EXHIBIT 4.10
AVONDALE XXXXX, INC.
EXCHANGE AGREEMENT
May 27, 2004
Cohanzick Management, L.L.C.
000 Xxxxxxx Xxxx
Xxxxx 000
Xxxxxxxxxxxxx, Xxx Xxxx 00000
Cohanzick Credit Opportunities Master Fund, Ltd.
000 Xxxxxxx Xxxx
Xxxxx 000
Xxxxxxxxxxxxx, Xxx Xxxx 00000
Xxxxxxx Capital, L.P.
000 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ariel Fund Limited
000 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Avondale Xxxxx, Inc., an Alabama corporation (the "Company"), and Avondale
Incorporated, a Georgia corporation and the Company's parent company (the
"Guarantor"), confirm their agreement with Cohanzick Credit Opportunities Master
Fund, Ltd. ("CMF"), Xxxxxxx Capital, L.P. ("Xxxxxxx"), Xxxxx Fund Limited
("Ariel," collectively with CMF and Xxxxxxx the "Holders" and each of them a
"Holder"), Cohanzick Management, L.L.C., a Delaware limited liability company
("Cohanzick"), on the terms set forth herein.
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1. Exchange. Subject to the terms and conditions of this Agreement, the
Company will enter into an exchange with the Holders pursuant to which the
Company will issue to the Holders $2,600,000 principal amount of its Floating
Rate Notes due 2012 (the "New Notes"), guaranteed on a senior, unsecured basis,
in one or more guarantees, by the Guarantor (the "Note Guarantee"), in the
amounts shown in Exhibit A hereto, in exchange for $4,000,000 principal amount
of the Company's outstanding 10.25% Senior Subordinated Notes due 2013 (the
"Securities") currently held by the Holders. This Agreement, the Note Guarantee
and the New Notes, the form of which is attached hereto as Exhibit B (the
"Note"), are hereinafter collectively referred to as the "Operative Documents"
and the execution and delivery of the Operative Documents and the transactions
contemplated herein and therein are hereinafter referred to as the "Exchange."
The Exchange will be made without registration of the New Notes (or the
Note Guarantee) under the Securities Act of 1933, as amended (the "Securities
Act"), in reliance upon one or more exemptions from the registration
requirements of the Securities Act contained in Section 4(2) and Regulation D
thereof.
2. Representations, Warranties and Agreements of the Company and the
Guarantor. The Company and the Guarantor jointly and severally represent and
warrant to, and agree with, the Holders that:
(a) Pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), the Guarantor has filed with the Securities and Exchange
Commission (the "SEC") an Annual Report on Form 10-K for the year ended August
28, 2003, a Quarterly Report on Form 10-Q for the quarter ended November 28,
2003, a Quarterly Report on Form 10-Q for the quarter ended February 28, 2004
and a Current Report on Form 8-K dated March 4, 2004 (collectively, and
including the exhibits thereto, the "Exchange Act Documents"), and all such
Exchange Act Documents complied in all material respects with the requirements
of the Exchange Act and did not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, at the time they were filed with the SEC,
in light of the circumstances under which they were made, not misleading.
(b) Except as qualified in the Exchange Act Documents, the audited
and unaudited financial statements and schedules included in the Exchange Act
Documents, present fairly in all material respects the consolidated financial
position of the Guarantor, the Company and its subsidiaries as of the dates
indicated and the consolidated results of operations and cash flows of the
Guarantor, the Company and its subsidiaries for the periods specified; such
financial statements and schedules have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis during
the periods involved.
(c) Each of the Company and the Guarantor is in good standing under
the laws of the jurisdiction in which it is chartered or organized and is duly
qualified to do business as a foreign corporation under the laws of each
jurisdiction which requires such qualification wherein it owns or leases
material properties or conducts material business, except in such jurisdictions
in which the failure to be so incorporated or organized and validly existing or
to so qualify, in the aggregate, would not have a Material Adverse Effect. As
used in this Agreement, the term "Material Adverse Effect" shall mean when used
in respect of any matter to the
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Company or the Guarantor a material adverse effect on the business, condition
(financial or otherwise), properties or results of operations of the Company,
the Guarantor and the Company's subsidiaries, considered as one enterprise, or
would materially adversely affect the ability of the Company or the Guarantor to
perform its obligations under the Operative Documents.
(d) Each of the Company and the Guarantor has full corporate power
to own or lease its respective properties and conduct its respective businesses
as described in the Exchange Act Documents; and each of the Company and the
Guarantor has full corporate power and authority to enter into this Agreement
and the other Operative Documents and to perform all the terms and provisions
hereof and thereof to be carried out by it.
(e) As of the date hereof, the Company does not have any significant
subsidiaries (as defined in Regulation S-X promulgated under the Securities
Act).
(f) Each of the Company and the Guarantor maintains a system of
internal accounting controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with management's general or
specific authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(g) The execution, delivery and performance of the Operative
Documents has been duly authorized by all necessary corporate action of the
Company and the Guarantor, as applicable, and, when duly executed and delivered
by the Company and the Guarantor and by the other parties thereto, the Operative
Documents will constitute legal, valid and binding obligations of the Company
and the Guarantor (to the extent each is a party thereto), enforceable against
the Company and the Guarantor in accordance with their respective terms,
subject, as to enforcement of remedies, to bankruptcy, insolvency (including,
without limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or similar laws affecting the rights of creditors generally and to
the effect of general principles of equity and except that any rights to
indemnity and contribution may be limited by federal and state securities laws
and public policy considerations.
(h) The execution, issuance, delivery, sale and performance of and
under the New Notes and the Note Guarantee have been duly authorized by all
necessary corporate action and, when executed and delivered as provided in this
Agreement, the New Notes and the Note Guarantee will constitute legal, valid and
binding obligations of the Company and the Guarantor, respectively, enforceable
against the Company and the Guarantor, respectively, in accordance with their
terms, subject, as to enforcement of remedies, to bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or similar laws affecting the rights of creditors
generally and to the effect of general principles of equity.
(i) The issuance and offering of the New Notes to the Holders by the
Company pursuant to this Agreement, the execution and delivery of any of the
Operative
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Documents, the consummation or performance by the Company or the Guarantor of
any of the terms of or obligations under the Operative Documents and the
consummation of the Exchange, do not (i) require the consent, approval,
authorization, order, registration or qualification of, or filing with, any
governmental authority or court, or body or arbitrator having jurisdiction over
the Company or the Guarantor, or (ii) conflict with, result in a breach or
violation of, or constitute a default under the Indenture, dated June 30, 2003,
by and among the Company, the Guarantor and Wachovia Bank, National Association,
as trustee (the "Indenture"), the Master Security Agreement (as defined below),
the Credit Facility (as defined in the Indenture) or any other material
indenture, note purchase agreement, credit agreement, mortgage, deed of trust,
loan agreement or other material agreement or instrument to which the Company or
the Guarantor is a party or by which the Company or the Guarantor or any of
their respective properties is bound, or with the charter or by-laws of the
Company or the Guarantor, or any statute, rule or regulation or any judgment,
order or decree of any governmental authority or court or any arbitrator
applicable to the Company or the Guarantor, except for (i) any statute, rule or
regulation or any judgment, order or decree of any governmental authority or
court or any arbitrator the noncompliance with which would not result in a
Material Adverse Effect, or (ii) for any consent, approval, authorization,
order, registration or qualification which has been made or obtained.
(j) No legal or governmental proceedings or investigations are
pending or, to the knowledge of the Company or the Guarantor, threatened to
which the Company or the Guarantor is a party or to which the property of the
Company, the Guarantor or any of their respective subsidiaries is subject that
are not described in the Exchange Act Documents, except for such proceedings or
investigations which could reasonably be expected to, singly or in the
aggregate, result in a Material Adverse Effect or materially and adversely
affect the consummation of the Exchange.
(k) Except as set forth in or granted in relation to (i) the Master
Security Agreement and related documents, dated July 30, 2002, among the Company
and The CIT Group/Equipment Financing, Inc. (the "Master Security Agreement")
and (ii) the Credit Facility, each of the Company and the Guarantor has good and
marketable title in fee simple to all items of real property and marketable
title to all personal property owned by each of them, in each case except as
described in the Exchange Act Documents, free and clear of any pledge, lien,
encumbrance, security interest or other defect or claim of any third party,
except such as do not have a Material Adverse Effect. Any real property held by
the Company or the Guarantor as lessor is held under valid, subsisting and
enforceable leases, with such exceptions as do not have a Material Adverse
Effect.
(l) Each of the Company and the Guarantor owns or possesses, or can
acquire on reasonable terms, adequate rights to use all material patents,
trademarks, service marks, trade names and copyrights, licenses, all
applications and registrations for each of the foregoing, and all other material
proprietary rights and confidential information necessary to conduct their
respective businesses as currently conducted; and none of the Company or the
Guarantor has received any notice, or is otherwise aware, of any infringement of
or conflict with the rights of any third party with respect to any of the
foregoing which could reasonably be expected to, singly or in the aggregate,
result in a Material Adverse Effect.
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(m) Each of the Company and the Guarantor is insured by insurers of
recognized financial responsibility (including self-insurance) against such
losses and risks and in such amounts and with such deductibles as are prudent in
the businesses in which they are engaged, except where the failure to have such
could not reasonably be expected to have a Material Adverse Effect; and none of
the Company and the Guarantor has any reason to believe that it will not be able
to renew its existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary to continue
its business at a cost that could not reasonably be expected to have a Material
Adverse Effect.
(n) Each of the Company and the Guarantor possesses all
certificates, authorizations and permits issued by the appropriate original
equipment manufacturers, federal, state or foreign regulatory authorities
necessary to conduct their respective businesses, except where the failure to
have such could not reasonably be expected to have a Material Adverse Effect,
and none of the Company and the Guarantor has received any notice of proceedings
relating to the revocation or modification of any such certificate,
authorization or permit which, could not reasonably be expected to, singly or in
the aggregate, result in a Material Adverse Effect.
(o) Except as described in the Exchange Act Documents:
(i) Each of the Company and the Guarantor is and has been in
compliance with all applicable laws, statutes, ordinances, rules,
regulations, orders, judgments, decisions, decrees, standards, and
requirements ("Legal Requirements") relating to: human health and
safety; pollution; management, disposal or release of any hazardous
chemical substance, product or waste; and protection, cleanup,
remediation or corrective action relating to the environment or
natural resources ("Environmental Law");
(ii) Each of the Company and the Guarantor has obtained and is
in compliance with the conditions of all permits, authorizations,
licenses, approvals, and variances necessary under any Environmental
Law for the continued conduct in the manner now conducted of the
business of each of the Company and the Guarantor ("Environmental
Permits");
(iii) There are no past or present conditions or circumstances
that are likely to interfere with the conduct of the business of
each of the Company and the Guarantor in the manner now conducted or
which would interfere with compliance with any Environmental Law or
Environmental Permits; and
(iv) There are no past or present conditions or circumstances
at, or arising out of, the business, assets and properties of each
of the Company and the Guarantor or any businesses, assets or
properties formerly leased, operated or owned by each of the Company
and the Guarantor, including but not limited to on-site or off-site
disposal or release of any hazardous chemical substance, product or
waste, which may give rise to: (i) liabilities or obligations for
any cleanup, remediation or corrective action under any
Environmental Law; (ii) claims arising under any Environmental Law
for personal injury, property
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damage, or damage to natural resources; (iii) liabilities or
obligations incurred by the Company and the Guarantor to comply with
any Environmental Law; or (iv) fines or penalties arising under any
Environmental Law;
except in each case for any noncompliance or conditions or circumstances that
could not reasonably be expected to, singly or in the aggregate, result in a
Material Adverse Effect.
(p) No default exists under, and no event has occurred that, with
notice or lapse of time or both, would constitute a default in the due
performance and observation of any term, covenant or condition of the Indenture,
the Credit Facility, the Master Security Agreement or any other indenture, note,
security agreement, guaranty, mortgage, deed of trust, lease or other agreement
or instrument to which each of the Company and the Guarantor is a party or by
which the Company and the Guarantor is bound which could reasonably be expected
to have, or could reasonably be expected to have after notice or lapse of time
or both, a Material Adverse Effect.
(q) Each of the Company and the Guarantor has filed all foreign,
federal, state and local tax returns that are required to be filed or has
requested extensions thereof and has paid all taxes required to be paid by it
and any other assessment, fine or penalty levied against them, to the extent
that any of the foregoing is due and payable, except for any such assessment,
fine or penalty that is currently being contested in good faith and for which
the Company and/or the Guarantor, as applicable, retains adequate reserves and
except in each case for any noncompliance that, singly or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect.
(r) Neither of the Company or the Guarantor is, nor after giving
effect to the Exchange, will be an "investment company," or a company
"controlled" by an "investment company," within the meaning of the Investment
Company Act of 1940, as amended (the "Investment Company Act").
(s) None of the Company, the Guarantor, any of their Affiliates (as
defined in Rule 501(b) of Regulation D under the Securities Act ("Regulation
D")), and any person acting on its or their behalf has, directly or indirectly,
made offers or sales of any security, or solicited offers to buy any security,
under circumstances that would require the registration of the New Notes under
the Securities Act.
(t) None of the Company, the Guarantor, any of their Affiliates, and
any person acting on its or their behalf has or will engage in any form of
general solicitation or general advertising (within the meaning of Regulation D)
in connection with any offer or sale of the New Notes in the United States.
(u) Assuming the accuracy of the representations and warranties of
Cohanzick and the Holders in Section 4 hereof and compliance by the Holders with
the procedures set forth in Section 4 hereof, it is not necessary in connection
with the offer, sale and delivery of the New Notes or the Note Guarantee to the
Holders in the manner contemplated by this Agreement to register any of the New
Notes or the Note Guarantee under the Securities Act or to qualify the New Note
under the Trust Indenture Act of 1939, as amended.
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(v) Each certificate signed by any officer of the Company or the
Guarantor and delivered to the Holders or their counsel shall be deemed to be a
representation and warranty by the Company or the Guarantor, as the case may be,
to the Holders as to the matters covered thereby.
3. Exchange. On the basis of the representations, warranties, agreements
and covenants herein contained and subject to the terms and conditions herein
set forth, the Company agrees to issue $2,600,000 aggregate principal amount of
New Notes in exchange for $4,000,000 aggregate principal amount of Securities
held by the Holders. The New Notes will be delivered in certificated form to the
Holders against delivery by the Holders of $4,000,000 principal amount of
Securities at 10:00 A.M., New York City time, on the date hereof, or at such
other time or date as the Holders and the Company may agree upon in writing,
such time and date of delivery against payment being herein referred to as the
"Closing Date." In addition, on the Closing Date, the Company shall pay to the
Holders all accrued but unpaid interest on the Securities to, but not including
the Closing Date, in accordance with the terms of the Indenture.
4. Cohanzick and Holders' Representations, Warranties and Agreements.
Cohanzick and the Holders represent and warrant to, and agree with, the Company
that:
(a) Cohanzick Management, L.L.C. is authorized to enter into this
Agreement and all transactions and actions contemplated hereby as the authorized
representative of the Holders pursuant to written agreements which are legal,
valid and binding obligations of each of the parties thereto, enforceable
against each of them in accordance with their respective terms, subject, as to
enforcement of remedies, to bankruptcy, insolvency, reorganization, moratorium,
or similar laws affecting rights of creditors generally and to the effect of
general principles of equity; and if Cohanzick is purchasing New Notes as a
fiduciary or agent for one or more investor accounts, Cohanzick represents that
it has sole investment discretion for each of those accounts with respect to any
Securities to be exchanged under this Agreement and full power to make the above
acknowledgments, representations and agreements on behalf of each account with
respect to any Securities to be exchanged under this Agreement.
(b) (i) Cohanzick and the Holders are knowledgeable, sophisticated
and experienced in making, and are qualified to make, decisions with respect to
investments in securities representing an investment decision like that involved
in the purchase of the New Notes, and have had the opportunity to request and
receive all material information relevant to the Company and relevant to making
an informed decision to enter into this Agreement and to purchase the New Notes,
as the case may be; (ii) the Holders are acquiring the New Notes in the ordinary
course of their business and for their own account for investment only and with
no present intention of distributing any of such New Notes or any arrangement or
understanding with any other persons regarding the distribution of such New
Notes; (iii) Cohanzick and the Holders will not, directly or indirectly, offer,
sell, pledge, transfer or otherwise dispose of (or solicit any offers to buy,
purchase or otherwise acquire or take a pledge of) any of the New Notes except
in compliance with the Securities Act and any applicable state securities laws;
(iv) the Holders, or their representatives (including Cohanzick), have been
afforded the opportunity to ask questions of the Company and the Guarantors; and
neither such inquiries nor any other due diligence investigations conducted by
the Holders, or their representatives, if any, shall modify, amend or affect the
Holders' right to rely on the Company's and the Guarantor's representations
8
and warranties contained in Section 2; and (v) the Holders understand that their
investment in the New Notes involves a significant degree of risk, including a
risk of total loss of their investment, they are fully aware of and understands
all the risks related to their purchase of the New Notes and that they may not
be able to sell or transfer the New Notes for an indefinite period of time.
(c) Cohanzick and the Holders have all necessary power and authority
to execute and deliver this Agreement; this Agreement has been duly authorized
by each of them; assuming that this Agreement is the valid and binding agreement
of each of the parties thereto, other than Cohanzick and the Holders, this
Agreement constitutes a valid and binding agreement of Cohanzick and the
Holders, enforceable against each of them in accordance with its terms, subject,
as to enforcement of remedies, to bankruptcy, insolvency, reorganization,
moratorium, or similar laws affecting rights of creditors generally and to the
effect of general principles of equity;
(d) Cohanzick and the Holders understand that the New Notes are
being offered in a transaction not involving any public offering within the
meaning of the Securities Act in compliance with Section 4(2) and/or Regulation
D of the Securities Act, that the New Notes have not been and will not be
registered under the Securities Act, except pursuant to a Registration Rights
Agreement as contemplated by Section 5, if at all, and that (i) if in the future
any Holder decides to offer, resell, pledge or otherwise transfer any of the New
Notes, such New Notes may be offered, resold, pledged or otherwise transferred
only (a) to the Company, (b) in the United States to a person whom the Holders
reasonably believes is a "qualified institutional buyer" (as defined in Rule
144A of the Securities Act) in a transaction meeting the requirements of Rule
144A under the Securities Act, (c) pursuant to an exemption from registration
under the Securities Act provided by Rule 144 thereunder (if available), (d) to
an "accredited investor" (as defined in Rule 501(a) of Regulation D) in a
transaction exempt from the registration requirements of the Securities Act or
(e) pursuant to an effective registration statement under the Securities Act, in
each of cases (a) through (e) in accordance with any applicable securities laws
of the states and other jurisdictions of the United States, and that (ii) the
applicable Holder will, and each subsequent holder is required to, notify any
subsequent purchaser of the New Notes from it of the resale restrictions
referred to in (i) above;
(e) Cohanzick and the Holders understand that the New Notes will
bear a legend, as set forth on the form of New Note attached hereto as Exhibit
B, until such legend shall no longer be necessary, in the Company's opinion,
because the New Notes are no longer subject to the restrictions on transfer
described therein;
(f) Cohanzick and the Holders understand that no United States
federal or state agency or any other government or governmental agency has
passed upon or made any recommendation or endorsement of the New Notes or the
fairness or suitability of the investment in the New Notes nor have such
authorities passed upon or endorsed the merits of the offering of the New Notes;
(g) Cohanzick is a Delaware limited liability company, Xxxxxxx is a
Delaware limited partnership, CMF and Ariel are organized in jurisdictions
outside the United States and each of them has a principal place of business in
the State of New York;
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(h) each of the Holders is a qualified institutional buyer;
(i) each of Cohanzick and the Holders agree to keep confidential the
existence and terms of the Exchange, its entering into this Agreement and all
transactions relating thereto and hereto, provided that, these matters may be
disclosed (i) to their respective officers, employees, attorneys and other
advisors on a confidential and "need to know" basis in connection with the
Exchange, (ii) as required by law and (iii) to the extent that these matters are
publicly disclosed by the Company or at such time as the Guarantor files with
the SEC its Form 10-Q for the quarter ended May 30, 2004; furthermore, until the
earliest to occur of (x) July 15, 2004, (y) the filing with the SEC of the
Guarantor's Quarterly Report on Form 10-Q for the quarter ended May 30, 2004 and
(z) such time as the existence of the Exchange is publicly disclosed by the
Company, neither Cohanzick nor any Holder nor any representative on their behalf
will engage in any discussions with any third party (a "counterparty") with
respect to any purchase or sale of Securities or New Notes without first either
(1) entering into a confidentiality agreement with the counterparty
substantially similar to this Section 4(i) or (2) obtaining an executed letter
from the counterparty (which shall be promptly forwarded to the Company) in
which the counterparty acknowledges that (x) the addressee of the letter may be
in possession of material, non-public information regarding the Company within
the meaning of the federal securities laws and (y) despite the counterparty
itself not being in possession of such information, it nevertheless elects to
enter into the purchase or sale;
(j) Cohanzick and the Holders have not, directly or indirectly,
purchased, including by an option or other arrangement providing for the right
to acquire any Securities, or sold or otherwise transferred, including by an
option or other arrangement to transfers, any Securities since May 5, 2004,
except for transfers between and among Affiliates of CMF; and
(k) Cohanzick and the Holders acknowledge that the Company, the
Guarantor and others will rely upon the truth and accuracy of the foregoing
representations, warranties and agreements; they agree that if any of the
representations, warranties or agreements Cohanzick or the Holders is deemed to
have made is no longer accurate, they shall promptly notify the Company.
5. Covenants.
(a) Upon their initial issuance, the Company will (i) qualify the
New Notes and the Note Guarantee for sale by the Holders under the applicable
laws of such jurisdictions as Cohanzick, as authorized representative for the
Holders, may designate and (ii) will maintain such qualifications for so long as
required for the sale of the New Notes and the Note Guarantee by the Holders, in
the case of clauses (i) and (ii) as required by applicable law; provided, that
the Company will not be required to qualify to do business in any jurisdiction
in which it is not then so qualified, to file any general consent to service of
process or to take any other action which would subject it to general service of
process or to taxation in any such jurisdiction where it is not then so subject.
The Company will promptly advise the Holders of the receipt by the Company of
any notification with respect to the suspension of the qualification of the New
Notes and the Note Guarantee for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose.
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(b) So long as any of this Note is a "restricted security" within
the meaning of Rule 144(a)(3) under the Securities Act, at any time that the
Company is not then subject to Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Company will provide at its expense to a Holder and to each
prospective purchaser (as designated by the Holder) of the New Notes, upon the
request of such Holder or prospective purchaser, any information required to be
provided by Rule 144A(d)(4) under the Securities Act.
(c) Except as may be contemplated in the Registration Rights
Agreement, none of the Company or any of its Affiliates, nor any person acting
on its or their behalf will, directly or indirectly, make offers or sales of any
security, or solicit offers to buy any security, under circumstances that would
require the registration of the New Notes under the Securities Act.
(d) For so long as the New Notes are outstanding, each of the
Company and the Guarantor and their respective subsidiaries will conduct its
operations in a manner that will not subject the Company, the Guarantor or any
such subsidiary to registration as an "investment company" under the Investment
Company Act.
6. Expenses.
The Company will pay all costs and expenses incident to the
performance of the obligations of the Company under this Agreement, including
the costs and expenses of the Holders incurred in connection with the
negotiation, documentation and consummation of the Operative Documents and the
Exchange, provided that the Company shall not be responsible to pay more than
$25,000 relating to the fees and disbursements of counsel for the Holders, and
any other experts or advisors retained by the Holders and the qualification of
the New Notes under state securities or blue sky laws, including filing fees and
reasonable fees and disbursements of counsel for the Holders relating thereto.
Except as otherwise provided herein, including the provisions of Section 8,
neither the Company nor the Guarantor shall in any event be liable to the
Holders for the loss of anticipated profits from the transactions covered by
this Agreement.
7. Conditions to Closing. This Agreement and the Exchange shall become
effective upon the satisfaction of the following conditions:
(a) Cohanzick, the Holders, the Company and the Guarantor shall have
executed and delivered to each other this Agreement;
(b) The Guarantor shall have executed and delivered to the Holders
the Note Guarantee;
(c) The Company shall have executed and delivered the New Notes in
the number and amounts requested by the Holders;
(d) The Holders shall have delivered, or caused to be delivered, to
the Company the Securities being exchanged pursuant to this Agreement;
(e) Each of the Company and the Guarantor shall have delivered to
Cohanzick a certificate, dated the Closing Date, executed by the secretary of
each of the Company and the
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Guarantor certifying in such capacity and on behalf of the applicable party (a)
as to the incumbency and signature of the officer of the Company and the
Guarantor who executed this Agreement, the Note Guarantee and the New Notes; and
(b) as to the adoption of resolutions of the board of directors of the Company
and the Guarantor as being correct, complete and in full force and effect on the
Closing Date, authorizing (i) the execution and delivery of this Agreement, the
New Notes and the Note Guarantee, and (ii) the performance of the obligations of
the Company and the Guarantor hereunder and thereunder; and
(f) The Company shall have delivered to Cohanzick a copy of the
waiver and/or consent of General Electric Capital Corporation, as administrative
agent and lender under the Credit Facility, to the transactions and exchanges
contemplated herein.
8. Indemnification and Contribution.
(a) The Company agrees to indemnify Cohanzick and the Holders from
and against any and all losses, claims, damages and liabilities (including,
without limitation, any legal or other expenses reasonably incurred in
connection with defending or investigating any such action or claim) to which
the Holders may become subject, under the Securities Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based on any misrepresentation, breach of warranty or
covenant or non-fulfillment of any agreement or obligation of the Company or the
Guarantor under this Agreement; provided, however, that the Company shall not be
liable for indemnification or otherwise for any such loss, claim, damage or
liability to the extent arising from gross negligence or willful misconduct of
Cohanzick or the Holders.
(b) Cohanzick and the Holders also agree to indemnify the Company
and the Guarantor from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) to which the Company or the Guarantor may become subject, under
the Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based on any
misrepresentation, breach of warranty or covenant or non-fulfillment of any
agreement or obligation of Cohanzick and the Holders under this Agreement;
provided, however, that Cohanzick and the Holders shall not be liable for
indemnification or otherwise for any such loss, claim, damage or liability to
the extent arising from gross negligence or willful misconduct of the Company or
the Guarantor.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to Section 8(a) or 8(b) hereof, such person
(the "indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing of the
commencement thereof; but the failure so to notify the indemnifying party (i)
will not relieve such indemnifying party from liability under paragraph (a) or
(b) above unless and to the extent it did not otherwise learn of such action and
such failure results in the forfeiture by the indemnifying party of substantial
rights and defenses and (ii) will not, in any event, relieve the indemnifying
party from any obligations to any indemnified party other than the
indemnification obligation provided in paragraph (a) or (b) above. The
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to
12
represent the indemnified party and any others the indemnifying party may
designate in such proceeding and shall pay the fees and disbursements of such
counsel related to such proceeding. In any such proceeding, any indemnified
party shall have the right to retain its own counsel, but the fees and expenses
of such counsel shall be at the expense of such indemnified party unless (i) the
indemnifying party and the indemnified party shall have mutually agreed to the
retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them. It
is understood that the indemnifying party shall not, in respect of the legal
expenses of any indemnified party in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for (i) the fees and expenses of
more than one separate firm (in addition to any local counsel) for Cohanzick and
the Holders and all persons, if any, who controls Cohanzick or the Holders
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act and (ii) the fees and expenses of more than one separate firm
(in addition to any local counsel) for the Company, the Guarantor, their
respective directors and officers and each person, if any, who controls the
Company or the Guarantor within the meaning of either such Section. In the case
of any such separate firm for Cohanzick and the Holders and such control persons
of Cohanzick or the Holders, such firm shall be designated in writing by
Cohanzick and the Holders. In the case of any such separate firm for the
Company, the Guarantor, and such directors, officers and control persons of the
Company, such firm shall be designated in writing by the Company or the
Guarantor. The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel as contemplated by the second and third sentences of this paragraph, the
indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such indemnifying party of the
aforesaid request, (ii) such request sets forth the terms of the proposed
settlement and (iii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request prior to the date of such
settlement. No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party,
unless such settlement includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such
proceeding.
(d) The obligations of the Company and the Guarantor under this
Section 8 shall be in addition to any liability that the Company and the
Guarantor may otherwise have and the obligations of Cohanzick and the Holders
under this Section 8 shall be in addition to any liability that Cohanzick and
the Holders may otherwise have.
9. Subsequent Exchanges. If (a) the New Notes continue to be owned by the
Holders, their affiliates, successors or in accounts managed by Cohanzick and
(b) the Company incurs new indebtedness (which shall not include indebtedness
incurred under the Credit Facility or the Master Security Agreement), in one or
more transactions, in exchange for or to finance the
13
repurchase by the Company of Securities on or before November 19, 2004 (each
such transaction, a "Subsequent Exchange"), (x) the Company will, on or before
the fifth Business Day following a filing of a report or document by the Company
with the SEC disclosing a Subsequent Exchange, notify the Holders of such
Subsequent Exchange, (y) a Holder will have the right to request, and, after
entering into a confidentiality agreement with the Company regarding the terms
and existence of any information regarding such Subsequent Exchange, receive,
information regarding the terms of such Subsequent Exchange and (z) upon receipt
by the Company of a notice from the Holder to elect the terms of the Subsequent
Exchange pursuant to this Section 9, the Company shall retroactively adjust the
New Notes and this Agreement, as applicable, other than terms relating to
registration rights, to reflect new terms that are offered by the Company in the
Subsequent Exchange, provided that any such request must (1) accept all of the
terms, conditions and other provisions of any such Subsequent Exchange and (2)
be received by the Company no later than five Business Days after the receipt by
the Holder of the information described in (y) above. A failure by a Holder to
deliver the notice described in clause (z) of the prior sentence within the
prescribed time period will constitute the waiver of the Holder's right to
accept the terms of the applicable Subsequent Exchange.
10. Termination and Amendment (a). This Agreement may be terminated in
writing pursuant to a writing signed by all parties hereto. Notwithstanding the
above, this Agreement shall terminate at such time as all New Notes issued
pursuant hereto are no longer outstanding. This Agreement may be amended
pursuant to a writing signed by all parties hereto; provided however, that if
the Company issues additional New Notes pursuant to the terms of the New Notes,
this Agreement may be amended by a writing signed by the Company, the Guarantor
and persons holding over 50% of the outstanding principal amount of all New
Notes, including such additional New Notes.
11. Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail,
telex, telecopier, or air courier guaranteeing overnight delivery:
(i) if to Cohanzick or any Holder, as follows:
Cohanzick Management, L.L.C.
000 Xxxxxxx Xxxx
Xxxxx 000
Xxxxxxxxxxxxx, Xxx Xxxx 00000
Attn: Mr. Xxxxx Xxxxxxx
Fax: (000) 000-0000
With a copy to:
Xxxxxxx, Xxxxxxxx & Xxxxx Professional Corporation
1901 Avenue of the Stars
00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xx. Xxxxxxx Xxxxxx
Fax: (000) 000-0000
14
(ii) if sent to the Company or the Guarantor, as follows:
Avondale Xxxxx, Inc. and/or Avondale Incorporated
000 Xxxxx Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxx, Xx., Chief Financial Officer
Fax: (000) 000-0000
With a copy to:
King & Spalding LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
12. Successors. This Agreement shall inure to the benefit of and shall be
binding upon Cohanzick, the Holders, the Company and the Guarantor and their
respective successors, and legal representatives, and nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any other
person any legal or equitable right, remedy or claim under or in respect of this
Agreement, or any provisions herein contained, this Agreement and all conditions
and provisions hereof being intended to be and being for the sole and exclusive
benefit of Cohanzick, the Holders, the Company and the Guarantor and their
respective successors, and legal representatives, and for the benefit of no
other person, except that (i) the indemnities of the Company and the Guarantor
contained in Section 8 of this Agreement shall also be for the benefit of any
person or persons who control Cohanzick or the Holders within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act and (ii) the
indemnities of Cohanzick and the Holders contained in Section 8 of this
Agreement shall also be for the benefit of the directors and officers of the
Company and the Guarantor, and any person or persons who control the Company or
the Guarantor within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act.
13. Governing Law. The validity and interpretation of this Agreement, and
the terms and conditions set forth herein, shall be governed by and construed in
accordance with the laws of the State of New York.
14. Consent to Jurisdiction and Service of Process
(a) All judicial proceedings arising out of or relating to this
Agreement may be brought in any state or federal court of competent jurisdiction
in the State of New York, which jurisdiction is non-exclusive.
(b) Each party agrees that any service of process or other legal
summons in connection with any proceeding may be served on it by mailing a copy
thereof by registered mail, or a form of mail substantially equivalent thereto,
postage prepaid, addressed to the served
15
party at its address as provided for in Section 11 hereof. Nothing in this
Section shall affect the right of the parties to serve process in any other
manner permitted by law.
15. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
If the foregoing correctly sets forth our understanding, please indicate
your acceptance thereof in the space provided below for that purpose, whereupon
this letter shall constitute an agreement binding the Company, the Guarantor and
the Holders.
Very truly yours,
AVONDALE XXXXX, INC.
By:____________________________________
Name: Xxxx X. Xxxxxxx, Xx.
Title: Vice Chairman and Chief Financial
Officer
AVONDALE INCORPORATED
By:____________________________________
Name: Xxxx X. Xxxxxxx, Xx.
Title: Vice Chairman and Chief Financial
Officer
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
COHANZICK CREDIT OPPORTUNITIES MASTER FUND, LTD.
By Cohanzick Management, L.L.C., its authorized representative
By:__________________________
Name:
Title:
XXXXXXX CAPITAL, L.P.
By Cohanzick Management, L.L.C., its authorized representative
By:__________________________
Name:
Title:
ARIEL FUND LIMITED
By Cohanzick Management, L.L.C., its authorized representative
By:__________________________
Name:
Title:
COHANZICK MANAGEMENT, L.L.C.
By:__________________________
Name:
Title:
EXHIBIT A - PRINCIPAL AMOUNT OF NEW NOTES PURCHASED
Holder Principal Amount Purchased
------------------------------------------------ --------------------------------------------
Cohanzick Credit Opportunities Master Fund, Ltd. $1,300,000 TOTAL AGGREGATE AMOUNT(in lots of
$500,000, $500,000 and $300,000)
Xxxxxxx Capital, L.P. $637,000 TOTAL AGGREGATE AMOUNT (in lots of
$500,000 and $137,000)
Ariel Fund Limited $663,000 TOTAL AGGREGATE AMOUNT (in lots of
$500,000 and $163,000)
EXHIBIT B - FORM OF NOTE
THE NOTE EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM
REGISTRATION UNDER XXXXXXX 0 XX XXX XXXXXX XXXXXX SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") AND STATE SECURITIES LAWS. THIS NOTE HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT AND STATE SECURITIES LAWS AND, ACCORDINGLY,
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER, OR AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF, THE SECURITIES ACT, IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER JURISDICTION AND
IN ACCORDANCE WITH TRANSFER RESTRICTIONS CONTAINED IN THIS NOTE UNDER WHICH THIS
NOTE WAS ISSUED. THE HOLDER OF THE NOTE WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY A PROPOSED TRANSFEREE OF THE NOTICE OF THE RESALE
RESTRICTIONS APPLICABLE TO THE NOTE.
AVONDALE XXXXX, INC.
FLOATING RATE NOTE DUE 2012
$500,000.00 No. 000
Xxxxxxxx Xxxxx, Xxx., an Alabama corporation (hereinafter, the "Company"),
promises to pay to Cohanzick Credit Opportunities Master Fund, Ltd. or its
successors, transferees or assigns the principal sum of five hundred thousand
dollars ($500,000.000) on July 1, 2012 (the "Stated Maturity").
Interest Payment Dates: July 1, October 1, January 1 and April 1.
Record Dates: June 15, September 15, December 15 and March 15.
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.
IN WITNESS WHEREOF, the Company has caused this Note to be signed manually
or by facsimile by its duly authorized officers.
Dated: ______________, 2004
AVONDALE XXXXX, INC.
By:_________________________________
Name: Xxxx X. Xxxxxxx, Xx.
Title: Vice Chairman and
Chief Financial Officer
Attest: ________________________________
Name: Xxxxxxx X. Xxxx
Title: Vice President, Controller
and Secretary
(REVERSE OF SECURITY)
AVONDALE XXXXX, INC.
FLOATING RATE NOTE DUE 2012
(a) Capitalized Terms. Capitalized terms not otherwise defined
herein shall have the meanings ascribed to such terms in that certain Exchange
Agreement, dated May 27, 2004 (the "Exchange Agreement"), by and among, Avondale
Xxxxx, Inc., an Alabama corporation (the "Company"), Avondale Incorporated, a
Georgia corporation (the "Guarantor"), and Cohanzick Credit Opportunities Master
Fund, Ltd. ("CMF"), Xxxxxxx Capital, L.P. ("Xxxxxxx"), Xxxxx Fund Limited
("Ariel," collectively with CMF and Xxxxxxx the "Holders" and each of them a
Holder), and Cohanzick Management, L.L.C., a Delaware limited liability company,
or if not defined therein, in that certain Indenture, dated as of June 30, 2003,
by and among the Company, the Guarantor and Wachovia Bank, National Association,
as Trustee (the "Indenture"). References herein to "this Note" shall mean this
Note evidencing the Floating Rate Note due 2012 of the Company. References
herein to the New Notes, shall mean this Note as well as any other Floating Rate
Notes due 2012 of the Company issued after the date hereof.
(b) Interest.
(i) Payment. The Company promises to pay interest on the
principal amount of this Note until its Stated Maturity as set forth
in this Section 2. The Company will pay interest quarterly in
arrears on July 1, October 1, January 1 and April 1 of each year
(each an "Interest Payment Date"), commencing on July 1, 2004, or if
any such day is not a Business Day, on the next succeeding Business
Day. Interest on the Notes will accrue from the most recent Interest
Payment Date on which interest has been paid or, if no interest has
been paid, from May 28, 2004. The Company shall pay interest
(including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal and premium, if any, from time
to time on demand at a rate equal to the interest rate then in
effect; it shall pay interest on overdue installments of interest
(without regard to any applicable grace periods) from time to time
on demand at the same rate to the extent lawful. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.
(ii) Interest Rate. This Note shall initially bear interest at
a rate equal to LIBOR (as defined below) for the applicable Interest
Period (which shall mean each of (a) the period from the date hereof
until and including July 1, 2004 and (b) each period thereafter from
the day after an Interest Payment Date to and including the next
Interest Payment Date) plus 7.00% per annum. LIBOR for the period
from the date of this Note until the first Interest Payment date
shall be 1.75% per annum. The Company will determine LIBOR for each
Interest Period following the initial Interest Period, on the second
London Business Day prior to the first day of such Interest Period
(each a "LIBOR Determination Date"). For purposes of calculating
LIBOR, a London Business Day is any day on which dealings in
deposits in United States dollars are transacted in the London
1
interbank market. "LIBOR" means, as of any LIBOR Determination Date,
the rate per annum for deposits in the United States dollars for a
three-month period which appears on Telerate Page 3750 (as defined
in the 1987 Interest Rate and Currency Exchange Definitions
published by the International Swap Dealers Association, Inc., or
such other page as may replace such Telerate Page 3750) as of 11:00
a.m., London time, on such date. The maximum LIBOR rate for purposes
of this Note shall be 4.50%, and the minimum LIBOR rate for purposes
of this Note shall be 1.75% notwithstanding the fact that the actual
LIBOR rate in effect on the LIBOR Determination Date may differ from
such maximum and minimum amounts. If, on any LIBOR Determination
Date, such rate does not appear on Telerate Page 3750 (or such other
page as may replace such Telerate Page 3750), the rate for that
LIBOR Determination Date will be the rate quoted by Wachovia Bank,
National Association in New York City at approximately 11:00 a.m.,
New York City time, on that day for loans in United States dollars
to leading European banks for a three-month period.
(iii) Method of Payment. The Company shall pay interest on
this Note (except defaulted interest) to the person who is the
registered holder of this Note at the close of business record date
immediately preceding the Interest Payment Date, even if this Note
is cancelled after the record date and on or before the Interest
Payment Date. The Company shall set a special record date for the
payment of defaulted interest. The Company shall pay interest by
wire transfer of immediately available funds pursuant to wire
transfer instructions delivered in writing to the Company by the
Holder designating such account no later than 30 days immediately
preceding the relevant due date for payment (or such other dates as
the Company may accept in its discretion). The Holder must surrender
this Note to the Company to collect principal payments. The Company
will pay principal of, premium, if any, and interest on this Note in
money of the United States of America that at the time of payment is
legal tender for payment of public and private debts. However, the
Company may pay principal or premium on this Note by check payable
in such money.
(iv) Paying Agent and Registrar. Initially, the Company will
act as Paying Agent and Registrar. The Company may appoint and
change any Paying Agent, Registrar or co-registrar without notice.
The Company or any of its domestically incorporated Wholly Owned
Subsidiaries may act as Paying Agent, Registrar or co-registrar.
(c) Covenants.
(i) Incorporation by Reference from Indenture. Reference is
hereby made to the following provisions of the Indenture which are
incorporated in their entirety by reference herein as if set forth
in their entirety herein, which are made applicable to this Note and
which are binding upon the Company and enforceable by the Holder:
Sections 4.04, 4.05, 4.06, 4.07 and 4.08. For purposes of these
incorporated sections (both as stated herein and as incorporated
herein), references to Section 4.03 of the Indenture shall be deemed
references to Section
2
3(d) of this Note, references to Section 4.03(a) of the Indenture
shall be deemed references to Section 3(d)(1) of this Note,
references to Section 4.03(b) of the Indenture, and its subsections,
shall be deemed references to Section 3(d)(2) of this Note, and its
subsections and for purposes of Section 4.06 of the Indenture, the
term Securities shall be defined to include the New Notes.
(ii) Payment of Notes. The Company shall promptly pay the
principal of and interest on this Note on the dates and in the
manner provided in this Note. The Company shall pay interest on
overdue principal at the rate specified therefor above, and it shall
pay interest on overdue installments of interest at the same rate to
the extent lawful.
(iii) SEC Reports. In the event that the Guarantor ceases to
file reports with the SEC pursuant to Section 13 or 15(d) of the
Exchange Act, the Guarantor shall provide the Holder an annual
report and the information documents and other reports which the
Guarantor would be required to file with the SEC pursuant to Section
13 or 15(d) of the Exchange Act were the Guarantor to still be
filing such reports. The reports will be delivered to the Holder
within 15 days after the date such reports would have been required
to be filed with the SEC if such reports were being filed. In the
event the Guarantor conducts any business or holds any significant
assets other than the Capital Stock of the Company at the time of
filing and providing any such report, information or other document
containing financial statements of the Guarantor, the Guarantor
shall include in such report, information or other document
summarized financial information (as defined in Rule 1-02(bb) of
Regulation S-X) with respect to the Company. Delivery of such
reports, information and documents to the Holder is for
informational purposes only and the Holder's receipt of such shall
not constitute constructive notice of any information contained
therein, including the Company's compliance with any of its
covenants hereunder.
(iv) Limitation on Indebtedness.
(1) The Company shall not, and shall not permit any Restricted
Subsidiary to, incur, directly or indirectly, any Indebtedness
unless, on the date of such incurrence, the Consolidated Coverage
Ratio exceeds 2.0 to 1.
(2) Notwithstanding the foregoing paragraph (1), the Company
and its Restricted Subsidiaries may incur any or all of the
following Indebtedness:
(a) Indebtedness incurred by the Company pursuant
to the Credit Facility or any other revolving
credit arrangement; provided, however, that, after
giving effect to any such incurrence, the
aggregate principal amount of such Indebtedness
then outstanding does not exceed the greater of
$175,000,000 (less the then outstanding principal
amount of Indebtedness arising under any
Receivables Program of the Company or any
Restricted Subsidiary,
3
other than Indebtedness described in clause (B)
below) and the sum of (i) 50% of the book value of
the inventory of the Company and its Restricted
Subsidiaries and (ii) 85% of the book value of the
accounts receivable of the Company and its
Restricted Subsidiaries (other than accounts
receivable subject to any Receivables Program of
the Company or any Restricted Subsidiary), in each
case determined in accordance with GAAP;
(b) Indebtedness of the Company owed to and held
by a Restricted Subsidiary and Indebtedness of a
Restricted Subsidiary owed to and held by the
Company or a Restricted Subsidiary; provided,
however, that any subsequent issuance or transfer
of any Capital Stock which results in any such
Restricted Subsidiary ceasing to be a Restricted
Subsidiary or any subsequent transfer of such
Indebtedness (other than to the Company or a
Restricted Subsidiary) shall be deemed, in each
case, to constitute the incurrence of such
Indebtedness by the issuer thereof;
(c) the Securities;
(d) Indebtedness outstanding as of the date of
this Note (other than Indebtedness described in
clause (A), (B) or (C) of this Section 3(d)(2));
(e) Refinancing Indebtedness in respect of
Indebtedness incurred pursuant to Section 3(d)(1)
or pursuant to clause (C) or (D) of this Section
3(d)(2) or this clause (E);
(f) Hedging Obligations consisting of Interest
Rate or Currency Protection Agreements directly
related to Indebtedness permitted to be incurred
hereunder;
(g) Indebtedness incurred by a Receivables
Subsidiary, other than Indebtedness described in
clause (B) above, in an amount not exceeding 95%
of the aggregate unpaid balance of the Receivables
and Related Assets of such Receivables Subsidiary
at the time of such incurrence pursuant to a
Receivables Program;
(h) Indebtedness of the Company and the Company's
Restricted Subsidiaries to the extent the net
proceeds thereof are concurrently deposited to
defease all Securities pursuant to the terms of
the Indenture or all New Notes pursuant to the
terms herein;
4
(i) Indebtedness represented by guarantees by the
Company or the Company's Restricted Subsidiaries
of Indebtedness otherwise permitted to be incurred
under the Indenture;
(j) Indebtedness incurred by the Company in an
aggregate principal amount which, together with
all other Indebtedness of the Company outstanding
on the date of such incurrence which was incurred
pursuant to this clause (J), does not exceed
$55,000,000. With respect to Indebtedness
permitted under this Section 3(d)(2)(J) no more
than $20,000,000 of Indebtedness may be incurred
pursuant to such provision in respect of Purchase
Money Indebtedness.
"Purchase Money Indebtedness" means Indebtedness:
(A) consisting of the deferred purchase price of property
conditional sale obligations, obligations under any title retention agreement
and other purchase money obligations, in each case whether directly from the
owner of such property or through a third-party financing arrangement, and in
each case where the maturity of such Indebtedness does not exceed the
anticipated useful life of the property being financed, and
(B) incurred to finance the acquisition, construction or lease
by the Company or a Restricted Subsidiary of the property, including additions
and improvements thereto;
provided, however, that the Indebtedness is incurred within 180 days
after the acquisition, construction or lease of the property by the
Company or Restricted Subsidiary.
(3) Notwithstanding the foregoing, and except as set forth in
Section 3(e) below, the Company shall not incur any Indebtedness
pursuant to Section 3(d)(2) if the proceeds thereof are used,
directly or indirectly, to Refinance or defease any Subordinated
Obligations unless such Indebtedness shall be subordinated to the
New Notes to at least the same extent as such Subordinated
Obligations. For the avoidance of doubt, for purposes of this
Section 3(d) "Subordinated Obligations" means any Indebtedness of
the Company (whether outstanding on the date of the New Notes or
thereafter incurred) which is subordinate or junior in right of
payment to the New Notes pursuant to a written agreement to that
effect, including the Securities.
(4) For purposes of determining any particular amount of
Indebtedness under this Section 3(d), (i) Indebtedness incurred
under the Credit Facility on or prior to the date hereof shall be
treated as incurred pursuant to clause (A) of Section 3(d)(2) and
(ii) Guarantees, Liens or obligations with respect to letters of
5
credit supporting Indebtedness otherwise included in the
determination of such particular amount shall not be included. For
purposes of determining compliance with this Section 3(d), (i) in
the event that an item of Indebtedness meets the criteria of more
than one of the types of Indebtedness described herein, the Company,
in its sole discretion, will classify (and may reclassify) such item
of Indebtedness and only be required to include the amount and type
of such Indebtedness in one of the above clauses and (ii) an item of
Indebtedness may be divided and classified (and reclassified) in
more than one of the types of Indebtedness described herein.
(v) Repurchase of Securities. The other provisions of this
Note and the Exchange Agreement notwithstanding, neither the Company
nor any Subsidiary may purchase, enter into an exchange for,
repurchase or otherwise acquire more than $75,000,000 in aggregate
principal amount of outstanding Securities (including the Securities
to be tendered in exchange for this Note). Furthermore, the Company
may not issue more than $55,000,000 in senior or unsubordinated
Indebtedness, including this Note, in exchange for Securities it
being understood that the limitation contained in this sentence
shall not apply to the incurrence indebtedness under the Master
Security Agreement or the Credit Facility used in whole or in part
in exchange for or to finance the repurchase of Securities. The
Company may not incur secured Indebtedness, except under the Master
Security Agreement or the Credit Facility, in exchange for or to
finance the repurchase of Securities unless the Indebtedness
evidenced by this Note shall be secured on an equal and ratable
basis with such secured Indebtedness.
(vi) Registration Rights. At such time as the Company issues
$25.0 million or more in aggregate principal amount of New Notes, in
one or more issuances, the Company agrees to enter into a
registration rights agreement (the "Registration Rights Agreement")
with the holders of New Notes on terms and conditions set forth in
Annex B hereto.
(d) Merger or Consolidation
(i) The Company shall not consolidate with or merge with or
into, or convey, transfer or lease, in one transaction or a series
of transactions, all or substantially all its assets to, any Person,
unless:
(1) the Company shall be the resulting, surviving or
transferee Person or the resulting, surviving or transferee Person
(in either case, the "Successor Company") shall be a Person
organized and existing under the laws of the United States of
America, any State thereof or the District of Columbia and the
Successor Company (if not the Company) shall expressly assume all
the obligations of the Company under this Note and the Exchange
Agreement;
(2) immediately after giving effect to such transaction (and
treating any Indebtedness which becomes an obligation of the
Successor Company or any
6
Restricted Subsidiary as a result of such transaction as having been
incurred by the Successor Company or such Restricted Subsidiary at
the time of such transaction), no Default shall have occurred and be
continuing; and
(3) immediately after giving effect to such transaction, the
Successor Company would be able to incur an additional $1.00 of
Indebtedness pursuant to Section 3(d)(1).
The Successor Company shall be the successor to the Company and shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under this Note and the Exchange Agreement, but the predecessor
Company in the case of a conveyance, transfer or lease shall not be released
from the obligation to pay the principal of and interest on this Note.
Notwithstanding the foregoing, any Restricted Subsidiary may consolidate
with, merge into or transfer all or part of its properties and assets to the
Company.
(ii) The Guarantor shall not consolidate with or merge with or
into, or convey, transfer or lease, in one transaction or series of
transactions, all or substantially all of its assets to any Person
unless: (i) the resulting, surviving or transferee Person (if not
the Guarantor) shall be a Person organized and existing under the
laws of the jurisdiction under which the Guarantor was organized or
under the laws of the United States of America, or any State thereof
or the District of Columbia, and such Person shall expressly assume,
by an amendment to this Note and the Exchange Agreement, in a form
acceptable to the Holder, all the obligations of the Guarantor, if
any, under the Guaranty; (ii) immediately after giving effect to
such transaction or transactions on a pro forma basis (and treating
any Indebtedness which becomes an obligation of the resulting,
surviving or transferee Person as a result of such transaction as
having been issued by such Person at the time of such transaction),
no Default shall have occurred and be continuing.
(e) Optional Redemption.
(i) The New Notes will not be redeemable at the Company's
option prior to July 1, 2005. At any time on or after July 1, 2005,
the Company may, at its option, redeem all or any portion of the
outstanding principal amount of the New Notes at the redemption
prices (expressed as percentages of the principal amount of the New
Notes) set forth below, plus, in each case, accrued interest thereon
to the applicable redemption date, if redeemed during the 12-month
period beginning July 1 of the years indicated below:
Year Percentage
---- ----------
2005 104.000%
2006 103.000%
2007 102.000%
2008 101.000%
2009 and thereafter 100.000%
7
(f) Notice of Redemption; Selection of New Notes to be Redeemed.(i)
(a) Notice of redemption will be mailed at least 30 days but not
more than 60 days before the redemption date to the Holder at its
address for notices set forth in the Exchange Agreement. Once notice
of redemption is mailed, the portion of the New Notes called for
redemption becomes due and payable on the redemption date and at the
redemption price stated in the notice. Upon surrender to the
Company, the New Notes shall be paid at the redemption price stated
in the notice, plus accrued interest to the redemption date.
(ii) If fewer than all the New Notes are to be redeemed, the
Company shall select the New Notes to be redeemed pro rata or by lot
or by a method that complies with applicable legal requirements, if
any. The Company shall make the selection from outstanding New Notes
not previously called for redemption. The Company may select for
redemption portions of the principal of New Notes that have
denominations larger than $1,000. New Notes and portions of them the
Company selects shall be in amounts of $1,000 or a whole multiple of
$1,000. Provisions of this Note that apply to New Notes called for
redemption also apply to portions of New Notes called for
redemption. Upon surrender of New Note that is redeemed in part, the
Company shall execute and deliver to the Holder a New Note in the
principal amount equal to the unredeemed portion of the New Note
surrendered.
(g) Change of Control.
(i) Upon a Change of Control, the Holder shall have the right
to require that the Company repurchase this Note, in its entirety,
at a purchase price in cash equal to 101% of the outstanding
principal amount thereof plus accrued and unpaid interest, if any,
to the date of purchase (subject to the right of the Holder to
receive interest due on an Interest Payment Date), in accordance
with the terms contemplated in Section 7(b). In the event that at
the time of such Change of Control the terms of the Bank
Indebtedness restrict or prohibit the repurchase of this Note
pursuant to this Section, then prior to the mailing of the notice to
the Holder provided for in Section 7(b) below but in any event
within 30 days following any Change of Control, the Company shall
(i) repay in full all such Bank Indebtedness or offer to repay in
full all such Bank Indebtedness and repay such Bank Indebtedness of
each lender who has accepted such offer or (ii) obtain the requisite
consent under the agreements governing such Bank Indebtedness to
permit the repurchase of this Note as provided for in Section 7(b).
(ii) Within 30 days following any Change of Control, the
Company shall mail a notice to the Holder stating:
(1) that a Change of Control has occurred and that the Holder
has the right to require the Company to purchase this Note at a
purchase price in cash equal to 101% of the principal amount thereof
plus accrued and unpaid interest, if
8
any, to the date of purchase (subject to the Holder's right to
receive interest on the relevant interest payment date);
(2) the circumstances and relevant facts regarding such Change
of Control (including information with respect to pro forma
historical income, cash flow and capitalization, after giving effect
to such Change of Control);
(3) the repurchase date (which shall be no earlier than 30
days nor later than 60 days from the date such notice is mailed);
and
(4) the instructions determined by the Company, consistent
with this Section, that the Holder must follow in order to have this
Note purchased.
(iii) In order to have its Note repurchased pursuant to the
terms hereof, the Holder will be required to surrender this Note,
with an appropriate form duly completed, to the Company at the
address specified in the notice at least three Business Days prior
to the purchase date. The Holder will be entitled to withdraw its
election if the Company receives not later than one Business Day
prior to the purchase date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the
principal amount of the Notes which were delivered for purchase by
the Holder and a statement that such Holder is withdrawing his
election to have such Note purchased.
(iv) On the purchase date, the Holder will surrender this Note
to the Company for cancellation, and the Company shall pay the
purchase price plus accrued and unpaid interest, if any, to the
Holder.
(v) The Company will comply with the applicable tender offer
rules, including Rule 14e-1 under the Exchange Act, and any other
applicable securities laws and resolutions in connection with a
change of control offer. To the extent that the provisions of any
securities laws or regulations conflict with provisions of this
covenant, the Company will comply with the applicable securities
laws and regulations and will not be deemed to have breached its
obligations under this clause by virtue hereof.
(h) Guaranty. To secure the due and punctual payment of the
principal and interest, if any, on the Note and all other amounts payable by the
Company under this Note when and as the same shall be due and payable, whether
at maturity, by acceleration or otherwise, according to the terms of the hereof,
the Guarantor has agreed to guarantee the Obligations on a senior basis as set
forth in the Note Guarantee attached hereto as Annex A.
(i) Ranking. This Note, and all amounts due and outstanding
hereunder, are Senior Indebtedness of the Company and shall rank pari passu in
right of payment with all other Senior Indebtedness of the Company.
(j) Amendment, Waiver, Voting.
9
(i) Without Consent of the Holder. The Company may amend this
Note or any New Notes without notice to or consent of the Holder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Section 4;
(3) to provide for uncertificated New Notes in addition to or
in place of certificated New Notes; provided, however, that the
uncertificated New Notes are issued in registered form for purposes
of Section 163(f) of the Code or in a manner such that the
uncertificated New Notes are described in Section 163(f)(2)(B) of
the Code;
(4) to add guarantees with respect to this Note or to secure
this Note;
(5) to add to the covenants of the Company for the benefit of
the Holder or to surrender any right or power herein conferred upon
the Company;
(6) to comply with any requirements of the SEC in connection
with qualifying, or maintaining the qualification of, the indenture
(as defined below) under the Trust Indenture Act of 1939, as amended
(to the extent the indenture will be required to be qualified under
the Registration Rights Agreement); or
(7) to make any change that does not materially adversely
affect the rights of the Holder.
References above to the Indenture means the indenture that may be required
to be executed and delivered pursuant to which New Notes are exchanged for
Securities as contemplated by the Registration Rights Agreement.
After an amendment under this Section becomes effective, the Company shall
mail to the Holder a notice briefly describing such amendment. The failure to
give such notice to the Holder, or any defect therein, shall not impair or
affect the validity of an amendment under this Section.
(ii) With Consent of the Holder. (i) The Company may amend
this Note or any New Notes without notice to the Holder but with the
written consent of the holders of at least a majority in principal
amount of the New Notes. (ii) Without the consent of each holder
affected, an amendment may not:
reduce the amount of New Notes whose Holders must consent to an amendment;
reduce the rate of or extend the time for payment of interest on any New Note;
reduce the principal of or extend the Stated Maturity of any New Note;
reduce the premium payable upon the redemption of any New Note or change the
time at which any New Note may be redeemed in accordance with Section 5;
make any New Note payable in money other than U.S. Dollars;
make any change in Section 12(b) or 12(c), or clause (ii) of this Section 10(b);
or
make any change in any the Note Guarantee that would adversely affect the
Holders; and
10
(iii) The above provisions notwithstanding, any amendment to Section
3(d)(2)(J), Section 3(d)(3) or Section 3(e) of this Note requires the written
consent of holders of least 75% of the outstanding aggregate principal amount of
the New Notes. This clause (iii) may not be amended or waived except upon the
written consent of holders of at least 75% of the outstanding aggregate
principal amount of the New Notes.
(iv) It shall not be necessary for the consent of the holders under this
Section to approve the particular form of any proposed amendment, but it shall
be sufficient if such consent approves the substance thereof.
(v) After an amendment under this Section becomes effective, the Company
shall mail to the Holder a notice briefly describing such amendment. The failure
to give such notice to the Holder, or any defect therein, shall not impair or
affect the validity of an amendment under this Section.
(iii) Revocation and Effect of Consents and Waivers. A consent
to an amendment or a waiver by a holder of a New Note shall bind the
holder and every subsequent holder of that New Note or portion of
the New Note that evidences the same debt as the consenting holder's
New Note, even if notation of the consent or waiver is not made on
the New Note. However, any such holder or subsequent holder may
revoke the consent or waiver as to such holder's New Note or portion
of the New Note if the Company receives the notice of revocation
before the date the amendment or waiver becomes effective. After an
amendment or waiver becomes effective, it shall bind every new
holder. An amendment or waiver becomes effective upon the execution
of such amendment or waiver by the Company.
(iv) The Company may, but shall not be obligated to, fix a
record date for the purpose of determining the holders of New Notes
entitled to give their consent or take any other action described
above or required or permitted to be taken pursuant to the New
Notes. If a record date is fixed, then notwithstanding the
immediately preceding paragraph, those Persons who were holders of
New Notes at such record date (or their duly designated proxies),
and only those Persons, shall be entitled to give such consent or to
revoke any consent previously given or to take any such action,
whether or not such Persons continue to be holders of New Notes
after such record date. No such consent shall be valid or effective
for more than 120 days after such record date.
(v) Payment for Consent. Neither the Company nor any Affiliate
of the Company shall, directly or indirectly, pay or cause to be
paid any consideration, whether by way of interest, fee or
otherwise, to any holder of New Notes for or as an inducement to any
consent, waiver or amendment of any of the terms or provisions of
the New Notes unless such consideration is offered to be paid to all
holders that so consent, waive or agree to amend in the time frame
set forth in solicitation documents relating to such consent, waiver
or agreement.
(k) Defaults and Remedies. An "Event of Default" occurs if:
11
(i) the Company defaults in any payment of interest on this
Note when the same becomes due and payable, and such default
continues for a period of 30 days;
(ii) the Company (i) defaults in the payment of the principal
of this Note when the same becomes due and payable at its Stated
Maturity, upon optional redemption, upon required repurchase, upon
declaration or otherwise or (ii) fails to redeem or purchase this
Note when required pursuant to the terms hereof;
(iii) the Company or the Guarantor fails to comply with
Section 4;
(iv) the Company fails to comply with Section 3 and such
failure continues for 30 days after the notice specified below;
(v) the Company or the Guarantor fails to comply with any of
its agreements set forth herein (other than those referred to in
clause (a), (b), (c) or (d) above) and such failure continues for 60
days after the notice specified below;
(vi) Indebtedness of the Company, the Guarantor or any
Significant Subsidiary is not paid within any applicable grace
period after final maturity or is accelerated by the holders thereof
because of a default and the total amount of such Indebtedness
unpaid or accelerated exceeds $10,000,000 or its foreign currency
equivalent;
(vii) the Company, the Guarantor or any Significant Subsidiary
pursuant to or within the meaning of any Bankruptcy Law:
(1) commences a voluntary case;
(2) consents to the entry of an order for relief against it in
an involuntary case;
(3) consents to the appointment of a Custodian of it or for
any substantial part of its property; or
(4) makes a general assignment for the benefit of its
creditors; or
(5) takes any comparable action under any foreign laws
relating to insolvency;
(viii) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(1) is for relief against the Company, the Guarantor or any
Significant Subsidiary in an involuntary case;
(2) appoints a Custodian of the Company, the Guarantor or any
Significant Subsidiary or for any substantial part of its property;
12
(3) orders the winding up or liquidation of the Company, the
Guarantor or any Significant Subsidiary; or
(4) any similar relief is granted under any foreign laws and
the order or decree remains unstayed and in effect for 60 days;
(ix) any judgment or decree for the payment of money in excess
of $10,000,000 or its foreign currency equivalent at the time is
entered against the Company, the Guarantor or any Significant
Subsidiary, remains outstanding for a period of 60 days following
the entry of such judgment or decree and is not discharged, waived
or the execution thereof stayed within 10 days after the notice
specified below; or
(x) the Guaranty ceases to be in full force and effect (other
than in accordance with the terms of the Guaranty) or the Guarantor
denies or disaffirms its obligations under the Guaranty.
The foregoing will constitute Events of Default whatever the reason for
any such Event of Default and whether it is voluntary or involuntary or is
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body.
The term "Bankruptcy Law" means Xxxxx 00, Xxxxxx Xxxxxx Code, or any
similar Federal or state law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator, custodian or similar official
under any Bankruptcy Law.
A Default under clauses (d), (e) or (i) is not an Event of Default until
the Holders of at least 25% in principal amount of the outstanding New Notes at
the time of such Default notify the Company of the Default and the Company does
not cure such Default within the time specified after receipt of such notice.
Such notice must specify the Default, demand that it be remedied and state that
such notice is a "Notice of Default."
The Company shall deliver to the Holder, within 30 days after the
occurrence thereof, written notice in the form of an Officers' Certificate of
any Event of Default under clause (f) or (j) and any event which with the giving
of notice or the lapse of time would become an Event of Default under clause
(d), (e) or (i), its status and what action the Company is taking or proposes to
take with respect thereto.
(l) Acceleration, Waivers of Past Defaults, Waiver of Stay or
Extension Laws, Right to Receive Payment.
(i) Acceleration. If an Event of Default occurs and is
continuing (other than an Event of Default specified in Section
11(g) or (h) with respect to the Company or the Guarantor), the
holders of at least 25% in principal amount of the New Notes may
declare the principal of and accrued but unpaid interest on this
Note to be due and payable. Upon such a declaration, such principal
and interest shall be due and payable immediately. If an Event of
Default specified in Section 11 (g) or (h) with respect to the
Company or the Guarantor occurs, all principal of
13
and interest on this Note shall ipso facto become and be immediately
due and payable without any declaration or other act on the part of
the Holder. The holders of a majority in principal amount of the New
Notes may by notice to the Company rescind an acceleration and its
consequences if the rescission would not conflict with any judgment
or decree and if all existing Events of Default have been cured or
waived except nonpayment of principal or interest that has become
due solely because of acceleration. No such rescission shall affect
any subsequent Default or impair any right consequent thereto.
(ii) Waiver of Past Defaults. The holders of a majority in
principal amount of the New Notes by notice to the Company may waive
an existing Default and its consequences except (i) a Default in the
payment of the principal of or interest on a New Note or (ii) a
Default in respect of a provision that under Section 10(b) cannot be
amended without the consent of each holder of New Notes affected. A
Default in respect of a provision that requires the consent of 75%
of the outstanding aggregate principal amount of the New Notes to
any amendment may only be waived by the holders of 75% of the
outstanding aggregate principal amount of the New Notes. When a
Default is waived, it is deemed cured, but no such waiver shall
extend to any subsequent or other Default or impair any consequent
right.
(iii) Right to Receive Payment. Notwithstanding any other
provision of this Note, the right of the Holder to receive payment
of principal of and interest on this Note, on or after the
respective due dates expressed in this Note, or to bring suit for
the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of the
Holder
(iv) Waiver of Stay or Extension Laws. The Company (to the
extent it may lawfully do so) shall not at any time insist upon, or
plead, or in any manner whatsoever claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at
any time hereafter in force, which may affect the covenants or the
performance under this Note; and the Company (to the extent that it
may lawfully do so) hereby expressly waives all benefit or advantage
of any such law, and shall not hinder, delay or impede the execution
of any power herein granted to the Holder, but shall suffer and
permit the execution of every such power as though no such law had
been enacted.
(v) When New Notes Disregarded; Registered Securities. In
determining whether the holders of the required principal amount of
New Notes have concurred in any direction, waiver or consent, New
Notes owned by the Company or by any Person directly or indirectly
controlling or controlled by or under direct or indirect common
control with the Company shall be disregarded and deemed not to be
outstanding. Also, subject to the foregoing, only New Notes
outstanding at the time shall be considered in any such
determination. For all purposes for this Note, any New Notes sold
pursuant to a Registration Rights Agreement shall be considered the
same class or series as this Note.
14
(vi) Successors. All agreements of the Company in this Note
shall bind its successors.
(vii) Headings. The headings sections and subsections of this
Note have been inserted for convenience of reference only, are not
intended to be considered a part hereof and shall not modify or
restrict any of the terms or provisions hereof.
(m) Notice of Transfer; Surrender; New Certificates. In the event
this Note or any portion of this Note is transferred by the holder thereof to a
third party (including any Affiliate (as defined in Regulation D of the
Securities Act) thereof), the holder will promptly execute and return to the
Company the assignment form attached hereto as Annex C.
Upon the Stated Maturity, the holder of this Note, in exchange for
the payment of principal of, and any accrued and unpaid interest, on this Note
shall surrender this Note to the Company.
In the event that the holder of this Note transfers any portion
hereof pursuant to the terms hereof, the transferring and new holder shall be
entitled to have the Company execute and deliver new certificates (with
corresponding Note Guarantees executed by the Guarantor) representing the
applicable principal amount of Notes in the names and denominations requested by
the transferring holder, provided that the Company may request the transferring
and new holder to confirm in writing that it has complied with federal and state
securities laws with respect to such transfer.
(n) Defeasance, Satisfaction and Discharge. Reference is hereby made
to Article 8 of the Indenture which is incorporated by reference herein as if
set forth in its entirety herein and made applicable to this Note.
(o) No Recourse Against Others. No director, officer, employee or
stockholder, as such, of the Company or the Guarantor shall have any individual
liability for any obligations of the Company or the Guarantor under the
Operative Documents or for any claim based on, in respect of or by reason of
such obligations or their creation. By accepting this Note, the Holder waives
and is releases all such liability. The waiver and release are part of the
consideration for the issue of this Note.
(p) Governing Law. THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO
APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
15
ANNEX A
NOTE GUARANTEE
To secure the due and punctual payment of the principal and interest, if
any, on the Floating Rate Note due 2012 of Avondale Xxxxx, Inc. (the "Note")
held by Cohanzick Credit Opportunities Master Fund, Ltd. (the "Holder") and all
other amounts payable by the Company under the Note when and as the same shall
be due and payable, whether at maturity, by acceleration or otherwise, according
to the terms of the Note, and for good and valuable consideration, the receipt
of which are hereby acknowledged, the Guarantor agrees to guarantee the
Obligations (as defined below) on a senior basis pursuant to the terms herein
(defined terms not otherwise defined herein shall have the meanings ascribed to
such terms in the Note):
(q) The Guarantor hereby unconditionally and irrevocably guarantees to the
Holder and its successors, transferees and assigns (a) the full and punctual
payment of principal and interest on the Note when due, whether at maturity, by
acceleration, by redemption or otherwise, and all other monetary obligations of
the Company under the Note and (b) the full and punctual performance within
applicable grace periods of all other obligations of the Company under the Note
(all the foregoing being hereinafter collectively called the "Obligations"). The
Guarantor further agrees that the Obligations may be extended or renewed, in
whole or in part, without notice or further assent from the Guarantor and that
the Guarantor will remain bound under this Note Guarantee notwithstanding any
extension or renewal of any Obligation.
(r) The Guarantor waives presentation to, demand of, payment from and protest to
the Company of any of the Obligations and also waives notice of protest for
nonpayment. The Guarantor waives notice of any default under the Note or the
Obligations. The obligations of the Guarantor hereunder are primary, absolute
and unconditional and shall not be affected by (a) the failure of the Holder to
assert any claim or demand or to enforce any right or remedy against the Company
or any other person under the Exchange Agreement, the Note or any other
agreement or otherwise; (b) any extension or renewal of any thereof; (c) any
rescission, waiver, amendment or modification of any of the terms or provisions
of the Exchange Agreement, the Note or any other agreement; (d) the release of
any security held by the Holder for the Obligations or any of them; (e) the
failure of the Holder to exercise any right or remedy against any other
guarantor of the Obligations; or (f) any change in the ownership of the
Guarantor.
(s) The Guarantor further agrees that its guarantee herein constitutes a
guarantee of payment, performance and compliance when due (and not a guarantee
of collection) and waives any right to require that any resort be had by the
Holder against the Company or any other person or to any security held for
payment of the Obligations.
(t) This Note Guarantee is Senior Indebtedness of the Guarantor and is equal in
right of payment to the payment in full of the principal of and premium, if any,
and interest on all Senior Indebtedness of the Guarantor.
(u) The obligations of the Guarantor hereunder shall not be subject to any
reduction, limitation, impairment or termination for any reason, including any
claim of waiver, release, surrender, alteration or compromise, and shall not be
subject to any defense of setoff,
A-1
counterclaim, recoupment or termination whatsoever or by reason of the
invalidity, illegality or unenforceability of the Obligations or otherwise.
Without limiting the generality of the foregoing, the obligations of the
Guarantor herein shall not be discharged or impaired or otherwise affected by
the failure of the Holder to assert any claim or demand or to enforce any remedy
under the Exchange Agreement, the Note or any other agreement, by any waiver or
modification of any thereof, by any default, failure or delay, willful or
otherwise, in the performance of the obligations, or by any other act or thing
or omission or delay to do any other act or thing which may or might in any
manner or to any extent vary the risk of the Guarantor or would otherwise
operate as a discharge of the Guarantor as a matter of law or equity.
(v) The Guarantor further agrees that this Note Guarantee shall continue to be
effective or be reinstated, as the case may be, if at any time payment, or any
part thereof, of principal or interest on any Obligation is rescinded or must
otherwise be restored by the Holder upon the bankruptcy or reorganization of the
Company, the Guarantor or otherwise.
(w) In furtherance of the foregoing and not in limitation of any other right
which the Holder has at law or in equity against the Guarantor by virtue hereof,
upon the failure of the Company to pay the principal or interest on any
Obligation when and as the same shall become due, whether at maturity, by
acceleration, by redemption or otherwise, or to perform or comply with any other
Obligation, the Guarantor hereby promises to and will, upon receipt of written
demand by the Holder, forthwith pay, or cause to be paid, in cash, to the Holder
an amount equal to the sum of (i) the unpaid amount of such Obligations, (ii)
accrued and unpaid interest on such Obligations (but only to the extent not
prohibited by law) and (iii) all other monetary Obligations of the Company to
the Holder.
(x) The Guarantor agrees that it shall not be entitled to any right of
subrogation in respect of any Obligations guaranteed hereby until payment in
full of all Obligations. The Guarantor further agrees that, as between it, on
the one hand, and the Holder, on the other hand, (x) the maturity of the
Obligations guaranteed hereby may be accelerated by the Holder after an Event of
Default under the Note for the purposes of the Guarantor's Guarantee herein,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the Obligations guaranteed hereby, and (y) in the
event of any declaration of acceleration of such obligations as provided by the
Note, such Obligations (whether or not due and payable) shall forthwith become
due and payable by the Guarantor for the purposes of this Note Guarantee.
(y) The Guarantor also agrees to pay any and all costs and expenses (including
reasonable attorneys' fees) incurred by the Holder in enforcing any rights under
this Note Guarantee;
(z) This Note Guarantee shall be binding upon the Guarantor and its successors
and assigns and shall enure to the benefit of the successors, transferees and
assigns of the Holder and, in the event of any transfer or assignment of rights
by the Holder, the rights and privileges conferred upon that party in this Note
Guarantee and in the Note shall automatically extend to and be vested in such
transferee or assignee, all subject to the terms and conditions of this Note
Guarantee.
2
(aa) Neither a failure nor a delay on the part of either the Holder in
exercising any right, power or privilege under this Note Guarantee shall operate
as a waiver thereof, nor shall a single or partial exercise thereof preclude any
other or further exercise of any right, power or privilege. The rights, remedies
and benefits of the Holder herein expressly specified are cumulative and not
exclusive of any other rights, remedies or benefits which either may have under
this Note Guarantee at law, in equity, by statute or otherwise.
(bb) No modification, amendment or waiver of any provision of this Note
Guarantee nor the consent to any departure by the Guarantor therefrom, shall in
any event be effective unless the same shall be in writing and signed by the
Holder, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. No notice to or demand on the
Guarantor in any case shall entitle the Guarantor to any other or further notice
or demand in the same, similar or other circumstances.
3
IN WITNESS WHEREOF, the Guarantor has executed this Note Guarantee as of
the ___ day of _____________, 2004.
AVONDALE INCORPORATED
By:__________________________________
Name: Xxxx X. Xxxxxxx, Xx.
Title: Vice Chairman, Chief Financial
Officer and Director
4
ANNEX B
TERM SHEET FOR REGISTRATION RIGHTS AGREEMENT
B-1
ANNEX C
ASSIGNMENT FORM
To assign this Note, fill in the form below:
I or we assign and transfer this Note to:
________________________________________________________________________________
(Insert assignee's social security or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint __________________________ as agent to transfer this
Note on the books of the Company. The agent may substitute another to act for
him.
________________________________________________________________________________
Your Signature:_________________________________________________________________
(Sign exactly as your name appears on the other side of this Note)
Your Name:______________________________________________________________________
Date:_____________________
Signature Guarantee:____________________________________________________________
B-1
