AMENDED AND RESTATED SECURITIES PURCHASE AGREEMENT

Exhibit 4.3

 

CT TECHNOLOGIES HOLDINGS, LLC

AMENDED AND RESTATED

SECURITIES PURCHASE AGREEMENT

for the

SENIOR PREFERRED SHARES

and

CLASS C SHARES

Dated as of September 22, 2008

TABLE OF CONTENTS

 

 

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SECURITIES PURCHASE AGREEMENT

This AMENDED AND RESTATED SECURITIES PURCHASE AGREEMENT (this “ Agreement ”), is entered into as of September 22, 2008, by and among CT Technologies Holdings, LLC, a Delaware limited liability company (the “ Company ”), the persons listed on Schedule A hereto (each, a “ Purchaser ” and collectively, the “ Purchasers ”). Capitalized terms used but not otherwise defined herein shall have the meanings given to those terms in Section 9.1 below.

WHEREAS, on June 15, 2007, pursuant to that certain Purchase Agreement, dated May 15, 2007, by and among the Company, the stockholders of Smart Holdings Corp., a Delaware corporation (“Smart Holdings”) set forth on the signature pages thereto, Smart Imaging Holdings, Inc., a Georgia corporation (“SIH”), Smart Document Solutions, LLC, a Georgia limited liability company (“SDS”) and Arcapita Inc., a Delaware corporation, the Company acquired 100% of the outstanding membership interests of SDS by causing its wholly owned indirect Subsidiary, CT Technologies Intermediate Holdings, Inc., a Delaware corporation (“ CT Holdings ”), to purchase (i) all of the equity securities of SDS owned by SIH; and (ii) all of the equity securities of Smart Holdings (collectively, the “SDS Acquisition”);

WHEREAS, prior to the consummation of the SDS Acquisition, the Company has caused 100% of the outstanding capital stock of HealthPort Incorporated (formerly known as Companion Technologies Corporation), a South Carolina Corporation (“ CT ”), to be contributed to CT Holdings resulting in CT becoming a wholly-owned Subsidiary of CT Holdings (the “ CT Contribution ”);

WHEREAS, in connection with the financing of the SDS Acquisition and related fees and expenses, the Purchasers purchased from the Company, and the Company sold to the Investors, the Company’s Senior Preferred Shares (the “Preferred Shares”) and Series C Shares (the “Series C Shares” and together with the Preferred Shares, the “Securities”), in the respective quantities and for the respective prices set forth on Schedule A hereto (the “Purchaser Schedule”), as the case may be, subject to the terms and conditions set forth in this Agreement; and

WHEREAS, pursuant to that certain Agreement and Plan of Merger, dated August 4, 2008 (as amended from time to time, the “Purchase Agreement”), by and among HealthPort Technologies, LLC, a Georgia limited liability company and a wholly-owned indirect subsidiary of the Company (“HealthPort”), ChartOne Acquisition Corp., a Delaware corporation and a wholly-owned direct Subsidiary of HealthPort (“Merger Sub”), and ChartOne, Inc., a Delaware corporation (“ChartOne” and together with ChartOne, LLC, the “Target Companies”), on the date hereof HealthPort has acquired the Target Companies by causing Merger Sub to merge with and into ChartOne, with ChartOne surviving the merger (collectively, the “Acquisition”), and in connection with the Acquisition, the parties hereto wish to amend and restate this Agreement in its entirety.

 

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NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which the parties acknowledge, the Company and the Purchasers agree as follows:

1. AUTHORIZATION OF ISSUE OF SECURITIES . The Company has authorized the issue of (a) its Senior Preferred Shares as defined and having the designations, rights and preferences (collectively, “ Rights ”) set forth in the LLC Agreement and (b) its Series C Shares as defined and having the Rights set forth in the LLC Agreement. The terms Preferred Shares and Units as used herein shall include each Preferred Share and Common Share, respectively, delivered pursuant to any provision of this Agreement. Each Preferred Share shall accrue a yield of 14.0% per annum on the sum of (i) the Unreturned Capital Value of such Preferred Share plus (ii) the Unpaid Yield on such Preferred Share for all prior quarterly periods (or any portion thereof) ending on any March 31, June 30, September 30 or December 31 ( provided that, during any period when an Event of Default shall be in existence, the rate of accrual for such yield shall be 17.0% per annum from and after the date of such Event of Default and until such Event of Default has been cured or waived in accordance with the terms of this Agreement, as provided in the definition of “Yield” set forth in the LLC Agreement).

2. PURCHASE AND SALE OF SECURITIES . On June 15, 2007, the Company sold to each Purchaser and, subject to the terms and conditions herein set forth, each Purchaser purchased from the Company the aggregate number of Preferred Shares and Series C Shares set forth opposite such Purchaser’s name in the Purchaser Schedule attached hereto for the aggregate price indicated opposite such Purchaser’s name for such Preferred Shares and Series C Shares, respectively, in such Purchaser Schedule. The closing of such transactions (the “ Closing ”) took place at the offices of Kirkland & Ellis LLP at Citigroup Center, 153 East 53rd Street, New York, New York 10022 on the date of the closing of the SDS Acquisition (herein called the “ Closing Date ”). On the Closing Date, each Purchaser paid the purchase price of the Securities to be purchased by such Purchaser hereunder by wire transfer of immediately available funds to the account or accounts specified by the Company in writing not less than one Business Day prior to the Closing.

3. REDEMPTION/PUT RIGHTS .

3.1 Optional Redemption .

(a) Optional Redemption in connection with Complete Exit Event . At any time prior to the second anniversary of the Closing Date, the Preferred Shares shall be subject to redemption, in whole (but not in part) concurrently with a Complete Exit Event at the option of the Company at a redemption price per unit equal to the Liquidation Value (as of the date of such redemption) of each such Preferred Share to be so redeemed plus the applicable Redemption Amount with respect to each such Preferred Share to be redeemed.

(b) Optional Redemption on or after the Second Anniversary of the Closing Date, but prior to the Fourth Anniversary of the Closing Date . On or after the second anniversary of the Closing Date, but prior to the fourth anniversary of the Closing Date, the Preferred Shares shall be redeemable at the option of the Company, in whole or in part, at any time or from time to time at a redemption price per unit equal to the Liquidation Value (as of such redemption date) of each such Preferred Share to be so redeemed plus the applicable Redemption Amount with respect to each such Preferred Share to be so redeemed.

 

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(c) Optional Redemption on or after the Fourth Anniversary of the Closing Date . On or after the fourth anniversary of the Closing Date, the Preferred Shares shall be redeemable at the option of the Company, in whole or in part, at any time or from time to time at a redemption price per unit equal to the Liquidation Value (as of such redemption date) of each such Preferred Share to be so redeemed.

(d) Redemptions Pro Rata . With respect to any redemption pursuant to Section 3.1(b) or 3.1(c) of fewer than all of the outstanding Preferred Shares, the Preferred Shares to be redeemed shall be selected pro rata among the Holders of all of the then outstanding Preferred Shares based upon the number of Preferred Shares owned by each such Holder.

(e) Redemption Notice . In the event the Company shall elect to redeem Preferred Shares pursuant to the terms of Section 3.1(a) , 3.1(b) , or 3.1(c) the Company shall give written notice of such redemption by first class mail, postage prepaid, or by a reputable nationally recognized overnight courier service, prepaid and preaddressed, sent not less than 10 days nor more than 60 days prior to the redemption date, to each Holder of Preferred Shares. Each notice shall state: (i) that such notice is being given by the Company in accordance with Section 3.1 of this Agreement and whether such redemption is being effected pursuant to Section 3.1(a) , 3.1(b) , or 3.1(c) (ii) the date fixed for redemption (which date may be described by reference to the date upon which the Payoff Transaction occurs), (iii) the total number of Preferred Shares to be redeemed and the number of Preferred Shares of such Holder to be redeemed, (iv) the redemption price, (v) that such redemption will be funded by proceeds received from a Change of Control or other transaction(s) described in reasonable detail (collectively, a “ Payoff Transaction ”) or cash on hand, and (vi) that the Company’s obligation to redeem will be irrevocable subject only to consummation of any applicable Payoff Transaction. Upon giving any such notice of redemption, the Company shall become irrevocably obligated to redeem the total number of Preferred Shares specified in such notice, subject (if applicable) to consummation of any Payoff Transaction described in such notice. The Company shall keep each Holder of Preferred Shares reasonably and timely informed of (1) any deferral of the closing of a Payoff Transaction, (2) the date on which such Payoff Transaction and the redemption are expected to occur, and (3) any determination by the Company that efforts to effect such Payoff Transaction have ceased or been abandoned (in which case the redemption notice given pursuant to this Section 3.1(e) in respect of such proposed redemption shall be deemed rescinded without liability on the part of the Company).

3.2 Put Right in the Event of a Change in Control .

(a) Notice of Occurrence of Change in Control or Control Event . The Company shall provide written notice to each Holder of Preferred Shares not less than 35 days prior to the occurrence of any Change in Control or Control Event. Such notice shall contain and constitute an irrevocable offer to redeem (if such Change in Control occurs), at each such Holder’s election, all or any part of such Holder’s Preferred Shares at a price per unit equal to the Liquidation Value (as of the date of such redemption) of each such Preferred Share to be so redeemed "plus the applicable Redemption Amount with respect to each such Preferred Share (if any). The offer to redeem Preferred Shares contemplated by this Section 3.2 shall specify: (i) a description (in reasonable detail) of the

 

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Change in Control; (ii) that the offer is being given by the Company in accordance with the terms of Section 3.2 of this Agreement and that such offer will be deemed to be accepted pursuant to Section 3.2(c) unless the Holder rejects such offer by written notice given to the Company within 30 days after such offer is made; (iii) the date (which date may be described by reference to the date such Change in Control occurs) fixed for redemption (the “ Redemption Date ”); and (iv) the redemption price.

(b) Condition to Company Action . Notwithstanding anything to the contrary contained herein, neither the Company nor any of its Subsidiaries will take any action that consummates or finalizes a Change in Control unless (i) at least 35 days prior to such action it shall have given to each Holder of Preferred Shares written notice containing and constituting an offer to redeem Preferred Shares as described in Section 3.2(a) above and (ii) contemporaneously with such action, the Company redeems all Preferred Shares required to be redeemed in accordance with this Section 3.2 .

(c) Rejection/Acceptance . A Holder of Preferred Shares may accept or reject the offer to redeem made pursuant to this Section 3.2 by causing a written notice of such acceptance or rejection to be given to the Company within 30 days after such offer is made (any such notice specifying an acceptance of such offer, an “ Acceptance ”). Such Acceptance shall specify the number of Preferred Shares to be so redeemed. A failure by such a Holder to respond to an offer to redeem made pursuant to this Section 3.2 shall be deemed to constitute an acceptance of such offer as to all Preferred Shares held by such Holder.

(d) Acceptance . Upon acceptance or deemed acceptance by any Holder of an offer to redeem given pursuant to Section 3.2(c) , the Company shall become irrevocably obligated, subject to the occurrence of the Change in Control, to redeem such Preferred Shares as are specified in the Acceptance on the Redemption Date at the price specified pursuant to Section 3.2(a) . In the event any Change in Control does not occur on the expected date, the Company shall keep each Holder of Preferred Shares reasonably and timely informed of (i) any deferral of the redemption of the Preferred Shares, (ii) the date on which such Change in Control and the redemption are expected to occur, and (iii) any determination by the Company that efforts to effect such Change in Control have ceased or been abandoned (in which case the offers and acceptances (or deemed acceptances) made pursuant to this Section 3.2 in respect of such proposed redemption shall be deemed rescinded without liability to the Company).

3.3 Mandatory Redemption . All outstanding Preferred Shares shall be redeemed by the Company, in whole, on September 22, 2014 (the “ Mandatory Redemption Date ”) at a redemption price per unit equal to the Liquidation Value (as of the date of such redemption) of each Preferred Share to be so redeemed through the date of redemption.

3.4 Common Share Put Right . On the Mandatory Redemption Date or any Business Day thereafter, any Holder of a Common Share shall have the right by written notice to the Company to require the Company to purchase all or any part of the Series C Shares held by such Holder at a cash price equal to the Fair Market Value (as defined in, and determined in accordance with, the LLC Agreement) thereof determined as of the date such notice is given,

 

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which price will be payable in immediately available funds on the 90th day following the day on which the Fair Market Value thereof has been finally determined in accordance with the LLC Agreement; provided , that any Holder may require the Company to purchase all or any part of the Series C Shares held by such Holder on the Mandatory Redemption Date at a cash price equal to the Fair Market Value thereof, determined as of the date which is 90 days prior to the Mandatory Redemption Date, by giving written notice thereof to the Company on or prior to the 90th day prior to the Mandatory Redemption Date, in which event such price will be payable in immediately available funds on the Mandatory Redemption Date.

3.5 Subordination.

(a) Notwithstanding anything to the contrary set forth in this Section 3 or elsewhere in this Agreement, so long as any Senior Indebtedness or commitments with respect thereto remain outstanding, the Holders shall not be entitled to receive any payment under this Section 3 , or elsewhere in this Agreement, unless and to the extent such payment is expressly permitted (including by waiver or amendment) under the terms of the applicable Senior Credit Documents or Mezzanine Loan Documents; provided, however, that without the prior written consent of the Required Holders, the Company shall not defer, renew, extend, replace, refinance, amend, modify or supplement any Senior Credit Document, Mezzanine Loan Document or Senior Indebtedness (as the case may be) if the effect of such deferral, renewal, extension, replacement, refinancing, amendment, modification or supplement would (i) increase the aggregate principal amount of the Senior Indebtedness (except as permitted by the definition of Senior Indebtedness set forth below), (ii) increase the weighted average interest margins with respect to the Senior Indebtedness by more than 250 basis points, except in connection with the imposition of a default rate of interest in accordance with the terms of the Senior Credit Documents or the Mezzanine Loan Documents, (iii) extend the final scheduled maturity date of the Senior Indebtedness to a date later than the Mandatory Redemption Date, or (iv) add any new provision, or make any existing provision more restrictive, that directly restricts the Company’s ability to make payments to the Holders under this Section 3 or elsewhere in this Agreement; provided , that the Holders hereby acknowledge and accept that all redemptions, purchases, dividends, retirements and all other payments related to the Securities is expressly prohibited by the terms of the Senior Credit Agreement and the Mezzanine Note Purchase Agreement, each as in effect on the date hereof.

(b) Subject to the foregoing, if any payment or distribution, or the proceeds thereof, are received by any Holder pursuant to Section 3.1 , or elsewhere in this Agreement, prior to the repayment in full of, and termination of all commitments with respect to, all Senior Indebtedness, each Holder shall forthwith deliver same to the applicable Acting Agent (for the benefit of all Senior Lenders) in the form received for application to the Senior Indebtedness. Until so delivered, any such payment or distribution shall be held by the Holders in trust for the Senior Lenders. The Senior Lenders shall be express third party beneficiaries of this Section 3.5 and each Senior Agent shall be entitled to enforce this Section 3.5 on behalf of the Senior Lenders.

(c) As used in this Section 3.5 , the term “ Senior Indebtedness ” shall mean all Indebtedness outstanding under the Senior Credit Documents and the Mezzanine Loan Documents; provided , however , that in no event shall the

 

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principal amount of the Senior Indebtedness exceed, in the case of the Senior Credit Documents, the Maximum Senior Principal Amount, and, in the case of the Mezzanine Loan Documents, the Maximum Subordinated Principal Amount.

4. AFFIRMATIVE COVENANTS .

4.1 Financial Information, Reports, Notices and Information . The Company will deliver, or cause to be delivered, to each Holder:

(a) Monthly Financial Statements . Within thirty (30) days after the end of each of the first two fiscal months of any fiscal quarter, financial information regarding the Company and its Subsidiaries, consisting of (i) unaudited consolidated balance sheets as of the close of such fiscal month and the related consolidated statements of income and cash flows for that portion of the fiscal year ending as of the close of such fiscal month and (ii) unaudited consolidated statements of income and cash flows for such fiscal month, commencing with such financial statements for the first full fiscal month ending after the one year anniversary of the date hereof, setting forth in comparative form the figures for the corresponding period in the prior year and the figures contained in the operating plan for such fiscal year.

(b) Quarterly Financial Statements . Within forty-five (45) days after the end of each of the first three fiscal quarters of each fiscal year, consolidated financial information regarding the Company and its Subsidiaries, certified by the Company and CT Holdings, consisting of (i) unaudited balance sheets as of the close of such fiscal quarter and the related statements of income and cash flow for that portion of the fiscal year ending as of the close of such fiscal quarter (except that no cash flow statements shall be required for the fiscal quarter ending September 30, 2008, and the financial statements for such fiscal quarter shall be due within 60 days after the end of such fiscal quarter) and (ii) unaudited statements of income and cash flows for such fiscal quarter (except that no cash flow statements shall be required for the fiscal quarter ending September 30, 2008, and the financial statements for such fiscal quarter shall be due within 60 days after the end of such fiscal quarter), in each case, commencing with such financial statements for the first full fiscal month ending after the one year anniversary of the date hereof, setting forth in comparative form the figures for the corresponding period in the prior year and the figures contained in the operating plan for such fiscal year.

(c) Annual Financial Statements . One hundred fifty (150) days after the end of the 2008 fiscal year, and within one hundred twenty (120) days after the end of each fiscal year ending thereafter, audited financial statements for the Company and its Subsidiaries consisting of balance sheets and statements of income on a consolidated basis and retained earnings and cash flows on a consolidated basis (provided that such financial statements for fiscal year 2008 shall include the Company and its Subsidiaries (other than ChartOne) for the full year, and ChartOne for the period from the date hereof until the end of the fiscal year), commencing with the 2010 fiscal year, setting forth in comparative form in each case the figures for the previous fiscal year, which financial statements shall be prepared in accordance with GAAP and certified without qualification, by an independent certified public accounting firm of national standing selected by the Company or any other independent certified public accounting firm selected by the Company that is otherwise acceptable to the Senior Administrative Agent.

 

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(d) Compliance Certificates . So long as such Holder holds any Preferred Shares, concurrently with the delivery of the financial information pursuant to Sections 4.1(b) and 4.1(c) above, a Compliance Certificate, executed by an Authorized Officer of the Parent Guarantor, showing compliance with the covenants set forth in Section 5.9 and stating that no Default or Event of Default has occurred and is continuing (or, if a Default or an Event of Default has occurred, specifying the details of such Default or Event of Default and the actions taken or to be taken with respect thereto).

(e) Operating Plan . As soon as available, but not later than sixty (60) days after the end of the 2008 fiscal year and forty-five (45) days after the end of each fiscal year ending thereafter, an annual operating plan for the Company, on a consolidated basis, approved by the Board of Directors of the Company, for the following fiscal year, which (i) includes a statement of all of the material assumptions on which such plan is based and (ii) includes monthly balance sheets, income statements and statements of cash flows for the following year.

(f) Defaults . As soon as practicable, and in any event within five (5) Business Days after an executive officer of any Parent Guarantor or its Subsidiaries has actual knowledge of the existence of any Default, Event of Default or other event that has had a Material Adverse Effect, telephonic or telecopied notice specifying the nature of such Default or Event of Default or other event, including the anticipated effect thereof, which notice, if given telephonically, shall be promptly confirmed in writing on the next Business Day.

(g) Litigation . Promptly upon learning thereof, notice of any litigation commenced or threatened against Parent Guarantor or any of its Subsidiaries that (i) seeks damages in excess of $3,000,000 in excess of any amounts covered by insurance, (ii) seeks injunctive relief, (iii) is asserted or instituted against any Plan, its fiduciaries or its assets or against any Credit Party or ERISA Affiliate in connection with any Plan, or (iv) alleges the violation of any law regarding, or seeks remedies in connection with, any liabilities with respect to Environmental Laws in excess of $500,000.

(h) Plans . Immediately upon becoming aware of (i) the institution of any steps by any Person to terminate any Plan, (ii) the failure to make a required contribution to any Plan if such failure is sufficient to give rise to a Lien on the assets of the Company or any of its Subsidiaries under Section 302(f) of ERISA, (iii) the taking of any action with respect to a Plan which could reasonably be expected to result in the requirement that the Company or any of its Subsidiaries furnish a bond or other security to the PBGC or such Plan, or (iv) the occurrence of any event with respect to any Plan which could reasonably be expected to result in the incurrence by the Company or any of its Subsidiaries of any material liability, fine or penalty, notice thereof and copies of all documentation relating thereto.

 

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(i) Management Letters . Promptly upon, and in any event within five (5) Business Days after receipt thereof by any Credit Party, copies of all final management letters submitted to the Company or any of its Subsidiaries by the independent public accountants.

(j) Bankruptcy, etc. Immediately upon becoming aware thereof, notice (whether involuntary or voluntary) of the bankruptcy, insolvency, reorganization of the Company or any of its Subsidiaries, or the appointment of any trustee in connection with or anticipation of any such occurrence, or the taking of any step by any Person in furtherance of any such action or occurrence.

(k) SEC Documents . Promptly upon their becoming available, copies of all financial statements, reports, notices and proxy statements sent or made available to the public generally by the Company or any of its Subsidiaries, if any, and all regular and periodic reports and all final registration statements and final prospectuses, if any, filed by the Company or any of its Subsidiaries with any securities exchange or with the SEC or any Governmental Authority succeeding to any of its functions.

(l) Senior Lender Deliveries . Promptly, and in any event within (3) Business Days of transmission thereof, copies (unless otherwise delivered pursuant to the other provisions of this Agreement) of all financial statements, notices, reports and other information and materials given to the Senior Lenders under the Senior Credit Agreement (excluding routine borrowing matters in the ordinary course of business such as borrowing requests and notices relating to repayments or interest rates) or to the Purchasers under the Mezzanine Note Purchase Agreement.

(m) Other Information . Promptly, and in any event within ten Business Days of any request, such additional financial and other information as any Holder may from time to time reasonably request.

4.2 Payment Obligations .

(a) So long as any Holder holds any Preferred Share, the Company will, and will cause each of its Subsidiaries to, file all income tax or similar tax returns required to be filed in any jurisdiction and to pay and discharge all taxes shown to be due and payable on such returns and all other taxes, assessments, governmental charges or levies payable by any of them, and to pay and discharge all amounts payable for work, labor and materials, in each case to the extent such taxes, assessments, charges, levies and amounts payable have become due and payable and before they have become delinquent, provided that neither the Company nor any Subsidiary need pay any such tax, assessment, charge, levy or amount payable if (i) the amount, applicability or validity thereof is being actively contested by the Company or such Subsidiary on a timely basis in good faith and in appropriate proceedings, and the Company has established adequate reserves therefor in accordance with GAAP on the books of the Company and (ii) the nonpayment of such taxes, assessments, charges, levies and amounts payable, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.

 

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(b) So long as any Holder holds any Preferred Share, the Company will, and will cause each of its Subsidiaries to, pay, discharge or otherwise satisfy at or before maturity or before they become delinquent, as the case may be, all its other obligations and liabilities of whatever nature, except (i) when the amount or validity thereof is currently being contested in good faith by appropriate proceedings and reserves in conformity with GAAP with respect thereto have been provided on the books of the Company or any of its Subsidiaries, as the case may be, (ii) for delinquent obligations which do not have a Material Adverse Effect, and (iii) for trade and other accounts payable in the ordinary course of business which are not overdue for a period of more than 120 days or, if overdue for more than 120 days, as to which a dispute exists and adequate reserves in conformity with GAAP have been established on the books of the Company or any of its Subsidiaries, as the case may be.

4.3 Conduct of Business and Maintenance of Existence . So long as any Holder holds any Preferred Share, except as otherwise permitted by Section 5.4 or Section 5.6 , the Company will, and will cause each Subsidiary to, preserve, renew and keep in full force and effect its limited liability company or corporate existence and take all reasonable action to maintain all material rights, material privileges, franchises, copyrights, patents, trademarks and trade names necessary or desirable in the normal conduct of its business except for rights, privileges, franchises, copyrights, patents, trademarks and trade names the loss of which could not, in the aggregate, reasonably be expected to have a Material Adverse Effect; and comply with all Applicable Laws except to the extent that the failure to comply therewith could not, in the aggregate, reasonably be expected to have a Material Adverse Effect. This Paragraph shall not be deemed to restrict the Company or any of its Subsidiaries from abandoning or failing to pursue or enforce any Intellectual Property or registrations or applications therefor, which actions or inactions are taken in the Company’s or its Subsidiary’s commercially reasonable discretion and would not, in the aggregate, have a Material Adverse Effect.

4.4 Maintenance of Properties . So long as any Holder holds any Preferred Share, the Company will, and will cause each of its Subsidiaries to, maintain and keep, or cause to be maintained and kept, their respective properties in good repair, working order and condition (other than ordinary wear and tear), so that the business carried on in connection therewith may be properly conducted at all times, provided , that this Section shall not prevent the Company or any Subsidiary from discontinuing the operation and the maintenance of any of its properties if such discontinuance is desirable in the conduct of its business and such discontinuance would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.

4.5 Insurance . So long as any Holder holds any Preferred Share, the Company will, and will cause each of its Subsidiaries to, maintain, with financially sound and reputable insurers, insurance with respect to their respective properties and businesses against such casualties and contingencies, of such types, on such terms and in such amounts as are usual for similarly situated companies engaged in similarly situated industries.

4.6 Information Required by Rule 144A . The Company will, upon the request of any Holder, provide such Holder and any qualified institutional buyer designated by such Holder such financial and other information as such Holder may reasonably determine to be necessary in order to permit compliance with the information requirements of Rule 144A under the Securities Act in connection with the resale of a Security, except at such times as the Company is subject to

 

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the reporting requirements of Section 13 or 15(d) of the Exchange Act. For the purpose of this Section 4.6 , the term “qualified institutional buyer” shall have the meaning specified in Rule 144A under the Securities Act.

4.7 Inspection of Property; Books and Records . The Company will, and will cause each Subsidiary to, (1) keep proper books of record and account in which full, true and correct entries are made of all dealings and transactions in relation to its business and activities which permit financial statements to be prepared in conformity with GAAP and all Requirements of Law; and (2) permit representatives of any Holder upon reasonable notice (at such Holder’s sole expense unless both any Preferred Share is outstanding and a Default or Event of Default shall have occurred and be continuing) to visit and inspect any of its properties or assets and examine and make abstracts from any of its books and records (including without limitation insurance policies) at any reasonable time and upon reasonable notice, and to discuss the business, operations, assets and financial and other condition of the Company and its Subsidiaries with officers and employees thereof and with their independent certified public accountants with prior reasonable notice to, and coordination with, the Company; provided that, so long as any Preferred Share is outstanding, the Company shall be required to pay the expenses of one such inspection of the Company per fiscal year conducted by a representative designated by the Required Holder(s) if so elected by the Required Holder(s).

4.8 Compliance with Law . So long as any Preferred Share is outstanding, the Company will, and will cause each of its Subsidiaries to, comply with all laws, ordinances or governmental rules or regulations to which each of them is subject (including, without limitation, Environmental Laws, and ERISA) and will obtain and maintain in effect all licenses, certificates, permits, franchises and other governmental authorizations necessary to the ownership of their respective properties or to the conduct of their respective businesses, in each case to the extent necessary to ensure that noncompliance with such laws, ordinances or governmental rules or regulations or failures to obtain or maintain in effect such licenses, certificates, permits, franchises and other governmental authorizations would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.

4.9 End of Fiscal Years; Fiscal Quarters . The Transaction Parties will, for financial reporting purposes, cause (a) each of their, and each of their Subsidiaries’, fiscal years to end on September 30 or December 31, as the case may be as of the date hereof, of each year and (b) each of their, and each of their Subsidiaries’, fiscal quarters to end on dates consistent with such fiscal year-end and the Parent Guarantor’s past practice; provided that the Transaction Parties may change their, and each of their respective Subsidiaries, fiscal year end (and change the end of the fiscal quarters in a corresponding manner) upon thirty (30) days’ prior written notice to the Required Purchasers.

5. NEGATIVE COVENANTS . For so long as any Preferred Shares remain outstanding (and, in the case of Section 5.3 , so long as any Series C Shares remain outstanding):

5.1 Limitation on Restricted Payments .

(a) The Company shall not, and shall not cause or permit any Subsidiary to, directly or indirectly:

 

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(i) declare or pay any dividend or any other distribution on any Capital Stock of the Company or make any payment or distribution to the direct or indirect holders (in their capacities as such) of Capital Stock of the Company (other than (1) any dividends, distributions and payments made to the Company or any Subsidiary and dividends or distributions payable to any Person solely in the form of Qualified Capital Stock (which is not Preferred Capital Stock) of the Company, and (2) accruals and payment of Yield on, and payments of Unreturned Capital Value or redemption of, the Preferred Shares in accordance with the terms hereof and of the LLC Agreement);

(ii) purchase, redeem or otherwise acquire or retire for value any Capital Stock of the Company (other than (1) any such Capital Stock owned by the Company or any Subsidiary, or (2) Preferred Shares in accordance with the terms hereof and of the LLC Agreement);

(iii) make any Investment (other than a Permitted Investment) in any Person; or

(iv) other than the repayment of the Subordinated Bridge Loan in connection with the Transactions, make any payment, repayment, redemption, retirement, repurchase or other acquisition on account of or in respect of any ABRY Subordinated Indebtedness (other than by conversion of such amounts into Qualified Capital Stock (which is not Preferred Capital Stock) of the Company as set forth in the definitions of Subordinated Bridge Loan and ABRY Subordinated Indebtedness, as applicable);

(any such payment or any other action (other than any exception thereto) described in clause (i) , (ii) , (iii)  or (iv)  above, a “ Restricted Payment ”), unless at the time the Company or such Subsidiary makes such Restricted Payment:

(1) no Default or Event of Default shall have occurred and be continuing at the time of or immediately after giving effect to such Restricted Payment;

(2) immediately after giving effect to such Restricted Payment, the Company’s Total Leverage Ratio would not be greater than the amount specified in Section 5.9(a) with respect to the fiscal quarter in which such Restricted Payment is paid; provided , however , that for purposes of this Section 5.1(a) , Total Leverage Ratio shall be calculated using (x) the amount of Consolidated Total Debt outstanding as of the date of such Restricted Payment (after giving effect thereto); and (y) the amount of Consolidated Adjusted EBITDA for the most recent twelve month period ending on the last day of the fiscal quarter for which financial statements have been delivered to the Holders pursuant to Section 4.1(a) ; and

(3) immediately after giving effect to such Restricted Payment, the sum of the aggregate amount of all Restricted Payments made on or after the Closing Date, plus the aggregate amount of all accrued Yield paid by the

 

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Company in cash with respect to the Preferred Shares does not exceed an amount equal to the sum of, without duplication:

(A) 100% of the cumulative Consolidated Adjusted EBITDA determined for the period (taken as one period) beginning on the first day of the fiscal quarter immediately following the Closing Date and ending on the last day of the most recent fiscal quarter immediately preceding the date of such Restricted Payment for which financial statements have been delivered to the Holders pursuant to Section 4.1(a) (or, if such cumulative Consolidated Adjusted EBITDA shall be negative, minus 100% of such cumulative Consolidated Adjusted EBITDA) less (z) 125% of cumulative Consolidated Interest Expense for the same period; plus

(B) the aggregate net proceeds (including the Fair Market Value of property other than cash) received after the Closing Date (I) by the Company (other than the Equity Financing), either as capital contributions to the Company or from the issue and sale (other than to a Subsidiary) of Qualified Capital Stock of the Company (including ABRY Subordinated Indebtedness issued by the Company to the extent it has been converted into or exchanged for Qualified Capital Stock (that is not Preferred Capital Stock) of the Company) or (II) by any Subsidiary from the issuance of ABRY Subordinated Indebtedness by such Subsidiary (except, in each case, to the extent set forth in clauses (ii) , (iii)  and (viii)  of Section 5.1(b) below); plus

(C) the principal amount (or accreted amount, determined in accordance with GAAP, if less) of any Indebtedness or Disqualified Capital Stock of the Company or any Subsidiary (other than any ABRY Subordinated Indebtedness described in clause (B)  above), in each case incurred after the Closing Date to the extent it has been converted into or exchanged for Qualified Capital Stock (that is not Preferred Capital Stock) of the Company; and

(4) all accrued Yield on the Preferred Shares has been paid in full in cash.

(b) Subject to Section 5.1(c) , the foregoing provisions will not prevent:

(i) the payment of any dividend or distribution on, or redemption of, Capital Stock within 60 days after the date of declaration of such dividend or distribution or the giving of formal notice of such redemption, if at the date of such declaration or giving of such formal notice such payment or redemption would comply with the provisions of this Agreement;

 

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(ii) the purchase, redemption, retirement or other acquisition of any Capital Stock of the Company in exchange for, or out of the net cash proceeds of the substantially concurrent issue and sale (other than to a Subsidiary) of, other Capital Stock of the Company (other than Preferred Capital Stock), including ABRY Subordinated Indebtedness; provided , however , that any such net proceeds and the value of any Qualified Capital Stock issued in exchange for any such Capital Stock are excluded from clause (a)(iv)(3)(B)  of Section 5.1(a) above (and were not included therein at any time);

(iii) the repurchase of shares of Capital Stock of the Company owned by former, present or future employees, directors or consultants of the Company or its Subsidiaries or their assigns, estates and heirs; provided that the aggregate amount expended by the Company pursuant to this clause (iii)  shall not in the aggregate exceed $7,500,000 plus any amounts contributed to the Company as a result of sales of any such shares of Capital Stock of the Company to such persons ( provided that any such amounts so contributed shall not be included in clause (a)(iv)(3)(B)  of Section 5.1(a) above to the extent available under this clause (iii) ) and the amount of any “key man” insurance proceeds received by the Company or any Subsidiary; provided that the cancellation of Indebtedness owing to the Company in connection with any such repurchase shall not be deemed a Restricted Payment;

(iv) payments required pursuant to the terms of the Purchase Agreement to consummate the Transactions or otherwise in connection with the Transactions;

(v) the payment of the dividends on Disqualified Capital Stock or Preferred Capital Stock of the Company or a Subsidiary of the Company, the incurrence of which was permitted by this Agreement;

(vi) repurchases of Capital Stock deemed to occur upon the cashless exercise or conversion of stock options, warrants or other convertible or exchangeable securities;

(vii) distributions to the extent (1) the Company is treated as a pass through or disregarded entity for tax purposes (such as a partnership, limited liability company or S corporation) to the extent necessary to permit it or the direct or indirect holders of its Capital Stock to pay any Federal, state or local taxes owing by it or them in respect of income of the Company and its Subsidiaries or (2) the Company is not such a pass through or disregarded entity but is a member of a consolidated group of corporations that includes a holding company above it to the extent necessary to pay taxes of the consolidated group; provided that nothing in this clause (vii)  will be deemed to permit any such distribution to pay any tax liabilities of direct or indirect investors in the Company resulting from the conversion of the Company from a limited liability company to corporate form;

(viii) repayment of, or payments of principal and interest of, any ABRY Subordinated Indebtedness in accordance with the terms thereof at the time of its issuance; provided , however , any net proceeds received from any ABRY Subordinated Indebtedness are excluded from clauses (3)(B)  and (3)(C)  of Section 5.1(a) above for so long as such ABRY Subordinated Indebtedness is outstanding;

 

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(ix) Restricted Payments not to exceed $2,000,000 in the aggregate since the date hereof;

(x) payment of dividends to Parent Guarantor or the Company to pay corporate overhead expenses incurred in the ordinary course of business not to exceed $1,500,000 in the aggregate on an annual basis; and

(xi) dividends by any Subsidiary to any other holder of its equity on a pro rata basis.

(c) Notwithstanding anything herein to the contrary, the Company shall not, and shall not permit any Subsidiary to, make any Restricted Payment referred to in Section 5.1(b) (other than a Restricted Payment referred to in clause (ii) , (vi) , (vii) , (viii) , (x)  or (xi)  of Section 5.1(b) ), with respect to any Capital Stock or ABRY Subordinated Indebtedness of the Company or to any holder thereof (other than payments to Holders with respect to Preferred Shares in accordance with the terms of this Agreement and the LLC Agreement) unless at the time the Company or such Subsidiary makes such Restricted Payment no Default or Event of Default shall have occurred and be continuing or would exist immediately after giving effect to such Restricted Payment and immediately after giving effect to such Restricted Payment the Company’s Total Leverage Ratio would not be greater than the amount specified in Section 5.9(a) with respect to the fiscal quarter in which such Restricted Payment is paid; provided , however , that for purposes of this Section 5.1(c) , Total Leverage Ratio shall be calculated using (x) the amount of Consolidated Total Debt outstanding as of the date of such Restricted Payment (after giving effect thereto); and (y) the amount of Consolidated Adjusted EBITDA for the most recent twelve month period ending on the last day of the fiscal quarter for which financial statements have been delivered to the Holders pursuant to Section 4.1(a) .

5.2 Limitation on Dividend and Other Payment Restrictions Affecting Subsidiaries . The Company shall not, and shall not cause or permit any Subsidiary to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction on the ability of any Subsidiary to: (a) pay dividends or make any other distributions to the Company or any other Subsidiary on its Capital Stock or with respect to any other interest or participation in, or measured by, its profits, or pay any Indebtedness owed to the Company or any other Subsidiary; (b) make loans or advances to, or guarantee any Indebtedness or other obligations of, the Company or any other Subsidiary; or (c) transfer any of its properties or assets to the Company or any other Subsidiary, except for such encumbrances or restrictions existing under or by reason of:

(i) any Indebtedness;

(ii) any instrument of an Acquired Person acquired by the Company or any Subsidiary as in effect at the time of such acquisition (except to the extent such instrument was entered into by such Acquired Person in connection with, as a result of or in contemplation of such acquisition); provided , however , that such encumbrances and restrictions are not applicable to the Company or any Subsidiary or the properties or assets of the Company or any Subsidiary other than the Acquired Person or the property or assets of the Acquired Person;

 

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(iii) customary nonassignment provisions in leases, licenses or contracts;

(iv) any agreement for the sale or disposition of the Capital Stock or assets of any Subsidiary; provided , however , that such encumbrances and restrictions described in this clause (iv)  are only applicable to such Subsidiary or assets, as applicable, and any such sale or disposition is made in compliance with Section 5.6 to the extent applicable thereto;

(v) any restriction contained in any security agreement or mortgage securing Indebtedness of the Company or any Subsidiary to the extent such restriction restricts the transfer of the property subject to such security agreement or mortgage;

(vi) customary restrictions imposed by the terms of shareholders’, partnership or joint venture agreements entered into in the ordinary course of business; provided , however , that such restrictions do not apply to any Person other than the applicable company, partnership or joint venture;

(vii) applicable law, rule, regulation or order; and

(viii) restrictions on cash or other deposits imposed under contracts entered into in the ordinary course of business.

5.3 Transactions with Affiliates . The Company shall not, and shall not cause or permit any Subsidiary to, directly or indirectly, conduct any business or enter into, renew, amend or conduct any transaction or series of related transactions including the purchase, sale, lease or exchange of any assets or the rendering of any service) with or for the benefit of any of their respective Affiliates (each an “ Affiliate Transaction ”), unless:

(a) such Affiliate Transaction, taken as a whole, is on terms which are no less favorable to the Company or such Subsidiary, as the case may be, than would be available in a comparable transaction on an arm’s length basis with an unaffiliated third party;

(b) if such Affiliate Transaction or series of related Affiliate Transactions involves aggregate payments or other consideration having a Fair Market Value in excess of $2,500,000, such Affiliate Transaction is in writing and a majority of the disinterested members of the Board of Directors of the Company shall have approved such Affiliate Transaction and determined that such Affiliate Transaction complies with the foregoing provisions, or, in the event that there are no disinterested directors, the Holders have received a written opinion from an Independent Financial Advisor stating that the terms of such Affiliate Transaction are fair, from a financial point of view, to the Company or the Subsidiary involved in such Affiliate Transaction, as the case may be; and

 

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(c) if such Affiliate Transaction or series of related Affiliate Transactions involves aggregate payments or other consideration having a Fair Market Value in excess of $5,000,000, such Affiliate Transaction is in writing and the Holders have received a written opinion from an Independent Financial Advisor stating that the terms of such Affiliate Transaction are fair, from a financial point of view, to the Company or the Subsidiary involved in such Affiliate Transaction, as the case may be.

Notwithstanding the foregoing, (x) the restrictions set forth in Section 5.3(a) above shall not apply to clauses (a) , (c) , (d) , (e) , or (h)  below and (y) the restrictions set forth in Section 5.3(b) and Section 5.3(c) above shall not apply to clauses (a) , (c)  through (f) , inclusive, or (h)  below:

(a) transactions with or among the Company and any Wholly Owned Subsidiary or between or among Wholly Owned Subsidiaries;

(b) any other transaction permitted to be made pursuant to Section 5 ;

(c) any issuance or sale of Capital Stock of the Company, or other payments, awards or grants in cash, in each case pursuant to employment arrangements or stock option plans for the benefit of employees, officers, directors, and consultants who are not otherwise Affiliates of the Company and made, in each case, in the ordinary course of business (so long as such Capital Stock is Qualified Capital Stock if such issuance or sale occurs at any time when any Preferred Share is outstanding);

(d) advances to officers, directors, employees and consultants who are not otherwise Affiliates of the Company, in each case, made in the ordinary course of business and in an aggregate outstanding amount not to exceed $1,700,000 in the aggregate;

(e) the payment of reasonable directors’ fees, indemnification and similar arrangements, expense reimbursements, consulting fees (paid to consultants who are not otherwise Affiliates of the Company), employee salaries, bonuses or employment agreements, compensation or employee benefit arrangements and incentive arrangements with any officer, director or employee of the Company or any Subsidiary, in each case, entered into in the ordinary course of business (including reasonable benefits thereunder);

(f) issuances and sales of Capital Stock of the Company to which the rights described in Section 9 of the Members Agreement are applicable or that are described in clauses (i), (ii), (iv) or (vi) of Section 9(a) of the Members Agreement (so long as such Capital Stock is Qualified Capital Stock if such issuance or sale occurs at any time when any Preferred Share is outstanding);

(g) provision or purchase of goods or services (other than with respect to employment services) in the ordinary course of business;

(h) any transactions undertaken pursuant to any contractual obligations in existence on the date hereof (or on the Closing Date and entered into in connection with the Transactions) which are described in reasonable detail on

 

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Schedule 5.3(h) hereto, as the same may be amended, modified or replaced from time to time so long as such amendment, modification or replacement is no less favorable to the Company and its Subsidiaries in any material respect; and

(i) payments by Parent Guarantor or any of its Subsidiaries, or distributions from Parent Guarantor or any of its Subsidiaries, to the Company to permit the Company to make payments of (I) Management Fees of not more than $300,000 in the aggregate in any fiscal year, provided that any payment of a Management Fee that is not permitted to be made as a result of the restrictions in this Agreement may be paid in a subsequent period, if, after giving effect thereto, no Default or Event of Default would exist and (II) reimbursements of reasonable out-of-pocket expenses of ABRY or its Controlled Investment Affiliates in connection with its ownership of the Company or its Subsidiaries.

5.4 Merger; Sale of Assets . The Company shall not consolidate with or merge with or into (whether or not the Company is the Surviving Person) any other entity and the Company shall not, and shall not cause or permit any Subsidiary to, sell, convey, assign, transfer, lease or otherwise dispose of all or substantially all of the Company’s and the Subsidiaries’ properties and assets (determined on a consolidated basis for the Company and the Subsidiaries) to any Person in a single transaction or series of related transactions, unless:

(a) either (i) the Company shall be the Surviving Person or (ii) the Surviving Person (if other than the Company) shall be a corporation or limited liability company organized and validly existing under the laws of the United States of America or any State thereof or the District of Columbia, and shall, in any such case, expressly assume pursuant to agreements reasonably satisfactory to the Required Holder(s), the due and punctual performance and observance of every covenant contained in this Agreement and the other Transaction Documents to be performed or observed on the part of the Company;

(b) immediately thereafter, on a pro forma basis after giving effect to such transaction (and treating any Indebtedness not previously an obligation of the Company or any Subsidiary in connection with or as a result of such transaction as having been incurred at the time of such transaction), no Default or Event of Default shall have occurred and be continuing; and

(c) immediately after giving effect to any such transaction including the incurrence by the Company or any Subsidiary, directly or indirectly, of additional Indebtedness (and treating any Indebtedness not previously an obligation of the Company or any Subsidiary in connection with or as a result of such transaction as having been incurred at the time of such transaction), the Total Leverage Ratio (determined on a pro forma basis giving effect to such transaction) would not be greater than the amount specified in Section 5.9(a) with respect to the fiscal quarter in which such transaction is effectuated; provided , however , that for purposes of this Section 5.4 , Total Leverage Ratio shall be calculated using (x) the amount of Consolidated Total Debt outstanding as of the date of such transaction (after giving effect thereto); and (y) the amount of Consolidated Adjusted EBITDA for the most recent twelve month period ending on the last day of the month for which financial statements have been delivered to the Holders pursuant to Section 4.1(a) (determined on a pro forma basis as if such transaction was effectuated on the first day of such period and giving effect to such adjustments as are agreed by the Company and the Required Holders).

 

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Notwithstanding the provisions of clause (c)  of the immediately preceding paragraph, (i) any Subsidiary may consolidate with, merge into or transfer all or part of its properties and assets to the Company or another Subsidiary, (ii) any merger or consolidation in connection with a Permitted Investment shall be permitted and (iii) the Company may merge with an Affiliate that has no significant assets or liabilities and was formed solely for the purpose of (1) changing the Company’s jurisdiction of organization to another state of the United States and (2) converting the Company to a corporation in connection with a Public Sale, provided that the surviving entity assumes, pursuant to agreements reasonably satisfactory to the Required Holder(s), the due and punctual performance and observance of every covenant contained in this Agreement and the other Transaction Documents to be performed or observed on the part of the Company.

For purposes of the foregoing, the transfer (by lease, assignment, sale or otherwise, in a single transaction or series of transactions) of all or substantially all the properties and assets of one or more Subsidiaries the Capital Stock of which constitute all or substantially all the properties and assets of the Company shall be deemed to be the transfer of all or substantially all the properties and assets of the Company.

In connection with any consolidation, merger, transfer, lease or other disposition contemplated hereby, the Company shall deliver, or cause to be delivered, to each Holder, in form and substance reasonably satisfactory to the Holders, an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger, transfer, lease or other disposition and the agreements required to be delivered with respect thereto comply with the requirements of this Agreement.

Upon any consolidation or merger of the Company or any transfer of all or substantially all of the assets of the Company in accordance with the foregoing in which the Company is not the Surviving Person, the Surviving Person shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Agreement and the other Transaction Documents with the same effect as if such successor corporation had been named as the Company therein.

5.5 Limitations on Line of Business . The Company shall not, and shall not permit any Subsidiary to, engage in any business or conduct any operations other than a Related Business.

5.6 Asset Sales .

(a) The Company shall not, and shall not cause or permit any Subsidiary to, directly or indirectly, make any Asset Sale, unless:

(i) the Company or such Subsidiary, as the case may be, receives consideration at the time of such Asset Sale at least equal to the Fair Market Value of the assets sold or otherwise disposed of (as determined by the Company’s Board of Directors (or a committee thereof) and evidenced by a Board Resolution), and

 

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(ii) at least 75% of such consideration consists of (1) cash or Cash Equivalents, (2) properties and capital assets to be used in a Related Business, (3) Capital Stock in a Person engaged in a Related Business that will become a Subsidiary as a result of such Asset Sale or (4) a combination of cash, Cash Equivalents and such assets.

(b) The amount of any (i) balance sheet liabilities of the Company or any Subsidiary that is actually assumed by the transferee in such Asset Sale and from which the Company and the Subsidiaries are fully and unconditionally released shall be deemed to be cash for purposes of determining the percentage of the consideration received by the Company or the Subsidiaries in cash or Cash Equivalents and (ii) notes, securities or other similar obligations received by the Company or the Subsidiaries from such transferee that are immediately converted, sold or exchanged (or are converted, sold or exchanged within ninety (90) days of the related Asset Sale) by the Company or the Subsidiaries into cash or Cash Equivalents or other assets of the type referred to in clause (2)  or (3)  of Section 5.6(a)(ii) shall be deemed to be cash, in an amount equal to the net cash proceeds or the Fair Market Value of the Cash Equivalents or other assets of the type referred to in clause (2)  or (3)  of Section 5.6(a)(ii) realized upon such conversion, sale or exchange for purposes of determining the percentage of the consideration received by the Company or the Subsidiaries in cash or Cash Equivalents.

(c) If at any time any non-cash consideration received by the Company or any Subsidiary, as the case may be, in connection with any Asset Sale is converted into or sold or otherwise disposed of for cash (other than interest received with respect to any such non-cash consideration), then such conversion or disposition shall be deemed to constitute an Asset Sale hereunder and the Net Cash Proceeds thereof shall be applied in accordance with the provisions of this covenant.

(d) The 75% limitation in Section 5.6(a)(ii) will not apply to any Asset Sale in which the cash or Cash Equivalents received therefrom, determined in accordance with the second preceding paragraph, are equal to or greater than the after tax cash and Cash Equivalents that would have been received therefrom had such provision applied.

(e) The Company or such Subsidiary, as the case may be, may apply an amount equal to the Net Cash Proceeds of any Asset Sale within 365 days of receipt thereof to:

(i) repay Indebtedness; or

(ii) make an investment in or expenditures for properties or capital assets to be used in a Related Business or make an Investment in any Person engaged in a Related Business that, as a result of or in connection with such Investment, becomes a Subsidiary.

During any period when any Indebtedness is outstanding under the Senior Credit Agreement, to the extent all or part of the Net Cash Proceeds of any Asset Sale are not applied within 365 days of such Asset Sale as described in clause (a)  or (b)  (such Net Cash Proceeds, the “ Unutilized Net Cash Proceeds ”), the Company shall apply such Unutilized Net Cash Proceeds as required by the Senior Credit Agreement as in effect on the date hereof.

 

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5.7 Senior Ranking of Preferred Shares . The Company shall not issue or create any Disqualified Capital Stock or any other equity security or interest which ranks pari passu with or has priority over the Preferred Shares as to dividends, liquidation rights or otherwise or is in any way senior in right of payment to the Preferred Shares.

5.8 Holding Company . The Company shall not, and shall not permit any of its Subsidiaries (other than CT Holdings and its Subsidiaries) to, engage in any business other than that directly incidental to being a holding company without any independent operations; provided that the Company and its Subsidiaries shall be permitted to incur, create, assume, or suffer to exist Indebtedness and to make and hold Investments in the Company or such Subsidiary’s Subsidiaries.

5.9 Financial Covenants . The Transaction Parties will not permit:

(a) Total Leverage Ratio . The Total Leverage Ratio, as of the last day of each Test Period set forth below, to be greater than the minimum ratio set forth below opposite such measurement date:

 

(b) Fixed Charge Coverage Ratio . The Fixed Charge Coverage Ratio, as of the last day of any Test Period, to be less than 1.00: 1.00.

 

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6. EVENTS OF DEFAULT .

6.1 Redemption Following Event of Default . If any of the following events shall occur and be continuing for any reason whatsoever (and whether such occurrence shall be voluntary or involuntary or come about or be effected by operation of law or otherwise):

(a) the Company fails to pay when due (i) any amount required to be paid by it with respect to the Preferred Shares and such failure continues for two Business Days or (ii) any amount otherwise required to be paid by it under this Agreement and such failure continues for five Business Days; or

(b) the Company or any Subsidiary defaults, whether as primary obligor or as guarantor or other surety, in any payment of principal at stated maturity of any Indebtedness beyond any period of grace provided with respect thereto, or the Company or any Subsidiary fails to perform or observe any other agreement, term or condition contained in any agreement under which any such Indebtedness or Preferred Capital Stock is created or governed (or if any other event thereunder or under any such agreement shall occur and be continuing) and the effect of such failure or other event is to cause, or the holder or holders of such obligation (or a trustee on behalf of such holder or holders) has caused, such obligation to become due (or to be repurchased by the Company or any Subsidiary) prior to any stated maturity, provided that the aggregate amount of all obligations as to which such a payment default shall occur and be continuing or such a failure or other event causing acceleration (or resale to the Company or any Subsidiary) shall occur and be continuing exceeds $4,000,000; or

(c) any representation or warranty made by the Company or any Subsidiary herein, any of the Prior Agreement Representations and Warranties or in any other Transaction Document or by the Company or any of its or their officers in any writing furnished in connection with or pursuant to this Agreement or any other Transaction Document that is qualified by Material Adverse Effect or materiality shall be false, or any such representation or warranty that is not so qualified shall be false in any material respect, on the date as of which made; or

(d) the Company fails to perform or observe any agreement contained in Sections 3 or 5 ; or

(e) the Company fails to perform or observe any agreement contained in Section 4.1(a) , 4.1(a) , or 4.1(c) and such failure shall not be remedied within 30 days thereafter; or

(f) the Company fails to perform or observe any other agreement, term or condition contained herein or in any other Transaction Document and such failure shall not be remedied within 60 days after any Responsible Officer obtains actual knowledge thereof; or

(g) (i) th