Exhibit 2.3
THIS PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD OR
TRANSFERRED WITHOUT COMPLIANCE WITH THE REGISTRATION OR QUALIFICATION PROVISIONS
OF APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR APPLICABLE EXEMPTIONS
THEREFROM.
THIS PROMISSORY NOTE IS SUBJECT TO A SUBORDINATION AND INTERCREDITOR AGREEMENT
DATED AS OF OCTOBER 11, 2002 BY AND AMONG Chemed Corporation, PCI-A Holding
Corp., PCI Holding Corp. and PNC Bank, National Association.
SENIOR SUBORDINATED PROMISSORY NOTE
$12,500,000 October 11, 2002
FOR VALUE RECEIVED, PCI Holding Corp., a Delaware corporation (the
"Borrower") promises to pay to the order of Chemed Corporation, a Delaware
corporation (hereinafter referred to as the "Lender") on or before October 11,
2007, the principal sum of Twelve Million Five Hundred Thousand Dollars
($12,500,000), or such part thereof as then remains unpaid, and to pay interest
from the date hereof on the whole amount of said principal sum remaining from
time to time unpaid at the rate of (i) seven and one-half percent (7.5%) per
annum for the period from October 11, 2002 through September 30, 2004; (ii)
eight and one-half percent (8.5%) per annum for the period from October 1, 2004
through September 30, 2005; and (iii) nine and one-half percent (9.5%) per annum
for the period from October 1, 2005 through September 30, 2007. Such interest
shall be payable quarterly in arrears on the last Business Day of March, June,
September and December in each year, the first such payment to be due and
payable on December 31, 2002 until the whole amount of the principal hereof
remaining unpaid shall become due and payable. Principal, premium, if any, and
interest shall be payable in lawful money of the United States of America, in
immediately available funds, by wire transfer of funds to the account or
accounts designated in writing by the Lender or in such other manner as the
Lender may designate from time to time in writing to the Borrower.
Interest shall be computed on the basis of a 360-day year for the
actual number of days elapsed. Nothing in this Note shall require the Borrower
to pay interest at a rate in excess of the maximum rate permitted by applicable
law. Notwithstanding any other provision of this Note, the Lender does not
intend to charge and Borrower shall not be required to pay any interest or other
fees or charges in excess of the maximum permitted by applicable law; any
payments in excess of such maximum shall be credited to reduce principal
hereunder. All payments received by the Lender hereunder will be applied first
to costs of collection, if any, then to interest and the balance to principal.
The Borrower also promises to pay all taxes levied or assessed upon
said advances against any holder of this Note and to pay all costs, including
attorneys' fees, costs relating to the appraisal and/or valuation of assets and
all costs incurred in the collection, defense, preservation, administration,
enforcement or protection of this Note or in any guaranty or endorsement of this
Note, or in any litigation arising out of the transactions of which this Note or
any guaranty or endorsement of this Note is a part.
This Note is subject to the following terms and conditions:
1. Prepayment.
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(a) Required Liquidity Redemption. In the event and upon the
closing of a Qualified Public Offering or a Sale Event (as defined below), the
Borrower shall redeem, without penalty or premium except as set forth in Section
1(c), this Note, together with all accrued and unpaid interest then due thereon.
(b) Optional Redemption. In addition to the redemption of
this Note required under Section 1(a), the Borrower may, at any time and from
time to time, redeem, without penalty or premium except as set forth in Section
1(c), this Note, in whole or in part, together with interest due on the amount
so redeemed through the date of redemption.
(c) Redemption Premium.
Should the Borrower redeem this Note pursuant to Section 1(a),
the Borrower shall pay to the Lender at the time of such redemption an
additional amount equal to one percent (1%) of the total principal amount of
this Note held by such holder redeemed at such time.
Should the Borrower redeem this Note, in whole or in part,
pursuant to Section 1(b), (i) at any time prior to the first anniversary of the
date hereof, the Borrower shall pay to the Lender at the time of such redemption
an additional amount equal to one percent (1%) of the total principal amount of
this Note redeemed at such time; (ii) at any time after the first anniversary
but prior to the second anniversary of the date hereof, the Borrower shall pay
to the Lender at the time of such redemption an additional amount equal to five
percent (5%) of the total principal amount of this Note redeemed at such time;
(iii) at any time after the second anniversary but prior to the third
anniversary of the date hereof, the Borrower shall pay to the Lender at the time
of such redemption an additional amount equal to four percent (4%) of the total
principal amount of this Note redeemed at such time; (iv) at any time after the
third anniversary but prior to the fourth anniversary of the date hereof, the
Borrower shall pay to the Lender at the time of such redemption an additional
amount equal to three percent (3%) of the total principal amount of this Note
redeemed at such time; and (v) at any time after the fourth anniversary of the
date hereof, the Borrower shall pay to the Lender at the time of such redemption
an additional amount equal to two percent (2%) of the total principal amount of
this Note redeemed at such time.
(d) Notice of Redemption. Notice of any optional redemption
pursuant to Section 1(b) shall be given to the Lender at least five (5) Business
Days prior to the date of such redemption and notice of any required redemption
pursuant to Section 1(a) shall be given to the Lender at least five (5) Business
Days prior to the closing of a Qualified Public Offering or a Sale Event.
2. Transfer and Exchange of this Note. The Lender may, prior to
maturity or prepayment thereof, surrender this Note at the principal office of
the Borrower for transfer or exchange. The Lender shall first notify the
Borrower in writing at least five (5) Business Days in advance of such transfer
or exchange. Within a reasonable time after such notice to the Borrower from the
Lender of its intention to make such exchange and without expense (other than
transfer taxes, if any) to the Lender, the Borrower shall issue in exchange
therefor another note or notes, in such denominations as requested by the
Lender, for the same aggregate principal amount, as of the date of such
issuance, as the unpaid principal amount of this Note so surrendered and having
the same maturity and rate of interest, containing the same provisions and
subject to the same terms and conditions as this Note so surrendered provided
that such proposed transferees shall, prior to the issuance of the new note,
execute and deliver an instrument of accession to the Subordination Agreement
(as defined below). Each new note shall be made payable to such person or
persons, or assigns, as the Lender may designate, and such transfer or exchange
shall be made in such a manner that no gain or loss of principal or interest
shall result therefrom.
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3. Replacement of Notes. Upon receipt of evidence satisfactory to
the Borrower of the loss, theft, destruction or mutilation of this Note and, if
requested by the Borrower in the case of any such loss, theft or destruction,
upon delivery of an indemnity bond or other agreement or security reasonably
satisfactory to the Borrower, or, in the case of any such mutilation, upon
surrender and cancellation of such Note, the Borrower will issue a new Note, of
like tenor and amount and dated the date to which interest has been paid, in
lieu of such lost, stolen, destroyed or mutilated Note.
4. Subordination. The indebtedness evidenced by this Note shall
be subordinate and junior to certain indebtedness of the Borrower to PNC Bank,
National Association (the "Bank") and certain other lenders in the manner and to
the extent provided in the Subordination and Intercreditor Agreement of even
date herewith by and among the Lender, PCI-A Holding Corp., the Borrower and the
Bank (the "Subordination Agreement").
5. Representations and Warranties of Borrower.
The Borrower represents and warrants to Lender as follows:
5.1 Organization and Corporate Power. The Borrower is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware, and has all necessary corporate power and
authority to issue this Note and to perform its obligations hereunder.
5.2 Authorization of Transaction. The execution, delivery and
performance of this Note has been duly and validly authorized by all requisite
corporate action on the part of the Borrower, and no other corporate proceedings
on their part are necessary to authorize the execution, delivery or performance
of this Note. This Note constitutes a valid and binding obligation of the
Borrower, enforceable in accordance with its terms.
5.3 No Violation. The Borrower is not subject to or obligated
under its certificate of incorporation or by-laws or any applicable material
law, rule or regulation of any governmental authority, or any agreement or
instrument, or any license, franchise or permit, or any order, writ, injunction
or decree, that would be breached or violated by the Borrower's execution,
delivery or performance of this Note.
5.4 Governmental Authorities and Consents. No consent, approval or
authorization of any governmental or regulatory authority or any other party or
person is required to be obtained by the Borrower in connection with its
execution, delivery and performance of this Note.
5.5 Litigation. There are no material actions, suits, proceedings
or orders pending or, to the Borrower's knowledge, threatened against or
affecting the Borrower at law or in equity, or before or by any federal, state,
municipal or other governmental court, department, commission, board, bureau,
agency or instrumentality, domestic or foreign, that would adversely affect the
Borrower's ability to perform its obligations under this Note.
6. Events of Default. If any of the following events ("Events of
Default") shall occur and be continuing:
(a) The Borrower shall fail to pay any installment of
principal of this Note when due; or
(b) The Borrower shall fail to pay any interest or premium,
if any, on this Note when
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due and such failure is not cured within fifteen (15) days; or
(c) The Borrower shall default in the performance of any
other covenant or obligation contained in this Note for thirty (30) days after
written notice thereof shall have been given to the Borrower; or
(d) The Borrower shall be involved in financial difficulties
evidenced (i) by its admitting in writing its inability to pay its debts
generally as they become due; (ii) by its commencement of a voluntary case under
Title 11 of the United States Code as from time to time in effect, or by its
authorizing, by appropriate proceedings of its board of directors or other
governing body, the commencement of such a voluntary case; (iii) by its filing
an answer or other pleading admitting or failing to deny the material
allegations of a petition filed against it commencing an involuntary case under
said Title 11, or seeking, consenting to or acquiescing in the relief therein
provided, or by its failing to controvert timely the material allegations of any
such petition; (iv) by the entry of an order for relief in any involuntary case
commenced under said Title 11 which is not dismissed within sixty (60) days; (v)
by its seeking relief as a debtor under any applicable law, other than said
Title 11, of any jurisdiction relating to the liquidation or reorganization of
debtors or to the modification or alteration of the rights of creditors, or by
its consenting to or acquiescing in such relief; (vi) by the entry of an order
by a court of competent jurisdiction (a) finding it to be bankrupt or insolvent,
(b) ordering or approving its liquidation, reorganization or any modification or
alteration of the rights of its creditors, or (c) assuming custody of, or
appointing a receiver or other custodian for, all or a substantial part of its
property; or (vii) by its making an assignment for the benefit of, or entering
into a composition with, its creditors, or appointing or consenting to the
appointment of a receiver or other custodian for all or a substantial part of
its property; or
(e) Any judgment, writ, warrant of attachment or execution
or similar process shall be issued or levied against a substantial part of the
property of the Borrower and such judgment, writ, or similar process shall not
be released, vacated or fully bonded within thirty (30) days after its issuance
or levy;
then, and in any such event listed in Sections 6(a) through (e), the Lender may,
by notice to the Borrower, declare the entire unpaid principal amount of this
Note, and all interest accrued and unpaid thereon to be forthwith due and
payable, whereupon this Note, and all such accrued interest shall become and be
forthwith due and payable (unless there shall have occurred an Event of Default
under Section 6(d) in which case all such amounts shall automatically become due
and payable), without presentment, demand, protest or further notice of any
kind, all of which are hereby expressly waived by the Borrower, provided that,
if at any time after the principal of this Note shall have become due and
payable, and before any judgment or decree for the payment of the moneys so due,
or any portion thereof, shall have been entered, then and in every such case the
Lender may, by written instrument filed with the Borrower, rescind and annul
such declaration and its consequences.
8. Definitions.
"Business Day" means any day other than a Saturday, Sunday or public
holiday or the equivalent for banks under the laws of the Commonwealth of
Massachusetts.
"Capital Stock" means all authorized capital stock of the Borrower.
"Common Stock" means the common stock of the Borrower, par value
$0.01 per share.
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"Qualified Public Offering" means an initial underwritten public
offering by the Borrower of its Common Stock pursuant to an effective
registration statement under the Securities Act of 1933, as amended, for an
offering price resulting in net proceeds to the Borrower of at least Fifty
Million Dollars ($50,000,000.00).
"Sale Event" means any (i) consolidation or merger of the Borrower
into or with any other entity or entities which results in the exchange of
outstanding shares of Capital Stock of the Borrower for securities or other
consideration issued or paid or caused to be issued or paid by any such entity
or any affiliate thereof (other than (A) a merger or consolidation to
reincorporate the Borrower in a different jurisdiction, (B) a merger or
consolidation in which the stockholders of the Borrower immediately prior to
such consolidation or merger shall own more than 50% of the outstanding shares
of capital stock or have sufficient voting power (by virtue of number of votes
and/or special voting rights) to elect a majority of the members of the board of
directors of the resulting or surviving Borrower immediately after such
consolidation or merger, or (C) the merger of the Borrower with PCI-A Holding
Corp. pursuant to the agreement and plan of merger dated as of October 11, 2002
by and between the Borrower and PCI-A Holding Corp.) (a "Merger Acquisition"),
(ii) the sale or transfer by the Borrower of all or substantially all its assets
(an "Asset Sale"), or (iii) the sale or transfer by the Borrower's stockholders
of outstanding shares of Capital Stock that have sufficient voting power (by
virtue of number of votes and/or special voting rights) to elect a majority of
the members of the Board of Directors, in a single transaction or series of
related transactions, to a person, entity or "group" (as such term is used in
Section 13(d) of the U.S. Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder) (a "Change of Control").
9. Waivers, Consent to Jurisdiction.
If this Note is not paid in accordance with its terms, Borrower
shall pay to Lender, in addition to principal and accrued interest thereon, all
costs of collection of the principal and accrued interest, including, but not
limited to, reasonable attorneys' fees, court costs and other costs for the
enforcement of payment of this Note.
No waiver of any obligation of Borrower under this Note shall be
effective unless it is in a writing signed by Lender. A waiver by Lender of any
right or remedy under this Note on any occasion shall not be a bar to exercise
of the same right or remedy on any subsequent occasion or of any other right or
remedy at any time.
This Note is delivered in and shall be enforceable in accordance
with the internal domestic laws of the State of Delaware (without regard to the
conflicts of law provisions thereof), and shall be construed in accordance
therewith, and shall have the effect of a sealed instrument.
Borrower hereby expressly waives presentment, demand, and protest,
notice of demand, dishonor and nonpayment of this Note, and all other notices or
demands of any kind in connection with the delivery, acceptance, performance,
default or enforcement hereof, and hereby consents to any delays, extensions of
time, renewals, waivers or modifications that may be granted or consented to by
the holder hereof with respect to the time of payment or any other provision
hereof.
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IN WITNESS WHEREOF, the Borrower has executed this Note under seal
as of the date first written above.
PCI Holding Corp.
By: /s/ Xxxxxx Xxxxxxxx
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Name: Xxxxxx Xxxxxxxx
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Title: President
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WITNESS:
By: /s/ Xxxx X. XxXxxxxx
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Name: Xxxx X. XxXxxxxx
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Title: Attorney
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