination of any period of Payment Blockage
Period, the Company shall, subject to the first paragraph of this Section 13.03
and to Section 13.07, resume making any and all required payments in respect of
the Notes, including any missed payments.
In the event that, notwithstanding the foregoing, the Company shall
make any Notes Payment to any Junior Creditor prohibited by the foregoing
provisions of this Section 13.03, then and in such event such Notes Payment to
such Junior Creditor shall be paid over and delivered forthwith to the holders
of the Senior Indebtedness of the Company in the same form received and, until
so turned over, the same shall be held in trust by such Junior Creditor as the
property of the holders of the Senior Indebtedness.
Except as provided in the previous paragraph, the provisions of this
Section 13.03 shall not apply to any Notes Payment with respect to which Section
13.02 would be applicable.
13.04. Payment Permitted If No Default. Nothing contained in this
Section 13 or elsewhere in this Agreement or in any of the Notes shall prevent
the Company, at any time except during the pendency of any Proceeding referred
to in Section 13.02 or under the conditions described in Section 13.03, from
making Notes Payments.
13.05. Subrogation to Rights of Holders of Senior Indebtedness. Only
after the payment in full in cash or Cash Equivalents of all amounts due or to
become due on or in respect of Senior Indebtedness, the Junior Creditors shall
be subrogated to the rights of the holders of Senior Indebtedness to receive
payments and distributions of cash, property and securities applicable to
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such Senior Indebtedness until the principal of (and premium, if any) and
interest on the Notes shall be paid in full. For purposes of such subrogation,
no payments or distributions to the holders of the Senior Indebtedness of the
Company of any cash, property or securities to which the Junior Creditors would
be entitled except for the provisions of this Section 13, and no payments over
pursuant to the provisions of this Section 13 to the holders of Senior
Indebtedness by such Junior Creditors, shall, as among the Company, its
creditors other than holders of Senior Indebtedness and the Junior Creditors, be
deemed to be a payment or distribution by the Company to or on account of the
Senior Indebtedness of the Company.
13.06. Provisions Solely to Define Relative Rights. The provisions of
this Section 13 are and are intended solely for the purpose of defining the
relative rights of the Lender and the Junior Creditors on the one hand and the
holders of Senior Indebtedness on the other hand. Nothing contained in this
Section 13 or elsewhere in this Agreement or in the Notes is intended to or
shall (a) impair, as among the Company, its creditors other than holders of
Senior Indebtedness and the Junior Creditors, the obligation of the Company,
which is absolute and unconditional (and which, subject to the rights under this
Section 13 of the holders of Senior Indebtedness, is intended to rank equally
with all other general unsecured obligations of the Company), to pay to the
Junior Creditors the principal of (and premium, if any) and interest on the
Notes as and when the same shall become due and payable in accordance with their
terms; or (b) affect the relative rights against the Company of the Junior
Creditors and creditors of the Company other than the holders of Senior
Indebtedness; or (c) prevent any Junior Creditor from exercising all remedies
otherwise permitted by applicable law upon default under this Agreement, subject
to the provisions of this Section 13.
13.07. No Waiver of Subordination Provisions. No right of any present
or future holder of any Senior Indebtedness to enforce subordination as herein
provided 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, by
any such holder, or by any noncompliance by the Company or any Junior Creditor
with the terms, provisions and covenants of this Agreement, or amendment hereto,
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 paragraph,
the holders of Senior Indebtedness may, at any time and from time to time,
without the consent of or notice to the Junior Creditors, without incurring
responsibility to the Junior Creditors and without impairing or releasing the
subordination provided in this Section 13, do any one or more of the following:
(i) change the manner, place or terms of payment or extend the time of payment
of, or renew or alter, Senior Indebtedness, or otherwise amend or supplement in
any manner Senior Indebtedness or any instrument evidencing the same or any
agreement under which Senior Indebtedness is outstanding; (ii) sell, exchange,
release or otherwise deal with any property pledged, mortgaged or otherwise
securing Senior Indebtedness; (iii) release any Person liable in any manner for
the collection of Senior Indebtedness; (iv) settle or compromise any such Senior
Indebtedness or any other liability of any obligor of such Senior Indebtedness
to such holder of any security therefor or any liability issued in respect
thereof and apply any sums by whomsoever paid and however realized to any
liability (including, without limitation, payment of any of the Senior
Indebtedness) in any manner or order, (v) fail to take or to record or otherwise
perfect, for any reason or for no reason, any lien or security interest securing
such Senior Indebtedness by whomsoever granted, exercise or delay in or refrain
from exercising any
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right or remedy against any obligor or any guarantor or any other Person, elect
any remedy and otherwise deal freely with any obligor and any security for such
Senior Indebtedness or any liability of any obligor to the holders of such
Senior Indebtedness or any liability issued in respect of such Senior
Indebtedness; and (vi) exercise or refrain from exercising any rights against
the Company and any other Person.
13.08. Reliance on Judicial Order or Certificate of Liquidating
Agent. Upon any payment or distribution of assets or securities of the Company
referred to in this Section 13, the Junior Creditors shall be entitled to rely
upon any order or decree entered by any court of competent jurisdiction in which
such Proceeding is pending, or a certificate of the trustee in bankruptcy,
receiver, liquidating trustee, custodian, assignee for the benefit of creditors,
agent or other Person making such payment or distribution, delivered to the
Junior Creditors, for the purpose of ascertaining the Persons entitled to
participate in such payment or 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 Section 13.
13.09. Reliance by Holders of Senior Indebtedness on Subordination
Provisions. Each Junior Creditor, by its execution hereof or by accepting its
Note, acknowledges and agrees that the foregoing subordination provisions are,
and are intended to be, an inducement and a consideration to each holder of any
Senior Indebtedness, whether such Senior Indebtedness was created or acquired
before or after the issuance of the Note, to acquire and continue to hold, or to
continue to hold, such Senior Indebtedness and such holder of such Senior
Indebtedness shall be deemed conclusively to have relied on such subordination
provisions in acquiring and continuing to hold, or in continuing to hold, such
Senior Indebtedness.
13.10. Authority to Act for Lender. Until the Senior Indebtedness has
been paid in full, in the event a Proceeding shall occur and be continuing, if
the Lender is within forty-five (45) days of a final bar on exercising its right
to present a proof of debt, proof of claim, suit or other similar right
available for the purpose of protecting the rights of holders of Series
Indebtedness (holders of a majority of the then outstanding Senior Indebtedness
may exercise the rights granted to such holders in this Section 13.10 for the
benefit of all holders of Senior Indebtedness ratably) created by the
subordination herein (to the extent that any of the foregoing proofs,
procedures, or rights are relevant in the context of the particular Section
13.10 involved), Lender shall advise such holder(s) prior to the date thirty
(30) days before such final bar occurs whether Lender intends to exercise its
rights and present a proof of debt, proof of claim, file suit, or preserve such
other rights as are available to Lender prior to the expiration of such rights.
In the event that Lender advises the holders of Senior Indebtedness of its
intention to let any such rights lapse, such holders shall thereupon immediately
have the right to act as Lender's attorney-in-fact for the purposes specified in
the remainder of this Section 13.10 (but solely to the extent that any of the
actions on behalf of such holders authorized hereby are relevant in the context
of the particular Section 13.10 involved). In the event Lender, regardless of
whether Lender notified the holders of Senior Indebtedness of its intention to
preserve its rights or not, is within fifteen (15) days of a final bar on
exercising its right to present a proof of debt, proof of claim, file suit or
exercise such other similar rights as are available to Lender, such holders
shall have the right to act as Lender's attorney-in-fact for the purposes
specified herein, and Lender hereby irrevocably appoints such holders its true
and lawful attorney, with full power of substitution, in
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the name of Lender or in the name of such holders, for the use and benefit of
such holders, without further or additional notice to Lender or any of its
representatives, successors or assigns, to perform the following acts, at such
holders' option, in such Section 13.10.
(A) To enforce or vote claims comprising the Obligations, either
in its own name or in the name of Lender, by proof of debt, proof of claim, suit
or otherwise; and
(B) To collect any assets of Company and its Subsidiaries
distributed, divided or applied by way of dividend or payment, or any securities
issued, on account of the Obligations and to apply the same, or the proceeds of
any realization upon the same that the holders of Senior Indebtedness in their
discretion elect to effect, to the Senior Indebtedness until all of the Senior
Indebtedness (including, without limitation, interest accruing on the Senior
Indebtedness after the commencement of any bankruptcy case, but only to the
extent such interest is included within the definition of Senior Indebtedness
hereunder) has been paid in full, rendering any surplus to Lender if and to the
extent permitted by law.
In no event shall the holders of Senior Indebtedness be liable to
Lender for any failure to prove the Obligations, to exercise any right with
respect thereto or to collect any sums payable thereon.
13.11. Intercreditor Arrangements in Bankruptcy.
(a) This Agreement shall remain in full force and effect and
enforceable pursuant to its terms in accordance with Section 510(a) of the
Bankruptcy Code, and all references herein to the Company shall be deemed to
apply to such entity as debtor in possession and to any trustee in bankruptcy
for the estate of such entity.
(b) Except as otherwise specifically permitted in this Section
13.11, until the holders of Senior Indebtedness have been paid in full in cash
or Cash Equivalents, no Junior Creditor shall assert without the written consent
of the holders of Senior Indebtedness any claim, motion, objection or argument
in respect of Collateral in connection with any Proceeding which could otherwise
be asserted or raised in connection with such Proceeding by such Junior Creditor
as a secured creditor of the Company, including without limitation any claim,
motion, objection or argument seeking adequate protection or relief from the
automatic stay in respect of the Collateral.
(c) Without limiting the generality of the foregoing, each Junior
Creditor agrees that if a Proceeding occurs, (i) the holders of Senior
Indebtedness may consent to the use of cash collateral on such terms and
conditions and in such amounts as the holders of Senior Indebtedness, in their
sole discretion, may decide without seeking or obtaining the consent of the
Lender as holder of an interest in the Collateral; (ii) the holders of Senior
Indebtedness may (A) provide financing to the Company or (B) consent to the
granting of a priming Lien to secure postpetition financing, in each case
pursuant to Section 364 of the Bankruptcy Code or other applicable law and on
such terms and conditions and in such amounts as the holders of Senior
Indebtedness, in their sole discretion, may decide without seeking or obtaining
the consent of any Junior Creditor as holder of an interest in the Collateral;
(iii) the Junior Creditors shall not oppose the Company's use of cash collateral
on the basis that the Lender's interest in the
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Collateral is impaired by such use or inadequately protected by such use to the
extent such use has been approved by the holders of Senior Indebtedness, and
(iv) the Junior Creditors shall not oppose any sale or other disposition of any
assets comprising part of the Collateral free and clear of security interests,
liens or other claims of any party, including the Junior Creditors under Section
363 of the Bankruptcy Code on the basis that the Junior Creditors' interest in
the Collateral is impaired by such sale or inadequately protected as a result of
such sale if the holders of Senior Indebtedness have consented to such sale or
disposition of such assets. For purposes of this Agreement, where the holders of
Senior Indebtedness are entitled to act hereunder and there is more than one
such holder, they shall act by the consent of holders of the majority of the
then outstanding Senior Indebtedness.
(d) Each Junior Creditor agrees that it will not initiate,
prosecute, encourage or cooperate with any other person to initiate or prosecute
any claim, action or other proceeding (whether or not in a Proceeding) (i)
challenging the validity or enforceability of this Agreement, (ii) challenging
the validity or enforceability of any Liens in favor of any holder of Senior
Indebtedness (or any agent, trustee, or other representative thereof), (iii)
challenging the validity or enforceability of any guaranty of Senior
Indebtedness, or (iv) asserting any claims which the Company may hold with
respect to the holders of Senior Indebtedness, if any.
(e) To the extent that any holder of Senior Indebtedness receives
payments or transfers on the Senior Indebtedness or proceeds of the Collateral
which are subsequently invalidated, declared to be fraudulent or preferential,
set aside and/or required to be repaid to a trustee, receiver or any other party
under any bankruptcy law, state or federal law, common law or equitable cause,
then, to the extent of such payment or proceeds received, the Senior
Indebtedness, or part thereof, intended to be satisfied shall be revived and
continue in full force and effect as if such payments or proceeds had not been
received by the Lender.
(f) Notwithstanding any other provision of this Section 13.11(A)
the Lender shall be entitled to file any necessary responsive or defensive
pleadings in opposition to any motion, claim, adversary proceeding or other
pleading made by any person objecting to or otherwise seeking the disallowance
of the claims of the Lender, including without limitation any claims secured by
the Collateral, if any, and (B) the Lender shall be entitled to file any
pleadings, objections, motions or agreement which assert rights or interests
available to unsecured creditors of the Company arising under either the
Bankruptcy Code or applicable non-bankruptcy law.
(g) In any Proceeding, the Junior Creditors shall not vote to
accept any plan of reorganization of the Company or any Subsidiaries if a holder
of the Senior Indebtedness has objected to such plan.
13.12. Collateral Subordination. The Junior Creditors hereby
subordinate and make inferior any and all of their now existing or hereafter
acquired security interests in, security titles to, and other liens and
encumbrances on any of the Collateral securing Junior Indebtedness to the
security interests, security titles, and other liens and encumbrances of any
holder of Senior Indebtedness (or any trustee, agent or other representative for
such holder), whether now existing or hereafter acquired, in, to and on the
Collateral. If the Company shall default under any Senior Indebtedness secured
by any of the Collateral, any holder of Senior Indebtedness (or any trustee,
agent or other representative for such holder) may exercise any or all of its
rights and remedies
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with respect to such Collateral without any obligation to give the Junior
Creditors in their capacity as such notice of such exercise and without regard
to any interest of the Junior Creditors in such Collateral. The Junior Creditors
in their capacity as such further consent and agree that the holders of Senior
Indebtedness shall not be under any obligation to marshal any assets in favor of
the Junior Creditors in their capacity as such or against or in payment of any
of the Senior Indebtedness.
SECTION 14
SUBSIDIARY GUARANTEES
14.01. Subsidiary Guarantees. Each of the Guarantors hereby, jointly
and severally, unconditionally guarantees, to each Noteholder, irrespective of
the validity and enforceability of this Agreement, the Notes or the obligations
of the Company hereunder or thereunder, and each Junior Creditor agrees that:
(a) all Obligations shall be promptly paid in full or performed when due, all in
accordance with the terms thereof; and (b) in case of any extension of time of
payment or renewal of any obligation, that the same shall be promptly paid in
full or performed when due in accordance with the terms of such extension or
renewal. Failing payment when due of any amount so guaranteed or any performance
so guaranteed for whatever reason, the Guarantors shall be jointly and severally
obligated to pay the same immediately. The Guarantors hereby agree that their
obligations hereunder shall be unconditional, irrespective of the validity,
regularity or enforceability of the Notes or this Agreement the absence of any
action to enforce the same, any waiver or consent by any Noteholder with respect
to any provisions hereof or thereof, the recovery of any judgment against the
Company, any action to enforce the same or any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of a Guarantor.
Each Guarantor hereby waives diligence, presentment, demand of payment, filing
of claims with a court in the event of insolvency or bankruptcy of the Company,
any right to require a proceeding first against the Company, protest, notice and
all demands whatsoever and covenants that this Subsidiary Guarantee shall not be
discharged except by complete performance of the obligations contained in the
Notes and this Agreement.
If any Noteholder is required by any court or otherwise to return to
the Company or Guarantors, or any Custodian, trustee, liquidator or other
similar official acting in relation to either the Company or Guarantors, any
amount paid to such Noteholder, this Subsidiary Guarantee, to the extent
theretofore discharged, shall be reinstated in full force and effect. Each
Guarantor agrees that it shall not be entitled to any right of subrogation in
relation to the Noteholders in respect of any obligations guaranteed hereby
until indefeasible payment in full of all obligations guaranteed hereby. Each
Guarantor further agrees that, as between the Guarantors, on the one hand, and
the Noteholders, on the other hand, (a) the Maturity of the obligations
guaranteed hereby may be accelerated as provided in Section 11 for the purposes
of this Subsidiary Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the obligations
guaranteed hereby and (b) in the event of any declaration of acceleration of
such obligations as provided n Section 11, such obligations (whether or not due
and payable) shall forthwith become due and payable by the Guarantors for
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the purpose of this Subsidiary Guarantee. The Guarantors shall have the right to
seek contribution from any non-paying Guarantor so long as the exercise of such
right does not impair the rights of the Noteholders under the Subsidiary
Guarantees.
14.02. Execution and Delivery of Subsidiary Guarantees. To evidence
its Subsidiary Guarantee set forth in Section 14.01, each Guarantor hereby
agrees that this Agreement and a Subsidiary Guarantee in the form of Exhibit E
hereto shall be executed on behalf of such Guarantor by its President or one of
its Vice Presidents and, to the extent not a party to this Agreement on the date
hereof, each Guarantor shall execute and deliver to the Noteholders a Subsidiary
Guarantee in the form of Exhibit E hereto and a supplemental agreement
substantially in the form of Exhibit F hereto, pursuant to which such Subsidiary
shall become a Guarantor under this Section 14 and shall guarantee the
Obligations of the Company under this Agreement and the Notes.
If an officer whose signature is on this Agreement or on a Subsidiary
Guarantee no longer holds that office at the time the Company executes and
delivers the Note on which a Subsidiary Guarantee is endorsed, the Subsidiary
Guarantee shall be valid nevertheless. The execution and delivery of any Note by
the Company shall constitute due delivery of the Subsidiary Guarantee set forth
in this Agreement on behalf of the Guarantors. Each Guarantor hereby agrees that
its Subsidiary Guarantee set forth in Section 14.01 shall remain in full force
and effect notwithstanding any failure to endorse on each Note a notation of
such Subsidiary Guarantee.
14.03. Guarantors May Consolidate, Etc. On Certain Terms. No
Guarantor may consolidate with or merge with or into (whether or not such
Guarantor is the surviving Person), another corporation, Person or entity (other
than the Company or another Guarantor) unless:
(a) subject to the provisions of Section 14.04 hereof, the Person
formed by or surviving any such consolidation or merger (if other than such
Guarantor) unconditionally assumes all the obligations of such Guarantor under
the Notes and this Agreement pursuant to a Supplemental Agreement, in the form
of Exhibit F hereto;
(b) immediately after giving effect to such transaction, no
Default or Event of Default exists;
(c) such Guarantor, or any Person formed by or surviving any such
consolidation or merger, would have Consolidated Net Worth (immediately after
giving effect to transaction), equal to or greater than the Consolidated Net
Worth of such Guarantor immediately preceding the transaction; and
(d) the Company and its Subsidiaries will, at the time of such
transaction and after giving pro forma effect thereto, have a ratio of
Indebtedness to Adjusted EBITDA on a consolidated basis for the preceding four
full fiscal quarters that is no less than the ratio of Indebtedness to Adjusted
EBITDA for the preceding four full fiscal quarters for the Company and its
Subsidiaries on a consolidated basis.
Notwithstanding the foregoing, no Guarantor shall be permitted to consolidate
with or merge with or into (whether or not such Guarantor is the surviving
Person), another corporation, Person
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or entity pursuant to the preceding sentence if such consolidation or merger
would not be permitted by Section 8.11 hereof.
In case of any such consolidation or merger and upon the assumption, by
the successor corporation, by supplemental agreement, executed and delivered to
the Noteholders and reasonably satisfactory in form to the Noteholders, of the
Subsidiary Guarantee endorsed upon the Notes and the due and punctual
performance of all of the covenants and conditions of this Agreement to be
performed by the Guarantor, such successor corporation shall succeed to and be
substituted for the Guarantor with the same effect as if it had been named
herein as a Guarantor. Such successor corporation thereupon may cause to be
signed any or all of the Subsidiary Guarantees to be endorsed upon all of the
Notes issuable hereunder which theretofore shall not have been signed by the
Company. All the Subsidiary Guarantees so issued shall in all respects have the
same legal rank and benefit under this Agreement as the Subsidiary Guarantees
theretofore and thereafter issued in accordance with the terms of this Agreement
as though all of such Subsidiary Guarantees had been issued at the date of the
execution hereof.
Except as set forth in Section 8 hereof, nothing contained in this
Agreement or in any of the Notes shall prevent any consolidation or merger of a
Guarantor with or into the Company, or shall prevent any sale or conveyance of
the property of a Guarantor as an entirety or substantially as an entirety to
the Company.
14.04. Releases of Subsidiary Guarantees. In the event of (i) a sale
or other disposition of all of the assets of any Guarantor, by way of merger,
consolidation or otherwise, or (ii) a sale or other disposition of all of the
capital stock of any Guarantor (including the sale or disposition of all of the
capital stock of such Guarantor under a Pledge Agreement), such Guarantor (in
the event of a sale or other disposition, by way of such a merger,
consolidation, distribution or otherwise, of all of the capital stock of such
Guarantor) or the corporation acquiring the property (in the event of a sale or
other disposition of all of the assets of such Guarantor) will be released and
relieved of any obligations under its Subsidiary Guarantee; provided that the
net proceeds of such sale or other disposition shall be applied in accordance
with the provisions of Section 8.05 hereof. Any Guarantor not released from its
obligations under its Subsidiary Guarantee shall remain liable for the full
amount of principal of and interest on the Notes and for the other obligations
of any Guarantor under this Agreement as provided in this Section 14.
14.05. Guarantees Subordinate to Guarantor Senior Indebtedness. Each
Guarantor covenants and agrees, and each Junior Creditor, by his acceptance
thereof, likewise covenants and agrees, that, to the extent and in the manner
hereinafter set forth in this Section 14, the obligations of each Guarantor
under its Subsidiary Guarantee are hereby expressly made subordinate and subject
in right of payment to the prior payment in full of all Senior Indebtedness and
the payment to any Junior Creditor of any Junior Indebtedness are hereby made
expressly subordinate and subject in right of payment to the prior payment in
full of all Senior Indebtedness of such Guarantor and the payment to any Junior
Indebtedness are hereby made expressly subordinate and subject in right of
payment to the prior payment in full of all Senior Indebtedness of each
Guarantor. The provisions of this Section 14 shall continue to be effective or
be reinstated, as the case may be, if at any time any payment of any of the
Senior Indebtedness is rescinded or must otherwise be returned by a holder of
Senior Indebtedness upon any Guarantor Proceeding or otherwise, all as though
such payment had not been made.
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14.06. Payment Over of Proceeds Upon Dissolution, Etc. In the event
of (a) any insolvency or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization or other similar case or proceeding in connection
therewith, relative to any Guarantor or to its creditors, as such, or to its
assets, or (b) any liquidation, dissolution or other winding up of any
Guarantor, whether voluntary or involuntary and whether or not involving
insolvency or bankruptcy, (c) any assignment for the benefit of creditors or any
other marshaling of assets and liabilities of any Guarantor, or (d) any event
described in Section 11.01(h) then and in any such event specified in clause
(a), (b), (c) or (d) above (each such event, if any, herein sometimes referred
to as a "Guarantor Proceeding") the holders of Guarantor Senior Indebtedness
shall be entitled to receive or retain payment in full in cash or Cash
Equivalents of all amounts due or to become due on or in respect of all Senior
Indebtedness, before the Junior Creditors are entitled to receive any payment or
distribution of any kind or character, whether in cash, property or securities,
on account of any Obligations in respect of the Subsidiary Guarantee of such
Guarantor (including any interest accruing on or after the filing of any
Guarantor Proceeding, whether or not allowed in such Guarantor Proceeding) or on
account of any purchase or other acquisition of Notes by any Guarantor or any
Subsidiary of a Guarantor, or otherwise on account of any Junior Indebtedness,
whether at maturity, by acceleration or demand for payment, or by filing or
joining filing in a Proceeding (all such payments, distributions, purchases and
acquisitions herein referred to, individually and collectively, as a "Guarantee
Payment"), and to that end the holders of Guarantor Senior Indebtedness shall be
entitled to receive, for application to the payment thereof, any Guarantee
Payment which may be payable or deliverable in respect of the Subsidiary
Guarantee of such Guarantor in any such Guarantor Proceeding.
In the event that, notwithstanding the foregoing provisions of this
Section 14.06, any Junior Creditor shall have received any Guarantee Payment
before all Guarantor Senior Indebtedness of such Guarantor is paid in full in
cash or Cash Equivalents, then and in such event such Guarantee Payment shall be
paid over or delivered forthwith to the trustee in bankruptcy or other person
making payment or distribution of assets of such Guarantor for the application
to the payment of all Guarantor Senior Indebtedness remaining unpaid, to the
extent necessary to pay the Guarantor Senior Indebtedness in full in cash or
Cash Equivalents, after giving effect to any concurrent payment or distribution
to or for the holders of Guarantor Senior Indebtedness.
For purposes of this Section 14 only, the words "any payment or
distribution of any kind or character, whether in cash, property or securities"
shall not be deemed to include a payment or distribution of stock or securities
of any Guarantor provided for by a plan of reorganization or readjustment
authorized by an order or decree of a court of competent jurisdiction in a
reorganization proceeding under any applicable bankruptcy law or of any other
corporation provided for by such plan of reorganization or readjustment which
stock or securities are subordinated in right of payment to all then outstanding
Guarantor Senior Indebtedness to substantially the same extent as, or to a
greater extent than, the Subsidiary Guarantees of the Guarantors are so
subordinated as provided in this Section 14, if such plan has been approved by
holders of Designated Senior Indebtedness. The consolidation of any Guarantor
with, or the merger of any Guarantor into, another Person or the liquidation or
dissolution of any Guarantor following the conveyance or transfer of all or
substantially all of its properties and assets as an entirety to another Person
upon the terms and conditions set forth in Section 14.03 shall not be deemed a
Guarantor Proceeding for the purposes of this Section 14.06 if the Person formed
by
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such consolidation or into which such Guarantor is merged or the Person which
acquires by conveyance or transfer such properties and assets, as the case may
be, shall, as a part of such consolidation, merger, conveyance or transfer,
comply with the conditions set forth in Section 14.03.
14.07. No Payment When Guarantor Senior Indebtedness in Default. In
the event that any Guarantor Senior Payment Default (as defined below) shall
have occurred and be continuing, then no Guarantee Payment shall be made or
retained, and no Junior Creditor shall attempt to collect any Guarantor Payment,
unless and until such Guarantor Senior Payment Default shall have been cured or
waived or shall have ceased to exist or all amounts then due and payable in
respect of Guarantor Senior Indebtedness shall have been paid in full in cash or
Cash Equivalents. "Guarantor Senior Payment Default" means any default in the
payment of Designated Senior Indebtedness when due, whether at the due date of
any such payment, by declaration of acceleration or call for redemption, or
otherwise.
Upon the occurrence of a Guarantor Senior Non-Payment Default (as
defined below) and receipt of written notice by the Company, as representative
of the applicable Guarantor, of the occurrence of such Guarantor Senior
Non-Payment Default from any holder of Designated Senior Indebtedness (or any
trustee, agent or other representative for such holder) which is the subject of
such Guarantor Senior Non-Payment Default, no Guarantee Payment may be made or
retained, and no Junior Creditor shall attempt to collect any Guarantor Payment,
during a period (the "Guarantor Payment Blockage Period") commencing on the date
of the receipt by such Guarantor of such notice and ending the earlier of (i)
the date on which such Guarantor Senior Non-Payment Default shall have been
cured or waived or ceased to exist or all Designated Senior Indebtedness which
was the subject of such Guarantor Senior Non-Payment Default shall have been
paid in full in cash or Cash Equivalents and (ii) the earlier to occur of (A)
the 364th day after the receipt of such notice and (B) 179th day after the date
the principal amount of the Notes becomes due and payable (without regard to any
payment accelerations). No Guarantor Senior Non-Payment Default that existed or
was continuing on the date of the commencement of a Guarantor Payment Blockage
Period may be made the basis of the commencement of a subsequent Guarantor
Payment Blockage Period whether or not within a period of 90 consecutive days,
unless such Guarantor Senior Non-Payment Default shall have been cured or waived
for a period of not less than 364 consecutive days. In any event,
notwithstanding the foregoing, no more than one Guarantor Payment Blockage
Period may be commenced during any 455-day period and there shall be a period of
at least 90 days during each 455-day period when no Guarantor Payment Blockage
Period is in effect and no Guarantor Payment Blockage Period shall be effective
with respect to the exercise of any remedies if an action or proceeding in
arbitration or litigation has been commenced within such 90-day period.
"Guarantor Senior Non-Payment Default" means the occurrence or existence and
continuance of an event of default with respect to Designated Senior
Indebtedness, other than a Guarantor Senior Payment Default, that, by the terms
of such Designated Senior Indebtedness, permits the holders of the Designated
Senior Indebtedness (or a trustee or other agent on behalf of the holders
thereof) then to declare such Designated Senior Indebtedness due and payable
prior to the date on which it would otherwise become due and payable.
The failure to make any payment under a Subsidiary Guarantee by reason
of the provisions of this Section 14.07 will not be construed as preventing the
occurrence of an Event
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of Default with respect to the Notes arising from any such failure to make
payment. Upon termination of any Guarantor Payment Blockage Period, the
applicable Guarantor shall, subject to the first paragraph of this Section 14.07
and to Section 14.06, resume making any and all required payments in respect of
its Subsidiary Guarantee, including any missed payments.
In the event that, notwithstanding the foregoing, any Guarantor shall
make any Guarantee Payment to any Junior Creditor prohibited by the foregoing
provisions of Section 14.06 or this Section 14.07, then and in such event such
Guarantee Payment to such Junior Creditor shall be paid over and delivered
forthwith to the holders of the Guarantor Senior Indebtedness in the same form
received and, until so turned over, the same shall be held in trust by such
Junior Creditor as the property of the holders of the Guarantor Senior
Indebtedness.
Except as provided in the previous paragraph, the provisions of this
Section 14.07 shall not apply to any Notes Payment with respect to which Section
14.06 would be applicable.
14.08. Payment Permitted If No Default. Nothing contained in this
Section 14 or elsewhere in this Agreement or in any of the Subsidiary Guarantees
shall prevent any Guarantor, at any time except during the pendency of any
Guarantor Proceeding referred to in Section 14.06 or under the conditions
described in Section 14.07, from making Guarantee Payments.
14.09. Subrogation to Rights of Holders of Guarantor Senior
Indebtedness. Only after the payment in full in cash of Cash Equivalents of all
amounts due or to become due on or in respect of Guarantor Senior Indebtedness,
the Junior Creditors shall be subrogated to the rights of the holders of such
Guarantor Senior Indebtedness to receive payments and distributions of cash,
property and securities applicable to such Guarantor Senior Indebtedness until
the principal of (and premium, if any) and interest on the Notes shall be paid
in full. For purposes of such subrogation, no payments or distributions to the
holders of the Guarantor Senior Indebtedness of a Guarantor of any cash,
property or securities to which the Junior Creditors would be entitled except
for the provisions of this Section 14, and no payments over pursuant to the
provisions of this Section 14 to the holders of Guarantor Senior Indebtedness by
Junior Creditors, shall, as among such Guarantor, its creditors other than
holders of Guarantor Senior Indebtedness of such Guarantor and the Junior
Creditors, be deemed to be a payment or distribution by such Guarantor to or on
account of the Guarantor Senior Indebtedness of such Guarantor.
14.10. Provisions Solely to Define Relative Rights. The provisions of
this Section 14 are and are intended solely for the purpose of defining the
relative rights of the Lender and the Junior Creditors on the one hand and the
holders of Guarantor Senior Indebtedness on the other hand. Nothing contained in
this Section 14 or elsewhere in this Agreement or in the Subsidiary Guarantees
is intended to or shall (a) impair, as among a Guarantor, its creditors other
than holders of Guarantor Senior Indebtedness of such Guarantor and the Junior
Creditors, the obligation of such Guarantor, which is absolute and unconditional
(and which, subject to the rights under this Section 14 of the holders of
Guarantor Senior Indebtedness of such Guarantor, is intended to rank equally
with all other general unsecured obligations of such Guarantor), to pay to the
Junior Creditors the principal of (and premium, if any) and interest on the
Notes as and when the same shall become due and payable in accordance with their
terms; or (b) affect the relative rights against such Guarantor of the Junior
Creditors and creditors of such Guarantor other than the holders of Guarantor
Senior Indebtedness; or (c) prevent any Junior Creditor from
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exercising all remedies otherwise permitted by applicable law upon default under
this Agreement subject to the provisions of this Section 14.
14.11. No Waiver of Subordination Provisions. No right of any present
or future holder of any Guarantor Senior Indebtedness to enforce subordination
as herein provided shall at, any time in any way be prejudiced or impaired by
any act or failure to act on the part of any Guarantor or by any act or failure
to act by any such holder, or by any noncompliance by any Guarantor with the
terms, provisions and covenants of this Agreement, 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 paragraph,
the holders of Guarantor Senior Indebtedness may, at any time and from time to
time, without the consent of or notice to the Junior Creditors, without
incurring responsibility to the Junior Creditors and without impairing or
releasing the subordination provided in this Section 14, do any one or more of
the following: (i) change the manner, place or terms of payment or extend the
time of payment of, or renew or alter, Guarantor Senior Indebtedness, or
otherwise amend or supplement in any manner Guarantor Senior Indebtedness or any
instrument evidencing the same or any agreement under which Guarantor Senior
Indebtedness is outstanding; (ii) sell, exchange, release or otherwise deal with
any property pledged, mortgaged or otherwise securing Guarantor Senior
Indebtedness; (iii) release any Person liable in any manner for the collection
of Guarantor Senior Indebtedness; (iv) settle or compromise any such Guarantor
Senior Indebtedness or any other liability of any obligor of such Guarantor
Senior Indebtedness to such holder of any security therefor or any liability
issued in respect thereof and apply any sums by whomsoever paid and however
realized to any liability (including, without limitation, payment of any of the
Guarantor Senior Indebtedness) in any manner or order; (v) fail to take or to
record or otherwise perfect, for any reason or for no reason, any lien or
security interest securing such Guarantor Senior Indebtedness by whomsoever
granted, exercise or delay in or refrain from exercising any right or remedy
against any obligor or any guarantor or any other Person, elect any remedy and
otherwise deal freely with any obligor and any security for such Guarantor
Senior Indebtedness or any liability of any obligor to the holders of such
Guarantor Senior Indebtedness or any liability issued in respect of such
Guarantor Senior Indebtedness; and (vi) exercise or refrain from exercising any
rights against any Guarantor and any other Person.
14.12. Reliance on Judicial Order or Certificate of Liquidating
Agent. Upon any payment or distribution of assets or securities of a Guarantor
referred to in this Section 14, the Junior Creditors shall be entitled to rely
upon any order or decree entered by any court of competent jurisdiction in which
such Guarantor Proceeding is pending, or a certificate of the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit
of creditors, agent or other Person making such payment or distribution,
delivered to the Junior Creditors, for the purpose of ascertaining the Persons
entitled to participate in such payment or distribution, the holders of the
Guarantor Senior Indebtedness and other Indebtedness of such Guarantor, the
account thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Section 14.
14.13. Reliance by Holders of Guarantor Senior Indebtedness on
Subordination Provisions. Each Junior Creditor, by its execution hereof or by
accepting its Note, acknowledges and agrees that the foregoing subordination
provisions are, and are intended to be, an inducement
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and a consideration to each holder of any Guarantor Senior Indebtedness, whether
such Guarantor Senior Indebtedness was created or acquired before or after the
issuance of the Note, to acquire and continue to hold, or to continue to hold,
such Guarantor Senior Indebtedness and such holder of such Guarantor Senior
Indebtedness shall be deemed conclusively to have relied on such subordination
provisions in acquiring and continuing to hold, or in continuing to hold, such
Guarantor Senior Indebtedness.
If a proper claim or proof of debt in the form required in such
proceeding is not filed by or on behalf of all Noteholders prior to 30 days
before the expiration of the time to file such claims or proofs, then the
holders or a representative of any Guarantor Senior Indebtedness are hereby
authorized, and shall have the right (without any duty), to file an appropriate
claim on behalf of the Noteholders.
14.14. Limitation on Guarantor Liability. Each Guarantor, and by its
execution hereof or its acceptance of the Notes, each Junior Creditor, hereby
confirms that it is the intention of all such parties that the Subsidiary
Guarantee of such Guarantor not constitute a fraudulent transfer or conveyance
for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the
Uniform Fraudulent Transfer Act or any similar federal or state law to the
extent applicable to any Subsidiary Guarantee. To effectuate the foregoing
intention, the Junior Creditors and the Guarantors hereby irrevocably agree that
the obligations of such Guarantor under its Subsidiary Guarantee and this
Section 14 shall be limited to the maximum amount as will, after giving effect
to such maximum amount and all other contingent and fixed liabilities of such
Guarantor that are relevant under such laws, and after giving effect to any
collections from, rights to receive contribution from or payments made by or on
behalf of any other Guarantor in respect of the obligations of such other
Guarantor under this Section 14, result in the obligations of such Guarantor
under its Subsidiary Guarantee not constituting a fraudulent transfer or
conveyance.
SECTION 15
FEES, EXPENSES, INDEMNIFICATION AND TERMINATIon
15.01. Fees and Expenses. The Company will pay the out-of-pocket
costs and expenses (including reasonable attorneys' and accountants' fees and
disbursements) incurred by the Lender or any holder of a Note after the
occurrence of and during the continuance of an Event of Default in connection
with enforcing, defending or declaring (or determining whether or how to
enforce, defend or declare) any rights or remedies under this Agreement, the
Transaction Documents or the Notes. The Company will pay, and will save the
Lender and each other holder of a Note harmless from, all claims in respect of
any fees, costs or expenses if any, of brokers and finders in relation to the
Transactions engaged by the Company or any person acting upon behalf of the
Company. The Company will also pay (a) any reasonable out-of-pocket expenses
incurred by Lender at the request of the Company in connection with any
amendment, waiver or consent under or in respect to this Agreement, the
Transaction Documents or the Notes proposed by the Company and (b) one-half of
any reasonable out-of-pocket expenses then owed by Lender in connection with the
release by the Lender and/or the re-granting to the Lender of any Lien in
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the Collateral under Section 9 of this Agreement (which the parties acknowledge
does not include expenses incurred in connection with the initial grant of any
Lien in the Collateral under Section as to which the provisions of Section 9
shall govern). The Company and Lender shall otherwise be responsible for their
own fees and expenses.
15.02. Indemnification. The Company agrees to indemnify and hold
harmless (i) the Lender, (ii) each Affiliate of the Lender, and (iii) the
respective officers, directors, managing directors, stockholders, partners,
employees, representatives, trustees, fiduciaries, and agents of the Lender or
any such Affiliate (any such Person referred to in clause (i), (ii) or (iii), an
"Indemnified Person") against any losses, damages or liabilities, joint or
several, arising from claims, actions or proceedings brought by third Persons
against any Indemnified Person to which such Indemnified Person may become
subject, under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) to the extent resulting
from (i) any material inaccuracy in any of the representations and warranties of
the Company contained herein not caused by or resulting from any fact or
condition with respect to any Subsidiary of the Company existing at the time
such Subsidiary was acquired by the Company from the Lender, (ii) any failure of
the Company to perform its obligations hereunder or under Applicable Law, or
(iii) the Transactions or the Lender's financing thereof, and will reimburse
each such Indemnified Person for the reasonable out-of-pocket legal and other
expenses incurred by such Indemnified Person in connection with investigating or
defending any such action or claims as such expenses are incurred; provided,
however, the Company shall not be required to indemnify or hold harmless any
Indemnified Person against any loss, damage or liability to the extent resulting
from (i) any violation by any Indemnified Person of any law regulating the
business of such person, (ii) the gross negligence, bad faith or misconduct of
any Indemnified Person or (iii) the breach by any Indemnified Person of any
provision of this Agreement. Upon receiving notice or acquiring knowledge of any
claim, action or proceeding as to which any Indemnified Person would be entitled
to an indemnity hereunder, such Person shall promptly give written notice
thereof to the Company and cooperate reasonably and in good faith with the
Company to permit the Company to defend any such claim, action or proceeding.
The indemnity agreement set forth in this Section 15.02 shall be in addition to
any liabilities that the Company may otherwise have.
15.03. Survival. The obligations of the Company under this Section 15
will survive the payment or transfer of any Note, the enforcement, amendment or
waiver of any provision of this Agreement and the termination of this Agreement.
15.04. Termination.
(a) The Lender may terminate this Agreement by notice to the
Company, at the Closing Time if any of the conditions contained in Section 3
shall not have been satisfied or waived in full. Any such termination shall
permit the Company, at its option, to terminate its obligations under the Stock
Purchase Agreement. This Agreement shall terminate without any further action by
any party upon the termination of the Stock Purchase Agreement prior to the
Closing time.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section 15.04, such termination shall be without liability of any party to any
other party.
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SECTION 16
MISCELLANEOUS
16.01. Notices. Except as otherwise expressly provided herein, all
notices and other communications shall have been duly given and shall be
effective (a) when delivered, (b) when transmitted via telecopy (or other
facsimile device) to the number set out below if the sender on the same day
sends a confirming copy of such notice by a recognized overnight delivery
service (charges prepaid), (c) the day following the day on which the same has
been delivered prepaid to a reputable national overnight air courier service or
(d) the third Business Day following the day on which the same is sent by
certified or registered mail, postage prepaid, in each case to the respective
parties at the address set forth below, or at such other address as such party
may specify by written notice to the other party hereto:
(i) if to the Lender or its nominee, to the
Lender or its nominee at the address specified for such
communications in Schedule A, with a copy to Proskauer Rose
LLP, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, attention:
▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq., or at such other address as the Lender
or its nominee shall have specified to the Company in writing;
(ii) if to any other Noteholder, to such
Noteholder at the address of such Noteholder appearing in the
Security Register or such other address as such other
Noteholder shall have specified to the Company in writing; or
(iii) if to the Company, to the Company at ▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇,
attention: President with a copy to ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇,
LLP, 1230 Peachtree Street, NE, Suite ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq., or
at such other address as the Company shall have specified to
the holder of each Note in writing.
16.02. Benefit of Agreement; Assignments and Participations. Except
as otherwise expressly provided herein, all covenants, agreements and other
provisions contained in this Agreement by or on behalf of any of the parties
hereto shall bind, inure to the benefit of and be enforceable by their
respective successors and assigns (including, without limitation, any subsequent
holder of a Note) whether so expressed or not; provided, however, that the
Company may not assign and transfer any of its rights or obligations without the
prior written consent of the other parties hereto and each such holder.
Notwithstanding the foregoing, (a) the Lender may not assign its Notes to a
Person who, at the time of such prospective assignment, competes with the
Borrower in business or for acquisitions (including any owner or operator of
healthcare facilities). In order for Lender to assign its Notes to any Person
who engages as a material part of its business in the business of purchasing
distressed loans, Lender must first offer Borrower the right for thirty (30)
days (after receipt of such offer from Lender) to pay for and consummate the
purchase of such Notes at the price Lender proposes to sell to such Person. By
way of clarification and not limitation, the Company acknowledges that it is
contemplated that the Lender and certain of its direct and indirect stockholders
may be dissolved and, accordingly, that the Lender's rights under this
Agreement, the Notes and the other Transaction Documents
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(including, without limitation, its Lien in the Collateral) shall be assigned to
Lender's successor-in-interest.
Nothing in this Agreement or in the Notes, express or implied, shall
give to any Person other than the parties hereto, their successors and assigns
and the holders from time to time of the Notes any benefit or any legal or
equitable right, remedy or claim under this Agreement.
The provisions regarding subordination of debt and those related to the
subordination of security interests contained in this Agreement are intended for
the benefit of, and shall be binding upon (i) the Holders of the Senior
Indebtedness and their respective successors and assigns, including subsequent
holders thereof and the term "Holder of Senior Indebtedness" shall include any
such subsequent or additional holder of Senior Indebtedness, wherever the
context permits, and (ii) the Lender and its respective successors and assigns,
including the subsequent holders of the Obligations. All provisions relating to
the subordination shall not give the Company any substantive rights vis-a-vis
either the Holders of the Senior Indebtedness or the Obligations.
16.03. No Waiver; Remedies Cumulative. No failure or delay on the
part of any party hereto or any Noteholder in exercising any right, power or
privilege hereunder or under the Notes and no course of dealing between the
Company and any other party or Noteholder shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or privilege hereunder
or under the Notes preclude any other or further exercise thereof or the
exercise of any other right, power or privilege hereunder or thereunder. The
rights and remedies provided herein and in the Notes are cumulative and not
exclusive of any rights or remedies which the parties or Noteholders would
otherwise have. No notice to or demand on the Company in any case shall entitle
the Company to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the other parties hereto
or the Noteholders to any other or further action in any circumstances without
notice or demand.
16.04. Amendments, Waivers and Consents. This Agreement may be
amended, and the observance of any term hereof may be waived (either
retroactively or prospectively) with (and only with) the written consent of the
Company and the Required Holders, provided, however, that no such amendment or
waiver may, without the prior written consent of each Noteholder then
outstanding and affected thereby (i) subject any Noteholder to any additional
obligation, (ii) reduce the principal of (or premium, if any) or rate of
interest on any Note, (iii) postpone the date fixed for any payment of principal
of (or premium, if any) or interest on any Note, and (iv) change the percentage
of the aggregate principal amount of the Notes the holders of which shall be
required to consent or take any other action under this Section 16.04 or any
other provision of this Agreement.
16.05. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall constitute one and the same instrument. It shall not be
necessary in making proof of this Agreement to produce or account for more than
one such counterpart. Each counterpart may consist of a number of copies hereof,
each signed by less than all, but together signed by all, of the parties hereto.
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16.06. Reproduction. This Agreement, the other Transaction Documents
and all documents relating hereto and thereto, including, without limitation,
(a) consents, waivers and modifications that may hereafter be executed, (b)
documents received by the Lender at the Closing Time (except the Notes
themselves), and (c) financial statements, certificates and other information
previously or hereafter furnished in connection herewith, may be reproduced by
any photographic, photostatic, microfilm, microcard, miniature photographic or
other similar process and any original document so reproduced may be destroyed.
The Company agrees and stipulates that, to the extent permitted by Applicable
Law, any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding (whether or not the original
is in existence and whether or not such reproduction was made in the regular
course of business) and any enlargement, facsimile or further reproduction of
such reproduction shall likewise be admissible in evidence. This Section 16.06
shall not prohibit the Company, any other party hereto or any Noteholder from
contesting any such reproduction to the same extent that it could contest the
original, or from introducing evidence to demonstrate the inaccuracy of any such
reproduction.
16.07. Headings. The headings of the sections and subsections hereof
are provided for convenience only and shall not in any way affect the meaning or
construction of any provision of this Agreement.
16.08. Governing Law; No Jury Trial.
(a) THIS AGREEMENT AND THE NOTES SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW
OF THE STATE OF NEW YORK 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.
(b) THE COMPANY HEREBY WAIVES ANY AND ALL RIGHTS THEY MAY HAVE TO
A TRIAL BY JURY IN RESPECT OF ANY ACTION, PROCEEDING OR LITIGATION DIRECTLY OR
INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH, THIS AGREEMENT, ANY OF
THE NOTES OR THE SUBSIDIARY GUARANTEES.
16.09. Arbitration.
(a) Any and all disputes, controversies or claims arising out of
or relating to this Agreement or any of the Transaction Documents executed in
connection with this Agreement, or the rights or interests of the Stockholder or
Acquiror or the breach or alleged breach of this Agreement or any such
Transaction Document, whether arising during or at or after the termination of
this Agreement or such Transaction Document, shall be settled exclusively by
arbitration to be held in Washington, D.C. in accordance with the commercial
rules of the American Arbitration Association then in effect. There shall be one
arbitrator appointed in accordance with those rules. As part of his award, the
arbitrator shall make a fair allocation between the parties of the fee and
expenses of the American Arbitration Association and the cost of any transcript,
taking into account the merits of their claims and defenses. The arbitrator
shall render his award on an expedited basis. Failure of any party hereto to
submit to arbitration under
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this Section shall result in arbitrator ruling in favor of the other party if
such other party has submitted to arbitration under this Section. Judgment may
be entered on the arbitrator's award in any court having jurisdiction, and the
parties irrevocably consent to the non-exclusive jurisdiction in the courts of
the District of Colubia, New York courts sitting in New York county and Georgia
courts sitting in ▇▇▇▇▇▇ county for that purpose. The arbitrator may grant
injunctive or other relief.
(b) The prevailing party shall be entitled to recover from the
other party reasonable attorney fees and charges in any action, suit or
proceeding arising out of or relating to this Agreement, the Notes and the
Subsidiary Guarantee and any of the transactions contemplated thereby.
16.10. Severability. If any provision of this Agreement is determined
to be illegal, invalid or unenforceable, such provision shall be fully severable
to the extent of such illegality, invalidity or unenforceability and the
remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.
16.11. Entirety. This Agreement together with the other Transaction
Documents represents the entire agreement of the parties hereto and thereto, and
supersedes all prior agreements and understandings, oral or written, if any,
relating to the Transaction Documents or the transactions contemplated herein or
therein.
16.12. Survival of Representations and Warranties. All
representations and warranties and covenants and indemnities made by the Company
and the Lender herein shall survive the execution and delivery of this
Agreement, the issuance and transfer of all or any portion of the Notes and the
payment of principal of the Notes, the expiration, exercise or other termination
of the Warrants and any other obligations hereunder, regardless of any
investigation made at any time by or on behalf of the Lender, the Company or any
of their respective Affiliates.
16.13. Incorporation. All Exhibits and Schedules attached hereto are
incorporated as part of this Agreement as if fully set forth herein.
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IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart
of this Agreement to be duly executed and delivered as of the date first above
written.
THE ISSUER:
SUNLINK HEALTHCARE CORP.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
---------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Title: Chief Executive Officer
THE SUBSIDIARIES:
SOUTHERN HEALTH CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
---------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Title: Chief Executive Officer
▇▇▇▇▇▇▇ HOSPITAL, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
---------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Title: Authorized Representative
DEXTER HOSPITAL, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
---------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Title: Authorized Representative
SOUTHERN HEALTH CORPORATION OF JASPER, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
---------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Title: Authorized Representative
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SOUTHERN HEALTH CORPORATION OF ELLIJAY, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
---------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Title: Authorized Representative
SOUTHERN HEALTH CORPORATION OF DAHLONEGA, INC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
---------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Title: Authorized Representative
SOUTHERN HEALTH CORPORATION OF HOUSTON, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
---------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Title: Authorized Representative
THE LENDER:
NHS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
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EXHIBIT A
[FORM OF NOTE]
THE SECURITY REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
QUALIFIED UNDER ANY STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED, SOLD OR
OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION STATEMENT IS IN EFFECT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
AND APPLICABLE STATE SECURITIES LAWS. THE HOLDER OF THIS SECURITY IS SUBJECT TO
THE TERMS OF THE LOAN AGREEMENT BETWEEN SUNLINK HEALTHCARE CORP. (THE
"COMPANY"), ITS SUBSIDIARIES, AND NHS, INS., DATED AS OF JANUARY 31, 2001 (THE
"LOAN AGREEMENT"). ALL TERMS USED IN THIS NOTE WHICH ARE NOT DEFINED HEREIN
SHALL HAVE THE MEANINGS ASSIGNED TO THEM IN THE LOAN AGREEMENT. A COPY OF SUCH
LOAN AGREEMENT IS AVAILABLE AT THE OFFICES OF THE COMPANY.
8.5% SENIOR SUBORDINATED NOTES DUE 2006
No. 1 $17,000,000
Sunlink Healthcare Corp., a corporation duly organized and existing
under the laws of Delaware (herein called the "Company," which term includes any
successor Person under the Loan Agreement between the Company, its Subsidiaries
and NHS, Inc., dated as of January 31, 2001 (the "Loan Agreement")), for value
received, hereby promises to pay to NHS, Inc., or registered assigns, the
principal sum of $17,000,000 Dollars on January 31, 2006 (the "Stated Maturity
Date"), and to pay interest thereon from January 31, 2001 or from the most
recent date on which interest has been paid or duly provided for, semi-annually
in arrears on June 1 and December 1 in each year commencing June 1, 2001 (each,
an "Interest Payment Date") at the rate of 8.5% per annum, until the principal
hereof is paid; provided, however, that prior to the expiration of the PIK
Period, at the option of the Company, such interest shall be paid by the Company
by the issuance of additional promissory notes in substantially the form of this
note (such additional notes being referred to herein as "Additional Balloon
Notes") to the Noteholder entitled to receive interest payments on each such
Interest Payment Date and, thereafter, the Company shall pay interest on the
Notes in cash; provided, further, that (to the extent that the payment of such
interest shall be legally enforceable) any principal of, or premium or
installment of interest on, this Note which is overdue shall bear interest at
the rate equal to the lesser of 4.0% per annum in excess of the rate of interest
then borne by the Notes and the maximum rate permitted by applicable law from
the date such amounts are due until they are paid, and such interest shall be
payable in the same manner as the other accrued interest on the next Interest
Payment Date.
All interest payable on any Interest Payment Date will, as provided in
the Loan Agreement, be paid to the Person in whose name this Note (or one or
more Predecessor Notes) is
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registered on the Security Register (as defined in the Loan Agreement) at the
close of business on the fifteenth calendar day (whether or not a Business Day)
immediately preceding such Interest Payment Date (the "Regular Record Date").
Notwithstanding the foregoing, if this Note is issued after a Regular Record
Date and prior to an Interest Payment Date, the record date for such Interest
Payment Date shall be the original issue date.
Principal on this Note shall be payable only against surrender
therefor. Payments of interest on this Note shall be made, in accordance with
the terms of this Note and the Loan Agreement and subject to applicable laws and
regulations, either by issuance of Additional Balloon Notes or by check mailed
on or before the due date for such payment to the person entitled thereto at
such person's address appearing on the Security Register or, in the case of cash
interest payments, by wire transfer to such account as any Noteholder shall
designate by written instructions received by the Company no less than 15 days
prior to any applicable Interest Payment Date, which wire instruction shall
continue in effect until such time as the Noteholder otherwise notifies the
Company or such Noteholder no longer is the registered owner of this Note.
Interest will be computed on the basis of a 360-day year of twelve
30-day months.
The indebtedness evidenced by this Note is, to the extent provided in
the Loan Agreement, subordinate and subject in right of payment to the prior
payment in full of all Senior Indebtedness, and this Note is issued subject to
the provisions of the Loan Agreement with respect thereto. This Note is secured
to the extent required under the Loan Agreement.
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
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IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated:
SUNLINK HEALTHCARE CORP.
[Seal]
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Title: Chief Executive Officer
Attest:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Director
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[Form of Reverse of Note]
This Note is one of a duly authorized issue of Notes of the Company
designated as its 8.5% Senior Subordinated Notes due 2006 (herein called the
"Notes"), in aggregate principal amount of $17 million and an additional
aggregate principal amount of the Notes that may be issued as Additional Balloon
Notes through January 31, 2003 pursuant to the Loan Agreement between the
Company, as Borrower, its Subsidiaries, as Guarantors and NHS, Inc., as Lender,
dated as of January 31, 2001 (herein called the "Loan Agreement"), to which Loan
Agreement and all amendments thereto reference is hereby made for a statement of
the respective rights, limitations of rights, duties and immunities thereunder
of the Company and the Noteholders and of the terms upon which the Notes are,
and are to be, issued and delivered.
The Notes are subject to redemption at any time, at the option of the
Company, in whole or in part, at a redemption price of the principal amount of
the Note and all Additional Balloon Notes and all accrued and unpaid interest
thereon, if any, to the date of redemption
If the Company elects to redeem less than all of the Notes, the Company
shall redeem the Notes pro rata from each Noteholder.
The Notes do not have the benefit of any sinking fund obligations.
In the event of redemption or purchase pursuant to an offer to purchase
this Note in part only, a new Note or Notes for the unredeemed or unpurchased
portion hereof will be issued in the name of the Noteholder hereof upon the
cancellation hereof.
The indebtedness evidenced by this Note is, to the extent provided in
the Loan Agreement, subordinate and subject in right of payment to the prior
payment in full of all Senior Indebtedness, and this Note is issued subject to
the provisions of the Loan Agreement with respect thereto. Each Noteholder, by
accepting the Note, agrees to and shall be bound by such provisions.
If an Event of Default shall occur and be continuing, the principal of
all the Notes may be declared due and payable in the manner and with the effect
provided in the Loan Agreement. Upon payment of (i) the principal so declared
due and payable and any overdue installment of interest, (ii) any overdue
principal payable upon redemption or repurchase of this Note, and (iii) as
provided on the face hereof, interest on any overdue principal of, or interest
on, this Note (in each case to the extent that the payment of such interest
shall be legally enforceable), all of the Company's obligations in respect of
the payment of the principal of, and interest on, this Note shall terminate.
The Loan Agreement provides that, subject to certain conditions, if (i)
certain Excess Proceeds are available to the Company as a result of Asset Sales
or (ii) a Change of Control occurs, the Company shall be required to make an
offer to purchase all or a specified portion of the Notes as provided for in the
Loan Agreement.
The Loan Agreement permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and
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certain rights of the Noteholders under the Loan Agreement at any time by the
Company with the consent of the Noteholders holding more than 51% in aggregate
principal amount of the Notes at the time outstanding. The Loan Agreement also
contains provisions permitting Noteholders of specified percentages in aggregate
principal amount of the Notes at the time outstanding, on behalf of the
Noteholders, to waive compliance by the Company with certain provisions of the
Loan Agreement and certain past defaults under the Loan Agreement and their
consequences. Any such consent or waiver by the specified percentage of
Noteholders shall be conclusive and binding upon such Noteholder and upon all
future Noteholders and of any Note issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof, whether or not notation of such
consent or waiver is made upon this Note.
As provided in the Loan Agreement and subject to certain limitations
therein set forth, the transfer of this Note is registrable in the Security
Register, upon surrender of this Note for registration of transfer at the
principal offices of the Company, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company duly executed by, the
Noteholder hereof or his attorney duly authorized in writing, and thereupon one
or more new Notes, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.
The Notes are issuable only in registered form without coupons. As
provided in the Loan Agreement and subject to certain limitations therein set
forth, Notes are exchangeable for a like aggregate principal amount of Notes of
a different authorized denomination, as requested by the Noteholder surrendering
the same.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer, the
Company and any agent of the Company may treat the Person in whose name this
Note is registered as the owner hereof for all purposes, whether or not this
Note be overdue, and neither the Company nor any such agent shall be affected by
notice to the contrary.
All terms used in this Note which are not defined herein shall have the
meanings assigned to them in the Loan Agreement.
THIS NOTE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE
RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF NEW YORK,
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.
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OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased in its entirety by the
Company pursuant to Section 7.08 or 7.09 of the Loan Agreement, check the box:
If you want to elect to have only a part of the principal amount of
this Note purchased by the Company pursuant to Section 7.08 or 7.09 of the Loan
Agreement, state the portion of such amount: $_____________.
If you want to receive the purchase price for the Note or portion of
the Note you elect to have purchased by the Company by check mailed to you at
the address recorded on the Security Register check the box:
If you want to receive the purchase price for the Note or portion of
the Note you elect to have purchased by the Company by wire transfer of
immediately available funds, state the wire transfer information:
_________________________________________________.
Dated: Your Signature:
-------------------------------------------
(Sign exactly as name appears on the other side of this Note)
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EXHIBIT B
[FORM OF NOTE]
THE SECURITY REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
QUALIFIED UNDER ANY STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED, SOLD OR
OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION STATEMENT IS IN EFFECT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
AND APPLICABLE STATE SECURITIES LAWS. THE HOLDER OF THIS SECURITY IS SUBJECT TO
THE TERMS OF THE LOAN AGREEMENT BETWEEN SUNLINK HEALTHCARE CORP. (THE
"COMPANY"), ITS SUBSIDIARIES, AND NHS, INC., DATED AS OF JANUARY 31, 2001 (THE
"LOAN AGREEMENT"). ALL TERMS USED IN THIS NOTE WHICH ARE NOT DEFINED HEREIN
SHALL HAVE THE MEANINGS ASSIGNED TO THEM IN THE LOAN AGREEMENT. A COPY OF SUCH
LOAN AGREEMENT IS AVAILABLE AT THE OFFICES OF THE COMPANY.
SENIOR SUBORDINATED ZERO COUPON NOTES DUE 2004
No. 1 $2,000,000
Sunlink Healthcare Corp., a corporation duly organized and existing
under the laws of Delaware (herein called the "Company," which term includes any
successor Person under the Loan Agreement between the Company, its Subsidiaries
and NHS, Inc., dated as of January 31, 2001 (the "Loan Agreement")), for value
received, hereby promises to pay to NHS, Inc., or registered assigns, the
principal sum of $2,000,000 Dollars on January 31, 2004 (the "Stated Maturity
Date"), provided, that any principal of this Note which is overdue shall bear
interest at a rate equal to the lesser of 12.5% per annum or the maximum rate
permitted by applicable law. Principal on this Note shall be payable only
against surrender therefor. Payments of on this Note shall be made, in
accordance with the terms of this Note and the Loan Agreement and subject to
applicable laws and regulations, either by check mailed on or before the due
date for such payment to the person entitled thereto at such person's address
appearing on the Security Register or by wire transfer to such account as any
Noteholder shall designate by written instructions received by the Company no
less than 15 days prior to any applicable date of payment which wire instruction
shall continue in effect until such time as the Noteholder otherwise notifies
the Company or such Noteholder no longer is the registered owner of this Note.
The indebtedness evidenced by this Note is, to the extent provided in
the Loan Agreement, subordinate and subject in right of payment to the prior
payment in full of all Senior Indebtedness, and this Note is issued subject to
the provisions of the Loan Agreement with respect thereto. This Note is secured
to the extent required under the Loan Agreement.
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If pursuant to the Stock Acquisition Agreement between the Company and
NHS, Inc. dated as of January 31, 2001, the Company shall be entitled to any
right of indemnification, then the Company shall have the right to set off
against its payment obligations under this Note the sum of the amount of the
obligations for which the Company is entitled to indemnification.
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
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IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated:
SUNLINK HEALTHCARE CORP.
[Seal]
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
---------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Title: Chief Executive Officer
Attest:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Director
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[Form of Reverse of Note]
This Note is one of a duly authorized issue of Notes of the Company
designated as its Senior Subordinated Zero Coupon Notes due 2004 (herein called
the "Notes"), in aggregate principal amount of $2.0 million pursuant to the Loan
Agreement between the Company, as Borrower, its Subsidiaries, as Guarantors, and
NHS, Inc., as Lender, dated as of January __, 2001 (herein called the "Loan
Agreement"), to which Loan Agreement and all amendments thereto reference is
hereby made for a statement of the respective rights, limitations of rights,
duties and immunities thereunder of the Company and the Noteholders and of the
terms upon which the Notes are, and are to be, issued and delivered.
The Notes are subject to redemption at any time, at the option of the
Company, in whole or in part, at a redemption price of the principal amount of
the Note on the date of redemption
If the Company elects to redeem less than all of the Notes, the Company
shall redeem the Notes pro rata from each Noteholder.
The Notes do not have the benefit of any sinking fund obligations.
In the event of redemption or purchase pursuant to an offer to purchase
this Note in part only, a new Note or Notes for the unredeemed or unpurchased
portion hereof will be issued in the name of the Noteholder hereof upon the
cancellation hereof.
The indebtedness evidenced by this Note is, to the extent provided in
the Loan Agreement, subordinate and subject in right of payment to the prior
payment in full of all Senior Indebtedness, and this Note is issued subject to
the provisions of the Loan Agreement with respect thereto. Each Noteholder, by
accepting the Note, agrees to and shall be bound by such provisions.
If an Event of Default shall occur and be continuing, the principal of
all the Notes may be declared due and payable in the manner and with the effect
provided in the Loan Agreement. Upon payment of (i) the principal so declared
due and payable and (ii) as provided on the face hereof, interest on any overdue
principal of this Note (to the extent that the payment of such interest shall be
legally enforceable), all of the Company's obligations in respect of the payment
of the principal of, and interest on, this Note shall terminate.
The Loan Agreement permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and certain rights of the Noteholders under the Loan
Agreement at any time by the Company with the consent of the Noteholders holding
more than 51% in aggregate principal amount of the Notes at the time
outstanding. The Loan Agreement also contains provisions permitting Noteholders
of specified percentages in aggregate principal amount of the Notes at the time
outstanding, on behalf of the Noteholders, to waive compliance by the Company
with certain provisions of the Loan Agreement and certain past defaults under
the Loan Agreement and their consequences. Any such consent or waiver by the
specified percentage of Noteholders shall be conclusive and binding upon such
Noteholder and upon all future Noteholders and of any Note issued upon the
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registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Note.
As provided in the Loan Agreement and subject to certain limitations
therein set forth, the transfer of this Note is registrable in the Security
Register, upon surrender of this Note for registration of transfer at the
principal offices of the Company, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company duly executed by, the
Noteholder hereof or his attorney duly authorized in writing, and thereupon one
or more new Notes, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.
The Notes are issuable only in registered form without coupons. As
provided in the Loan Agreement and subject to certain limitations therein set
forth, Notes are exchangeable for a like aggregate principal amount of Notes of
a different authorized denomination, as requested by the Noteholder surrendering
the same.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer, the
Company and any agent of the Company may treat the Person in whose name this
Note is registered as the owner hereof for all purposes, whether or not this
Note be overdue, and neither the Company nor any such agent shall be affected by
notice to the contrary.
All terms used in this Note which are not defined herein shall have the
meanings assigned to them in the Loan Agreement.
THIS NOTE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE
RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF NEW YORK,
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.
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93
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased in its entirety by the
Company pursuant to Section 7.08 or 7.09 of the Loan Agreement, check the box:
If you want to elect to have only a part of the principal amount of
this Note purchased by the Company pursuant to Section 7.08 or 7.09 of the Loan
Agreement, state the portion of such amount:
$___________.
If you want to receive the purchase price for the Note or portion of
the Note you elect to have purchased by the Company by check mailed to you at
the address recorded on the Security Register check the box:
If you want to receive the purchase price for the Note or portion of
the Note you elect to have purchased by the Company by wire transfer of
immediately available funds, state the wire transfer information:
_________________________________________________.
Dated: Your Signature:
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(Sign exactly as name appears on the other side of this Note)
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