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A portion of our operations is currently conducted through URNA's subsidiaries and URNA will depend in part
on distributions from these subsidiaries in order to pay amounts due on the New Notes. Certain provisions of law or contractual restrictions could limit distributions from URNA's subsidiaries.
A portion of our operations is conducted through URNA's subsidiaries. The effect of this structure is that URNA will depend in part on the
earnings of its subsidiaries, and the payment or other distribution to it of these earnings, in order to meet its obligations under the New Notes and its other debt. Provisions of law, such as those
requiring that dividends be paid only from surplus, could limit the ability of URNA's subsidiaries to make payments or other distributions to it. Furthermore, these subsidiaries could in certain
circumstances agree to contractual restrictions on their ability to make distributions. These restrictions could also render the subsidiary guarantors financially or contractually unable to make
payments under their guarantees of the New Notes.
Holdings' primary asset is its equity interest in URNA.
The New Notes will be guaranteed by Holdings. However, substantially all of Holdings' net worth is attributable to the stock of URNA owned by
Holdings and all of its operations are conducted through URNA. Consequently, the Holdings guarantee will not give holders of the New Notes a claim to significant assets other than those to
which they already have a claim as URNA's direct creditors. Furthermore, substantially all of Holdings' assets are subject to a security interest in favor of the lenders under the ABL Facility, which
gives these lenders a first-priority claim to such assets.
A guarantee by a subsidiary guarantor could be voided if the subsidiary guarantor fraudulently transferred
the guarantee at the time it incurred the indebtedness, which could result in the holders of the New Notes being able to rely only on URNA and Holdings to satisfy claims.
A guarantee by one of our subsidiary guarantors that is found to be a fraudulent transfer may be voided under the fraudulent transfer laws
described below. The application of these laws requires the making of complex factual determinations and estimates as to which there may be different opinions and views.
general, federal and state fraudulent transfer laws provide that a guarantee by a subsidiary guarantor can be voided, or claims under a guarantee by a subsidiary guarantor may be
subordinated to all other debts of that subsidiary guarantor if, among other things, at the time it incurred the indebtedness evidenced by its guarantee:
- the subsidiary guarantor intended to hinder, delay or defraud any present or future creditor; or
- the subsidiary guarantor received less than reasonably equivalent value or fair consideration for the incurrence of the guarantee; and
- was insolvent or rendered insolvent by reason of such incurrence;
- was engaged in a business or transaction for which the subsidiary guarantor's remaining assets constituted unreasonably small
- intended to incur, or believed that it would incur, debts beyond its ability to pay those debts as they mature.
addition, any payment by that subsidiary guarantor under a guarantee could be voided and required to be returned to the subsidiary guarantor or to a fund for the benefit of the
creditors of the subsidiary guarantor.