EXHIBIT 10.20
[FORM OF] SERIES A NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE SOLD, TRANSFERRED, OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE
STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH
ACT AND SUCH LAWS.
KINETICS GROUP, INC.
SENIOR SECURED NOTE DUE 2006
$[ ] Issue Date: September 26, 2003
For value received, the undersigned, KINETICS GROUP, INC., a Delaware
corporation (the "COMPANY", which term includes any successor corporation under
the Purchase Agreement hereinafter referred to), hereby promises to pay to the
order of [HOLDER], a [ ], or its registered assigns (the "HOLDER"), the
principal sum of $[ ] on August 25, 2006 (the "MATURITY DATE") and to pay
interest thereon from time to time as provided herein.
This Note is one of a duly authorized issue of notes of the Company
designated as its Series A Senior Secured Notes due 2006 (herein called the
"NOTES"), issued in the aggregate principal amount limited to $75,000,000
pursuant to the Amended and Restated Purchase Agreement dated as of April
[ ], 2004 (the "PURCHASE AGREEMENT") by and among the Company, Celerity
Group, Inc., Kinetic Systems, Inc., the Subsidiary Guarantors party thereto, the
KSI Guarantors party thereto, the Purchasers party thereto, and Xxxxxxxxxx
Capital Partners, LLC, as Collateral Agent and Agent for the purchasers, and is
entitled to the benefits thereof and to the exercise of the remedies provided
thereby or otherwise available in respect thereof. Capitalized terms used herein
without definition have the meanings assigned thereto in the Purchase Agreement.
The Company promises to pay interest ("INTEREST") on the principal
amount of this Note at the rate of LIBOR + 10.00% per annum, subject to Section
2.04 of the Purchase Agreement (the "INTEREST RATE"). Interest on this Note
shall accrue from and including the date of issuance through and until repayment
of the principal amount of this Note and payment of all Interest in full, and
shall be computed on the basis of a 360-day year of twelve 30-day months.
Interest shall be payable quarterly on each March 31, June 30, September 30 and
December 31 of each year or, if any such date shall not be a Business Day, on
the next succeeding Business Day to occur after such date (each date upon which
interest shall be so payable, an "INTEREST PAYMENT DATE"), beginning on June 30,
2004, by wire transfer of immediately available funds to an account at a bank
designated in writing by the Holder on reasonable notice. In the absence of
A-1
any such written designation, any such Interest payment shall be deemed made on
the date a check for good funds in the applicable amount payable to the order of
Holder is received by the Holder at its last address as reflected in the
Company's Note Register (as defined below); if no such address appears, then to
such Holder in care of the last address in such note register of any predecessor
holder of this Note (or its predecessor).
Notwithstanding the foregoing provisions of this Note, but subject to
applicable law, any overdue principal of, overdue Interest on and any other
overdue amounts payable under this Note shall bear interest, payable on demand
in immediately available funds, for each day from the date payment thereof was
due to the date of actual payment, at a rate equal to the sum of (i) the
Interest Rate and (ii) an additional 2% per annum. Subject to applicable law,
any interest that shall accrue on overdue interest on this Note as provided in
the preceding sentence and shall not have been paid in full in cash on or before
the next Interest Payment Date to occur after the date on which the overdue
interest became due and payable shall itself be deemed to be overdue interest on
this Note to which the preceding sentence shall apply.
In the event that any interest rate(s) provided for in this Note shall
be determined to be unlawful, such interest rate(s) shall be computed at the
highest rate permitted by applicable law. Any payment by the Company of any
interest amount in excess of that permitted by law shall be considered a
mistake, with the excess being applied to the principal amount of this Note
without prepayment premium or penalty; if no such principal amount is
outstanding, such excess shall be returned to the Company.
The Notes are subject to redemption in accordance with the terms of the
Purchase Agreement. All redemption payments shall include payment of accrued
Interest on the principal amount of this Note so prepaid and shall be applied
first to all costs, expenses and indemnities payable under the Purchase
Agreement, then to payment of default interest, if any, then to payment of the
Interest, and thereafter to principal. In the event of redemption of this Note
in part only, a new Note or Notes for the unredeemed portion hereof shall be
issued in the name of the Holder hereof upon cancellation hereof.
All redemption payments shall include payment of accrued Interest on
the principal amount of this Note so prepaid and shall be applied first to all
costs, expenses and indemnities payable under the Purchase Agreement, then to
payment of default interest, if any, then to payment of the Interest, and
thereafter to principal.
In the event of redemption of this Note in part only, a new Note or
Notes for the unredeemed portion hereof shall be issue in the name of the Holder
hereof upon cancellation hereof.
The Notes are subject to, at the option of the Board of Directors of
the Company and the satisfaction of a number of conditions, Legal Defeasance and
Covenant Defeasance. Among the conditions for Defeasance are an irrevocable
deposit by Company with the Trustee, for the benefit of the Holders, of cash or
U.S. Government Obligations in an amount sufficient to pay the principal of the
outstanding Notes, accrued but unpaid interest on the outstanding Notes through
the date of Defeasance, interest on the outstanding Notes through the applicable
redemption date or the stated date of maturity, and the Redemption Premium, if
applicable.
A-2
If an Event of Default shall occur and be continuing, the principal of
all the Notes may be declared to be due and payable in the manner and with the
effect provided in the Purchase Agreement. This Note is entitled to the benefits
of certain guarantees set forth in the Purchase Agreement (the "GUARANTIES")
made in favor of the Holders of the Notes by Holdings, which holds all the
equity interest in the Company, KSI, and certain subsidiaries of the Company and
KSI. In addition the Notes are entitled to the benefits of the Parent
Non-Recourse Guaranty. Reference is hereby made to the Purchase Agreement for a
statement of the respective rights, limitation of rights, duties and obligations
thereunder of the Guarantors and Holders of the Notes.
The Notes are secured by a pledge of substantially all of the assets
and properties of the Company and the Guaranties are secured by the pledge of
certain assets of the Guarantors, as set forth in the Purchase Agreement.
Additionally, the Notes are secured by the collateral described in the Parent
Pledge Agreement. Pursuant to the Intercreditor Agreement, the security
interests securing the indebtedness evidenced by the Notes is contractually
subordinate to the prior payment in full of amounts outstanding under the
Amended and Restated Credit Agreement dated as of December 10, 2002 among the
Company and certain financial institutions, as such agreement has been and may
be amended from time to time.
This Note may be transferred, pledged or assigned, in whole or in part,
by the Holder at any time, in accordance with the provisions of the Purchase
Agreement. The Purchase Agreement also contains provisions permitting the
Holders of specified percentages in aggregate principal amount of the Notes at
the time outstanding, on behalf of the Holders of all the Notes, to waive
compliance by the Company with certain provisions of the Purchase Agreement and
certain past defaults under the Purchase Agreement and their consequences. Any
such consent or waiver by or on behalf of the Holder of this Note shall be
conclusive and binding upon such Holder and upon all future Holders of this Note
and of any Note issued upon the registration of transfer hereof or in the
exchange herefor or in lieu hereof whether or not notation of such consent or
waiver is made upon this Note.
No reference herein to the Purchase Agreement and no provision of this
Note or of the Purchase Agreement shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of (and
premium, if any) and interest on this Note at the times, place and rate, and in
the coin and currency, herein prescribed.
The Company shall maintain a register (the "NOTE REGISTER") in its
principal offices for the purpose of registering the Notes and any transfer or
partial transfer thereof, which register shall as set forth in the Purchase
Agreement reflect and identify the ownership of record of any interest in this
Note. Upon surrender for registration of transfer or exchange of this Note at
the principal offices of the Company, the Company shall, at its expense, execute
and deliver one or more new Notes of like tenor and of denominations of at least
$1.0 million (except as may be necessary to reflect any principal amount not
evenly divisible by $1.0 million) of a like aggregate principal amount,
registered in the name of the Holder or a transferee or transferees. Every Note
surrendered for registration of transfer or exchange shall be duly endorsed, or
be accompanied by a written instrument of transfer duly executed by the Holder
of such Note or such Xxxxxx's attorney duly authorized in writing. Prior to and
at the time of due presentment of this Note for registration of transfer, the
Company may treat the Person in whose name this Note
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is registered as the owner hereof for all purposes, whether or not this Note be
overdue, and the Company shall not be affected by notice to the contrary.
The term "Holder" as used herein shall also include any transferee of
this Note whose name has been recorded by the Company in the Note Register. Each
transferee of this Note acknowledges that this Note has not been registered
under the Securities Act, and may be transferred only pursuant to an effective
registration under the Securities Act or pursuant to an applicable exemption
from the registration requirements of the Securities Act.
On receipt by the Company of an affidavit of an authorized
representative of the Holder stating the circumstances of the loss, theft,
destruction or mutilation of this Note (and in the case of any such mutilation,
on surrender and cancellation of such Note), the Company, at its expense, will
promptly execute and deliver, in lieu thereof, a new Note of like tenor. If
required by the Company, such Holder must provide indemnity sufficient in the
reasonable judgment of the Company to protect the Company from any loss which
they may suffer if a lost, stolen or destroyed Note is replaced.
All notices, demands and other communications provided for or permitted
hereunder shall be made in accordance with the applicable provisions of the
Purchase Agreement.
This Note shall be governed by, construed in accordance with, and
enforced under, the laws of the state of New York applicable to agreements or
instruments entered into and performed entirely within such state.
A-4
KINETICS GROUP, INC.
By: ______________________________
Name:
Title:
Signature Page - Series A Note
[FORM OF] SERIES B NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE
AND MAY NOT BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR
PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF SUCH ACT AND SUCH LAWS.
KINETICS GROUP, INC.
SENIOR SECURED NOTE DUE 2006
$[ ] Issue Date: [ ](1), 2004
For value received, the undersigned, KINETICS GROUP, INC., a Delaware
corporation (the "COMPANY", which term includes any successor corporation under
the Purchase Agreement hereinafter referred to), hereby promises to pay to the
order of [HOLDER], a [ ], or its registered assigns (the "HOLDER"), the
principal sum of $[ ] on August 25, 2006 (the "MATURITY DATE") and to pay
interest thereon from time to time as provided herein.
This Note is one of a duly authorized issue of notes of the Company
designated as its Series B Senior Secured Notes due 2006 (herein called the
"NOTES"), issued in the aggregate principal amount limited to $20,000,000
pursuant to the Amended and Restated Purchase Agreement dated as of April
[ ], 2004 (the "PURCHASE AGREEMENT") by and among the Company, Celerity
Group, Inc., Kinetic Systems, Inc., the Subsidiary Guarantors party thereto, the
KSI Guarantors party thereto, the Purchasers party thereto, and Xxxxxxxxxx
Capital Partners, LLC, as Collateral Agent and Agent for the purchasers, and is
entitled to the benefits thereof and to the exercise of the remedies provided
thereby or otherwise available in respect thereof. Capitalized terms used herein
without definition have the meanings assigned thereto in the Purchase Agreement.
The Company promises to pay interest ("INTEREST") on the principal
amount of this Note at the rate of LIBOR + 10.00% per annum, subject to Section
2.04 of the Purchase Agreement (the "INTEREST RATE"). Interest on this Note
shall accrue from and including the date of issuance through and until repayment
of the principal amount of this Note and payment of all Interest in full, and
shall be computed on the basis of a 360-day year of twelve 30-day months.
-----------
(1) January 23, 2004 for original Series B; April [8], 2004 for new Series B.
1
Interest shall be payable quarterly on each March 31, June 30, September 30 and
December 31 of each year or, if any such date shall not be a Business Day, on
the next succeeding Business Day to occur after such date (each date upon which
interest shall be so payable, an "INTEREST PAYMENT DATE"), beginning on June 30,
2004, by wire transfer of immediately available funds to an account at a bank
designated in writing by the Holder on reasonable notice. In the absence of any
such written designation, any such Interest payment shall be deemed made on the
date a check for good funds in the applicable amount payable to the order of
Holder is received by the Holder at its last address as reflected in the
Company's Note Register (as defined below); if no such address appears, then to
such Holder in care of the last address in such note register of any predecessor
holder of this Note (or its predecessor).
Notwithstanding the foregoing provisions of this Note, but subject to
applicable law, any overdue principal of, overdue Interest on and any other
overdue amounts payable under this Note shall bear interest, payable on demand
in immediately available funds, for each day from the date payment thereof was
due to the date of actual payment, at a rate equal to the sum of (i) the
Interest Rate and (ii) an additional 2% per annum. Subject to applicable law,
any interest that shall accrue on overdue interest on this Note as provided in
the preceding sentence and shall not have been paid in full in cash on or before
the next Interest Payment Date to occur after the date on which the overdue
interest became due and payable shall itself be deemed to be overdue interest on
this Note to which the preceding sentence shall apply.
In the event that any interest rate(s) provided for in this Note shall
be determined to be unlawful, such interest rate(s) shall be computed at the
highest rate permitted by applicable law. Any payment by the Company of any
interest amount in excess of that permitted by law shall be considered a
mistake, with the excess being applied to the principal amount of this Note
without prepayment premium or penalty; if no such principal amount is
outstanding, such excess shall be returned to the Company.
The Notes are subject to redemption in accordance with the terms of the
Purchase Agreement. All redemption payments shall include payment of accrued
Interest on the principal amount of this Note so prepaid and shall be applied
first to all costs, expenses and indemnities payable under the Purchase
Agreement, then to payment of default interest, if any, then to payment of the
Interest, and thereafter to principal. In the event of redemption of this Note
in part only, a new Note or Notes for the unredeemed portion hereof shall be
issued in the name of the Holder hereof upon cancellation hereof.
The Notes are subject to, at the option of the Board of Directors of
the Company and the satisfaction of a number of conditions, Legal Defeasance and
Covenant Defeasance. Among the conditions for Defeasance are an irrevocable
deposit by Company with the Trustee, for the benefit of the Holders, of cash or
U.S. Government Obligations in an amount sufficient to pay the principal of the
outstanding Notes, accrued but unpaid interest on the outstanding Notes through
the date of Defeasance, interest on the outstanding Notes through the applicable
redemption date or the stated date of maturity, and the Redemption Premium, if
applicable.
If an Event of Default shall occur and be continuing, the principal of
all the Notes may be declared to be due and payable in the manner and with the
effect provided in the Purchase Agreement. This Note is entitled to the benefits
of certain guarantees set forth in the
2
Purchase Agreement (the "GUARANTIES") made in favor of the Holders of the Notes
by Holdings, which holds all the equity interest in the Company, KSI, and
certain subsidiaries of the Company and KSI. In addition the Notes are entitled
to the benefits of the Parent Non-Recourse Guaranty. Reference is hereby made to
the Purchase Agreement for a statement of the respective rights, limitation of
rights, duties and obligations thereunder of the Guarantors and Holders of the
Notes.
The Notes are secured by a pledge of substantially all of the assets
and properties of the Company and the Guaranties are secured by the pledge of
certain assets of the Guarantors, as set forth in the Purchase Agreement.
Additionally, the Notes are secured by the collateral described in the Parent
Pledge Agreement. Pursuant to the Intercreditor Agreement, the security
interests securing the indebtedness evidenced by the Notes is contractually
subordinate to the prior payment in full of amounts outstanding under the
Amended and Restated Credit Agreement dated as of December 10, 2002 among the
Company and certain financial institutions, as such agreement has been and may
be amended from time to time.
This Note may be transferred, pledged or assigned, in whole or in part,
by the Holder at any time, in accordance with the provisions of the Purchase
Agreement. The Purchase Agreement also contains provisions permitting the
Holders of specified percentages in aggregate principal amount of the Notes at
the time outstanding, on behalf of the Holders of all the Notes, to waive
compliance by the Company with certain provisions of the Purchase Agreement and
certain past defaults under the Purchase Agreement and their consequences. Any
such consent or waiver by or on behalf of the Holder of this Note shall be
conclusive and binding upon such Holder and upon all future Holders of this Note
and of any Note issued upon the registration of transfer hereof or in the
exchange herefor or in lieu hereof whether or not notation of such consent or
waiver is made upon this Note.
No reference herein to the Purchase Agreement and no provision of this
Note or of the Purchase Agreement shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of (and
premium, if any) and interest on this Note at the times, place and rate, and in
the coin and currency, herein prescribed.
The Company shall maintain a register (the "NOTE REGISTER") in its
principal offices for the purpose of registering the Notes and any transfer or
partial transfer thereof, which register shall as set forth in the Purchase
Agreement reflect and identify the ownership of record of any interest in this
Note. Upon surrender for registration of transfer or exchange of this Note at
the principal offices of the Company, the Company shall, at its expense, execute
and deliver one or more new Notes of like tenor and of denominations of at least
$1.0 million (except as may be necessary to reflect any principal amount not
evenly divisible by $1.0 million) of a like aggregate principal amount,
registered in the name of the Holder or a transferee or transferees. Every Note
surrendered for registration of transfer or exchange shall be duly endorsed, or
be accompanied by a written instrument of transfer duly executed by the Holder
of such Note or such Xxxxxx's attorney duly authorized in writing. Prior to and
at the time of due presentment of this Note for registration of transfer, 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 the Company
shall not be affected by notice to the contrary.
3
The term "Holder" as used herein shall also include any transferee of
this Note whose name has been recorded by the Company in the Note Register. Each
transferee of this Note acknowledges that this Note has not been registered
under the Securities Act, and may be transferred only pursuant to an effective
registration under the Securities Act or pursuant to an applicable exemption
from the registration requirements of the Securities Act.
On receipt by the Company of an affidavit of an authorized
representative of the Holder stating the circumstances of the loss, theft,
destruction or mutilation of this Note (and in the case of any such mutilation,
on surrender and cancellation of such Note), the Company, at its expense, will
promptly execute and deliver, in lieu thereof, a new Note of like tenor. If
required by the Company, such Holder must provide indemnity sufficient in the
reasonable judgment of the Company to protect the Company from any loss which
they may suffer if a lost, stolen or destroyed Note is replaced.
All notices, demands and other communications provided for or permitted
hereunder shall be made in accordance with the applicable provisions of the
Purchase Agreement.
This Note shall be governed by, construed in accordance with, and
enforced under, the laws of the state of New York applicable to agreements or
instruments entered into and performed entirely within such state.
4
KINETICS GROUP, INC.
By: ______________________________
Name:
Title:
Signature Page - Series B Note
[FORM OF] SERIES C NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE
AND MAY NOT BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR
PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF SUCH ACT AND SUCH LAWS.
KINETICS GROUP, INC.
SENIOR SECURED NOTE DUE 2006
$[ ] Issue Date: April [ ], 2004
For value received, the undersigned, KINETICS GROUP, INC., a Delaware
corporation (the "COMPANY", which term includes any successor corporation under
the Purchase Agreement hereinafter referred to), hereby promises to pay to the
order of [HOLDER], a [ ], or its registered assigns (the "HOLDER"), the
principal sum of $[ ] on August 25, 2006 (the "MATURITY DATE") and to pay
interest thereon from time to time as provided herein.
This Note is one of a duly authorized issue of notes of the Company
designated as its Series C Senior Secured Notes due 2006 (herein called the
"NOTES"), issued in the aggregate principal amount limited to $30,000,000
pursuant to the Amended and Restated Purchase Agreement dated as of April
[ ], 2004 (the "PURCHASE AGREEMENT") by and among the Company, Celerity
Group, Inc., Kinetic Systems, Inc., the Subsidiary Guarantors party thereto, the
KSI Guarantors party thereto, the Purchasers party thereto, and Xxxxxxxxxx
Capital Partners, LLC, as Collateral Agent and Agent for the purchasers, and is
entitled to the benefits thereof and to the exercise of the remedies provided
thereby or otherwise available in respect thereof. Capitalized terms used herein
without definition have the meanings assigned thereto in the Purchase Agreement.
The Company promises to pay interest ("INTEREST") on the principal
amount of this Note at the rate of LIBOR + 10.00% per annum, subject to Section
2.04 of the Purchase Agreement (the "INTEREST RATE"). Interest on this Note
shall accrue from and including the date of issuance through and until repayment
of the principal amount of this Note and payment of all Interest in full, and
shall be computed on the basis of a 360-day year of twelve 30-day months.
Interest shall be payable quarterly on each March 31, June 30, September 30 and
December 31 of each year or, if any such date shall not be a Business Day, on
the next succeeding Business Day to occur after such date (each date upon which
interest shall be so payable, an "INTEREST PAYMENT DATE"), beginning on June 30,
2004, by wire transfer of immediately available funds to
1
an account at a bank designated in writing by the Holder on reasonable notice.
In the absence of any such written designation, any such Interest payment shall
be deemed made on the date a check for good funds in the applicable amount
payable to the order of Holder is received by the Holder at its last address as
reflected in the Company's Note Register (as defined below); if no such address
appears, then to such Holder in care of the last address in such note register
of any predecessor holder of this Note (or its predecessor).
Notwithstanding the foregoing provisions of this Note, but subject to
applicable law, any overdue principal of, overdue Interest on and any other
overdue amounts payable under this Note shall bear interest, payable on demand
in immediately available funds, for each day from the date payment thereof was
due to the date of actual payment, at a rate equal to the sum of (i) the
Interest Rate and (ii) an additional 2% per annum. Subject to applicable law,
any interest that shall accrue on overdue interest on this Note as provided in
the preceding sentence and shall not have been paid in full in cash on or before
the next Interest Payment Date to occur after the date on which the overdue
interest became due and payable shall itself be deemed to be overdue interest on
this Note to which the preceding sentence shall apply.
In the event that any interest rate(s) provided for in this Note shall
be determined to be unlawful, such interest rate(s) shall be computed at the
highest rate permitted by applicable law. Any payment by the Company of any
interest amount in excess of that permitted by law shall be considered a
mistake, with the excess being applied to the principal amount of this Note
without prepayment premium or penalty; if no such principal amount is
outstanding, such excess shall be returned to the Company.
The Notes are subject to redemption in accordance with the terms of the
Purchase Agreement. All redemption payments shall include payment of accrued
Interest on the principal amount of this Note so prepaid and shall be applied
first to all costs, expenses and indemnities payable under the Purchase
Agreement, then to payment of default interest, if any, then to payment of the
Interest, and thereafter to principal. In the event of redemption of this Note
in part only, a new Note or Notes for the unredeemed portion hereof shall be
issued in the name of the Holder hereof upon cancellation hereof.
The Notes are subject to, at the option of the Board of Directors of
the Company and the satisfaction of a number of conditions, Legal Defeasance and
Covenant Defeasance. Among the conditions for Defeasance are an irrevocable
deposit by Company with the Trustee, for the benefit of the Holders, of cash or
U.S. Government Obligations in an amount sufficient to pay the principal of the
outstanding Notes, accrued but unpaid interest on the outstanding Notes through
the date of Defeasance, interest on the outstanding Notes through the applicable
redemption date or the stated date of maturity, and the Redemption Premium, if
applicable.
If an Event of Default shall occur and be continuing, the principal of
all the Notes may be declared to be due and payable in the manner and with the
effect provided in the Purchase Agreement. This Note is entitled to the benefits
of certain guarantees set forth in the Purchase Agreement (the "GUARANTIES")
made in favor of the Holders of the Notes by Holdings, which holds all the
equity interest in the Company, KSI, and certain subsidiaries of the Company and
KSI. In addition the Notes are entitled to the benefits of the Parent
Non-Recourse Guaranty. Reference is hereby made to the Purchase Agreement for a
statement of the respective rights,
2
limitation of rights, duties and obligations thereunder of the Guarantors and
Holders of the Notes.
The Notes are secured by a pledge of substantially all of the assets
and properties of the Company and the Guaranties are secured by the pledge of
certain assets of the Guarantors, as set forth in the Purchase Agreement.
Additionally, the Notes are secured by the collateral described in the Parent
Pledge Agreement. Pursuant to the Intercreditor Agreement, the security
interests securing the indebtedness evidenced by the Notes is contractually
subordinate to the prior payment in full of amounts outstanding under the
Amended and Restated Credit Agreement dated as of December 10, 2002 among the
Company and certain financial institutions, as such agreement has been and may
be amended from time to time.
This Note may be transferred, pledged or assigned, in whole or in part,
by the Holder at any time, in accordance with the provisions of the Purchase
Agreement. The Purchase Agreement also contains provisions permitting the
Holders of specified percentages in aggregate principal amount of the Notes at
the time outstanding, on behalf of the Holders of all the Notes, to waive
compliance by the Company with certain provisions of the Purchase Agreement and
certain past defaults under the Purchase Agreement and their consequences. Any
such consent or waiver by or on behalf of the Holder of this Note shall be
conclusive and binding upon such Holder and upon all future Holders of this Note
and of any Note issued upon the registration of transfer hereof or in the
exchange herefor or in lieu hereof whether or not notation of such consent or
waiver is made upon this Note.
No reference herein to the Purchase Agreement and no provision of this
Note or of the Purchase Agreement shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of (and
premium, if any) and interest on this Note at the times, place and rate, and in
the coin and currency, herein prescribed.
The Company shall maintain a register (the "NOTE REGISTER") in its
principal offices for the purpose of registering the Notes and any transfer or
partial transfer thereof, which register shall as set forth in the Purchase
Agreement reflect and identify the ownership of record of any interest in this
Note. Upon surrender for registration of transfer or exchange of this Note at
the principal offices of the Company, the Company shall, at its expense, execute
and deliver one or more new Notes of like tenor and of denominations of at least
$1.0 million (except as may be necessary to reflect any principal amount not
evenly divisible by $1.0 million) of a like aggregate principal amount,
registered in the name of the Holder or a transferee or transferees. Every Note
surrendered for registration of transfer or exchange shall be duly endorsed, or
be accompanied by a written instrument of transfer duly executed by the Holder
of such Note or such Xxxxxx's attorney duly authorized in writing. Prior to and
at the time of due presentment of this Note for registration of transfer, 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 the Company
shall not be affected by notice to the contrary.
The term "Holder" as used herein shall also include any transferee of
this Note whose name has been recorded by the Company in the Note Register. Each
transferee of this Note acknowledges that this Note has not been registered
under the Securities Act, and may be
3
transferred only pursuant to an effective registration under the Securities Act
or pursuant to an applicable exemption from the registration requirements of the
Securities Act.
On receipt by the Company of an affidavit of an authorized
representative of the Holder stating the circumstances of the loss, theft,
destruction or mutilation of this Note (and in the case of any such mutilation,
on surrender and cancellation of such Note), the Company, at its expense, will
promptly execute and deliver, in lieu thereof, a new Note of like tenor. If
required by the Company, such Holder must provide indemnity sufficient in the
reasonable judgment of the Company to protect the Company from any loss which
they may suffer if a lost, stolen or destroyed Note is replaced.
All notices, demands and other communications provided for or permitted
hereunder shall be made in accordance with the applicable provisions of the
Purchase Agreement.
This Note shall be governed by, construed in accordance with, and
enforced under, the laws of the state of New York applicable to agreements or
instruments entered into and performed entirely within such state.
4
KINETICS GROUP, INC.
By: ______________________________
Name:
Title:
Signature Page - Series C Note
