EXHIBIT 10.38
EXHIBIT B
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THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD,
TRANSFERRED, OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES
LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF SUCH ACT AND SUCH LAWS
THE SUBORDINATED INDEBTEDNESS EVIDENCED BY THIS INSTRUMENT RANKS PARI
PASSU WITH CERTAIN OTHER SUBORDINATED INDEBTEDNESS OF THE MAKER AND IS
OTHERWISE SUBJECT TO CERTAIN OTHER RESTRICTIONS SET FORTH IN THAT
CERTAIN INTERCREDITOR AGREEMENT, DATED AS OF MARCH 30, 1999, BY AND
AMONG THE MAKER HEREOF, THE PAYEE NAMED HEREIN, CERTAIN OTHER
HOLDER(S) OF INDEBTEDNESS OF THE MAKER AND THE GUARANTORS OF SUCH
INDEBTEDNESS, AS SUCH AGREEMENT MAY BE AMENDED FROM TIME TO TIME.
MEDSOURCE TECHNOLOGIES, LLC
AMENDED AND RESTATED 2.5% SENIOR SUBORDINATED PROMISSORY NOTE
DUE MARCH 29, 2008
$15,000,000 New York, New York
Dated as of March 30, 1999
Issued as of December 28, 2001
FOR VALUE RECEIVED, the undersigned, MedSource Technologies, LLC
("Borrower"), a Delaware limited liability company, hereby promises to pay to
the order of J. H. Whitney Mezzanine Fund, L.P. ("WMF"), a Delaware limited
partnership, or its registered assigns (the "Holder"), the principal sum of
FIFTEEN MILLION DOLLARS ($15,000,000) on March 29, 2008 (the "Maturity Date"),
with interest thereon from time to time as provided herein. This Amended and
Restated 12.5% Senior Subordinated Promissory Note Due March
29, 2008, amends and restates in its entirety the 12.5% Senior Subordinated
Promissory Note Due March 29, 2008 of Borrower issued on March 30, 1999, as
amended by Amendment No. 1 thereto dated October 24, 2000 (the "Original Note")
and upon delivery hereof the Original Note shall be of no further force and
effect and promptly thereafter shall be delivered to the Borrower for
cancellation.
1. Purchase Agreement. This Amended and Restated Senior Subordinated
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Promissory Note (this "Note") is issued by Borrower, as of the date hereof,
pursuant to the Securities Purchase Agreement (the "Purchase Agreement"), dated
as of March 30, 1999 by and among MedSource Technologies Inc. (the "Parent"), a
Delaware corporation, Borrower, WMF, J. H. Whitney III, L.P. ("JHW III"), a
Delaware limited partnership, Whitney Strategic Partners III, L.P. ("WSP"), a
Delaware limited partnership, and German American Capital Corporation, a
Maryland corporation, as amended by the First Amendment thereto, dated October
24, 2000, the Second Amendment thereto, dated as of June 30, 2001 and the Third
Amendment thereto, dated as of December , 2001 (as so amended, and as further
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amended from time to time, the "Purchase Agreement"), and is subject to the
terms thereof. This Note, together with all other promissory notes issued under
the Purchase Agreement, and all promissory notes issued pursuant to paragraph 12
hereof or thereto are hereinafter referred to as the "Notes." The Holder is
entitled to the benefits of this Note and the Purchase Agreement, as it relates
to the Note, and may enforce the agreements of Borrower contained herein and in
the Purchase Agreement, and exercise the remedies provided for hereby and
thereby or otherwise available in respect hereto and thereto. Capitalized terms
used herein without definition are used herein with the meanings ascribed to
such terms in the Purchase Agreement.
2. Interest. Borrower promises to pay interest ("Interest") on the
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principal amount of this Note at the rate of 12.5% per annum (the "Interest
Rate"). Interest on this Note shall accrue from and including the date of
issuance through and until repayment of the principal amount of this Note and
payment of all Interest in full, and shall be computed on the basis of a 360-day
year of twelve 30-day months. Interest shall be paid as follows:
(a) Basic Interest. Borrower shall pay Interest quarterly in
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arrears on each March 31, June 30, September 30 and December 31 of each year or,
if any such date shall not be a Business Day, on the next succeeding Business
Day to occur after such date (each date upon which interest shall be so payable,
an "Interest Payment Date"), beginning on June 30, 1999, by wire transfer of
immediately available funds to an account at a bank designated in writing by the
Holder. In the absence of any such written designation, any such Interest
payment shall be deemed made on the date a check in the applicable amount
payable to the order of Holder is received by the Holder at its last address as
reflected in Borrower's note register; if no such address appears, then to such
Holder in care of the last address in such note register of any predecessor
holder of this Note (or its predecessor). In certain instances Interest may be
paid from the cash collateral account established pursuant to the terms and
conditions of the Cash Collateral Pledge Agreement.
(b) Default Rate of Interest. Notwithstanding the foregoing
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provisions of this Section 2, but subject to applicable law, any overdue
principal of and overdue Interest on
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this Note shall bear interest, payable on demand in immediately available funds,
for each day from the date payment thereof was due to the date of actual
payment, at a rate equal to the sum of (i) the Interest Rate and (ii) an
additional 2% per annum. Subject to applicable law, any interest that shall
accrue on overdue interest on this Note as provided in the preceding sentence
and shall not have been paid in full on or before the next Interest Payment Date
to occur after the date on which the overdue interest became due and payable
shall itself be deemed to be overdue interest on this Note to which the
preceding sentence shall apply.
(c) No Usurious Interest. In the event that any interest rate(s)
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provided for in this Section 2, shall be determined to be unlawful, such
interest rate(s) shall be computed at the highest rate permitted by applicable
law. Any payment by Borrower of any interest amount in excess of that permitted
by law shall be considered a mistake, with the excess being applied to the
principal amount of this Note without prepayment premium or penalty; if no such
principal amount is outstanding, such excess shall be returned to Borrower.
3. Mandatory Prepayment/Redemption.
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(a) Initial Public Offerings. Subject to the subordination
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provisions of Section 7 hereof, upon the consummation of an Initial Public
Offering (as hereinafter defined), Borrower shall, unless the Holder shall have
waived its rights under this Section 3(a) in writing, use an amount of the Net
Cash Proceeds (as defined below) equal to the lesser of (i) the aggregate
outstanding principal amount of the Notes, and (ii) 30% of such Net Cash
Proceeds (the lesser of (i) and (ii) being referred to in this Section 3(a) as
the "Available Net Cash Proceeds") to ratably prepay the aggregate outstanding
principal amount of this Note and any other Notes or, if the amount of Available
Net Cash Proceeds is less than the aggregate outstanding principal amount of the
Notes, then a ratable portion of the outstanding principal amount of this Note
and each other Note which in the aggregate equal the Available Net Cash
Proceeds, in each case in accordance with the redemption prices (the "Mandatory
Redemption Prices") set forth below (expressed as a percentage of the
outstanding principal amount of this Note so prepaid), together with Interest
accrued on the aggregate outstanding principal amount of this Note through the
date of such prepayment. If the consummation of an Initial Public Offering shall
occur during the consecutive 12-month period immediately preceding March 30 of
the calendar year set forth below, the Mandatory Redemption Price shall be
determined based upon the percentage of the outstanding principal amount of this
Note which corresponds to the period in question.
Period Mandatory Redemption Price
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2002 108%
2003 107%
2004 106%
2005 and thereafter 105%
Borrower shall pay the Mandatory Redemption Price, together with Interest
accrued thereon, within 3 Business Days after receipt by either Borrower or any
of its Subsidiaries of the proceeds
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of such Initial Public Offering. For the purposes hereof, "Initial Public
Offering" means the sale by any of Borrower, Parent or any of its Subsidiaries
of their capital stock pursuant to a registration statement on Form S-1 or other
similar registration form (other than a registration on Form S-8, Form S-4 or
any similar form) under the Securities Act in which the issuer receives any Net
Cash Proceeds. For the purposes hereof, "Net Cash Proceeds" means (x) the cash
proceeds in respect of an Initial Public Offering minus (y) reasonable brokerage
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commissions or underwriting fees and other reasonable fees and expenses
(including, without limitation, reasonable fees, charges and disbursements of
counsel and reasonable fees and expenses of investment bankers) relating to such
Initial Public Offering.
(b) Change of Control. Subject to the subordination provisions of
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Section 7 hereof, upon the occurrence of a Change of Control (as hereinafter
defined), Borrower shall, unless the Holder shall have waived its rights under
this Section 3(b) in writing, prepay the outstanding principal amount of this
Note in accordance with the Mandatory Redemption Prices set forth above in
Section 3(a), together with interest accrued thereon through the date of such
prepayment. If the occurrence of a Change of Control shall occur during the
consecutive 12-month period immediately preceding March 30 of the calendar year
set forth above in Section 3(a), the Mandatory Redemption price shall be
determined based upon the percentage of the outstanding principal amount of this
Note which corresponds to the period in question. Borrower shall pay the
Mandatory Redemption Price, together with interest accrued thereon, within 5
Business Days after the occurrence of a Change of Control. For the purposes
hereof, "Change of Control" means (i) any transaction or series of transactions
in which any Person or group, other than WMF, JHW III, WSP, William J. Kidd
("Kidd") and the 1818 Fund III, L.P., a Delaware limited partnership and an
affiliate of Brown Brothers Harriman, Inc. (the "1818 Fund"), or any affiliates
of the foregoing becomes the beneficial owner of 50% or more of the then
outstanding capital stock of Borrower or of any of its Subsidiaries, the
operations of which would constitute a material part of the business or
operations of Borrower and all of its Subsidiaries, taken as a whole, (ii) the
sale of all or substantially all of the assets of Borrower or of any of its
Subsidiaries, the operations of which would constitute a material part of the
business or operations of Borrower and all of its Subsidiaries, taken as a
whole, (iii) the liquidation of (A) Borrower or (B) any of its Subsidiaries, the
operations of which would constitute a material part of the business or
operations of Borrower and all of its Subsidiaries taken as a whole, except with
respect to this item (iii)(B) in connection with any Permitted Reorganization,
(iv) the election of any person to the Board of Directors of Parent or Borrower
who was not placed in nomination for that office as contemplated by or provided
for in the Stockholders Agreement, as amended from time to time, and/or (v) the
combination of Borrower or of any of its Subsidiaries, the operations of which
would constitute a material part of the business or operations of Borrower and
all of its Subsidiaries, taken as a whole, with another entity, as a result of
which (A) any Person or group, other than WMF, JHW III, WSP, Kidd and the 1818
Fund, or any affiliates of the foregoing becomes the beneficial owner of 50% or
more of the then outstanding capital stock of the combined entity or (B) the
directors of Borrower or such Subsidiary, as the case may be, constitute less
than a majority of the Board of Directors of the combined entity; provided,
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however, that any of the events described in subdivisions (i), (ii) or (v) above
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as applied to a Subsidiary of Borrower shall be deemed to be a Change in Control
only if such event is also an Event of Default.
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(c) Prior to any obligation arising on the part of Borrower to
prepay any Note pursuant to Sections 3(a) or 3(b), but in any event within 30
days following the consummation of an Initial Public Offering or the occurrence
of a Change of Control, as applicable, Borrower shall either (i) repay, and
terminate commitments under, Indebtedness under the Senior Credit Facility and
all other Senior Indebtedness to the extent required by the terms thereof, or
offer to repay and terminate commitments under Indebtedness under the Senior
Credit Facility and all other such Senior Indebtedness in accordance with the
terms thereof, and to repay Indebtedness owed to each lender under the Senior
Credit Facility which has accepted such offer or (ii) obtain the requisite
consents under the Senior Credit Facility and the other Senior Indebtedness to
permit the repurchase of the Notes as provided herein. Borrower shall first
comply with the covenant in the immediately preceding sentence before it shall
be required to repurchase Notes pursuant to the provisions described in Sections
3(a) and 3(b). Borrower's failure to comply with this covenant shall constitute
an Event of Default under Section 6(a)(iv).
(d) Notice. Borrower shall give written notice to the Holder of
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any mandatory prepayment pursuant to this Section 3 at least five (5) Business
Days prior to the date of such prepayment. Such notice shall be given in the
manner specified in Section 11.2 of the Purchase Agreement.
4. Optional Prepayment/Redemption.
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(a) Upon notice given to the Holder as provided in Section 4(b),
Borrower, at its option, may prepay all or any portion of the principal amount
of this Note at any time, by paying to the Holder an amount equal to the
redemption prices (the "Optional Redemption Prices") set forth below (expressed
as a percentage of the outstanding principal amount being prepaid, from time to
time) together with Interest accrued and unpaid thereon to the date fixed for
such prepayment, and reasonable out-of-pocket costs and expenses (including,
without limitation, reasonable fees, charges and disbursements of counsel), if
any, associated with such prepayment; provided, however, each prepayment of less
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than the full outstanding balance of the principal amount of this Note shall be
in an aggregate principal amount of this Note of not less than $2,500,000 or
integral multiples of $500,000 in excess thereof, and provided, further, that
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unless this Note and all Notes shall be paid in full, the aggregate principal
balance of the Notes outstanding at any time shall be at least $7,500,000. If
such prepayment is to be made by Borrower to the Holder during the consecutive
12-month period immediately preceding March 30, of the calendar year set forth
below, the Optional Redemption Price shall be determined based upon the
percentage of the outstanding principal amount of this Note and which
corresponds to period in question:
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Period Optional Redemption Price
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2002 108%
2003 107%
2004 106%
2005 and thereafter 105%
(b) Borrower shall give written notice of prepayment of this
Note, or any portion thereof, pursuant to this Section 4 not less than 10 nor
more than 60 days prior to the date fixed for such prepayment. Such notice of
prepayment pursuant to this Section 4 shall be given in the manner specified in
Section 11.2 of the Purchase Agreement. Upon notice of prepayment pursuant to
this Section 4 being given by Borrower, Borrower covenants and agrees that it
will prepay, on the date therein fixed for prepayment, this Note or the portion
hereof so called for prepayment, at the applicable Optional Redemption Price set
forth above with respect to the outstanding principal amount of this Note or the
portion thereof so called for prepayment, together with Interest accrued and
unpaid thereon to the date fixed for such prepayment and the costs and expenses
referred to in Section 4(a).
(c) All optional prepayments under this Section 4 shall include
payment of accrued Interest on the principal amount of this Note so prepaid and
shall be applied first to all costs, expenses and indemnities payable under the
Purchase Agreement, then to payment of default interest, if any, then to payment
of Interest, and thereafter to principal.
5. Amendment. Amendments and modifications of this Note may be made
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only in the manner provided in Section 11.4 of the Purchase Agreement.
6. Defaults and Remedies.
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(a) Events of Default. An "Event of Default" shall occur if:
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(i) Borrower shall default in the payment of the principal
of this Note, when and as the same shall become due and payable, whether at
maturity or at a date fixed for prepayment or by acceleration or otherwise; or
(ii) Borrower shall default in the payment of any
installment of Interest according to its terms, when and as the same shall
become due and payable and such default shall continue for a period of 5
Business Days; provided, however, that any failure by Borrower to pay any
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installment of Interest due solely to the failure of the Collateral Agent (as
defined in the Cash Collateral Pledge Agreement) to timely perform its duties
under the Cash Collateral Pledge Agreement shall not result in a default under
this Section 6(a)(ii);or
(iii) Borrower shall default in the due observance or
performance of any covenant to be observed or performed pursuant to Sections
8.1, 8.2(a), 8.3, 8.8, 8.10, 8.11 or Sections 9.1, 9.2, 9.4, 9.5, 9.6, 9.7, 9.8,
or 9.8A, as the case may be, 9.11, 9.12
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or 9.13 of the Purchase Agreement and any such default shall continue for a
period of 10 Business Days; or
(iv) Borrower, Parent or any of their Subsidiaries shall
default in the due observance or performance of any other covenant, condition or
agreement on the part of Borrower, Parent or any of their Subsidiaries to be
observed or performed pursuant to the terms hereof or pursuant to the terms of
the Purchase Agreement, the Cash Collateral Pledge Agreement or the Guaranties
(other than those referred to in clauses (i), (ii) or (iii) of this Section
6(a)), and such default shall continue for 30 days after the earliest of (A) the
date Borrower is required pursuant to the Transaction Documents or otherwise to
give notice thereof to any Holder (whether or not such notice is actually given)
or (B) the date of written notice thereof, specifying such default and, if such
default is capable of being remedied, requesting that the same be remedied,
shall have been given to Borrower by any Holder; or
(v) any representation, warranty or certification made by or
on behalf of Borrower, Parent or any of their Subsidiaries in the Purchase
Agreement, this Note, the Cash Collateral Pledge Agreement or the Guaranties or
in any certificate or other document delivered pursuant hereto or thereto shall
have been incorrect when made; or
(vi) any event or condition shall occur that results in the
acceleration of the maturity of any Indebtedness of Borrower, Parent or any of
their Subsidiaries in a principal amount aggregating $2,000,000 or more; or
(vii) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent jurisdiction seeking
(a) relief in respect of Borrower, Parent or any of their Subsidiaries, or of a
substantial part of their property or assets, under Title 11 of the United
States Code, as now constituted or hereafter amended, or any other Federal or
state bankruptcy, insolvency, receivership or similar law, (b) the appointment
of a receiver, trustee, custodian, sequestrator, conservator or similar official
for Borrower, Parent or any of their Subsidiaries, or for a substantial part of
their property or assets, or (c) the winding up or liquidation of Borrower,
Parent or any of their Subsidiaries; and such proceeding or petition shall
continue undismissed for 60 days, or an order or decree approving or ordering
any of the foregoing shall be entered; or
(viii) Borrower, Parent or any of their Subsidiaries shall
(a) voluntarily commence any proceeding or file any petition seeking relief
under Title 11 of the United States Code, as now constituted or hereafter
amended, or any other Federal or state bankruptcy, insolvency, receivership or
similar law, (b) consent to the institution of, or fail to contest in a timely
and appropriate manner, any proceeding or the filing of any petition described
in paragraph (viii) of this Section 6(a), (c) apply for or consent to the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for Borrower, Parent or any of their Subsidiaries, or for a
substantial part of their property or assets, (d) file an answer admitting the
material allegations of a petition filed against it in any such proceeding, (e)
make a general assignment for the benefit of creditors, (f) become unable, admit
in writing its inability or fail
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generally to pay its debts as they become due or (g) take any action for the
purpose of effecting any of the foregoing; or
(ix) Borrower shall default in the due observance or
performance of any covenant to be observed or performed pursuant to Section 8.13
of the Purchase Agreement; or
(x) one or more judgments for the payment of money in an
aggregate amount in excess of $1,000,000 (to the extent not covered by insurance
or by a third party indemnification from a Person with credit worthiness
acceptable to the Holders, in their reasonable judgment) shall be rendered
against Borrower, Parent or any of their Subsidiaries and the same shall remain
undischarged for a period of 30 days during which execution shall not be
effectively stayed, or any action shall be legally taken by a judgment creditor
to levy upon assets or properties of Borrower, Parent or any of their
Subsidiaries to enforce any such judgment.
(b) Acceleration. If an Event of Default occurs under Section
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6(a)(vii) or (viii) with respect to Parent or Borrower, then the outstanding
principal of and all accrued Interest on this Note shall automatically become
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which are hereby expressly waived. If any other Event of
Default occurs and is continuing, subject to the subordination provisions set
forth in Section 7 below, the Holder, by written notice to Borrower, may declare
the principal of and accrued Interest on this Note to be immediately due and
payable. Upon such declaration, such principal and Interest shall become
immediately due and payable. The Holder may rescind an acceleration and its
consequences if all existing Events of Default have been cured or waived, except
nonpayment of principal or Interest that has become due solely because of the
acceleration, and if the rescission would not conflict with any judgment or
decree. Any notice or rescission shall be given in the manner specified in
Section 11.2 of the Purchase Agreement.
7. Subordination. Subject to the limitations set forth in Section
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7(p) below, this Note and the other Subordinated Indebtedness shall at all times
be wholly subordinate and junior in right of payment to all Senior Indebtedness
to the extent and in the manner provided in this Section 7.
(a) Definitions. As used in this Section 7, the following terms
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shall have the following meanings:
"Indebtedness" shall have the meaning assigned to that term in the
Purchase Agreement.
"Senior Covenant Default" shall mean any event of default as defined
under any agreement pertaining to Senior Indebtedness, other than a Senior
Payment Default.
"Senior Indebtedness" shall mean the principal of, premium, if any,
and interest on (including any interest accruing subsequent to the filing
of a petition of bankruptcy at the rate provided for in the documentation
with respect thereto, whether or not such
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interest is an allowed claim under applicable law) and any other monetary
obligations with respect to any Indebtedness for borrowed money of either
of Parent or Borrower and/or any of their respective Subsidiaries, whether
outstanding on the date hereof or hereafter created, incurred or assumed,
in each case, from any bank or institution have total assets (together with
its affiliates) in excess of $250,000,000, unless, in the case of any
particular Indebtedness, the instrument creating or evidencing the same or
pursuant to which the same is outstanding expressly provides that such
Indebtedness shall not be senior in right of payment to the Notes. Without
limiting the generality of the foregoing, "Senior Indebtedness" shall also
include the principal of, premium, if any, interest (including any interest
accruing subsequent to the filing of a petition of bankruptcy at the rate
provided for in the documentation with respect thereto, whether or not such
interest is an allowed claim under applicable law) on, and all other
amounts owing in respect of, (i) all monetary obligations (including
guarantees thereof) of every nature of Parent and Borrower and each of
their respective Subsidiaries under the Senior Credit Facility, including,
without limitation, obligations to pay principal and interest,
reimbursement obligations under letters of credit, fees, expenses and
indemnities, and (ii) all interest rate and currency swaps, caps, collars
and similar agreements or hedging devices under which payments are
obligated to be made by Parent, Borrower or any of their respective
Subsidiaries; provided, however, in no event shall the aggregate principal
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amount of Senior Indebtedness exceed the amount allowable under Section 9.4
of the Purchase Agreement. At any time on or prior to the termination of
the Senior Credit Facility, "Senior Indebtedness" shall be limited to the
Indebtedness and other obligations referenced in the immediately preceding
sentence unless the Agent or the Required Banks, as such terms are defined
in the Senior Credit Facility, otherwise consent in writing.
"Senior Default" shall mean a Senior Payment Default or a Senior
Covenant Default.
"Senior Payment Default" shall mean any default in the payment of any
Senior Indebtedness.
"Subordinated Indebtedness" shall mean (i) the principal of and
Interest and premium on this Note; (ii) any other obligations of Borrower
arising out of or in connection with the Purchase Agreement, this Note or
the other Transaction Documents (other than the Cash Collateral Pledge
Agreement) and (iii) any obligations of Parent or any of its Subsidiaries
arising out of or in connection with the Guaranties or the other
Transaction Documents (other than the Cash Collateral Pledge Agreement).
(b) General. Upon the maturity of any Senior Indebtedness by
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lapse of time, acceleration, required prepayment or otherwise, all Senior
Indebtedness shall first be paid in full in cash, or such payment duly provided
for in cash or in a manner satisfactory to the holders of such Senior
Indebtedness, before any payment is made on account of the Subordinated
Indebtedness or by Borrower, Parent of any of their respective Subsidiaries or
Affiliates to acquire this Note. Notwithstanding any provision in Section 7 of
this Note to the contrary, (i) for
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so long as no Senior Default has occurred and is continuing, or would occur as a
result of such a payment, the Borrower, Parent or any of its Subsidiaries may
pay and the Holder may receive (A) all regularly scheduled payments of interest
under this Note, and (B) all amounts due to the Holder or its Affiliates
pursuant to either Section 2.6 or Section 7.1 of the Purchase Agreement (or any
Management Services Agreements referred to in such Sections), (ii) for so long
as no Senior Default has occurred and is continuing or would occur as a result
of any such prepayment, Borrower may prepay this Note in accordance with the
provisions of Section 3 hereof, and the Holder may receive such prepayments,
(iii) for so long as no Senior Default has occurred and is continuing, or would
occur as a result of such a payment, the Borrower may prepay this Note in
accordance with the provisions of Section 4 hereof and the Holder may receive
such prepayments, (iv) the Collateral Agent under the Cash Collateral Pledge
Agreement may pay, and the Holder may receive, any and all payments contemplated
under the Cash Collateral Pledge Agreement, in each case, pursuant to the terms
thereof; and (v) the Holder may receive any distributions provided for in
Section 7(e)(ii) hereof.
(c) Limitation on Payment.
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(i) Upon receipt by Borrower and the Holder of a Blockage
Notice (as defined below), then unless and until (1) all Senior Defaults that
gave rise to the Blockage Notice shall have been remedied or effectively waived
or shall have ceased to exist, or (2) the Senior Indebtedness in respect of
which such Senior Defaults shall have occurred shall have been paid in full, no
direct or indirect payment (in cash, property, securities or by set-off or
otherwise) of or on account of the principal of or Interest on this Note or as a
sinking fund for this Note or in respect of any redemption, retirement, purchase
or other acquisition of this Note shall be made during any period prior to the
expiration of the Blockage Period (as defined below). Notwithstanding the
foregoing, all interest paid with respect to this Note prior to the receipt of
the Blockage Notice in question by the Holder hereof may be kept by such Holder.
(ii) For purposes of this Section 7, a "Blockage Notice" is
a notice of a Senior Default that in fact has occurred and is continuing, given
to Borrower and the Holder by the holders of a majority in principal amount of
the Senior Indebtedness then outstanding (or their authorized agent).
(iii) For purposes of this Section 7, a "Blockage Period"
with respect to a Blockage Notice is the period commencing upon Borrower's
receipt of such Blockage Notice and having a duration as follows:
(1) until no Senior Payment Default exists if the Senior
Default to which the Blockage Notice refers is a Senior Payment
Default; or
(2) 180 days if the Senior Default to which the Blockage
Notice refers is a Senior Covenant Default.
Notwithstanding any provision contained herein to the contrary: (A) the Borrower
shall not be prohibited from making, and the Holder shall not be prohibited from
receiving, payments under
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this Note pursuant to Section 7(c)(iii)(2) hereof for more than an aggregate of
180 days within any 360 day period, (B) there shall not be more than two
Blockage Notices given in any 360 day period; (C) no Senior Covenant Default
existing on the date any Blockage Notice is given to the Holder shall be used as
a basis for any subsequent such notice, unless such Senior Covenant Default
shall have ceased to exist for a period of at least 90 consecutive days; and (D)
once all Senior Defaults which gave rise to the Blockage Notice in question
shall have been remedied or effectively waived or shall have ceased to exist, or
the Senior Indebtedness in respect of which such Senior Defaults shall have
occurred shall have been paid in full, thereafter (unless another Blockage
Period shall then be in effect) all amounts which would have been payable
hereunder but for the existence of the Blockage Period effected by the Blockage
Notice delivered with respect to the Senior Default in question shall be payable
in their entirety.
(d) Limitation on Remedies. As long as any Senior Indebtedness
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remains outstanding, upon the occurrence of an Event of Default under this Note,
the Holder shall not, unless the holders of any Senior Indebtedness shall have
caused such Senior Indebtedness to become due prior to its stated maturity or
any Event of Default pursuant to Section 6(a)(vii) or (viii) of this Note shall
have commenced, declare or join in any declaration of this Note to be due and
payable by reason of such Event of Default or otherwise take any action against
Borrower, Parent or any of their respective Subsidiaries (including, without
limitation, commencing any legal action against Borrower, Parent or any of their
respective Subsidiaries or filing or joining in the filing of any insolvency
petition against Borrower, Parent or any of their respective Subsidiaries) prior
to the expiration of 30 days after the written notice of intention to accelerate
on account of the occurrence of such Event of Default (a "Remedy Notice") shall
have been given by the Holder to Borrower and the holders of the Senior
Indebtedness (a "Remedy Standstill Period"), provided, that such Remedy
Standstill Period shall be extended to 120 days from the date of such Remedy
Notice if, at the time the Remedy Standstill Period would otherwise expire,
there exists any Senior Default.
Notwithstanding the foregoing, the Remedy Standstill Period shall (i)
be inapplicable or cease to be effective if the holders of any Senior
Indebtedness shall have caused such Senior Indebtedness to become due prior to
its stated maturity or an Event of Default pursuant to Section 6(a)(vii) or
(viii) shall have occurred, and (ii) not apply to prohibit or restrict the
Holder in any manner from taking any action (relating solely to the Holder's
rights under the Cash Collateral Pledge Agreement) to enforce its rights under
the Cash Collateral Pledge Agreement. In addition, any Remedy Standstill Period
shall cease to be effective if at any time during such period: (i) substantial
assets of Borrower, Parent or any of their Subsidiaries are sold or otherwise
disposed of other than to a Person which is either wholly owned by Parent or
Borrower, or a wholly owned Subsidiary thereof, outside of the ordinary course
of business for less than fair value or (ii) payment or any distribution of any
character, whether in cash, securities or other property of Borrower, Parent or
any of their Subsidiaries shall be made to or received by any creditor outside
the ordinary course of business on any Indebtedness which is on the same level
of priority with or junior and subordinate in right of payment to this Note.
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Upon the expiration or termination of any Remedy Standstill Period,
the Holder shall be entitled to exercise any of its rights with respect to this
Note (subject to the obligations to turn amounts received over to the holders of
Senior Indebtedness as provided in Section 7(f) below) other than any right to
accelerate the maturity date of this Note based upon the occurrence of any Event
of Default in respect thereto which has been cured or otherwise remedied during
the Remedy Standstill Period.
(e) Subordination Upon Certain Events. Upon the occurrence of any
---------------------------------
Event of Default with respect to Borrower, Parent or any of their respective
Subsidiaries under Sections 6(a)(vii) or (viii) of this Note:
(i) Upon any payment or distribution of assets of Borrower,
Parent or any of their respective Subsidiaries to creditors of Borrower, Parent
or any of their respective Subsidiaries, holders of Senior Indebtedness shall be
entitled to receive indefeasible payment in full in cash of all obligations with
respect to the Senior Indebtedness before the Holder shall be entitled to
receive any payment in respect of the Subordinated Indebtedness.
(ii) Until all Senior Indebtedness is paid in full in cash,
any distribution to which the Holder would be entitled but for this Section 7
shall be made to the holders of Senior Indebtedness, as their interests may
appear, except that the Holder may, pursuant to a plan of reorganization under
Chapter 11 of the Bankruptcy Code of 1978, as amended, or any similar provision
of any successor legislation thereto, receive securities that are unsecured,
have a maturity date which is not earlier than the maturity date of this Note,
do not contain any mandatory repayment provisions which are more favorable to
the Holder than those currently contained in this Note and are subordinate to
the Senior Indebtedness to at least the same extent as this Note, if pursuant to
such plan the distributions to the holders of the Senior Indebtedness in the
form of cash, securities or other property, by set-off or otherwise, provide for
payment of the full amount of the allowed claim of the holders of the Senior
Indebtedness.
(iii) For purposes of this Section 7, a distribution may
consist of cash, securities or other property, by set-off or otherwise.
(f) Payments and Distributions Received. If the Holder shall have
-----------------------------------
received any payment from or distribution of assets of Borrower, Parent or any
of their respective Subsidiaries in respect of the Subordinated Indebtedness in
contravention of the terms of this Section 7 before all Senior Indebtedness is
paid in full in cash, then and in such event such payment or distribution shall
be received and held in trust for and shall be promptly paid over or delivered
to the holders of Senior Indebtedness to the extent necessary to pay all such
Senior Indebtedness in full in cash.
(g) Proofs of Claim. If, while any Senior Indebtedness is
----------------
outstanding, any Event of Default under Section 6(a)(vii) or (viii) of this Note
occurs with respect to Borrower, Parent or any of their respective Subsidiaries,
the Holder shall duly and promptly take such action as any holder of Senior
Indebtedness may reasonably request to collect any payment with respect to this
Note for the account of the holders of the Senior Indebtedness and to file
12
appropriate claims or proofs of claim in respect of this Note. Upon the failure
of the Holder to take any such action, each holder of Senior Indebtedness is
hereby irrevocably authorized and empowered (in its own name or otherwise), but
shall have no obligation, to demand, sue for, collect and receive every payment
or distribution referred to in respect of this Note and to file claims and
proofs of claim and take such other action as it may deem necessary or advisable
for the exercise or enforcement of any of the rights or interests of the Holder
with respect to this Note.
(h) Subrogation. After all amounts payable under or in respect of
-----------
Senior Indebtedness are paid in full, the Holder shall be subrogated to the
rights of holders of Senior Indebtedness to receive payments or distributions
applicable to Senior Indebtedness to the extent that distributions otherwise
payable to the Holder have been applied to the payment of Senior Indebtedness. A
distribution made under this Section 7 to a holder of Senior Indebtedness which
otherwise would have been made to the Holder is not, as between Borrower, Parent
and any of their respective Subsidiaries, on the one hand, and the Holder, on
the other hand, a payment by Borrower, Parent or any of their respective
Subsidiaries on Senior Indebtedness.
(i) Relative Rights. This Section defines the relative rights of
---------------
the Holder and the holders of Senior Indebtedness. Nothing in this Section
shall: (1) impair, as between Borrower, Parent or any of their respective
Subsidiaries on the one hand, and the Holder on the other hand, the obligations
of Borrower, Parent or any of their respective Subsidiaries, which are absolute
and unconditional, to pay principal of and interest (including default interest)
on this Note in accordance with its terms; (2) affect the relative rights of the
Holder and creditors of Borrower, Parent or any of their respective Subsidiaries
other than holders of Senior Indebtedness or (3) prevent the Holder from
exercising its available remedies upon a default or Event of Default, subject to
the rights, if any, under this Section 7 of holders of Senior Indebtedness.
(j) Subordination May Not Be Impaired by Borrower, Parent or any
-------------------------------------------------------------
of its Subsidiaries. No right of any holder of any Senior Indebtedness to
- -------------------
enforce the subordination of the Indebtedness evidenced by this Note shall be
impaired by any failure to act by Borrower, Parent or any of their respective
Subsidiaries or such holder of Senior Indebtedness or by the failure of
Borrower, Parent or any of their respective Subsidiaries or such holder to
comply with this Note. The provisions of this Section 7 shall continue to be
effective or be reinstated, as the case may be, if at any time any payment of
any of the Senior Indebtedness is rescinded or must otherwise be returned by any
holder of Senior Indebtedness as a result of the insolvency, bankruptcy or
reorganization of Borrower, Parent or any of its Subsidiaries or otherwise, all
as though such payment had not been made.
(k) Payments. A payment with respect to principal of or interest
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on the Subordinated Indebtedness shall include, without limitation, payment of
principal of, and Interest on this Note, any depositing of funds for the
defeasance of the Subordinated Indebtedness, any sinking fund and any payment on
account of mandatory prepayment or optional prepayment provisions.
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(l) Section Not to Prevent Events of Default. The failure to make
----------------------------------------
a payment on account of principal of or interest on or other amounts
constituting Subordinated Indebtedness by reason of any provision of this
Section 7 shall not be construed as preventing the occurrence of an Event of
Default under Section 6 (it being understood and agreed that the Holders' right
to take action as a result of the existence of any such Event of Default may be
suspended or otherwise affected as a result of the provisions of this Section
7).
(m) Subordination Not Impaired: Benefit of Subordination. The
----------------------------------------------------
Holder agrees and consents that without notice to or assent by such Holder, and
without affecting the liabilities and obligations of Borrower, Parent or any of
their respective Subsidiaries and the rights and benefits of the holders of the
Senior Indebtedness set forth in this Section 7:
(i) The obligations and liabilities of Borrower, Parent and
any of their respective Subsidiaries and any other party or parties for or upon
the Senior Indebtedness may, from time to time, be increased, renewed,
refinanced, extended, modified, amended, restated, compromised, supplemented,
terminated, waived or released, except as prohibited by Section 9.4 of the
Purchase Agreement;
(ii) The holders of Senior Indebtedness, and any
representative or representatives acting on behalf thereof, may exercise or
refrain from exercising any right, remedy or power granted by or in connection
with any agreements relating to the Senior Indebtedness; and
(iii) Any balance or balances of funds with any holder of
Senior Indebtedness at any time outstanding to the credit of Borrower, Parent or
any of their respective Subsidiaries may, from time to time, in whole or in
part, be surrendered or released;
all as the holders of the Senior Indebtedness, and any representative or
representatives acting on behalf thereof, may deem advisable, and all without
impairing, abridging, diminishing, releasing or affecting the subordination of
the Subordinated Indebtedness to the Senior Indebtedness provided for herein.
(n) Modification of Section 7. The provisions of this Section 7
-------------------------
are for the benefit of the holders from time to time of Senior Indebtedness and,
so long as any Senior Indebtedness remains unpaid, may not be modified,
rescinded or canceled in whole or in part without the prior written consent
thereto of all holders of Senior Indebtedness.
(o) Covenants of Holder. Until all of the Senior Indebtedness has
-------------------
been fully paid in cash:
(i) The Holder shall not hereafter give any subordination in
respect of this Note.
14
(ii) Upon the occurrence and during the continuance of a
Senior Default, the Holder shall not release, exchange, extend the time of
payment of, compromise, set off or otherwise discharge any part of this Note or
modify or amend this Note; provided, however, that at such time or times as the
-------- -------
actions referred to in this Section 7(o)(ii) may be taken by the Holder, such
Holder shall give the holders of Senior Indebtedness five Business Days prior
written notice before taking any of such actions.
(iii) The Holder hereby undertakes and agrees for the
benefit of the holders of Senior Indebtedness that, upon the occurrence and
during the continuance of a Senior Default, it shall take any actions reasonably
requested by any holder of Senior Indebtedness to effectuate the full benefit of
the subordination contained herein.
(p) Covenant of Borrower; Limitation on Indebtedness. Until all
-------------------------------------------------
Subordinated Indebtedness shall have been paid in full, Borrower shall not, and
shall not cause, suffer or permit Parent or any of its Subsidiaries to, directly
or indirectly, collectively and in the aggregate, issue, assume or otherwise
incur Senior Indebtedness or other Indebtedness except as permitted under
Section 9.4 of the Purchase Agreement, as it now exists or may be amended or
modified.
(q) Miscellaneous.
-------------
(i) To the extent permitted by applicable law, the Holder,
Borrower, Parent and each Subsidiary of Borrower and Parent hereby waive (1)
notice of acceptance hereof by the holders of the Senior Indebtedness, and (2)
all diligence in the collection or protection of or realization upon the Senior
Indebtedness.
(ii) Borrower, Parent, each of their respective Subsidiaries
and the Holder hereby expressly agree that the holders of Senior Indebtedness
may enforce any and all rights derived herein by suit, either in equity or law,
for specific performance of any agreement contained in this Section 7 or for
judgment at law and any other relief whatsoever appropriate to such action or
procedure.
(iii) The Holder acknowledges and agrees that the foregoing
subordination provisions are, and are intended to be, an inducement and a
consideration to each holder of Senior Indebtedness, whether such Senior
Indebtedness was created or acquired before or after the issuance of this
Agreement, and each holder of Senior Indebtedness shall be deemed conclusively
to have relied upon such subordination provisions in acquiring and continuing to
hold such Senior Indebtedness.
8. Use of Proceeds. Borrower shall use the principal amount of this
---------------
Note in accordance with the permitted uses described in Section 8.10 of the
Purchase Agreement.
9. Suits for Enforcement.
---------------------
15
(a) Subject to Section 7, upon the occurrence of any one or more
Events of Default, the Holder of this Note may proceed to protect and enforce
its rights hereunder by suit in equity, action at law or by other appropriate
proceeding, whether for the specific performance of any covenant or agreement
contained in the Purchase Agreement or this Note or in aid of the exercise of
any power granted in the Purchase Agreement or this Note, or may proceed to
enforce the payment of this Note, or to enforce any other legal or equitable
right of the Holders of this Note.
(b) In case of any default under this Note, Borrower will pay to
the Holder such amounts as shall be sufficient to cover the reasonable costs and
expenses of such Holder due to such default, as provided in Article 7 of the
Purchase Agreement.
10. Remedies Cumulative. No remedy herein conferred upon the Holder
-------------------
is intended to be exclusive of any other remedy and each and every such remedy
shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by statute or
otherwise.
11. Remedies Not Waived. No course of dealing between Borrower and
-------------------
the Holder or any delay on the part of the Holder in exercising any rights
hereunder shall operate as a waiver of any right.
12. Transfer.
--------
(a) The term "Holder" as used herein shall also include any
transferee of this Note whose name has been recorded by Borrower in the Note
Register. Each transferee of this Note acknowledges that this Note has not been
registered under the Securities Act, and may be transferred only pursuant to an
effective registration under the Securities Act or pursuant to an applicable
exemption from the registration requirements of the Securities Act.
(b) Borrower shall maintain a register (the "Note Register") in
its principal offices for the purpose of registering the Note and any transfer
or partial transfer thereof, which register shall reflect and identify, at all
times, the ownership of record of any interest in the Note. Upon the issuance of
this Note, Borrower shall record the name and address of the initial purchaser
of this Note in the Note Register as the first Holder. Upon surrender for
registration of transfer or exchange of this Note at the principal offices of
Borrower, Borrower shall, at its expense, execute and deliver one or more new
Notes of like tenor and of denominations of at least $500,000 (except as may be
necessary to reflect any principal amount not evenly divisible by $500,000) of a
like aggregate principal amount, registered in the name of the Holder or a
transferee or transferees. Every Note surrendered for registration of transfer
or exchange shall be duly endorsed, or be accompanied by written instrument of
transfer duly executed by the Holder of such Note or such holder's attorney duly
authorized in writing.
(c) This Note may be transferred or assigned, in whole or in
part, by the Holder at any time.
16
13. Replacement of Note. On receipt by Borrower of an affidavit of an
-------------------
authorized representative of the Holder stating the circumstances of the loss,
theft, destruction or mutilation of this Note (and in the case of any such
mutilation, on surrender and cancellation of such Note), Borrower, at its
expense, will promptly execute and deliver, in lieu thereof, a new Note of like
tenor. If required by Borrower, such Holder must provide indemnity sufficient in
the reasonable judgment of Borrower to protect Borrower from any loss which they
may suffer if a lost, stolen or destroyed Note is replaced.
14. Covenants Bind Successors and Assigns. All the covenants,
-------------------------------------
stipulations, promises and agreements in this Note contained by or on behalf of
Borrower shall bind its successors and assigns, whether so expressed or not.
15. Notices. All notices, demands and other communications provided
-------
for or permitted hereunder shall be made in writing and shall be by registered
or certified first-class mail, return receipt requested, telecopier (with
receipt confirmed), courier service or personal delivery at the addresses
specified in Section 11.2 of the Purchase Agreement. All such notices and
communications shall be deemed to have been duly given when: delivered by hand,
if personally delivered; when delivered by courier, if delivered by commercial
overnight courier service; if mailed, five Business Days after being deposited
in the mail, postage prepaid; or if telecopied, when receipt is electronically
confirmed.
16. GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
-------------
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (INCLUDING GIVING EFFECT TO
GOL SECTION 5-1401).
17. Severability. If any one or more of the provisions contained
------------
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, unless the provisions held
invalid, illegal or unenforceable shall substantially impair the benefits of the
remaining provisions hereof.
17
18. Headings. The headings in this Note are for convenience of
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reference only and shall not limit or otherwise affect the meaning hereof.
MEDSOURCE TECHNOLOGIES, LLC
By: /s/ Richard J. Effress
----------------------------------
Name: Richard J. Effress
Title: Chairman
[SIGNATURE PAGE TO AMENDED AND RESTATED 12.5%
SENIOR SUBORDINATED PROMISSORY NOTE]