Attached files
Exhibit 4.2
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
SECURITIES ACT), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED WITHOUT (I)
REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS OR (II) AN OPINION OF
COUNSEL, SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED.
PAYMENTS UNDER THIS NOTE ARE SUBJECT TO THE SET-OFF AND SUBORDINATION PROVISIONS SET FORTH HEREIN.
NEW CENTURY TRANSPORTATION, INC.
14% AMENDED AND RESTATED CONVERTIBLE SUBORDINATED NOTE
$[ ] | June 29, 2007 |
New Century Transportation, Inc., a New Jersey corporation (the Company), for value
received, hereby promises to pay to [ ] (Holder), the principal sum of [ ]
($[ ]) (the Principal Amount) on the Maturity Date (as defined herein), and to
pay interest on the unpaid balance of the principal amount of this Note at the rate of seven
percent (7%) per annum for the period from the date hereof through March 28, 2008 and at fourteen
percent per annum (14%) thereafter, with interest to be payable in the manner and at times provided
herein.
This Note amends and restates and replaces the 7% Convertible Subordinated Note dated June 29,
2007 (the Prior Note) which shall be terminated upon execution and delivery of this Note, and is
one of the Seller Notes issued pursuant to the Stock Purchase Agreement, dated as of June 13, 2007
(the Acquisition Agreement) by and among the Company, P&P Transport, Inc. and Evergreen Equipment
Leasing Co., Inc. (each, a Target and collectively, the Targets) and the Sellers of the
Targets. Pursuant to Treasury Regulation 1.1001-3, this Note is considered a newly issued note on
March 28, 2008.
1. Interest. Subject to the provisions of Section 5, accrued but unpaid interest on
this Note will be payable in cash on March 28, 2008 and thereafter will accrue and be added to the
principal amount hereof on the last day of each calendar quarter commencing June 30, 2008 and on
the Maturity Date (each date of payment being an Interest Payment Date). Interest on this Note
will accrue from the most recent date to which interest has been paid or accrued. Interest will be
computed on the basis of a 365/6-day year for the actual days elapsed. If an Interest Payment Date
is a Saturday, a Sunday or a legal holiday at a place of payment, payment may be made at that place
on the next succeeding business day that is not a Saturday, Sunday or a legal holiday, and no
interest on the amount payable shall accrue for the intervening period.
2. Prepayment. Subject to the provisions of Section 5, this Note may be prepaid at
any time in whole or in part without premium or penalty.
3. Maturity Date. The principal of this Note, together with accrued but unpaid
interest thereon, shall be immediately due and payable and shall be repaid on February 28, 2013
(the Maturity Date);
4. Method of Payment.
Except as provided herein, the Company will pay principal and interest in currency of the
United States that at the time of payment is legal tender for payment of public and private debts.
Payments shall be made to Holder by wire transfer of immediately available funds to an account
designated in writing by Holder and provided to the Company at least ten (10) business days before
any Payment Date.
5. Subordination.
(a) Certain Defined Terms. The following terms shall have the following meanings:
Indebtedness means, without duplication, with respect to any person, (1) all indebtedness of
such person for borrowed money, (2) all obligations evidenced by notes, bonds, debentures or other
similar instruments, (3) all indebtedness created or arising under any conditional sale or other
title retention agreement with respect to property acquired by such person, (4) all obligations of
such person as lessee under capital leases, (5) all obligations of such person under acceptance,
letter of credit or similar facilities and (6) all Indebtedness of the type referred to in clauses
(1) through (5) above guaranteed directly or indirectly in any manner by such person.
Notes means the Seller Notes issued by the Company pursuant to the Acquisition Agreement as
amended from time to time. This Note is pari passu with the other Notes.
Senior Debt shall mean the principal of and premium, if any, and interest (including,
without limitation, interest accruing or that would have accrued but for the filing of a
bankruptcy, reorganization or other insolvency proceeding whether or not such interest constitutes
an allowable claim in such proceeding) on, and any and all other fees, expenses, supplemental
payments, reimbursement obligations, indemnities, and other amounts owing pursuant to the terms of
all agreements, documents and instruments providing for, creating, securing, or evidencing or
otherwise entered into in connection with, all Indebtedness of the Company, whether outstanding on
the date hereof or hereafter created, incurred or assumed, including without limitation all debt
payable under the Credit Agreement, dated as of August 14, 2006, among the Company, the Lenders and
the other parties thereto (and any amendments, refinancings or replacements thereof or any debt
owing under any interest rate swap pursuant thereto) (the Credit Agreement). Notwithstanding the
foregoing, Senior Debt shall not include (i) any Indebtedness of the Company which, by its terms or
the terms of any instrument creating or evidencing it, (A) is expressly pari passu with or
expressly subordinate in right of payment to this Note or (B) expressly prohibits this Note or (ii)
the Notes.
2
Subordinated Debt shall mean all Indebtedness of the Company under the Notes, including (a)
all principal of, and interest on, the Notes and (b) all other indebtedness, fees, expenses,
obligations and liabilities of the Company to any holder of the Notes, whether now existing or
hereafter incurred or created, under or pursuant to the Notes or separately under any other
document, instrument or agreement executed in connection therewith which relates to the
Indebtedness evidenced by the Notes, in each case, whether such amounts are due or not due, direct
or indirect, absolute or contingent.
(b) Subordination to Senior Debt. The Company, for itself and its successors, and
the Holder, by acceptance of the Note, agree that the Subordinated Debt shall, to the extent and in
the manner hereinafter set forth, be subordinate and junior to the prior payment in full of all
Senior Debt.
This Section 5 will constitute a continuing offer to all persons who, in reliance upon its
provisions, become holders of, or continue to hold, Senior Debt, and such provisions are made for
the benefit of the holders of Senior Debt, and such holders are made obligees under this Section
and they and/or each of them may enforce its provisions.
(c) Company Not to Make Payments with Respect to Subordinated Debt.
(i) Upon the maturity of all or any part of the Senior Debt by lapse of time, acceleration or
otherwise, such Senior Debt shall first be paid in full in cash, or such payment shall be duly
provided for in cash or in a manner satisfactory to the holders of Senior Debt before any payment
by or on behalf of the Company is made on account of any Subordinated Debt.
(ii) Unless and until all Senior Debt shall have been paid in full in cash and all commitments
to make loans of Senior Debt to the Company shall have terminated, no payment shall be made by or
on behalf of the Company on or with respect to any Subordinated Debt, except (A) payment of regular
quarterly payments of interest on the Subordinated Debt when due which payment shall be made solely
by addition of accrued interest to the principal amount of this Note, and (B) payment of the
principal amount of the Subordinated Debt pursuant to Section 3 hereof so long as (x) at the time
such payment pursuant to (A) or (B) is made no event of default or default has occurred and is
continuing under the terms of any Senior Debt and (y) such payment pursuant to (A) or (B) will not
give rise to an event of default or default under the terms of any Senior Debt.
(iii) For so long as payment hereunder is prohibited pursuant to Section 5(c)(ii) above, the
Company shall not make and no holder of any Subordinated Debt shall demand, accept or receive (in
cash or property or by set-off, exercise of contractual or statutory rights or otherwise), or shall
attempt to collect or commence any legal proceedings to collect, any direct or indirect payment on
account of any Subordinated Debt. For the avoidance of doubt, full or partial conversion of the
Note shall not be deemed to be such a payment.
3
(iv) Unless and until all Senior Debt shall have been paid in full in cash and all commitments
to make loans of Senior Debt to the Company shall have terminated, no holder of any Subordinated
Debt will commence or maintain any action, suit or any other legal or equitable proceedings against
the Company, or join with any creditor in any such proceedings, under any insolvency, bankruptcy,
receivership, liquidation, reorganization or other similar law, unless the holders of Senior Debt
shall also join in bringing such proceedings, provided that this Section 5(c)(iv) shall not
prohibit a holder of any Subordinated Debt from filing a proof of claim or otherwise participating
in any such proceedings not commenced by it.
(d) Notes Subordinated to Prior Payment of all Senior Debt on Dissolution, Liquidation or
Reorganization of Company. In the event of any insolvency or bankruptcy proceedings, and any
receivership, liquidation, reorganization or other similar proceedings in connection therewith,
relative to the Company or to substantially all of its property, and in the event of any
proceedings for voluntary liquidation, dissolution or other winding up of the Company, whether or
not involving insolvency or bankruptcy, then:
(i) the holders of all Senior Debt shall first be entitled to receive payment in full in cash
of the principal thereon, premium, if any, interest and all other amounts payable thereon (accruing
before and after the commencement of the proceedings, whether or not allowed or allowable as a
claim in such proceedings) before the holders of any Subordinated Debt are entitled to receive any
payment on account of the principal of, or interest on any Subordinated Debt;
(ii) any payment or distribution of assets of the Company of any kind or character, whether in
cash, property or securities (other than shares of Common Stock issued to the Holder pursuant to
Paragraph 7 hereof) to which the holders of any Subordinated Debt would be entitled, but for the
provisions of this Note, shall be paid or distributed by the liquidating trustee or agent or other
person making such payment or distribution, whether a trustee in bankruptcy, a receiver or
liquidating trustee or other trustee or agent, directly to the holders of Senior Debt or any
representative on behalf of the holders of Senior Debt, to the extent necessary to make payment in
full in cash of Senior Debt remaining unpaid;
(iii) the holders of all Subordinated Debt at the time outstanding irrevocably authorize and
empower (without imposing any obligation on) each holder of Senior Debt at the time outstanding,
and any representative on behalf of the holders of Senior Debt to demand, sue for, collect and
receive such holders ratable share of all such payments and distributions in respect of all
Subordinated Debt and to give receipt therefor, and to file and prove all claims therefor and take
all such other action not inconsistent with the foregoing (including the right to vote such Senior
Debt holders ratable share of the Subordinated Debt) in the name of the holders of Subordinated
Debt or otherwise, as such holder of Senior Debt, or any representative on behalf of the holders of
Senior Debt may determine to be necessary or appropriate for the enforcement of this Note; and
(iv) the holders of Subordinated Debt shall execute and deliver to the holders of Senior Debt
all such further instruments confirming the above authorization, and at
4
the sole cost and expense of the Company shall take all such other action as may be requested
by any holder of Senior Debt, in order to enable such holder to enforce all claims upon or in
respect of each holders ratable share of the Subordinated Debt.
(e) Rights of Holders of Senior Debt; Subrogation.
(i) Should any payment or distribution or security or the proceeds of any thereof be collected
or received by any holder of Subordinated Debt in respect of any Subordinated Debt at a time when
such payment or distribution should not have been so made or received because of the provisions of
this Section 5, such holder of Subordinated Debt will forthwith deliver the same to the holders of
Senior Debt of which such holder of Subordinated Debt is aware for the equal and ratable benefit of
the holders of Senior Debt in precisely the form received (except for the non-recourse endorsement
or the non-recourse assignment of or by such holder where necessary) for application to payment of
all Senior Debt in full, after giving effect to any concurrent payment or distribution to the
holders of Senior Debt and, until so delivered, the same shall be held in trust by such holder as
the property of the holders of Senior Debt.
(ii) Upon the payment in full in cash of all Senior Debt, the holder of Subordinated Debt will
be subrogated to the rights of the holders of Senior Debt to receive payments or distributions of
assets of the Company applicable to the Senior Debt until all amounts owing on the Subordinated
Debt have been paid in full, and for the purpose of such subrogation no such payments or
distributions to the holders of Senior Debt by or on behalf of the Company or by or on behalf of
the holders of Subordinated Debt by virtue of this Section 5 which otherwise would have been made
to the holders of Subordinated Debt will, as between the Company and the holders of Subordinated
Debt to be deemed to be payment by the Company to or on account of the Senior Debt, it being
understood that the provisions of this Section 5 are and are intended to be solely for the purpose
of defining the relative rights of the holder Subordinated Debt on the one hand, and holders of
Senior Debt, on the other hand.
(f) Subordination Rights Not Impaired by Acts or Omissions of the Company or Holders of
Senior Debt. No right of any present or future holders of any Senior Debt to enforce
subordination as provided herein will at any time in any way be prejudiced or impaired by any act
or failure to act on the part of the Company or by any act or failure to act, in good faith, by any
such holder, or by any noncompliance by the Company with the terms of this Note regardless of any
knowledge thereof which any such holder may have or otherwise be charged with. The holders of
Senior Debt may extend, renew, increase, modify or amend the terms of the Senior Debt or any
security therefor and release, sell or exchange such security and otherwise deal freely with the
Company; provided, however, that no such extension, renewal, increase, modification or amendment
shall relieve the Company of its obligations to pay principal and interest as provided herein.
5
6. Events of Default.
(a) An Event of Default occurs if:
(i) the Company defaults in the payment of the principal of this Note when the same becomes
due and payable at maturity, upon acceleration, or otherwise, and such default continues for more
than ten (10) business days;
(ii) the Company shall generally not pay its debts as such debts become due, or shall admit in
writing its inability to pay its debts generally, or shall make a general assignment for the
benefit of creditors, or any proceeding shall be instituted by or against the Company seeking to
adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of
an order for relief or the appointment of a receiver, trustee, or other similar official for it or
for any substantial part of its property and in the case of any such proceeding instituted against
the Company such proceeding shall not be stayed or dismissed within sixty (60) days from the date
of institution thereof;
(iii) there is a payment default or event of default under the Credit Agreement and, as a
result thereof, the Lenders under the Credit Agreement accelerate the maturity of all debt payable
under the Credit Agreement before its stated maturity; and
(iv) the Company fails to observe or perform, in any material respect, any other provision of
this Note and such failure continues for a period of thirty (30) days after the Holder has
delivered written notice of such default to the Company.
(b) Acceleration. Subject to the provisions of Section 5, if an Event of Default
(other than an Event of Default specified in clause (a)(ii) of Section 6) occurs and is continuing,
the Holder, by written notice to the Company and the holders of Senior Debt of which such Holder is
aware or should reasonably be aware after due inquiry (an Acceleration Notice), may declare the
unpaid principal of and accrued interest on this Note to be immediately due and payable. Upon such
declaration, if there is at such time any Senior Debt outstanding, the principal and interest on
the Notes shall be due and payable only upon an acceleration under the applicable Senior Debt
instrument. If an Event of Default specified in clause (a)(ii) of Section 6 occurs, all principal
of and interest on the Notes outstanding shall ipso facto become and be immediately due and payable
without any declaration or other act on the part of the Holder. The Holder by written notice to
the Company may rescind an acceleration and its consequences if (i) all existing Events of Default,
other than the nonpayment of principal of or interest on this Notes which has become due solely
because of the acceleration, have been cured or waived and (ii) the rescission would not conflict
with any judgment or decree of a court of competent jurisdiction. Any amounts received by the
Holder in connection with any action taken pursuant to this Section 6(b) shall be subject to the
provisions of Section 5.
6
(c) Default Rate. Any payment of principal or interest under this Note which is not
paid on the date such payment is due, whether at stated maturity, by acceleration or otherwise,
shall begin to bear interest at a default rate of sixteen percent (16%) per annum on the business
day after such payment default until either the Holder is paid in full or such payment default has
been cured.
(d) Remedies Cumulative. A delay or omission by the Holder in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a
waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy.
All remedies are cumulative to the extent permitted by law.
7. Conversion
(a) Optional Conversion. In accordance with the procedures set forth below, the
Holder may convert all or any portion of the original Principal Amount of the Note (without
including any accrued interest added to such Principal Amount) into shares of common stock, par
value $.01 per share, of the Company (the Common Stock) at a conversion price of $927 (the
Conversion Price) for each share of Common Stock, subject to any applicable laws. If the Company
splits or subdivides the Common Stock, then the number of shares of Common Stock issuable upon
conversion of this Note immediately prior to such split or subdivision shall be proportionately
increased, and the Conversion Price shall be proportionately decreased. If the Company undertakes
a reverse stock split or similar stock combination with respect to the Common Stock, then the
number of shares of Common Stock issuable upon conversion of this Note immediately prior to such
reverse split or combination shall be proportionately decreased, and the Conversion Price shall be
proportionately increased.
(b) Covenants. The Company covenants and agrees that so long as this Note is
outstanding, (i) the Company shall have authorized and reserved a sufficient number of shares of
Common Stock to enable the Holder to convert all or a portion of this Note into Common Stock, and
(ii) the Company shall issue the shares of Common Stock upon conversion of this Note in accordance
with the terms hereof. The Company further covenants to cause the shares of Common Stock, when
issued pursuant to this Section 7, to be fully paid and nonassessable, and free from all taxes,
liens and charges with respect to the issuance thereof (other than any liens that may be imposed
pursuant to applicable securities laws).
(c) Procedure. The Holder shall provide written notice (which notice shall be
irrevocable) to the Company of its intent to exercise the conversion procedures set forth in this
Section 7, including without limitation the portion of the Note being converted. Upon surrender of
the Note to the Company by the Holder together with the provision of such notice (the Surrender
Date) and upon compliance by the Holder with Section 6.19 of the Acquisition Agreement, the
Company shall within two (2) Business Days thereafter issue and deliver the Common Stock to the
Holder (and, if the Holder is only converting a portion of the principal amount of the Note, a new
Note substantially in the form of this Note but with a reduction in the principal amount which
reflects the portion of the Note which has been converted) and pay any accrued and unpaid Interest
owed to the Holder up to and including the date on which such
7
conversion takes place (the Conversion Date) by adding such interest to the principal amount
of the Note which remains unconverted or if no such amount remains, such unpaid interest will be
the remaining principal amount. The Holder shall be deemed to have become the holder of record of,
and shall be treated for all purposes as the record holder of, the Common Stock issuable hereunder
(and such Common Stock shall be deemed to have been issued) the day following the Surrender Date.
(d) Notice of Certain Events. No later than five (5) business days prior to the
occurrence of (i) an initial public offering of any class of the Companys equity securities or
(ii) a merger or sale of (including a sale of all or substantially all of the assets of) the
Company, the Company shall provide the Holder with written notice of such occurrence.
8. Amendment and Waiver.
(a) Consent Required. Any term, covenant, agreement or condition of this Note may,
with the consent of the Company, be amended or compliance therewith may be waived (either generally
or in a particular instance and either retroactively or prospectively), if the Company shall have
obtained the consent in writing of the Holder. So long as there is Senior Debt outstanding, the
subordination provisions of this Note may not be amended without the consent in writing of the
holders of a majority in principal amount of the Senior Debt.
(b) Effect of Amendment or Waiver. Any amendment or waiver shall apply equally to
each future holder of the Note and upon the Company. No such amendment or waiver shall extend to
or affect any obligation not expressly amended or waived or impair any right consequent thereon.
9. Replacement Notes.
If a mutilated Note is surrendered to the Company or if the Holder of this Note presents
evidence to the reasonable satisfaction of the Company that this Note has been lost, destroyed or
wrongfully taken, the Company shall issue a replacement Note of like tenor if the requirements of
the Company for such transactions are met. An indemnity agreement may be required that is
sufficient in the reasonable judgment of the Company to protect the Company from any loss which it
may suffer. The Company may charge for its out-of-pocket expenses incurred in replacing this Note.
10. No Recourse Against Others.
No director, officer, employee or stockholder, as such, of the Company shall have any
liability for any obligations of the Company under this Note or for any claim based on, in respect
or by reason of, such obligations or their creation. The Holder by accepting this Note waives and
releases all such liability. This waiver and release are part of the consideration for the issue
of this Note.
8
11. Notices.
All notices, requests, consents and demands shall be made in writing and shall be given by
registered or certified mail postage prepaid to the following addresses: if to the Company, to New
Century Transportation, Inc., 45 East Park Drive, Westhampton, NJ 08060, Attn.: Harry J.
Muhlschlegel and Brian Fitzpatrick, with a required copy to Dechert LLP, Cira Centre, 2929 Arch
Street, Philadelphia, PA 19104, Attention: Carmen J. Romano, Esq. or to such other address as may
be furnished in writing to the Holder; and if to the Holder, to [ ] at [ ].
Unless otherwise indicated herein, notices hereunder shall be effective when delivered, if
delivered personally, or, if sent by mail, when sent.
12. Governing Law.
This Note shall be deemed a contract under, and shall be governed and construed in accordance
with, the laws of the State of New Jersey without giving effect to principles of conflicts of laws.
13. Set-off; Satisfaction of Claims.
The Company shall have the right but not the obligation to set off against its obligations
hereunder any claim it or its affiliates may have against the Holder under the Acquisition
Agreement or otherwise.
14. Successors, etc.; Entire Agreement; Assignment.
This Note shall be binding upon and shall inure to the benefit of the Holder and the Company
and their respective successors and permitted assigns. This Note constitutes the entire agreement
between the parties, superseding all prior understandings and writings, with respect to the
indebtedness represented hereby. Neither Holder nor the Company may assign or transfer this Note
without the prior written consent of the other; provided, however, that the Company may assign or
transfer this Note to any successor entity (whether by merger, acquisition, sale of all or
substantially all of its assets or otherwise) without Holders prior written consent.
15. Headings.
The section headings of this Note are for convenience only and shall not affect the meaning or
interpretation of this Note or any provision hereof.
16. Subordination Agreement.
Holder agrees at the Companys request to enter into a Subordination Agreement with each
holder of Senior Debt in the form as is customarily used by holders of Senior Debt, with such
changes therein as such holder of Senior Debt may reasonably request.
9
17. Restrictions on Dividends.
For so long as this Note is outstanding, unless the Holder otherwise agrees in writing, the
Company shall not declare or pay any dividend or cash distribution on or in respect of its capital
stock (other than for the payment of taxes); provided, however, that the Company shall be permitted
to repurchase shares of the Companys capital stock (i) from a former employee or consultant of the
Company (or any subsidiary) where such repurchase arises from the Companys option or obligation to
repurchase such shares upon termination of such employees or consultants employment and (ii)
following an offering of the Companys capital stock, where such repurchase is made from investors
in such offering with proceeds from other investors who exercise any preemptive rights they may
have with respect to such offering.
* * * * *
IN WITNESS WHEREOF, the Company has caused this Note to be executed by its duly authorized
officer.
Amended and Restated as of
March 28, 2008
March 28, 2008
NEW CENTURY TRANSPORTATION, INC. |
||||
By: | ||||
Name: | ||||
Title: | ||||
Agreed:
[ ]
10