<PAGE>
As filed with the Securities and Exchange Commission on June 16, 1997
Registration No. 333-
---------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
TULTEX CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Virginia 228 54-0367896
(State or other jurisdiction (Primary standard industrial (I.R.S. Employer Identification No.)
of incorporation or organization) classification code number)
</TABLE>
101 Commonwealth Boulevard
Martinsville, Virginia 24112
(540) 632-2961
(Address, including zip code, and telephone number
including area code, of registrants' principal executive offices)
O. Randolph Rollins
Executive Vice President and General Counsel
Tultex Corporation
101 Commonwealth Boulevard
Martinsville, Virginia 24112
(540) 632-2961
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copy to:
Lathan M. Ewers, Jr.
Hunton & Williams
951 East Byrd Street
Richmond, Virginia 23219-4074
(804) 788-8269
Approximate date of commencement of proposed sale to the public: As
soon as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this form are to be
offered in connection with the formation of a holding company and there is
compliance with General Instruction G, check the following box. [_]
CALCULATION OF REGISTRATION FEE
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<CAPTION>
===================================================================================================================================
Title of Each Class of Amount Proposed Maximum Proposed Maximum Amount of
Securities To Be Registered To Be Registered Offering Price Per Unit Aggregate Offering Price Registration Fee
Per Unit (1)
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<S> <C> <C> <C> <C>
9 5/8% Senior Notes of Tultex Corporation $75,000,000 $1,000 $75,000,000 $25,863
Guarantees with respect to 9 5/8% Senior ____ ____ ____ (1)
Notes by Subsidiaries of Tultex
Corporation
----------- ----------- ------------ ---------
TOTAL $75,000,000 $1,000 $75,000,000 $25,863
===================================================================================================================================
</TABLE>
(1) Pursuant to Rule 457(n), no registration fee for the Guarantees is payable.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
Co-Registrants
<TABLE>
<CAPTION>
State or Other
Exact Name of Co-Registrant Jurisdiction of Incorporation IRS Employer
As Specified in its Charter or Organization Identification No.
- --------------------------- ----------------------------- ------------------
<S> <C> <C>
AKOM, Ltd. Cayman Islands, BWI (foreign)
Dominion Stores, Inc. Virginia 54-1427013
Tultex International, Inc. Virginia 54-1513129
LogoAthletic, Inc. Virginia 54-1611615
LogoAthletic/Headwear, Inc. Massachusetts 04-3022142
Tultex Canada, Inc. Canada (foreign)
Sweatjet, Inc. Virginia 54-1403227
</TABLE>
<PAGE>
Prospectus Subject to Completion
Dated [ ], 1997
TULTEX CORPORATION
OFFER TO EXCHANGE
ALL OUTSTANDING
$75,000,000 9 5/8% SENIOR NOTES DUE 2007
($75,000,000 PRINCIPAL AMOUNT OUTSTANDING)
FOR $75,000,000 9 5/8% SENIOR NOTES DUE 2007
The Exchange Offer Will Expire at 5:00 p.m., Richmond Time
on [ ], 1997, Unless Extended
Tultex Corporation, Inc., a Virginia corporation, hereby offers (the "Exchange
Offer"), upon the terms and subject to the conditions set forth in this
Prospectus (the "Prospectus") and the accompanying Letter of Transmittal (the
"Letter of Transmittal"), to exchange $1,000 principal amount of its new 9 5/8%
Senior Notes due 2007 (the "Exchange Notes") for each $1,000 principal amount of
its outstanding 9 5/8% Senior Notes due 2007 (the "Old Notes"), of which
$75,000,000 aggregate principal amount is outstanding. The form and terms of the
Exchange Notes are substantially identical to the form and terms of the Old
Notes, except that the Exchange Notes will have been registered under the
Securities Act of 1933, as amended (the "Securities Act"). All references herein
to the "Notes" shall be references to the Old Notes and/or the Exchange Notes,
whichever was, is or will be outstanding in the particular context. See "The
Exchange Offer" and "Description of Exchange Notes."
This Prospectus and Letter of Transmittal are being mailed to all holders of
the Old Notes on [ ], 1997.
See "Risk Factors" beginning on page For A Discussion Of Certain Factors That
--
Should Be Considered In Connection With The Exchange Offer And An Investment In
The Exchange Notes Offered Hereby.
THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THE PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is [ ], 1997.
<PAGE>
The Exchange Notes will be issued under the Indenture (as defined
below). See "Description of Exchange Notes."
The Exchange Notes will be fully and unconditionally guaranteed on a
joint and several basis by all direct and indirect Material Subsidiaries (as
defined) of the Company. Presently, the Guarantors are Dominion Stores, Inc.,
Tultex International, Inc., LogoAthletic, Inc., LogoAthletic/Headwear, Inc.,
AKOM, Ltd., Tultex Canada, Inc., and SweatJet Incorporated, Inc., which,
together with any subsequent Guarantors, are collectively referred to as
"Guarantors." See "Description of Exchange Notes--Guarantees of Exchange Notes."
The Company will accept for exchange any and all Old Notes validly
tendered and not withdrawn prior to 5:00 p.m., New York City time, on
[ ], 1997, unless extended by the Company in its sole discretion (the
"Expiration Date"). Tenders of Old Notes may be withdrawn prior to the
Expiration Date. Old Notes may be tendered only in integral multiples of $1,000
principal amount. See "The Exchange Offer."
The Old Notes were sold on April 10, 1997 in a transaction exempt from
registration under the Securities Act. Payment for the Old Notes was made by
J.P. Morgan Securities Inc. and NationsBanc Capital Markets, Inc. (the "Initial
Purchasers") on April 17, 1997 (the "Closing Date"). The Exchange Notes are
being offered to satisfy certain obligations of the Company under the
Registration Rights Agreement (as defined below) relating to the Old Notes. See
"The Exchange Offer--Purpose and Effect of the Exchange Offer." Exchange Notes
issued pursuant to the Exchange Offer in exchange for Old Notes may be offered
for resale, resold or otherwise transferred by the holders thereof (other than
any holder which is an affiliate of the Company within the meaning of Rule 405
under the Securities Act), without compliance with the registration and
prospectus delivery requirements of the Securities Act, provided that such
Exchange Notes are acquired in the ordinary course of such holders' business and
such holders have no arrangement with any person to participate in the
distribution of such Exchange Notes. Each broker-dealer that receives Exchange
Notes for its own account pursuant to the Exchange Offer must acknowledge that
it will deliver a prospectus in connection with any resale of such Exchange
Notes. The Letter of Transmittal states that by acknowledging and by delivering
a prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. See "The Exchange
Offer--Purpose and Effect of the Exchange Offer" and "Plan of Distribution."
The Notes constitute securities for which there is no established
trading market. Any Old Notes not tendered and accepted in the Exchange Offer
will remain outstanding. To the extent that any Old Notes are tendered and
accepted in the Exchange Offer, a holder's ability to sell untendered Old Notes
could be adversely affected. No assurance can be given as to the liquidity of
the trading market for either the Old Notes or the Exchange Notes. See "Risk
Factors."
Interest on the Exchange Notes shall accrue from the last April 15 or
October 15 (an "Interest Payment Date") on which interest was paid on the Old
Notes so surrendered, or, if no interest has been paid on such Old Notes, from
April 17, 1997. No interest will be paid on Old Notes accepted for exchange.
NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THE
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THE EXCHANGE OFFER IS
NOT BEING MADE TO, NOR WILL THE COMPANY ACCEPT SURRENDERS FOR EXCHANGE FROM,
HOLDERS OF OLD NOTES IN ANY JURISDICTION IN WHICH THE EXCHANGE OFFER OR THE
ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE SECURITIES OR BLUE SKY
LAWS OF SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
EXCHANGE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION
THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO
THE DATE HEREOF.
UNTIL [ ], 1997, ALL DEALERS EFFECTING TRANSACTIONS IN THE EXCHANGE
NOTES, WHETHER OR NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER
A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
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<PAGE>
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE
UPON REQUEST FROM TULTEX CORPORATION, 101 COMMONWEALTH BOULEVARD,
MARTINSVILLE, VIRGINIA, 24401, ATTENTION: KATHY H. ROGERS, SECRETARY,
TELEPHONE 540/632-2961, EXTENSION 3830. IN ORDER TO ENSURE TIMELY DELIVERY OF
THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY [5 BUSINESS DAYS PRIOR TO
EXPIRATION DATE].
-3-
<PAGE>
TABLE OF CONTENTS
AVAILABLE INFORMATION...................................................... 5
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............................ 5
PROSPECTUS SUMMARY......................................................... 6
THE EXCHANGE OFFER......................................................... 10
RISK FACTORS............................................................... 13
USE OF PROCEEDS............................................................ 16
CAPITALIZATION............................................................. 16
SELECTED CONSOLIDATED FINANCIAL DATA....................................... 17
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS........................... 19
BUSINESS .................................................................. 23
MANAGEMENT................................................................. 33
DESCRIPTION OF CERTAIN OTHER INDEBTEDNESS.................................. 34
THE EXCHANGE OFFER......................................................... 35
DESCRIPTION OF EXCHANGE NOTES.............................................. 40
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS.................... 57
PLAN OF DISTRIBUTION....................................................... 59
LEGAL MATTERS.............................................................. 60
EXPERTS .................................................................. 60
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
THIS PROSPECTUS INCLUDES "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF
SECTION 27A OF THE SECURITIES ACT AND SECTION 21E OF THE EXCHANGE ACT. ALL
STATEMENTS OTHER THAN STATEMENTS OF HISTORICAL FACTS INCLUDED IN THIS
PROSPECTUS, INCLUDING WITHOUT LIMITATION, CERTAIN STATEMENTS UNDER THE
"PROSPECTUS SUMMARY," "THE COMPANY," "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS" AND "BUSINESS" AND LOCATED
ELSEWHERE HEREIN REGARDING THE COMPANY'S FINANCIAL POSITION AND BUSINESS
STRATEGY, MAY CONSTITUTE FORWARD-LOOKING STATEMENTS. ALTHOUGH THE COMPANY
BELIEVES THAT THE EXPECTATIONS REFLECTED IN SUCH FORWARD-LOOKING STATEMENTS ARE
REASONABLE, IT CAN GIVE NO ASSURANCE THAT SUCH EXPECTATIONS WILL PROVE TO HAVE
BEEN CORRECT. IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THE COMPANY'S EXPECTATIONS ("CAUTIONARY STATEMENTS") ARE
DISCLOSED IN THIS PROSPECTUS, INCLUDING WITHOUT LIMITATION IN CONJUNCTION WITH
THE FORWARD-LOOKING STATEMENTS INCLUDED IN THIS PROSPECTUS AND UNDER "RISK
FACTORS." ALL SUBSEQUENT WRITTEN AND ORAL FORWARD-LOOKING STATEMENTS
ATTRIBUTABLE TO THE COMPANY OR PERSONS ACTING ON ITS BEHALF ARE EXPRESSLY
QUALIFIED IN THEIR ENTIRETY BY THE CAUTIONARY STATEMENTS.
-4-
<PAGE>
AVAILABLE INFORMATION
The Company and the Guarantors have filed with the Commission a
Registration Statement on Form S-4 under the Securities Act for the registration
of the securities offered hereby. This Prospectus, which constitutes a part of
the Registration Statement, does not contain all of the information set forth in
the Registration Statement, certain items of which are contained in exhibits and
schedules to the Registration Statement as permitted by the rules and
regulations of the Commission. For further information with respect to the
Company, the Guarantors and the securities offered hereby, reference is made to
the Registration Statement, including the exhibits thereto, and financial
statements and notes filed as a part thereof. Statements made in this Prospectus
concerning the contents of any document referred to herein are not necessarily
complete. With respect to each such document filed with the Commission as an
exhibit to the Registration Statement, reference is made to the exhibit for a
more complete description of the matter involved, and each such statement shall
be deemed qualified in its entirety by such reference.
The Company is subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Commission. Any reports, proxy statements and other information filed with the
Commission may be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the Commission's regional offices in
Chicago, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and in
New York, 7 World Trade Center, 13th Floor, New York, New York 10048. Copies of
such material may also be obtained by mail from the Public Reference Section of
the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. The Commission maintains a Web site
(http://www.sec.gov) that contains reports, proxy and information statements and
other information regarding registrants who file electronically with the
Commission. In addition, such reports, proxy statements and other information
can be inspected at the New York Stock Exchange, Inc., 20 Broad Street, New
York, New York 10005, on which exchange the common stock of the Company is
listed.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated into this Prospectus by reference:
1. Annual Report on Form 10-K for the fiscal year ended
December 28, 1996; and
2. Quarterly Report on Form 10-Q for the fiscal quarter
ended April 5, 1997.
All documents subsequently filed by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date hereof and prior to
the termination of the offering of the New Securities offered hereby shall be
deemed to be incorporated by reference into this Prospectus and to be a part of
this Prospectus from the date of filing of such document. Any statement
contained herein or in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
As used herein, the terms "Prospectus" and "herein" mean this
Prospectus including the documents incorporated or deemed to be incorporated
herein by reference, as the same may be amended, supplemented or otherwise
modified from time to time. Statements contained in this Prospectus as to the
contents of any contract or other document referred to herein do not purport to
be complete, and where reference is made to the particular provisions of such
contract or other document, such provisions are qualified in all respects by
reference to all of the provisions of such contract or other document. The
Company will provide without charge to any person to whom this Prospectus is
delivered, on the written or oral request of such person, a copy of any or all
of the foregoing documents incorporated by reference herein (other than exhibits
not specifically incorporated by reference into the texts of such documents).
Requests for such documents should be directed to: Tultex Corporation, 101
Commonwealth Boulevard, Martinsville, Virginia, 24401, Attention: Kathy H.
Rogers, Secretary, Telephone 540/632-2961, extension 3830.
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<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere in this Prospectus and the Company's Annual
Report on Form 10-K for the year ended December 28, 1996 and its Quarterly
Report on Form 10-Q for the fiscal quarter ended April 5, 1997, which are
incorporated by reference in this Prospectus. Unless the context requires
otherwise, "Tultex" or the "Company" refers to Tultex Corporation and its
consolidated subsidiaries. "Guarantors" refers to the Company's wholly owned
subsidiaries that have guaranteed the Notes. Capitalized terms used in this
summary under the caption "The Offering" and not otherwise defined are defined
below under the caption "Description of Exchange Notes--Certain Definitions."
References to "year end" refer to the Company's fiscal year end.
The Company
Tultex Corporation is one of the world's largest marketers and manufacturers of
activewear and licensed sports apparel for consumers and sports enthusiasts. The
Company's diverse product line includes fleeced sweats, jersey products
(outerwear T-shirts), decorated jackets and caps. These products are sold under
the Company's own brands led by the Discus Athletic and LogoAthletic premium
labels and under private labels, including Nike, Reebok and Pro Spirit. In
addition, the Company has numerous professional and college sports licenses to
market and manufacture embroidered and screen-printed products with team logos
and designs under its Discus Athletic, LogoAthletic, Logo 7 and TrackGear
brands. The Company is a licensee of professional sports apparel, holding
licenses from the National Football League, Major League Baseball, the National
Basketball Association, the National Hockey League and the National Association
for Stock Car Auto Racing to manufacture a full range of apparel for adults and
children.
Historically a producer of quality fleecewear, in recent years Tultex has
successfully pursued a strategy to enhance its competitiveness and to capitalize
on growth opportunities by becoming a consumer-oriented apparel maker able to
compete in a changing industry. This strategy includes the following elements:
. Promoting Higher-Margin Products. The Company continues to strengthen
its competitiveness through (i) the development of branded and private
label, higher-quality and higher-margin products to supplement its
traditionally strong position in the lower-priced segment of the business
and (ii) since 1991, the manufacture of jersey products. The Company has
developed its own brands, promoting Discus Athletic and LogoAthletic for
its premium products and using the Tultex and Logo 7 labels for the value-
oriented and wholesale segments of the market. Discus Athletic's highly
visible advertising during televised broadcasts of college football and
basketball on the ESPN and ABC television networks and sports marketing
sponsorships, such as ProBeach Women's Volleyball, have contributed to
significant annual increases in sales of this brand since 1992. In
addition, Tultex has partnering arrangements to supply higher-quality,
private label products to companies such as Reebok and Nike, none of which
accounted for more than 10% of the Company's consolidated sales during
1996. Sales of the higher-margin branded and premium private label products
have grown from 13.8% of consolidated sales in 1993 to 37.6% in 1996.
. Expanding into Licensed Apparel Business to Complement Activewear
Business. Tultex's 1992 acquisitions of Logo 7, Inc. ("LogoAthletic"), a
marketer of licensed sports apparel, and Universal Industries, Inc.
("LogoAthletic/Headwear"), a marketer of sports licensed headwear,
contributed to the Company's achieving the third largest market share
(11.8%) in the higher-margin licensed apparel business in 1995, and created
opportunities for significant manufacturing and distribution synergies with
the Company's activewear business. The promotion of the LogoAthletic brand
of licensed apparel through television and print advertising, as well as
promotional arrangements featuring Dallas Cowboys' Troy Aikman, Miami
Dolphins' Dan Marino, Denver Broncos' John Elway, Kansas City Chiefs'
Marcus Allen, and the Buffalo Bills' Bruce Smith, among others, has helped
to increase the visibility and sales of LogoAthletic products.
. Strengthening Customer Relationships. Tultex actively pursues strong
relationships with department, sporting goods and other specialty stores,
such as Sears, JC Penney, Modell's, Dillard's, Foot Locker, Champs and
Sports Authority, to distribute its higher margin branded and private label
products. In addition, the Company continues to strengthen its
relationships with high volume retailers such as Wal-Mart, Kmart and Target
by supplying private label, Tultex and Logo 7 products. Tultex provides
customers with exceptional service and support; as an example, its
distribution capabilities are highly responsive to customers' changing
delivery and inventory management requirements.
-6-
<PAGE>
. Increasing Emphasis on Wholesale Distribution. In recent years, Tultex has
placed increased emphasis on distribution channels acquiring California
Shirt Sales, Inc., Fullerton, California ("California Shirt"), a major
jerseywear distributor in 11 western states and Hawaii, in April 1997 and
acquiring T-Shirt City, Inc., a major distributor of fleecewear and
jerseywear in the Midwest, in May 1997. See "Business--Recent
Developments."
. Vertically Integrating. The Company's activewear business is vertically
integrated, spinning approximately 80-85% of the yarn it requires in three
yarn plants located in North Carolina (the balance is purchased under yarn
supply contracts) and knitting, dyeing and cutting fabric and sewing
finished goods in eight plants in Virginia and North Carolina and one plant
in Jamaica. The Company's licensed apparel operations are conducted from
one plant in Indiana, one plant in Massachusetts, and one plant in North
Carolina.
The Company's strategy has improved its sales mix. While net sales increased
8.7% in fiscal 1996 over 1995, net sales of Discus Athletic activewear,
LogoAthletic licensed apparel and premium private label products increased 23.7%
to $239.3 million. Sales of jersey products were $112.4 million for the fiscal
year ended December 28, 1996, representing 27.5% of the Company's activewear
sales during such period compared to 24.0% for fiscal 1995.
Trademarks and service marks of the Company are italicized where they appear in
this Prospectus. Tultex, Discus Athletic and The Sweatshirt
Company are registered trademarks of the Company. Logo 7 and
LogoAthletic are registered trademarks of the Company's subsidiary,
LogoAthletic, Inc. TrackGear(TM) is a trademark of the Company's TrackGear
subsidiary. The Company's principal executive offices are located at 101
Commonwealth Boulevard, Martinsville, Virginia 24112, telephone 540/632-2961.
The Financing
Net proceeds of the offering of the Old Notes were used to repay approximately
$65 million of borrowings outstanding under the Company's Senior Credit Facility
with a group of commercial banks (the "Senior Credit Facility"). Concurrently,
the borrowing availability under the Senior Credit Facility was reduced from
$225,000,000 to $187,500,000. The balance of the net proceeds was used to
redeem, at a cost of $7,687,500, 75,000 of the 150,000 outstanding shares of the
Company's Cumulative Convertible Preferred Stock, $7.50 Series B, issued as part
of the purchase price in the Company's acquisition of LogoAthletic in 1992 (the
offering and sale of the Old Notes, together with the use of proceeds therefrom,
is referred to herein as the "Financing"). The Company will not receive any
proceeds from the Exchange Offer.
Description of Exchange Notes
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<S> <C>
Securities Offered....................... $75 million aggregate principal
amount of 9 5/8% Senior Notes
due 2007.
Maturity Date............................ April 15, 2007.
Interest Payment Dates................... April 15 and October 15, commencing
October 15, 1997.
Optional Redemption by the Company....... Exchange Notes are not redeemable
prior to April 15, 2002, except as
set forth below. The Exchange Notes
will be redeemable at the option of
the Company, in whole or in part, at
any time on or after April 15, 2002,
at the redemption prices set forth
herein, together with accrued and
unpaid interest to the redemption
date.
Sinking Fund............................. None.
</TABLE>
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<TABLE>
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Ranking.................................. Exchange Notes are general unsecured
obligations of the Company and rank
pari passu in right of payment with
all other unsubordinated Indebtedness
(including Old Notes not exchanged
for Exchange Notes, the 1995 Notes
(as defined below), and the Senior
Credit Facility) of the Company.
Guarantees............................... Exchange Notes are guaranteed on a
joint and several basis by each of
the Guarantors. The Guarantees are
general unsecured obligations of the
Guarantors and will rank pari passu
in right of payment with all other
unsubordinated indebtedness of the
Guarantors. The Guarantors' liability
under the Guarantees is limited as
described herein, and Guarantees will
be released in connection with
certain asset sales and dispositions.
See "Description of Notes--
Guarantees."
Change of Control Offer.................. Upon a Change of Control, the Company
will be required to make an offer to
purchase all outstanding Exchange
Notes at a purchase price of 101% of
the principal amount thereof, plus
accrued and unpaid interest to the
repurchase date.
Certain Covenants........................ The Indenture contains certain
covenants that, among other things,
limit the ability of the Company or
any of its Subsidiaries to incur
additional Indebtedness, make certain
Restricted Payments, make certain
Investments, create Liens, engage in
Sale and Leaseback Transactions,
permit dividend or other payment
restrictions to apply to
Subsidiaries, enter into certain
transactions with Affiliates or
Related Persons or consummate certain
merger, consolidation or similar
transactions. In addition, in certain
circumstances, the Company is
required to offer to purchase
Exchange Notes at 100% of the
principal amount thereof with the net
proceeds of certain asset sales.
These covenants are subject to a
number of significant exceptions and
qualifications. See "Description of
Notes."
Registration Requirements................ The Company is obligated to commence
an exchange offer (the "Exchange
Offer") pursuant to an effective
registration statement or cause the
resale of the Exchange Notes to be
registered under the Securities Act
and, if (i) the Exchange Offer
Registration Statement is not filed
with the Commission on or prior to
the 60th day following the original
issue of the Old Notes, (ii) the
Exchange Offer Registration Statement
is not declared effective by the
Commission on or prior to the 120th
day following the original issuance
of the Old Notes, or (iii) the
Exchange Offer is not consummated or
a registration statement with respect
to resales of the Old Notes is not
declared
</TABLE>
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<PAGE>
effective on or prior to the 150th
day following the original issuance
of the Old Notes, then certain
additional interest (in addition to
the interest otherwise due on the Old
Notes) will accrue on the Old Notes.
Upon the subsequent consummation of
the Exchange Offer or the declaration
of effectiveness of such resale
registration statement with respect
to the Old Notes, such additional
interest will cease accruing. See
"Description of Exchange Notes -
Registration Rights."
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<PAGE>
The Exchange Offer
The Old Notes were sold on April 10, 1997 in a transaction exempt from
registration under the Securities Act. Payment for the Old Notes was made on
April 17, 1997 (the "Closing Date"). In connection therewith, the Company and
the Guarantors executed and delivered, for the benefit of the holders of the Old
Notes, the Registration Rights Agreement dated as of April 15, 1997 (the
"Registration Rights Agreement"). The Registration Rights Agreement grants the
holders of Old Notes certain exchange and registration rights. The Exchange
Offer is intended to satisfy certain of such rights, which terminate upon
consummation of the Exchange Offer. Thereafter, holders of Exchange Notes will
not be entitled to any exchange or registration rights with respect to the
Exchange Notes.
The Company is obligated to commence an Exchange Offer pursuant to an effective
registration statement (the "Exchange Offer Registration Statement") or cause
the Old Notes to be registered under the Securities Act and, if (i) the Exchange
Offer Registration Statement is not filed with the Commission on or prior to the
60th day following the original issuance of the Old Notes, (ii) the Exchange
Offer Registration Statement is not declared effective by the Commission on or
prior to the 120th day following the original issuance of the Old Notes, or
(iii) the Exchange Offer is not consummated or a registration statement with
respect to resales of the Old Notes is not declared effective on or prior to the
150th day following the original issuance of the Old Notes (each such event
referred to in clauses (i) through (iii), a "Registration Default"), then the
Company will pay additional interest (in addition to the interest otherwise due
on the Old Notes) to each holder of Old Notes during the first 90-day period
immediately following the occurrence of each such Registration Default in an
amount equal to 0.25% per annum. The amount of interest will increase by an
additional 0.25% per annum for each subsequent 90-day period until such
Registration Default is cured, up to a maximum amount of additional interest of
1.00% per annum. Such additional interest will cease accruing on such Old Notes
when the Registration Default has been cured. See "The Exchange Offer--Purpose
and Effect of the Exchange Offer."
<TABLE>
<S> <C>
The Exchange Offer....................... $1,000 principal amount of Exchange
Notes in exchange for each $1,000
principal amount of Old Notes. As of
the date hereof, $75,000,000
aggregate principal amount of Old
Notes is outstanding. The terms of
the Exchange Notes are substantially
identical (including principal
amount, interest rate and maturity)
to the terms of the Old Notes for
which they may be exchanged pursuant
to the Exchange Offer, except that
the Exchange Notes will have been
registered under the Securities Act
and will not bear legends restricting
their transfer. See "The Exchange
Offer--Terms of the Exchange Offer"
and "The Exchange Offer--Procedures
for Tendering."
Based on an interpretation by the
staff of the Commission set forth in
no-action letters issued to third
parties, the Company believes that
Exchange Notes issued pursuant to the
Exchange Offer in exchange for Old
Notes may be offered for resale,
resold and otherwise transferred by
any holder or beneficial owner
thereof (other than any such holder
or beneficial owner which is an
"affiliate" of the Company within the
meaning of Rule 405 under the
Securities Act or a "broker" or
"dealer" registered under the
Exchange Act) without compliance with
the registration and prospectus
delivery provisions of the Securities
Act, provided that such Exchange
Notes are acquired in the ordinary
course of such holder's or beneficial
owner's business and that such holder
or beneficial owner is not engaged
in, does not intend to engage in and
has no arrangement or understanding
with any person to participate in the
distribution of such Exchange Notes.
See "Plan of Distribution."
Expiration Date.......................... 5:00 p.m., New York City time, on
[ ], 1997, unless the Exchange
Offer is extended by the Company in
its sole
</TABLE>
-10-
<PAGE>
<TABLE>
<S> <C>
discretion, in which case the term
"Expiration Date" means the latest
date and time to which the Exchange
Offer is extended. See "The Exchange
Offer--Expirations; Extensions;
Amendments."
Interest................................. Interest on the Exchange Notes shall
accrue from the last Interest Payment
Date on which interest was paid on
the Old Notes so surrendered, or, if
no interest has been paid on such Old
Notes, from April 17, 1997. No
interest will be paid on the Old
Notes accepted for exchange. See "The
Exchange Offer--Interest."
Procedures for Tendering................. Each holder of Old Notes wishing to
accept the Exchange Offer must
complete, sign and date the Letter of
Transmittal, or a facsimile thereof,
in accordance with the instructions
contained herein and therein, and
mail or otherwise deliver such Letter
of Transmittal, or such facsimile,
together with the Old Notes and any
other required documentation to First
Union National Bank of Virginia (the
"Exchange Agent") at the address set
forth herein. By executing the Letter
of Transmittal, each holder will
represent to the Company, among other
things, that (i) the Exchange Notes
acquired pursuant to the Exchange
Offer are being obtained in the
ordinary course of business of the
person receiving such Exchange Notes,
whether or not such person is the
holder, (ii) neither the holder nor
any such other person is engaged in,
intends to engage in or has an
arrangement or understanding with any
person to participate in the
distribution of such Exchange Notes
and (iii) neither the holder nor any
such other person is an "affiliate,"
as defined under Rule 405 under the
Securities Act, of the Company. See
"The Exchange Offer--Procedures for
Tendering."
Special Procedures for
Beneficial Owners........................ Any beneficial owner whose Old Notes
are registered in the name of a
broker, dealer, commercial bank,
trust company or other nominee and
who wishes to tender should contact
such registered holder promptly and
instruct such registered holder to
tender on such beneficial owner's
behalf. See "The Exchange Offer--
Procedures for Tendering."
Brokers or Dealers....................... Any broker or dealer participating
in the Exchange Offer will be
required to acknowledge that it will
deliver a prospectus in connection
with any resales of the Exchange
Notes received by it in the Exchange
Offer. A broker or dealer registered
under the Exchange Act that acquired
Old Notes for its own account
pursuant to its market-making or
other trading activities (other than
Old Notes acquired directly from the
Company or an affiliate of the
Company) may participate in the
Exchange Offer but may be deemed an
underwriter under the Securities Act
and, therefore, must deliver a
prospectus relating to the Exchange
Notes in connection with any resales
by it of Exchange Notes acquired by
it for its own account in the
Exchange Offer; only such brokers or
dealers may use this Prospectus in
connection with resales of the
Exchange Notes. See "Plan of
Distribution."
Guaranteed Delivery Procedures........... Holders of Old Notes who wish to
tender their Old Notes and whose Old
Notes are not immediately available
or who cannot deliver their Old
Notes, the Letter of Transmittal or
any other documents required by the
Letter of Transmittal
</TABLE>
-11-
<PAGE>
<TABLE>
<S> <C>
to the Exchange Agent on or prior to
the Expiration Date, must tender
their Old Notes according to the
guaranteed delivery procedures set
forth under "The Exchange Offer--
Guaranteed Delivery Procedures."
Exchanging Book-Entry Old
Notes.................................... Financial institutions that have an
account with The Depository Trust
Company ("DTC") may utilize DTC's
Automatic Tender Offer Program
("ATOP") to tender Old Notes. See
"The Exchange Offer--Exchanging Book-
Entry Old Notes."
Withdrawal Rights........................ Old Notes tendered pursuant to the
Exchange Offer may be withdrawn on or
prior to the Expiration Date. See
"The Exchange Offer--Withdrawal of
Tenders."
Acceptance of Old Notes and
Delivery of Exchange Notes.............. The Company will accept for exchange
any and all Old Notes which are
properly tendered in the Exchange
Offer prior to the Expiration Date.
The Exchange Notes issued pursuant to
the Exchange Offer will be delivered
on the earliest practicable date
following the Expiration Date. See
"The Exchange Offer--Terms of the
Exchange Offer."
Certain U.S. Income Tax
Considerations.......................... An exchange of Old Notes for
Exchange Notes pursuant to the
Exchange Offer should not be treated
as an exchange or otherwise as a
taxable event for United States
federal income tax purposes.
Accordingly, the Exchange Notes
should have the same issue price as
the Old Notes and each holder should
have the same adjusted basis and
holding period in the Exchange Notes
as it had in the Old Notes
immediately before the Exchange
Offer. See "Certain United States
Federal Income Tax Considerations."
Effect on Holders of the Old
Notes................................... As a result of the making of, and
upon acceptance for exchange of all
validly tendered Old Notes pursuant
to the terms of, the Exchange Offer,
the Company will have fulfilled
certain of its obligations contained
in the Registration Rights
Agreements. Holders of the Old Notes
who do not tender their Old Notes
will be entitled to all the rights
and limitations applicable thereto
under the Indenture (as defined) and
the Registration Rights Agreement,
except for any rights under the
Indenture or the Registration Rights
Agreement which by their terms
terminate or cease to have further
effect as a result of the making of,
and the acceptance for exchange of
all validly tendered Old Notes
pursuant to, the Exchange Offer. All
untendered Old Notes will continue to
be subject to the restrictions on
transfer provided for in the Old
Notes and in the Indentures.
Use of Proceeds.......................... There will be no cash proceeds to
the Company from the exchange
pursuant to the Exchange Offer. See
"Use of Proceeds."
Exchange Agent........................... First Union National Bank of
Virginia, as Trustee, is serving as
Exchange Agent in connection with the
Exchange Offer. See "The Exchange
Offer--Exchange Agent."
</TABLE>
-12-
<PAGE>
RISK FACTORS
Prospective investors should consider carefully all the information contained in
this Prospectus including the following risk factors.
Substantial Leverage
As of April 5, 1997, after giving effect to the Financing, the Company's total
indebtedness would have been approximately $247.0 million, all of which was
unsubordinated, and total stockholders' equity would have been approximately
$192.1 million, resulting in a pro forma total debt to total capitalization
ratio of 56.3%. In addition, at such date and after giving effect to the
Financing, approximately $104.9 million of additional borrowing capacity would
have been available (pursuant to the borrowing base formula) under the Senior
Credit Facility. The Indenture permits the Company and its subsidiaries to incur
certain additional specified indebtedness. See "Description of Exchange Notes."
The Company's borrowing needs are seasonal. The maximum amount of indebtedness
outstanding at any fiscal month end in 1996 was approximately $285.0 million at
August 24, 1996. See "--Seasonality and Cyclicality."
The Company currently has incurred, and will continue to incur, significant
annual cash interest expense. After giving effect to the Financing, the pro
forma ration of EBITDA to interest expense would have been 2.89 to 1 for the
fiscal year ended December 28, 1996 (0.63 for the fiscal quarter ended April 5,
1997), compared to 3.28 to 1 before the Financing (0.71 for the fiscal quarter
ended April 5, 1997). After giving effect to the Financing, the pro forma ratio
of earnings to fixed charges for the fiscal year ended December 28, 1996 would
have been 1.82 to 1 compared to 2.03 to 1 before the Financing. After giving
effect to the Financing, pro forma earnings did not cover fixed charges by $7.7
million for the fiscal quarter ended April 5, 1997. Earnings for the fiscal
quarter ended April 5, 1997 did not cover fixed changes by $7.0 million before
considering the Financing. See "Use of Proceeds" and "Capitalization."
The level of the Company's indebtedness could have important consequences to
holders of the Notes, including: (i) the Company's ability to obtain additional
financing in the future for working capital, capital expenditures, acquisitions,
debt service requirements, general corporate purposes or other purposes may be
restricted, (ii) a substantial portion of the Company's cash flow from
operations must be dedicated to the payment of the Company's interest expense,
(iii) the Company is more highly leveraged than certain of its competitors,
which may place the Company at a competitive disadvantage and (iv) the Company's
borrowings under the Senior Credit Facility, which will be reduced as a result
of the Financing, will accrue interest at variable rates, which could result in
increased interest expense in the event of higher interest rates.
The Company's ability to make interest payments on the Notes will be dependent
on the Company's future operating performance, which is itself dependent on a
number of factors, many of which are beyond the Company's control. The Company's
ability to repay the Notes at maturity will depend upon these same factors and
the ability of the Company to raise additional funds. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Financial Condition, Liquidity and Capital Resources."
Restrictive Covenants in the Senior Credit Facility and the 1995 Notes
The Senior Credit Facility and the Company's 105/8% Senior Notes due 2005 (the
"1995 Notes") contain material restrictions on the operation of the Company's
business.
The Senior Credit Facility includes covenants restricting, among other things,
the ability of the Company and certain subsidiaries to incur indebtedness,
create liens on the Company's property, guarantee obligations, alter the
character of the Company's business, consolidate, merge, purchase or sell the
Company's assets, make investments or advance funds, prepay indebtedness and
transact business with affiliates. The Senior Credit Facility also contains
certain financial covenants, including covenants that require the Company to
maintain a minimum tangible net worth, leverage ratio, and a fixed charge
coverage ratio, as well as customary representations and warranties, funding
conditions and events of default. At April 5, 1997, the Company was in
compliance with all such financial covenants. A breach of one or more covenants
under the Senior Credit Facility could result in an acceleration of the
Company's obligations thereunder, and the inability of the Company to borrow
additional amounts under the Senior Credit Facility. In addition, a default
under the Notes or the 1995 Notes constitutes an event of default under the
Senior Credit Facility.
-13-
<PAGE>
The 1995 Notes contain covenants that limit the ability of the Company and its
subsidiaries to incur additional indebtedness, make certain restricted payments,
make certain investments, create liens, engage in sale and lease transactions
and merge, consolidate or engage in similar transactions; that impose dividend
and other payment restrictions on subsidiaries; and that prohibit certain
transactions with affiliates or related persons. In certain circumstances, the
Company must also purchase the 1995 Notes at par with the net proceeds of asset
sales. A default under the Notes or the Senior Credit Facility constitutes an
event of default under the 1995 Notes.
Restrictive Covenants in Indenture
The Indenture contains material restrictions on the Company's operations,
including covenants that restrict or limit (i) indebtedness that may be incurred
by the Company and its subsidiaries, (ii) the ability of the Company and its
subsidiaries to pay dividends or make other distributions, purchase or redeem
stock and make other investments, (iii) the creation of liens, (iv) the
disposition of assets, (v) sale and leaseback transactions, (vi) the issuance
and sale of capital stock of the Company's subsidiaries, (vii) transactions with
affiliates, (viii) a change of control of the Company and (ix) mergers,
consolidations and certain sales of assets by the Company. A breach of one or
more covenants under the Indenture could result in an acceleration of the
Company's obligations thereunder. See "Description of Notes."
Competition
The domestic activewear and licensed apparel industries are highly competitive.
Since the 1980s, the activewear industry, and in recent years the licensed
apparel industry, have been characterized by the acquisition of existing
competitors by larger companies with substantial financial resources and
manufacturing and distribution capabilities. Certain participants in these
industries have greater financial and other resources than the Company.
Increased competition from these and future competitors could reduce sales and
prices, adversely affecting the Company's results of operations. Because of the
Company's high leverage, it may be less able to respond effectively to such
competition than other participants.
The Company's products are also subject to foreign competition. The extent of
import protection afforded to domestic manufacturers has been, and is likely to
remain, subject to considerable political deliberation. Beginning in 1995, the
General Agreement on Tariffs and Trade ("GATT") eliminated over a period of 10
years restrictions on imports of apparel. In addition, on January 1, 1994, the
North American Free Trade Agreement ("NAFTA") became effective.
Licenses and Trademarks
Professional and collegiate athletic licensors successfully have increased their
royalty percentages and minimum guaranteed payments in contracts with licensees,
such as the Company's subsidiaries. In addition, the Company's material licenses
are non-exclusive, and new or existing competitors may obtain similar licenses.
If a significant license or licenses were not renewed or replaced, the Company's
sales and results of operations likely would be materially and adversely
affected. See "Business--Licenses."
Because of its growing emphasis on branded products, the Company relies on the
strength of its trademarks. The Company has in the past and may in the future be
required to expend significant resources protecting these trademarks, and the
loss or limitation of the exclusive right to use them could adversely affect the
Company's sales and results of operations. See "Business--Industry--Competition"
and "--Trademarks."
Raw Materials
The principal raw materials used by the Company in the manufacture of its
products are cotton of various grades and staple lengths and polyester in staple
form. Any shortage in the cotton supply by reason of weather, crop disease or
other factors, or significant increase in the price of cotton or polyester,
could adversely affect the Company's results of operations. Tultex makes advance
purchases of raw cotton based on projected demand. The Company has contracted to
purchase substantially all of its raw cotton needs for 1997 and has fixed the
price on approximately 60% of its raw cotton needs. To the extent cotton prices
increase before the Company fixes the price for the remainder of its raw cotton
needs, the Company's results of operations could be adversely affected. See
"Business--Raw Materials."
-14-
<PAGE>
Seasonality and Cyclicality
Historically, the fleecewear and licensed apparel industries have been seasonal,
with peak sales occurring in the third and fourth quarters of the calendar year,
coinciding with cooler weather and the playing seasons for some of the most
popular professional and college sports, notably football and basketball. The
licensed apparel industry also is cyclical, in substantial part because of the
changing allegiances of sports fans as their teams win or lose, the fluctuating
popularity of a particular sport, and the possibility of sports related labor
disruptions. The Company's performance may be negatively affected by the
foregoing factors and by changing retailer and consumer demands and downturns in
consumer spending. See "Business--Industry" and "--Seasonality."
Environmental Laws and Regulations
The Company is subject to various federal, state, local and foreign
environmental laws and regulations governing the discharge, emission, storage,
handling and disposal of a variety of substances and wastes used in or resulting
from the Company's operations. The Company returns dyeing waste for treatment to
the City of Martinsville, Virginia's municipal wastewater treatment system
operated under a permit issued by the state. While the Company believes it is in
material compliance with these laws and regulations, there can be no assurance
that environmental requirements will not become more stringent in the future or
that the Company will not incur substantial costs in the future to comply with
such requirements. See "Business--Environmental Matters."
Fraudulent Conveyance Considerations
Each Guarantor's Guarantee of the obligations of the Company under the Notes may
be subject to review under relevant federal and state fraudulent conveyance
statutes in a bankruptcy, reorganization or rehabilitation case or similar
proceeding or a lawsuit by or on behalf of unpaid creditors of such Guarantor.
If a court were to find under relevant fraudulent conveyance statutes that, at
the time the Notes were issued, (a) a Guarantor guaranteed the Notes with the
intent of hindering, delaying or defrauding current or future creditors or
(b)(i) a Guarantor received less than reasonably equivalent value or fair
consideration for guaranteeing the Notes and (ii)(A) was insolvent or was
rendered insolvent by reason of such Guarantee, (B) was engaged, or about to
engage, in a business or transaction for which its assets constituted
unreasonably small capital or (C) intended to incur, or believed that it would
incur, obligations beyond its ability to pay as such obligations matured (as all
of the foregoing terms are defined in or interpreted under such fraudulent
conveyance statutes), such court could avoid or subordinate such Guarantee to
presently existing and future indebtedness of such Guarantor and take other
action detrimental to the holders of the Notes, including, under certain
circumstances, invalidating such Guarantee. See "Description of Exchange
Notes--The Guarantees."
Lack of Public Market
The Notes are a new issue of securities for which there is no trading market.
Because the Old Notes were sold pursuant to an exemption from registration under
the applicable securities laws and, therefore, may not be publicly offered, sold
or otherwise transferred in any jurisdiction where such registration may be
required, no public market for the Old Notes had developed. The Old Notes are
eligible for trading in the PORTAL market. The Company has been advised by the
Initial Purchasers that they intend to make a market in the Notes. Any
market-making activities with respect to the Notes may be discontinued at any
time without notice. In addition, such market-making activity is subject to the
limits imposed by the Securities Act and the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and may be limited during the Exchange Offer and
the pendency of any shelf registration statement. Although under the
Registration Rights Agreement the Company is required to consummate an offer to
exchange the Old Notes for equivalent registered securities, or to register the
Old Notes under the Securities Act, there can be no assurance that an active
trading market for the Old Notes and/or the Exchange Notes will develop. If a
market were to exist, the Exchange Notes could trade at prices that may be lower
than the initial offering price thereof depending on many factors, including
prevailing interest rates and the markets for similar securities, general
economic conditions and the financial condition and performance of, and
prospects for, the Company. See "Description of Notes--Registration Rights."
-15-
<PAGE>
USE OF PROCEEDS
The Company will receive no proceeds from the exchange of Old Notes for Exchange
Notes. The net proceeds from the offering of Old Notes were approximately
$72,500,000. Net proceeds were used to repay approximately $65 million of
borrowings outstanding under the Company's Senior Credit Facility .
Concurrently, the borrowing availability under the Senior Credit Facility was
reduced from $225,000,000 to $187,500,000. The balance of the net proceeds was
used to redeem, at a cost of $7,687,500, 75,000 of the 150,000 outstanding
shares of Cumulative Convertible Preferred Stock, $7.50 Series B, issued as part
of the purchase price in the Company's acquisition of LogoAthletic in 1992. The
Company believes that the extended maturity of the Notes will provide more
permanent support for the Company's long-term growth strategies than the Senior
Credit Facility, which will be used primarily for seasonal working capital
needs.
CAPITALIZATION
The following table sets forth the capitalization of the Company at April 5,
1997, and as adjusted to give effect to the consummation of the Financing and
the use of the net proceeds from the offering and sale of Old Notes as set forth
in "Use of Proceeds." See the Company's Quarterly Report on Form 10-Q for the
fiscal quarter ended April 5, 1997, which is incorporated by reference in this
Prospectus.
<TABLE>
<CAPTION>
As of April 5, 1997
In thousands, except share amounts Actual As Adjusted
-------- -----------
Short-Term Indebtedness:
<S> <C> <C>
Notes payable to bank $ 7,525 $ 7,525
Current maturities of long-term indebtedness 423 423
---------- ----------
Total short-term indebtedness 7,948 7,948
========== ==========
Long-Term Indebtedness, Less Current Maturities:
105/8% Senior Notes due 2005 110,000 110,000
95/8% Senior Notes due 2007 75,000
Notes payable to banks (Senior Credit Facility) 118,850 54,038
Other long-term indebtedness 11 11
---------- ----------
Total long-term indebtedness 228,861 239,049
---------- ----------
Total indebtedness 236,809 246,997
========== ==========
Stockholders' Equity:
5% Cumulative Preferred Stock, $100 par value per share;
22,000 shares authorized, 1,975 shares outstanding 198 198
Cumulative Convertible Preferred Stock, $7.50 Series B, no par value;
150,000 shares authorized and outstanding 15,000 7,500
Common Stock, par value $1 per share; 60,000,000 shares authorized;
29,503,571 shares issued and outstanding 29,504 29,504
Capital in excess of par value 4,057 4,057
Retained earnings 151,339 151,151
Less notes receivable from stockholders (356) (356)
---------- ----------
Total stockholders' equity 199,742 192,054
Total capitalization $ 436,551 $ 439,051
========== ==========
</TABLE>
- ----------------
(1) Gives effect to the $188 premium associated with the redemption of 75,000
shares of Cumulative Convertible Preferred Stock $7.50 Series B.
-16-
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated statement of income and balance sheet data set forth
below for each of the five fiscal years in the period ended December 28, 1996 is
derived from the Consolidated Financial Statements of the Company, as audited by
Price Waterhouse LLP, independent accountants. In addition, the selected
consolidated statement of income and balance sheet data for each of the fiscal
quarters ended April 5, 1997 and March 30, 1996 is derived from the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended April 5, 1997. The
data presented below should be read in conjunction with "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and the Company's
Consolidated Financial Statements, related notes, and other financial data
included elsewhere in or incorporated by reference in this Prospectus.
<TABLE>
<CAPTION>
Fiscal Quarter for Ended Year Ended
------------------------- ------------------------------------------------------
In thousands, except ratios April 5 March 30, Dec. 28 Dec. 30 Dec. 31 Jan. 1 Jan. 2
and per share data 1997 1996 1996 1995 1994 1994(1) 1993(1)(2)
---- ---- ---- ---- ---- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Income Data:
Net sales and other income $99,630 $95,303 $636,341 $585,289 $565,433 $533,611 $503,946
Cost of products sold 73,881 70,019 469,715 432,062 419,769 395,727 368,027
Depreciation 5,092 5,736 21,497 23,163 23,973 23,364 20,831
Selling, general and administrative 22,156 23,595 96,454 99,164 93,510 88,433 81,297
------- ------- -------- -------- ------- ------- --------
Income from operations (1,499) (4,047) 48,675 30,900 28,181 26,087 33,791
Gain on sale of facilities - - -- -- 4,405 -- --
Interest expense 5,453 4,854 21,742 21,952 18,151 16,996 13,540
------- ------- -------- -------- ------- ------- --------
Income (loss) before income taxes and
extraordinary loss on early
extinguishment of debt (6,952) (8,901) 26,933 8,948 14,435 9,091 20,251
Income taxes (benefit) (2,717) (3,381) 10,234 3,400 5,485 3,188 7,060
------- ------- -------- -------- ------- ------- --------
Income (loss) before extraordinary loss (4,235) (5,520)
on early extinguishment of debt 16,699 5,548 8,950 5,903 13,191
Extraordinary loss on early
extinguishment of debt (net of income
taxes of $2,296) - - -- (3,746) -- -- --
------- ------- -------- -------- ------- ------- --------
Net income (loss) ($4,235) ($5,520) $ 16,699 $ 1,802 $ 8,950 $ 5,903 $ 13,191
======= ======= ======== ======== ======= ======= ========
Per Common Share Data:
Income (loss) before extraordinary loss
on early extinguishment of debt ($.15) ($.19) $ 0.53 $ 0.15 $ 0.26 $ 0.16 $ 0.42
Net income (loss) (.15) (.19) 0.53 0.02 0.26 0.16 0.42
Dividends declared 0 0 0 0.00 0.00 0.05 0.20 0.20
Pro Forma Data(3)
(unaudited):
Pro forma income (loss) from
continuing operations ($4,692) $ 14,841
Pro forma income (loss) per common
share from continuing operations (0.16) 0.48
Balance Sheet Data (end of period):
Working capital $266,439 $251,355 $275,491 $274,844 $122,854 $243,553 $126,717
Total assets 493,728 459,285 500,780 475,799 456,809 474,965 435,818
Total debt 236,809 214,626 229,668 227,685 216,355 239,438 200,531
Total stockholders' equity 199,742 183,290 202,928 189,057 187,101 179,197 178,793
Other Data:
EBITDA(4) $3,897 $1,993 $ 71,389 $ 55,279 $ 53,371 $ 50,668 $ 55,559
Capital expenditures 12,504 4,999 29,048 17,337 8,624 22,250 30,330
Ratio of EBITDA to interest
expense(4) .71 .41 3.28 2.52 2.94 2.98 4.10
Ratio of EBITDA minus capital
expenditures to interest
expense(4)(6) 1.95 1.73 2.47 1.67 1.86
Ratio of total debt to EBITDA(4) 3.22 4.12 4.05 4.73 3.61
Ratio of earnings to fixed
charges(5)(7) 2.03 1.34 1.59 1.41 2.11
</TABLE>
-17-
<PAGE>
- --------------
(1) During the fourth quarter of fiscal 1993, the Company changed its method of
determining the cost of inventories from the last-in, first-out (LIFO) method to
the first-in, first-out (FIFO) method. Under the current economic environment of
low inflation, the Company believes that the FIFO method will result in a better
measurement of operating results. The operating results of all years prior to
fiscal 1993 have been restated to apply the new method retroactively. The effect
of the accounting change on net income as previously reported was to reduce net
income by $4,001 for fiscal 1992. In addition, earnings per common share were
reduced by $0.14 for fiscal 1992.
(2) Includes 53 weeks. All other years presented include 52 weeks.
(3) Pro forma income from continuing operations and pro forma income per common
share from continuing operations have been calculated by adjusting historical
results of operations to give effect to the transactions described in "Use of
Proceeds" as if they had been consummated at December 31, 1995. For purposes of
preparing the pro forma financial information, the Company assumed interest
rates of 9.625% and 6.9% on the Notes and the Senior Credit Facility,
respectively.
(4) EBITDA represents earnings before taking into consideration interest
expense, income taxes, extraordinary item, depreciation and amortization and
excludes gain on sale of facilities. EBITDA is included herein to provide
additional information related to the Company's ability to service debt. EBITDA
should not be considered as an alternative measure of the Company's net income,
operating performance, cash flow or liquidity computed in accordance with
generally accepted accounting principles. After giving effect to the Financing,
for the year ended December 28, 1996, EBITDA would have been $71,389, pro forma
ratio of EBITDA to interest expense would have been 2.89 and pro forma ratio of
EBITDA minus capital expenditures to interest expense would have been 1.71.
After giving effect to the Financing, for the fiscal quarter ended April 5,
1997, EBITDA would have been $3,897, pro forma ratio of EBITDA to interest
expense would have been 0.63 and pro forma EBITDA would not have covered capital
expenditures by $8,607.
(5) For purposes of computing this ratio, earnings consist of earnings before
income taxes, extraordinary items and fixed charges. Fixed charges consist of
interest expense, amortization of deferred debt issuance costs and one-third of
rental expense (the portion considered representative of the interest factor).
After giving effect to the Financing, the pro forma ratio of earnings to fixed
charges would have been 1.82 for the year ended December 28, 1996. After giving
effect to the Financing, the pro forma earnings did not cover fixed charges by
$7,701 for the fiscal quarter ended April 5, 1997.
(6) EBITDA did not cover capital expenditures by $8,607 and $3,006 for the
fiscal quarters ended April 5, 1997 and March 30, 1996, respectively.
(7) Earnings did not cover fixed charges by $6,952 and $8,901 for the fiscal
quarters ended April 5, 1997 and March 30, 1996, respectively.
-18-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Three Months Ended April 5, 1997 and March 30, 1996
Results of Operations
The following table presents the Company's consolidated statement of operations
items as a percentage of net sales.
<TABLE>
<CAPTION>
Three Months Ended
------------------------------------------
April 5, 1997 March 30, 1996
----------------- ----------------
<S> <C> <C>
Net sales and other income 100.0% 100.0%
----------- ----------
Cost of products sold 74.2 73.4
Depreciation 5.1 6.0
Selling, general and administrative 22.2 24.8
Interest 5.5 5.1
----------- ----------
Total costs and expenses 107.0 109.3
----------- ----------
Income (loss) before income taxes (7.0) (9.3)
Benefit (provision) for income taxes 2.7 3.5
----------- ----------
Net income (loss) (4.3)% (5.8)%
=========== ==========
</TABLE>
Note: Certain items have been rounded to cause the columns to add to 100%.
Net sales and other income for the three months ended April 5, 1997, increased
$4.3 million, or 4.5%, from the first quarter of 1996. Activewear sales of $57.6
million represent an increase of $3.0 million, or 5.4%, as compared to the first
quarter of 1996. Licensed apparel sales of $42.0 million in the first quarter of
1997 represent an increase of $1.4 million, or 3.3%, as compared to the first
three months of 1996. During the first quarter of 1997, sales of higher margin
branded and premium private label products increased 10.1%, compared to the same
period of the prior year. Sales of jersey products were $31.5 million
representing a 5.0% increase over the first quarter of 1996.
Cost of products sold as a percentage of sales increased to 74.2% for the first
quarter of 1997 compared to 73.4% for the comparable first quarter of last year.
The decrease in margin as a percentage of sales reflects the shift in product
mix toward jersey products which typically carry a lower margin than the
Company's fleece products.
Depreciation expense decreased $644,000, or 11.2%, during the first quarter of
1997. This decrease was the result of certain assets becoming fully depreciated
during 1996. The Company invested $12.5 million in fixed assets during the first
three months of 1997.
Selling, general and administrative expenses (S, G&A) decreased $1.4 million for
the first quarter of 1997 compared to the same period of 1996. The primary
reason for this decrease was a $1.3 million reduction in advertising expense for
the first quarter of 1997 compared to the same period of 1996. As a percentage
of sales, S,G&A expenses were 22.2% compared to 24.8% for the first three months
of 1996.
Interest expense as a percentage of sales increased from 5.1% for the first
quarter of 1996 to 5.5% for the comparable period of 1997. Interest expense
increased from $4.9 million for the first quarter of 1996 to $5.5 million for
the first three months of 1997 due to higher average borrowings. The nature of
the Company's business requires extensive seasonal borrowings to support its
working capital needs. For the first three months of 1997 working capital
borrowings averaged $115.2 million at an average rate of 7.0% compared to $105.7
million and 7.0%, respectively, for the comparable period of the prior year.
Benefit (provision) for income taxes reflects an effective rate for combined
federal and state income taxes of 39% for the first three months of 1997 and 38%
for the comparable period of 1996.
Financial Condition, Liquidity and Capital Resources
Net working capital at April 5, 1997, decreased $9.1 million from year-end 1996
due primarily to lower accounts receivable partially offset by higher
inventories. Net accounts receivable decreased $51.7 million from December 28,
1996, to April 5, 1997, due to the seasonality of the Company's products.
Receivables normally
-19-
<PAGE>
peak in September and October and begin to decline in December as shipment
volume decreases and cash is collected.
Inventories traditionally increase during the first half of the year to support
second-half shipments. Compared to December 28, 1996, inventories increased
$35.7 million, or 22.0%.
The current ratio at April 5, 1997 was 6.4 compared to 5.9 at December 28, 1996.
The increase in the ratio from the beginning of the year was mainly due to lower
accounts payable.
Total long-term debt at April 5, 1997 included the senior notes totaling $110
million and $118.9 million outstanding under the revolving credit facility. At
the end of the first quarter of 1997, the Company was in compliance with all
debt covenants.
On April 15, 1997 the Company sold $75 million of 9 5/8% Senior Notes due 2007.
Proceeds from the sale of the Senior Notes were used to repay existing
indebtedness and to redeem $7,500,000 of the Series B, $7.50 cumulative
convertible preferred stock. The Company has renegotiated the terms of its
revolving credit facility with a group of banks headed by NationsBank, N.A. The
terms of the new facility are substantially equivalent to those of the current
revolving credit facility, except that the maximum borrowing amount under the
new facility will be $187 million, compared with $225 million under the old
facility. Reduction of the borrowing limit reflects the sale of $75 million
Senior Notes.
On March 20, 1996, the Company's Board of Directors authorized the purchase of
up to 750,000 shares of the Company's common stock. On October 29, 1996 the
Company's Board of Directors authorized the purchase of an additional 250,000
shares. As of April 5, 1997, a total of 534,800 shares had been purchased and
retired. Stockholders' equity decreased $3.2 million during the first three
months of 1997 as a result of net loss for the period of $4.2 million, dividends
of $284,000 and stock repurchases of $248,000 partially offset by proceeds from
stock plans of $1.6 million. Debt as a percentage of total capitalization was
54.2% compared to 53.9% at March 30, 1996.
On April 28, 1997, the Company called for mandatory redemption 75,000 shares of
the 150,000 outstanding shares of its $7.50 Series B, $100 stated value
Preferred Stock at a redemption price (including accrued but unpaid dividends)
of $103.75 per share.
For the first three months of 1997 net cash provided by operations was $6.2
million versus $22.3 million for the same period last year. The reduction in
operating cash was due to a decrease of $4.0 million in accounts payable and
accrued expenses compared to an increase of $9.2 million for the comparable
period of the prior year. Cash used for capital asset additions increased $7.5
million in 1997 compared to the first three months of 1996. Cash provided by
financing activities increased $21.5 million from the first three months of 1997
primarily as a result of higher seasonal borrowing requirements. The Company
expects that annual cash flows from income and non-cash items, supplemented by
the revolving credit facility, will be adequate to support requirements for the
remainder of 1997.
New Accounting Standard
In February 1997, the Financial Accounting Standards Board (the "Board") adopted
Statement of Financial Accounting Standards No. 128, "Earnings per Share" ("FAS
128"), which replaces the presentation of primary and fully diluted earnings per
share ("EPS") with basic and diluted EPS, respectively. FAS 128 simplifies the
standards for computing earnings per share and makes them comparable to
international EPS standards. It also requires dual presentation of basic and
diluted EPS on the face of the income statement for all entities with complex
capital structures and requires a reconciliation of the numerator and
denominator of the basic EPS computation to the numerator and denominator of the
diluted EPS computation.
The Company must adopt this Statement in the fourth quarter of 1997. Pro forma
basic and diluted EPS were both $(.15) for the quarter ended April 5, 1997 and
$(.19) for the quarter March 30, 1996.
-20-
<PAGE>
Two Years Ended December 28, 1996
Results of Operations
The following table presents the Company's consolidated statement of operations
as a percentage of net sales and other income:
<TABLE>
<CAPTION>
December 28, 1996 December 30, 1995 December 31, 1994
(52 weeks) (52 weeks) (52 weeks)
--------- --------- ---------
<S> <C> <C> <C>
Net sales and other income 100.0% 100.0% 100.0%
-------------- -------------- --------------
Cost of products sold 73.8 73.8 74.2
Depreciation 3.4 4.0 4.2
Selling, general and administrative 15.2 16.9 16.5
Gain on sales of facilities -- -- (0.7)
Interest 3.4 3.8 3.2
-------------- -------------- --------------
Total costs and expenses 95.8 98.5 97.4
-------------- -------------- --------------
Income before income taxes and extraordinary loss
on early extinguishment of debt 4.2 1.5 2.6
Benefit (Provision) for income taxes (1.6) (0.6) (1.0)
-------------- -------------- --------------
Income before extraordinary loss on early
extinguishment of debt 2.6 0.9 1.6
Extraordinary loss on early extinguishment of debt
(net of income taxes) -- (0.6) --
-------------- -------------- --------------
Net income 2.6% 0.3% 1.6%
============== ============== ==============
</TABLE>
- --------------------
Note: Certain items have been rounded to cause the columns to add to 100%.
Fiscal Year 1996 Compared to Fiscal Year 1995
Net sales and other income of $636.3 million for the year ended December 28,
1996, represents an increase of $51.1 million, or 8.7%, over the prior year.
This increase was primarily the result of increased sales volumes, and was
further supported by a shift in sales mix to premium products. Activewear sales
of $408.2 million in 1996 represent an increase of $20.4 million, or 5.3%, as
compared to 1995. Licensed sales of $228.1 million in 1996 represent an increase
of $30.7 million, or 15.5%, as compared to fiscal 1995. Licensed apparel sales
in 1995 were adversely effected by professional sports labor issues which were
resolved prior to fiscal 1996. During 1996, sales of higher margin branded and
premium private label products increased 23.7%, and sales to the screenprint and
distributor channels increased 10.2%. Sales of jersey products were $112.4
million for fiscal 1996, representing 27.5% of the Company's activewear sales as
compared to 24.0% for fiscal 1995.
Cost of products sold as a percentage of sales was 73.8% for both 1996 and 1995.
The increased margins achieved from the sale of premium products in 1996 were
offset by higher raw material costs and the increased percentage of jersey
product sales which are at lower margins. The higher raw material costs were due
to raw cotton and polyester prices which peaked in the first half of 1996. These
prices began to decline in the second half of the year, and the Company expects
its raw material prices for 1997 to decline from 1996 levels. As of February 20,
1997, the Company has fixed the price on approximately 60% of its planned cotton
purchases for fiscal 1997.
Depreciation expense as a percentage of sales was 3.4% for fiscal 1996 and 4.0%
for fiscal 1995. The $1.7 million decline in depreciation expense from the 1995
amount of $23.2 million was the result of certain assets becoming fully
depreciated during 1996. This decrease was partially offset by depreciation
expense incurred on 1996 capital additions of $29.0 million.
Selling, general and administrative ("SG&A") expenses decreased $2.7 million in
1996. As a percentage of sales, SG&A expenses were 15.2% in 1996 and 16.9% in
1995. The 1995 percentage includes a one-time charge of $5.0 million, or .8% of
sales, in deferred advertising costs which were charged off as required by the
Accounting Standards Executive Committee's Statement on Reporting Advertising
Costs. This statement first became effective for the Company at the beginning of
fiscal 1995. Excluding the effect of this charge in 1996, SG&A expenses reflect
higher advertising costs which were used to support the increase in sales. This
increase in advertising spending was partially offset by a decrease in the bad
debt provision resulting from improved collection experience.
Operating income (income before interest and income taxes) increased 57.6%
during the 1996 fiscal year to $48.7 million compared to $30.9 million for
fiscal 1995. This increase results from both the higher revenues achieved and
the effects of improved cost controls.
-21-
<PAGE>
Interest expense as a percentage of sales decreased from 3.8% in 1995 to 3.4% in
1996. Interest expense decreased from $22.0 million to $21.7 million in 1996,
primarily as a result of lower average rates. The nature of the Company's
primary business requires extensive seasonal borrowings to support its working
capital needs. During fiscal 1996, working capital borrowings averaged $137.5
million at an average rate of 6.9% compared to $136.4 million and 7.6%
respectively, for the comparable period of the prior year.
Provision for income taxes is a function of pretax earnings and the combined
effective rate of federal and state income taxes. This combined rate was 38% in
both 1996 and 1995. The provision for income taxes increased $6.8 million in
1996 as a result of higher pretax earnings, representing 1.6% of net sales as
compared to 0.6% in fiscal 1995.
Fiscal Year 1995 Compared to Fiscal Year 1994
Net sales and other income of $585.3 million for fiscal 1995 increased $19.9
million, or 3.5%, over the 1994 level of $565.4 million. The 1995 sales growth
was due to increased sales volume in the activewear line, and was partially
offset by decreases in licensed apparel and headwear sales volume which resulted
from professional sports labor issues. Sales of premium products increased in
1995, with Discus Athletic activewear up 29.9% to $75.8 million, and
LogoAthletic licensed apparel up 42.8% to $92.0 million. Sales of jersey
products were $93.1 million for 1995, representing 24.0% of the Company's
activewear sales as compared to 16.5% for 1994.
Cost of products sold as a percentage of sales improved in fiscal 1995,
decreasing from 74.2% in fiscal 1994 to 73.8%. This reduction resulted primarily
from manufacturing efficiencies realized from increased production schedules and
higher average selling prices. Costs were reduced in spite of growth in jersey
volume, which typically produces lower margins, and increased raw material
costs. Raw material costs were higher in 1995 than in 1994 as a result of the
increased price of both raw cotton and polyester fiber.
Depreciation expense as a percentage of sales decreased from 4.2% for 1994 to
4.0% for 1995. Depreciation expense decreased from $24.0 million in 1994 to
$23.2 million in 1995, due to relatively low capital expenditures.
SG&A expenses increased as a percentage of sales to 16.9% for 1995 from 16.5%
for 1994. This increase is primarily due to the one-time charge of $5.0 million
for deferred advertising costs required to be recognized in 1995. In addition,
the bad debt provision was increased in 1995 in response to collection
difficulties.
Interest expense as a percentage of sales increased from 3.2% in 1994 to 3.8% in
1995. Interest expense increased from $18.2 million in 1994 to $22.0 million in
1995 due to higher interest rates. Average borrowing requirements of $136.4
million at an average rate of 7.6% in 1995 compared with $155.3 million and 5.2%
for 1994, respectively.
Provision for income taxes reflects an effective rate for combined federal and
state income of 38% for both 1995 and 1994.
Financial Condition, Liquidity and Capital Resources
Net working capital at December 28, 1996 of $275.4 million was $0.6 million
higher than the December 30, 1995 amount of $274.8 million. Net accounts
receivable increased $17.4 million from December 30, 1995 to December 28, 1996
due to the strong fourth quarter sales increase.
Inventories traditionally increase through the first half of the year to support
second-half shipments. In 1996, inventories peaked on May 25, 1996 at $220.9
million and then dropped to $162.3 million on December 28, 1996. As of December
28, 1996, inventories had increased $4.3 million or 2.7% from December 30, 1995.
This increase was primarily due to additional jersey inventories produced to
meet anticipated first quarter 1997 demand. The current ratio (ratio of current
assets to current liabilities) at December 28, 1996, was 5.9 compared to 7.8 for
December 30, 1995. The decrease in the ratio was mainly due to higher current
liabilities required to meet the increase in receivables and inventories.
Total indebtedness at December 28, 1996 consisted primarily of the 1995 Notes
totaling $110 million and $113.6 million outstanding under the Senior Credit
Facility. The Company's average credit facility borrowings during fiscal 1996
were $137.5 million and its peak borrowing was $175.5 million at September 11,
1996. At December 28, 1996, the Company was in compliance with all debt
covenants.
-22-
<PAGE>
On March 20, 1996, the Company's Board of Directors authorized the purchase of
up to 750,000 shares of the Company's common stock. On October 29, 1996, the
Company's Board of Directors authorized the purchase of an additional 250,000
shares. As of December 28, 1996, a total of 497,800 shares had been purchased
and retired. Stockholders' equity increased $13.9 million during fiscal 1996 as
a result of net income for the period of $16.7 million and net proceeds from the
employee stock purchase plan of $0.8 million partially offset by repurchases of
common stock totalling $2.5 million and preferred dividends of $1.1 million.
In fiscal 1996, net cash provided by operations was $31.2 million compared to
$6.9 million in fiscal 1995, reflecting the improved earnings in 1996. Cash used
for capital expenditures increased $11.7 million in fiscal 1996 from $17.3
million to $29.0 million primarily as a result of the purchase of the Asheville
dyeing facility. The Company has budgeted $21.0 million for capital expenditures
in fiscal 1997. Cash used by financing activities was $0.6 million for fiscal
1996 compared to cash provided by financing activities of $7.4 million in 1995
as a result of payments on the revolving credit facility and stock repurchases.
The Company expects that its short-term borrowing needs, including that required
for the acquisition of California Shirt Sales, Inc., will be met through cash
generated from operations and borrowings under the Senior Credit Facility. See
"Business--Recent Development." Debt as a percentage of capitalization was 53.1%
at December 28, 1996 compared to 54.6% at December 30, 1995.
BUSINESS
General
The Company is one of the world's largest marketers and manufacturers of
activewear and licensed sports apparel for consumers and sports enthusiasts. The
Company's diverse product line includes fleeced sweats, jersey products
(outerwear T-shirts), decorated jackets and caps. These products are sold under
the Company's own brands led by the Discus Athletic and LogoAthletic premium
labels and under private labels, including Nike, Reebok and Pro Spirit. In
addition, the Company has numerous professional and college sports licenses to
market and manufacture embroidered and screen-printed products with team logos
and designs under its Discus Athletic, LogoAthletic, Logo 7 and TrackGear
brands. The Company is a licensee of professional sports apparel, holding
licenses from the National Football League ("NFL"), Major League Baseball
("MLB"), the National Basketball Association ("NBA"), the National Hockey League
("NHL") and the National Association for Stock Car Auto Racing ("NASCAR") to
manufacture a full range of apparel for adults and children.
Historically, Tultex has been a producer of quality fleece products for sale to
distributors and resale to consumers under private labels. However, in the
1980s, the activewear industry began to change. Increasing consumer demand
reflecting more active and casual lifestyles and the industry's historically
good long-term growth prospects and low fashion risk as compared to other
apparel products, attracted large, well-financed companies which acquired
competitors of the Company. Simultaneously, larger mass merchandise retailers
began to exert pressure on margins for lower-priced fleece products.
In recent years, Tultex has successfully pursued a strategy to enhance its
competitiveness and to capitalize on growth opportunities by becoming a
consumer-oriented apparel maker able to compete in a changing industry.
This strategy includes the following elements:
. Promoting Higher-Margin Products. The Company continues to strengthen its
competitiveness through (i) the development of branded and private label,
higher-quality and higher-margin products to supplement its traditionally
strong position in the lower-priced segment of the business and (ii) since
1991, the manufacture of jersey products. The Company has developed its own
brands, promoting Discus Athletic and LogoAthletic for its premium products
and using the Tultex and Logo 7 labels for the value-oriented and wholesale
segments of the market. Discus Athletic's highly visible advertising during
televised broadcasts of college football and basketball on the ESPN and ABC
television networks and sports marketing sponsorships, such as ProBeach
Women's Volleyball, have contributed to significant annual increases in
sales of this brand since 1992. In addition, Tultex has partnering
arrangements to supply higher-quality, private label products to companies
such as Reebok and Nike, none of which accounted for more than 10% of the
Company's consolidated sales during 1996. Sales of the higher-margin
branded and premium private label products have grown from 13.8% of
consolidated sales in 1993 to 37.6% in 1996.
-23-
<PAGE>
. Expanding into Licensed Apparel Business to Complement Activewear Business.
Tultex's 1992 acquisitions of LogoAthletic, a marketer of licensed sports
apparel, and LogoAthletic/Headwear, a marketer of sports licensed headwear,
contributed to the Company's achieving the third largest market share
(11.8%) in the higher-margin licensed apparel business in 1995, and created
opportunities for significant manufacturing and distribution synergies with
the Company's activewear business. The promotion of the LogoAthletic brand
of licensed apparel through television and print advertising, as well as
promotional arrangements featuring Dallas Cowboys' Troy Aikman, Miami
Dolphins' Dan Marino, Denver Broncos' John Elway, Kansas City Chiefs'
Marcus Allen and the Buffalo Bills' Bruce Smith, among others, has helped
to increase the visibility and sales of LogoAthletic products.
. Strengthening Customer Relationships. Tultex actively pursues strong
relationships with department, sporting goods and other specialty stores,
such as Sears, JC Penney, Modell's, Dillard's, Foot Locker, Champs and
Sports Authority, to distribute its higher margin branded and private label
products. In addition, the Company continues to strengthen its
relationships with high volume retailers such as Wal-Mart, Kmart and Target
by supplying private label, Tultex and Logo 7 products. Tultex provides
customers with exceptional service and support; as an example, its
distribution capabilities are highly responsive to customers' changing
delivery and inventory management requirements.
. Increasing Emphasis on Wholesale Distribution. In recent years, Tultex has
placed increased emphasis on distribution channels, acquiring California
Shirt, a major jerseywear distributor in 11 western states and Hawaii in
April 1997, and T-Shirt City, Cincinnati, Ohio, a major distributor of
fleecewear and jerseywear in the Midwest in May 1997. See " --Recent
Development".
. Vertically Integrating. The Company's activewear business is vertically
integrated, spinning approximately 80-85% of the yarn it requires in three
yarn plants located in North Carolina (the balance is purchased under yarn
supply contracts) and knitting, dyeing and cutting fabric and sewing
finished goods in eight plants in Virginia and North Carolina and one plant
in Jamaica. The Company's licensed apparel operations are conducted from
one plant in Indiana, one plant in Massachusetts, and one plant in North
Carolina.
The Company's strategy has improved its sales mix. While net sales increased
8.7% in fiscal 1996 over 1995, net sales of Discus Athletic activewear,
LogoAthletic licensed apparel and premium private label products increased 23.7%
to $239.3 million. Sales of jersey products were $112.4 million for the fiscal
year ended December 28, 1996, representing 27.5% of the Company's activewear
sales during such period compared to 24.0% for fiscal 1995.
Recent Developments
On April 16, 1997, the Company acquired substantially all of the assets and
assumed the operating liabilities of California Shirt Sales, Inc., a major
jerseywear distributor headquartered in California with distribution operations
in 11 western states and Hawaii. Prior to the transaction, California Shirt had
been the Company's major distributor for sales to small retail outlets and
screenprinters in California Shirt's distribution territory. In addition to
distributing Tultex jerseywear, California Shirt distributes products
manufactured by others under nationally recognized name brands. The acquisition
is not expected to affect the availability of product from these manufacturers.
This acquisition furthers the Company's strategy to become more vertically
integrated from the manufacture of fleece and jerseywear to distributing
consumer products to wholesale and screenprint customers. The acquisition did
not require a significant financial commitment and was funded by internally
generated funds.
On May 6, 1997, the Company acquired certain of the assets and assumed the
operating liabilities of T-Shirt City, Inc., a major fleecewear and jerseywear
distributor headquartered in Ohio with distribution operations in the Midwest.
Prior to the transaction, T-Shirt City had been a distributor for the Company's
products in its distribution territory. In addition to distributing the
Company's products, T-Shirt City distributes products manufactured by others
under nationally recognized name brands. The acquisition is not expected to
affect the availability of products from other manufacturers. As with the
California Shirt Sales acquisition, the T-Shirt City acquisition furthers the
Company's strategy to become more vertically integrated, as described in the
preceding paragraph. The acquisition did not require a significant financial
commitment and was funded by internally generated funds.
-24-
<PAGE>
Industry
The Company produces activewear and licensed apparel and headwear for sale at a
broad range of price points through all major distribution channels.
Activewear
The Company's activewear business consists of its fleecewear and jersey
products. All activewear industry and market share data included herein has been
estimated by the Company based on data provided by Market Research Corporation
of America, a leading provider of market information on the textile industry.
Fleecewear. The fleecewear industry, with retail sales of approximately $7.8
billion in 1995, has grown 1.7% in unit sales from 1990 to 1995. The predominant
fleecewear products are sweatshirts and bottoms.
The basic fleecewear industry is characterized by:
. low fashion risk--although fashion detailing changes often, basic garment
styles are not driven by trends or fads;
. overall stability--despite cyclical fluctuations, industry sales volume is
estimated to have remained relatively stable, growing from 680.0 million
units in 1990 to 691.6 million units in 1995;
. entry by well-financed acquirors--s20 new entrants have been attracted by
the industry's long-term growth and have been able to make the large
initial capital investments for manufacturing;
. barriers to entry--barriers include large required capital investments, and
growing importance of brand-name recognition and established customer
relationships; and
. low threat of imports--the low labor portion of the cost of manufacturing
fleecewear and the short delivery times required for inventory control by
retail customers reduce the threat of competition from imports.
Sales of fleeced apparel experienced significant growth during the late 1970s
and 1980s due to the increased pursuit of physical fitness and active lifestyles
and the related rise in popularity and acceptance of sweatshirts, jersey apparel
and other types of athletic clothing as "streetwear." Moreover, fleecewear
products have registered significant improvements in fabric weights, blends,
quality of construction, size, style, and color availability over the past few
years, which has contributed to this growth in demand. In particular, garments
are sized larger and typically use heavier, more shrink-resistant fabrics. In
addition, acrylic-dominant blends have been supplanted by polyester-dominant and
cotton-dominant blends. Despite these upgrades in product specifications, retail
prices have remained relatively flat in real terms due to improvements in
manufacturing technology and competitive pressures.
Fleecewear exhibits a marked seasonality. For example, over the past three
fiscal years, an average of 72.9% of the Company's fleecewear unit sales have
occurred in the third and fourth quarters.
Jersey (Outerwear T-shirts). Unit retail sales of jersey products have grown
7.5% from 1990 to 1995 and in 1995 totaled $7.0 billion, or 871.9 million units.
Like fleecewear, the industry characteristics of jersey apparel include low
fashion risk and long-term growth. Imports are a greater threat as the
weight/labor ratio and the freight costs involved are lower for jersey products
than for fleecewear; however, the ability to produce large volumes with short
delivery times gives domestic manufacturers an advantage over import competition
in both fleecewear and jersey apparel.
Industry Makeup and Retail Channels. In 1995, the five largest fleece
manufacturers together accounted for an estimated 29.9% of the branded market in
the fleecewear industry, with Hanes Corporation, Russell Corporation,
Fruit-of-the-Loom, Inc., Tultex and VF Corporation accounting for approximately
10.9%, 6.7%, 4.3%, 4.2% and 3.8% of wholesale industry sales, respectively. The
retail jersey industry also is fragmented. In 1995, the 5 largest jersey
manufacturers together accounted for an estimated 18.1% of the branded market in
the jersey industry, with Sara Lee Corporation, Fruit-of-the-Loom, Russell
Corporation, VF Corporation and Tultex accounting for approximately 6.5%, 5.8%,
2.7%, 2.1% and 1.0% of wholesale industry sales, respectively. The activewear
industry has been characterized since the 1980s by the acquisition of existing
competitors by larger companies with substantial financial resources and
manufacturing and distribution
-25-
<PAGE>
capabilities. These factors and the resulting price reductions and inventory
build-ups have adversely affected participants in the activewear industry,
including Tultex, particularly with respect to the fleecewear industry.
While fleeced apparel pricing has improved and inventory levels have recovered
to more typical levels in the second half of 1996, there can be no assurance
that these market conditions will continue. Fleecewear is distributed through
department stores, chain stores and sporting goods stores, although mass
merchandisers, wholesale clubs, and other discount retailers represent a
dominant and growing percentage of the total fleecewear market.
Competitive Factors. The Company believes that price and quality are the primary
factors in consumer purchasing decisions. Brand name is often a proxy for
quality; as a result, those companies with brand name recognition enjoy
increased sales from this competitive advantage, as mass merchandisers,
department store chains, and wholesale clubs are requiring more branded than
private label activewear. Management believes that the market share of foreign
competitors in the fleecewear and jersey industries is immaterial.
Licensed Apparel
Estimated wholesale sales of professional sports licensed apparel (including
headwear) for 1995 were approximately $2.2 billion, according to Sports Style
Magazine, an industry publication. In general, the Company believes that the
prospects for its continued growth in this market are good, although growth is
expected to be less rapid than in recent years due to increased competition. The
Company also believes that the industry has recovered from the effect of labor
disputes in basketball and continues to recover from the effect of the labor
disputes in baseball and hockey. The continually changing fortunes of existing
teams, together with the introduction of new franchises, has made the market
extremely dynamic, as interest in each team fluctuates with its performance.
Manufacturers, such as the Company, with the capacity to respond quickly to
these changes with new products and designs, enjoy a competitive advantage over
smaller competitors.
Industry Makeup and Retail Channels. The industry has expanded rapidly over the
past five years, with the professional sports leagues granting large numbers of
licenses. With this proliferation of licenses, individual competitor's sales
growth slowed, though the top companies continued to gain market share. After
giving effect to industry consolidation, management estimates that at the end of
1995, the top four companies would have accounted for approximately 51.5% of the
market, with Starter Corporation, VF Corporation, Tultex and Fruit-of-the-Loom
accounting for approximately 17.3%, 13.1%, 11.8% and 9.3% of wholesale industry
sales in 1995, respectively, according to Sports Style Magazine. Imports of
finished goods purchased by retailers directly or through import companies do
not represent a significant factor in the industry as a whole, since there are
no foreign licensees. However, all of the larger domestic companies competing in
the market do use significant off-shore sourcing of finished outerwear goods.
Licensed apparel products are generally sold through the same retail channels as
activewear.
Competitive Factors. There are significant barriers to entering the licensed
sports apparel industry and expanding such a business to significant size. After
expanding the number of licensees rapidly in recent years, the licensing
associations have begun to consolidate their relationships with existing
manufacturers and appear less likely to enter into licensing agreements with new
entrants. New entrants would be required to devote considerable resources to
developing their product mix and sales and distribution capabilities to compete
effectively.
Company Products
Activewear ($408.2 million or 64.2% of 1996 consolidated sales)
The principal activewear products of the Company are fleeced knitwear items such
as sweatshirts, jogging suits, hooded jackets, headwear and jersey apparel for
work and casual wear. The Company manufactures apparel products principally
under the Discus Athletic and Tultex brands. Products carrying the Discus
Athletic name are marketed for sale to chains such as Foot Locker, department
stores such as Sears and sporting goods stores, while Tultex products are
marketed for sale to mass merchandisers such as Wal-Mart and wholesale clubs
such as Sam's. The Company also manufactures private-label products for sale
under many labels, including Nike, Reebok and Pro Spirit.
-26-
<PAGE>
Licensed Apparel and Headwear ($228.1 million or 35.8% of 1996 consolidated
sales)
The Company's licensed products include jackets, sweats, T-shirts,
baseball-style caps and other headwear, embroidered or imprinted with
professional and college sports logos. These products are marketed under the
LogoAthletic, Logo 7 and TrackGear brands. Under the LogoAthletic name, the
Company offers premium-quality jackets, caps and other activewear, including NFL
"Pro-Line" authentic sideline gear and NBA "Authentics" apparel. Tultex, through
LogoAthletic, acquired Pro-Line status from the NFL in 1993, a flagship program
entitling the Company to sell products identical to those worn on the sidelines
by NFL players and coaches. Under the terms of the nonexclusive Pro-Line
contract, the Company markets Pro-Line products at retail for all 30 NFL teams.
The Company's NFL Pro-Line and NBA Authentics products prominently feature the
LogoAthletic name and trademark, which the Company believes are key elements in
developing the LogoAthletic brand. See "--Licenses." Under the Logo 7 brand, the
Company offers moderately-priced outerwear, fleecewear, T-shirts and caps with
licensed designs and logos. The Company also sells popularly- priced licensed
fleecewear, jersey apparel and headwear. Under the TrackGear brand, the Company
offers items such as t-shirts, sweatshirts, windbreakers and hats featuring
designs involving NASCAR drivers and cars.
Customers; Marketing and Sales
Customers
The Company offers a diverse product line for sale at a full range of price
points through all major distribution channels. Customers include chain stores,
department stores, sporting goods specialty stores, and mass merchandisers. The
Company's higher-quality fleecewear and jersey products, such as the Discus
Athletic and LogoAthletic brands, are sold primarily through department and
specialty stores and mail-order distribution channels rather than through mass
merchandisers and wholesale clubs, thereby enabling Tultex to enhance the image
of these branded and private label products and achieve higher margins. The
Tultex and Logo 7 brands are marketed through mass merchandisers and wholesale
clubs that compete more on price than brand. The following chart details the
distribution channels for the Company's branded products.
<TABLE>
<CAPTION>
Brands Products Distribution Channels
- ------ -------- ---------------------
<S> <C> <C>
Discus Athletic Fleece and jersey activewear Sporting goods
specialty stores and chain
stores (Sports Authority,
Modell's), department store
(Belk's) retail chains
(Sears), international
distributors and sales
agencies (Nissan Trading)
Tultex Fleece and jersey activewear Mass merchants (Kmart, Wal-
Mart), retail chains
(Montgomery Ward), regional
discounters (Shopko),
distributors and mass
merchant screenprinters
(California Shirt Sales, T-
Shirt City, Brazos
Sportswear, Jerry Leigh,
Giant Merchandise,
Wintergreen), wholesale
clubs (Sam's)
LogoAthletic Licensed activewear, outerwear Retail chains (JC Penney,
and headwear Sears), sporting goods
specialty stores (Champs,
Foot Locker), department
stores (Dillard's,
Mercantile)
Logo 7 Licensed activewear, outerwear Mass merchants (Kmart),
and headwear distributors (West Coast
Novelties)
TrackGear Licensed activewear, outerwear Retail chains, corporate
and headwear accounts, and stockcar
racetracks
</TABLE>
Marketing and Sales
The Company has shifted its marketing strategy in recent years to focus on the
development of its own brands and sales through distribution channels that
support higher margins. In particular, the Company has devoted significant
resources to the promotion of its Discus Athletic and LogoAthletic brands.
In 1993, the Company began conducting advertising campaigns to promote its
Discus Athletic and LogoAthletic brands. The Discus Athletic advertising
campaign emphasizes quality and the usefulness of the product for many sports.
The Company believes that this positioning effectively differentiates the Discus
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<PAGE>
Athletic line from competing specialized lines with powerful brand associations.
To reinforce the association of the brand with
competitive athletics, Discus Athletic advertises on ESPN's college football and
basketball programs, ABC's college basketball program and televised Atlantic
Coast Conference and Big 10 basketball games. The Company believes these
placements are particularly effective in reaching college sports enthusiasts, an
important part of the Company's target market.
The LogoAthletic campaign focuses on establishing the "authenticity" of
LogoAthletic products. The Company believes that licensed apparel sales benefit
substantially from the perception that products are the same as those worn by
professional sports stars. LogoAthletic acquired NFL Pro-Line status in 1993. To
provide visibility and reinforce this authenticity, the Company provided
sideline garments and caps prominently featuring the LogoAthletic trademark for
eight NFL teams in 1996, the Green Bay Packers, Indianapolis Colts, St. Louis
Rams, Phoenix Cardinals, Tampa Bay Buccaneers, Buffalo Bills, Kansas City Chiefs
and Houston Oilers, as well as for several NFL All-Pro players, such as the
Dallas Cowboys' Troy Aikman, Denver Broncos' John Elway, Miami Dolphins' Dan
Marino, Kansas City Chiefs' Marcus Allen and Buffalo Bills' Bruce Smith. The
Company participates in the NBA Authentics program and provides ball-boy
garments featuring the LogoAthletic trademark to the Boston Celtics, Denver
Nuggets, Indiana Pacers, Orlando Magic and Toronto Raptors for use during games.
The Company also has become recognized as a prominent designer and supplier of
distinctive "locker room" caps bearing championship team logos and carrying the
highly visible LogoAthletic trademark.
The Company paid $21.6 million and $17.7 million for advertising services in
1996 and 1995, respectively, and recognized $21.6 million and $22.7 million,
respectively, in expense in those years. The advertising expense budget for 1997
is $28.7 million.
New product introductions are important to the Company's licensed apparel
business and are undertaken to generate consumer excitement and demand.
LogoAthletic's creative design team, in cooperation with key customers and
licensors, continually develops and introduces new products and styles. For
example, the "shark's tooth" design featured on certain LogoAthletic caps and
jackets has been extremely successful and is in high demand. The Company is able
to react quickly to changing team fortunes, designing new products to capitalize
on shifts in popularity and delivering those products to the market rapidly,
sometimes in a matter of hours. During major professional and collegiate
sporting events, such as the Super Bowl, the Company produces on-site decorated
products with championship logos of the winning teams for immediate distribution
and sale at the event.
The Company's marketing methods for other products are typical of producers of
basic clothing products. Its merchandising department keeps abreast of current
fashionable styles and colors. After internal reviews by manufacturing
departments, selected customers preview and comment upon prototype garments
before the merchandising department determines those to be presented in sales
catalogs. Production is planned on orders received and anticipated customer
orders for these garments.
As of December 28, 1996, Tultex operated a sales office in each of New York,
Boston and Chicago and a Discus Athletic showroom in New York City. These
offices are the primary points of contact for customers and coordinate sales,
distribution of sales information, certain advertising, point-of-sale displays
and customer service. The Company also employs seven independent sales
representatives to market its Discus Athletic line in the fragmented sporting
goods market. LogoAthletic's products are marketed through a sales force of
approximately 50 people, including employees and independent sales
representatives. In 1996, the Company renewed its agreement with Nissan Trading
Co., Ltd., a subsidiary of Nissan Motor Co., to market and sell the Company's
products in Japan. This agreement has been extended through 1999. International
sales in 1995 and 1996 were insignificant.
At December 28, 1996, Dominion Stores, Inc., a wholly-owned subsidiary, operated
13 outlet stores in North Carolina, Virginia and West Virginia, which sell
surplus Company apparel and apparel items of other manufacturers, 21 The
Sweatshirt Company retail stores in 14 states, which primarily sell
first-quality Company- made products and accessories and two LogoAthletic stores
in Indiana which primarily sell surplus licensed apparel. Dominion Stores' total
sales in fiscal 1996 were $16.4 million.
Licenses
Most of the Company's licensed products are sold through LogoAthletic . The
Company is a licensee of professional sports apparel, maintaining a full
complement of licenses with all of the major North American professional sports
leagues--the NFL, MLB, the NBA and the NHL--and the Collegiate Licensing
Company. The Company also holds licenses for NASCAR. These licenses require the
payment of royalties ranging from
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<PAGE>
8% to 15% of sales with guaranteed royalties of approximately $2.8 million in
fiscal 1997. The Company's major licenses with the NBA, NHL and MLB expire in
1997 and in 1999 for the NFL. The Company anticipates that the licenses with the
NBA, NHL and MLB expiring this year will be renewed on terms similar to those
currently in effect.
The Company's ability to compete is dependent on its ability to obtain and renew
licenses, particularly those from the major professional sports leagues. The
Company enjoys long-standing relationships with its major league licensees,
having been awarded its first licenses with the NFL in 1971, with the NBA in
1977, with MLB in 1980 and with the NHL in 1988. The Company has no reason to
believe that it will not be able to successfully renew these licenses. While the
Company has enjoyed long, successful and uninterrupted licensing relationships
with its professional and collegiate athletic licensors, if a significant
license or licenses were not renewed or replaced, the Company's sales would
likely be materially and adversely affected. In addition, the Company's material
licenses are non-exclusive and new or existing competitors may obtain similar
licenses.
Manufacturing and Distribution
Because consumer value is a key competitive factor in the activewear industry,
Tultex has focused on being a low-cost producer of quality goods. The Company
pursues this goal through cost reduction measures, plant modernization and
improvement of garment characteristics, such as increasing the range of garment
sizes, cloth weight, durability, style and comfort to meet consumer demands.
Implementation of modern information systems and inventory cost control measures
have allowed the closing or sale of several costlier, less efficient plants,
including the Company's December 1994 sale of its yarn production plant in
Rockingham, North Carolina. Savings are achieved through lower average
production costs in the more modern facilities and higher capacity utilization
in the remaining plants.
The Company's manufacturing process consists of: yarn production; fabric
construction including knitting, dyeing and finishing operations; apparel
manufacturing including cutting and sewing operations; and, for garments with
logos, screenprint and embroidery operations. As a result of its modernization
efforts, the Company believes that its manufacturing facilities are outfitted
with some of the most efficient and technologically-advanced equipment in the
industry.
During fiscal 1989 through fiscal 1996, the Company invested approximately $203
million to open new facilities, including sewing facilities in Roanoke, Virginia
and Montego Bay, Jamaica (a leased facility), a dyeing facility in Asheville,
North Carolina, and the highly automated customer service center in
Martinsville, Virginia, and to modernize other facilities. Open-end spinning
frames were acquired to increase yarn production and reduce costs, higher color
quality and lower dyeing costs were achieved from the installation of new jet
dyeing equipment, new dryers were added in the fabric finishing process,
automated cutting machines were introduced, and new information systems were
implemented.
Tultex's highly-automated customer service center, opened in 1991, has greatly
expanded the Company's distribution capabilities. The customer service center
allows the Company to package and ship its products according to the more
detailed color, size and quantity specifications typically required by
high-margin retailers and department stores and has permitted consolidation of
the Company's warehouses. The Company has improved its utilization of the
customer service center and believes that its strategy of increasing sales of
higher-margin retail products, which require more sophisticated packaging, will
continue to improve utilization of the customer service center. Additionally,
management's continued focus on cost reduction, streamlining of operations and
increased throughput has reduced activewear distribution costs as a percentage
of sales from 13.3% in 1993 to 7.5% in 1996.
In spring 1992, LogoAthletic moved its operations to a newly-constructed, leased
facility built to its specifications. This 650,000 square foot building allowed
LogoAthletic to centralize operations, increase inventory control, improve
material flow and will allow for future expansion.
Tultex manufactures yarn at three facilities located in North Carolina, which
have a combined production capacity of 1.5 million pounds per week, utilizing
modern, open-end spinning frames. For its knitting operations, Tultex operates
approximately 500 modern high-speed, latch-needle circular knitting machines,
which produce various types of fabrics. The Company believes its dyeing
operations are among the most modern and technologically efficient in the
industry; dyeing operations are computer-controlled, allowing precise
duplication of dyeing procedures to ensure "shade repeatability" and color-fast
properties. The finishing operations employ mechanical squeezing and steaming
equipment.
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<PAGE>
The Martinsville cutting facility uses advanced Bierrebi automatic continuous
cutting machines with computer-controlled hydraulic die-cutting heads and
"lay-up" machines and high-speed reciprocating knives. Sewing production at the
Company's eight sewing facilities is organized on an assembly-line basis.
The Company has incorporated sophisticated systems into several key areas of the
manufacturing process. The Company relies on a knitting ticket system to track
and report the manufacturing process from yarn inventory through the knitting of
individual rolls of fabric into greige cloth storage. From this point, the shop
floor control module of the Cullinet manufacturing system monitors and reports
the movement of each production lot through the operations of dyeing, finishing,
cutting and sewing. Each sewing plant then electronically transmits an advance
shipping notice to the automated customer service center so the distribution
planning module at the center can plan the arrival and storage/packing of the
sewn garments. Frontier knitting monitor systems, cutting production systems,
and sewing production systems use computer-based data collection on each
knitting, cutting, and sewing machine to monitor machine and operator
efficiency, data that is useful for quality control, incentive-based payroll
data, and production management information.
The Company decorates its unfinished licensed apparel products using
screenprinting or embroidery at facilities in Indiana, Massachusetts and North
Carolina. Automatic silkscreen machines and dryers are used for longer runs, and
hand-operated presses are used for shorter or more complicated runs. Embroidery
is applied using high-speed, computerized stitching equipment.
Raw Materials
The Company's principal raw materials for the production of activewear are
cotton and polyester. Cotton content in fleecewear typically is 50% and in
jersey apparel typically is 100%. The Company is producing increasing amounts of
fleecewear containing 90-100% cotton. Fleecewear and jersey manufacturers are
extremely sensitive to fluctuations in cotton and polyester prices as these
materials represent approximately 30% of the manufacturing cost of the product.
In addition, the Company is indirectly impacted by increasing costs of raw
materials in its licensed apparel business because the Company purchases
finished goods containing cotton and polyester and these higher raw materials
costs often are effectively passed on to the Company. In 1996, the Company's
average price per pound of fiber (cotton and polyester) purchased was $0.75,
compared with $0.83 in 1995. In 1997, Tultex expects to use approximately 50
million pounds of raw cotton and 25 million pounds of polyester staple in its
manufacture of yarn for fleecewear and jersey apparel. Tultex makes advance
purchases of raw cotton based on projected demand. The Company has contracted to
purchase substantially all of its raw cotton needs for 1997 and has fixed the
price on approximately 60% of its raw cotton needs. To the extent cotton prices
increase before the Company fixes the price for the remainder of its raw cotton
needs, the Company's results of operations could be adversely affected. Also in
1997, the Company expects to use an additional 25 million pounds of yarn which
will be purchased. See "Risk Factors."
Trademarks
The Company promotes and relies upon its trademarks, including Discus Athletic,
LogoAthletic, Tultex, TrackGear and Logo 7, many of which are registered in the
United States and foreign countries.
Seasonality
The Company's business is seasonal. The majority of fleecewear sales occur in
the third and fourth quarters, coinciding with cooler weather and the playing
seasons of popular professional and college sports. Jersey sales peak in the
second and third quarters of the year, somewhat offsetting the seasonality of
fleecewear sales.
Environmental Matters
The Company is subject to various federal, state, local and foreign
environmental laws and regulations governing, among other things, the discharge,
emission, storage, handling and disposal of a variety of substances and wastes
used in or resulting from its operations, including, but not limited to, the
Water Pollution Control Act, as amended; the Clean Air Act, as amended; the
Resource Conservation and Recovery Act, as amended; the Toxic Substances Control
Act, as amended; and the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended.
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<PAGE>
The Company returns dyeing wastes for treatment to the City of Martinsville,
Virginia's municipal wastewater treatment systems operated pursuant to a permit
issued by the state. In 1989, the city adopted a plan for removing the
coloration, caused by the dye wastes, from the water by using polymer chemicals
to combine with the extremely small particles of the dye to create a sludge-like
substance that can be retrieved from the water at the city's wastewater
treatment plant and disposed of as a non-hazardous waste in the city's landfill.
To cover the cost to the city, the Company pays 50 to 80 cents per thousand
gallons of water above regular water costs. The expenditures required do not
have a material effect on the Company's earnings or competitive position.
The Company's operations also are governed by laws and regulations relating to
employee safety and health, principally the Occupational Safety and Health Act
and regulations thereunder, which, among other things, establish exposure
limitations for cotton dust, formaldehyde, asbestos and noise, and regulate
chemical and ergonomic hazards in the workplace.
The Company believes that it is in material compliance with the aforementioned
laws and regulations and does not expect that future compliance will have a
material adverse effect on its capital expenditures, earnings or competitive
position in the foreseeable future. However, there can be no assurances that
environmental and other legal requirements will not become more stringent in the
future or that the Company will not incur significant costs in the future to
comply with such requirements.
Litigation
The Company is not currently a party to any legal proceedings the result of
which it believes could have a material adverse impact on its business or
financial condition.
Employees
The Company had approximately 6,600 employees at December 28, 1996, of which
approximately 87% were paid hourly.
Hourly employees at the Company's Martinsville and South Boston, Virginia
facilities are represented by the Union of Needletrades, Industrial and Textile
Employees (UNITE). The Company's labor contracts with the union, covering all
hourly employees at the Martinsville and South Boston facilities, expire in
1998. As of December 28, 1996, the Company's hourly employees represented by the
Union accounted for approximately 40.0% of the Company's total employees and
approximately 45.9% of the Company's hourly employees. None of the Company's
other employees are represented by a union. The following table summarizes the
approximate number of employees in the Company's principal divisions at December
28, 1996.
<TABLE>
<CAPTION>
December 28, 1996
-----------------
Division Salary Hourly Total
-------- ------ ------ -----
<S> <C> <C> <C>
Activewear 715 5,041 5,756
Licensed Apparel 99 627 726
Licensed Headwear 30 106 136
--- ----- -----
Total 844 5,774 6,618
=== ===== =====
</TABLE>
Properties
Almost all of the Company's principal physical facilities (other than those of
LogoAthletic) are located in Virginia and North Carolina, within a 150-mile
radius of the City of Martinsville. All buildings are well- maintained. The
Company and its subsidiaries also lease sales offices and retail outlets in
major cities from coast to coast. The location, approximate size and use of the
Company's principal owned properties are summarized in the following table:
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<PAGE>
<TABLE>
<CAPTION>
Square
Location Footage Use
- -------- ------- ---
<S> <C> <C>
Martinsville, VA 1,100,000 Manufacturing (apparel) and administrative offices
Koehler, VA 60,000 Warehousing
Martinsville, VA 70,000 Warehousing
South Boston, VA 130,000 Sewing (apparel)
Bastian, VA 53,500 Sewing (apparel)
Longhurst, NC 287,000 Manufacturing (yarn)
Roxboro, NC 110,000 Manufacturing (yarn)
Dobson, NC 38,000 Sewing (apparel)
Mayodan, NC 612,000 Manufacturing, warehousing and shipping
(yarn and apparel)
Vinton, VA 50,000 Sewing (apparel)
Martinsville, VA 502,200 Warehousing and shipping (apparel)
Mattapoisett, MA 116,250 Distribution (headwear)
Asheville, NC 106,650 Manufacturing (apparel)
</TABLE>
The following table presents certain information relating to the Company's
principal leased facilities:
<TABLE>
<CAPTION>
Lease Current
Square Expiration Annual
Location Footage Date Rental Use
- -------- ------- ---- ------ ---
<S> <C> <C> <C> <C>
Chilhowie, VA 40,015 8/31/97 $ 46,200 Sewing (apparel)
Montego Bay, Jamaica 28,422 Monthly 113,688 Sewing (apparel)
Montego Bay, Jamaica 38,088 12/31/98 152,352 Sewing (apparel)
Martinsville, VA 300,000 6/1/98 684,000 Warehousing (apparel)
Martinsville, VA 300,000 6/1/98 594,000 Warehousing (apparel)
Indianapolis, IN 650,000 5/31/07 1,408,000 Distribution (licensed apparel)
Charlotte, NC 26,500 10/30/99 94,104 Distribution (licensed apparel)
Fullerton, CA 205,000 12/31/04 762,600 Distribution (apparel)
San Diego, CA 23,812 03/31/99 142,872 Distribution (apparel)
Salt Lake City, UT 33,000 06/30/97 106,812 Distribution (apparel)
Oakland, CA 22,282 07/31/99 70,404 Distribution (apparel)
Los Angeles, CA 25,017 11/30/97 32,784 Distribution (apparel)
Honolulo, HI 8,257 05/31/97 64,404 Distribution (apparel)
Denver, CO 28,600 12/31/98 85,800 Distribution (apparel)
Seattle, WA 34,020 09/30/97 141,852 Distribution (apparel)
Los Vegas, NV 30,199 07/31/03 259,444 Distribution (apparel)
Phoenix, AZ 20,400 100,368 Distribution (apparel)
Cincinnati, OH 105,000 02/28/99 199,200 Distribution (apparel)
</TABLE>
Manufacturing equipment, substantially all of which is owned by the Company,
includes carding, spinning and knitting machines, jet-dye machinery, dryers,
cloth finishing machines, cutting and sewing equipment and automated
storage/retrieval equipment. This machinery is modern and kept in good repair.
The Company leases a fleet of trucks and tractor-trailers which are used for
transportation of raw materials and for interplant transportation of
semi-finished and finished products.
The Company's facilities and its manufacturing equipment are considered adequate
for its immediate needs.
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<PAGE>
MANAGEMENT
Executive Officers of the Company
The following information is furnished concerning the executive officers of the
Company.
<TABLE>
<CAPTION>
Name Age Office
- ---- --- ------
<S> <C> <C>
John M. Franck 44 Chairman of the Board of Directors
Charles W. Davies, Jr. 48 President and Chief Executive Officer
O. Randolph Rollins 54 Executive Vice President and General Counsel
Walter J. Caruba 49 Vice President--Marketing and Sales
W. Jack Gardner, Jr. 53 Vice President--Domestic Operations
Anthony J. Pichirallo 38 Vice President--Wholesale Marketing
B. Alvin Ratliff 51 Vice President--Resources
John J. Smith 54 Vice President--Distribution/Logistics and
Systems
Suzanne H. Wood 37 Vice President and Chief Financial Officer
Jeffrey F. Kies 40 Corporate Controller
</TABLE>
John M. Franck, Chairman of the Board of Directors, was Chairman of the Board
and Chief Executive Officer of the Company from January 1991 to January 1995,
and served as President and Chief Operating Officer from November 1988 to
January 1991. Mr. Franck is a director of Piedmont Trust Bank, Martinsville,
Virginia.
Charles W. Davies, Jr., President and Chief Executive Officer of the Company
since January 1995, was President and Chief Operating Officer of the Company
from January 1991 to January 1995, and Executive Vice President from December
1989 to January 1991. From February 1988 through November 1989, he was President
and Chief Executive Officer of Signal Apparel Company in Chattanooga, Tennessee.
From March 1986 to February 1988, Mr. Davies was President of Little Cotton
Manufacturing Company in Wadesboro, North Carolina and from December 1984
through February 1986 was Senior Vice President of Fieldcrest-Cannon in
Kannapolis, North Carolina.
O. Randolph Rollins became Executive Vice President and General Counsel in
October 1994. From 1995 to 1996 he was Chief Financial Officer. Prior thereto,
Mr. Rollins was a partner with the law firm of McGuire, Woods, Battle & Boothe,
Richmond, Virginia, from 1973 to 1990 and from January 1994 to October 1994.
From 1990 to January 1994, Mr. Rollins served in the Cabinet of Virginia's
Governor L. Douglas Wilder, first as Deputy Secretary of Public Safety and from
1992 through January 14, 1994 as Secretary of Public Safety of the Commonwealth
of Virginia. Mr. Rollins is the brother-in-law of John M. Franck.
Walter J. Caruba became Vice President--Marketing and Sales in September 1992.
He served as Vice President--Distribution between October 1990 and September
1992. He served as General Manager--Planning from November 1989 to October 1990
and was Director--Production Control from December 1985 to November 1989.
W. Jack Gardner became Vice President--Domestic Operations in September 1994 and
served as General Manager--Fabric Manufacturing from January 1988 until that
time.
Anthony J. Pichirallo became Vice President--Wholesale Marketing in February
1997. He served as General Manager--Wholesale from July 1991 until that time.
B. Alvin Ratliff became Vice President--Resources in March 1995. He previously
served as Vice President and Service Quality Coordinator from February 1994
until March, 1995 after serving as Vice President--Operations since December
1984.
John J. Smith became Vice President--Distribution/Logistics and Systems in
September 1992. Prior thereto, he served as Vice President--Sales and Marketing
since December 1987 after serving as Director--Corporate Planning since May
1987. He was Manager--Information Systems & Services between December 1985 and
May 1987.
Suzanne H. Wood became Vice President and Chief Financial Officer in February
1996. Prior to that appointment, Ms. Wood was Corporate Controller. In the 10
years prior to joining the Company in 1993, she was employed by Price Waterhouse
LLP, most recently as Audit Senior Manager.
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<PAGE>
Jeffrey F. Kies became Corporate Controller in August 1996. Prior to joining the
Company, he was employed by R. J. Reynolds Tobacco Co. as Senior Financial
Manager.
DESCRIPTION OF CERTAIN OTHER INDEBTEDNESS
The Company has outstanding $110 million of 10 5/8% Senior Notes due March 15,
2005 and has a $187.5 million Senior Credit Facility provided by a syndicate of
banks headed by NationsBank, N.A.
The 1995 Notes are redeemable beginning March 15, 2000 at declining redemption
prices, are general unsecured obligations of the Company, rank pari passu in
right of payment with all other unsubordinated indebtedness of the Company, and
are guaranteed jointly and severally by the Company's principal subsidiaries.
The 1995 Notes contain covenants that limit the ability of the Company and its
subsidiaries to incur additional indebtedness, to make certain restricted
payments, to make certain investments, to create liens, to engage in sale and
lease transactions and to merge, consolidate or engage in similar transactions;
that impose dividend and other payment restrictions on subsidiaries; and that
prohibit certain transactions with affiliates or related persons. The Company is
also required to make an offer to repurchase the 1995 Notes upon a change in
control. In certain circumstances, the Company must also purchase the 1995 Notes
at par with the net proceeds of asset sales. These covenants are subject to a
number of significant exceptions and qualifications.
Borrowings under the Senior Credit Facility are general unsecured obligations of
the Company and rank pari passu in right of payment with all other
unsubordinated indebtedness of the Company. Borrowings under the Senior Credit
Facility bear a floating rate of interest equal to the prime rate of
NationsBank, N.A. or a reference rate plus a margin ranging from 0.50% to 1.625%
per annum. The Senior Credit Facility contains customary representations and
events of default, including default upon a change of control of the Company. It
also contains covenants restricting the ability of the Company and its
subsidiaries to incur indebtedness, to create liens on the Company's property,
to issue guarantees, to alter the character of the Company's business, to
consolidate, merge or purchase or sell the Company's assets, to make investments
or advance funds, to prepay indebtedness, and to transact business with
affiliates. As with the 1995 Notes, these covenants are subject to exceptions
and qualifications. The Senior Credit Facility contains certain financial
covenants regarding the maintenance of net worth, indebtedness levels, and
restrictions on the payment of cash dividends. At December 28, 1996, the Company
was in compliance with all of the financial covenants of the Senior Credit
Facility. As part of the Financing, the size of the Senior Credit Facility was
reduced from 225 million to $187.5 million.
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<PAGE>
THE EXCHANGE OFFER
Purpose and Effect of the Exchange Offer
The Company, the Guarantors and the Initial Purchasers entered into the
Registration Rights Agreement which provides that the Company and the Guarantors
will use their best efforts, and at their cost, to file and cause to become
effective the Exchange Offer Registration Statement with respect to a registered
offer to exchange (the "Exchange Offer") the Old Notes for an issue of Exchange
Notes with terms which are substantially identical (including principal amount,
interest rate and maturity) to the terms of the Old Notes for which they will be
exchanged (except that the Exchange Notes will have been registered under the
Securities Act and will not bear legends restricting their transfer other than
as provided in the Indenture) and guaranteed on a joint and several basis by the
Guarantors with terms identical to the Guarantees of the Old Notes. Upon such
registration statement being declared effective, the Company shall offer the
Exchange Notes in return for surrender of the Old Notes as aforesaid. Such offer
shall remain open for 30 days (or longer if required by applicable law) after
the date notice of the Exchange Offer is mailed to holders of the Old Notes. For
each Old Note surrendered to the Company under the Exchange Offer, the holder
will receive a New Note of equal principal amount on or prior to the fifth day
following the Expiration Date.
In the event that (i) the Exchange Offer Registration Statement relating to the
Exchange Offer is not filed with the Commission on or prior to the 60th day
following the Closing Date, (ii) the Exchange Offer Registration Statement is
not declared effective on or prior to the 120th day following the Closing Date
or (iii) the Exchange Offer is not consummated or a registration statement with
respect to resales of the Old Notes is not declared effective on or prior to the
150th day following the Closing Date (each such event referred to in clauses (i)
through (iii), a "Registration Default"), then the Company will pay additional
interest (in addition to the interest otherwise due on the Old Notes) to each
holder of Old Notes during the first 90-day period immediately following the
occurrence of each such Registration Default in an amount equal to 0.25% per
annum. The amount of interest will increase by an additional 0.25% per annum for
each subsequent 90-day period until such Registration Default is cured, up to a
maximum amount of additional interest of 1.00% per annum. Such additional
interest will cease accruing on such Old Notes when the Registration Default has
been cured.
Following consummation of the Exchange Offer, except as set forth below, holders
of Old Notes not tendered will not have any further registration rights and the
Old Notes will continue to be subject to certain restrictions on transfer. See
"--Consequences of Failure to Exchange." Accordingly, the liquidity of the
market for the Old Notes could be adversely affected.
Terms of the Exchange Offer
Upon the terms and subject to the conditions set forth in this Prospectus and in
the Letter of Transmittal, the Company will accept any and all Old Notes validly
tendered and not withdrawn on or prior to the Expiration Date. the Company will
issue $1,000 principal amount of Exchange Notes in exchange for each $1,000
principal amount of outstanding Old Notes accepted in the Exchange Offer.
Holders may tender some or all of their Old Notes pursuant to the Exchange
Offer, but only in integral multiples of $1,000 principal amount.
The form and terms of the Exchange Notes are substantially identical (including
principal amount, interest rate, and maturity) to the form and terms of the Old
Notes, except that (i) the Exchange Notes will have been registered under the
Securities Act and, therefore, will not bear legends restricting their transfer
pursuant to the Securities Act and (ii) holders of Exchange Notes will not be
entitled to certain rights of holders of Old Notes under the Registration Rights
Agreement which will terminate upon the consummation of the Exchange Offer. The
Exchange Notes will evidence the same debt as the Old Notes (which they replace)
and will be issued under, and be entitled to the benefits of, the Indenture.
As of the Closing Date, of the $75,000,000 aggregate principal amount of Old
Notes outstanding, $[ ] were registered in the name of institutions and the
remainder were registered in the name of Cede & Co, as nominee for The
Depository Trust Company (the "Depository" or "DTC"). Only a registered holder
of Old Notes (or such holder's legal representative or attorney-in-fact) as
reflected on the records of the Trustee under the Indentures may participate in
the Exchange Offer. There will be no fixed record date for determining
registered holders of Old Notes entitled to participate in the Exchange Offer.
The Company shall be deemed to have accepted validly tendered Old Notes when, as
and if the Company has given oral or written notice thereof to the Exchange
Agent. The Exchange Agent will act as agent for the tendering holders of Old
Notes for the purposes of receiving the Exchange Notes from the Company.
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If any tendered Old Notes are not accepted for exchange because of an invalid
tender, the occurrence of certain other events set forth herein or otherwise,
certificates for any such unaccepted Old Notes will be returned (or in the case
of Old Notes tendered by book-entry transfer through DTC, will be credited to an
account maintained with DTC), without expense, to the tendering holder thereof
as promptly as practicable after the Expiration Date. See "--Procedures for
Tendering."
Holders who tender Old Notes in the Exchange Offer will not be required to pay
brokerage commissions or fees with respect to the exchange of Old Notes pursuant
to the Exchange Offer. The Company will pay all charges and expenses, other than
any applicable taxes, in connection with the Exchange Offer. See "--Fees and
Expenses."
If, prior to consummation of the Exchange Offer, any Initial Purchaser holds any
Old Notes acquired by it and having, or which are reasonably likely to be
determined to have, the status of an unsold allotment in the initial
distribution, the Company upon the request of such Initial Purchaser shall,
simultaneously with the delivery of the Exchange Notes in the Exchange Offer,
issue and deliver to such Initial Purchaser, in exchange (the "Private
Exchange") for the Old Notes held by such Initial Purchaser, a like principal
amount of debt securities of the Company that are identical to the Exchange
Notes and guaranteed by the Guarantors with terms identical to the Guarantees
(the "Private Exchange Securities") (and which are issued pursuant to the
Indentures). The Private Exchange Securities shall bear the same CUSIP number as
the Exchange Notes. Interest on the Exchange Notes and Private Exchange
Securities will accrue from the last Interest Payment Date on which interest was
paid on the Old Notes surrendered in exchange therefor or, if no interest has
been paid on the Old Notes, from the Issue Date.
The Indenture provides that the holders of the Notes and any Private Exchange
Securities will vote and consent together on all matters (to which such holders
are entitled to vote or consent) as one class and that none of the holders of
the Notes and any Private Exchange Securities will have the right to vote or
consent as a separate class on any matter (to which such holders are entitled to
vote or consent).
Expiration Date; Extensions; Amendments
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on [ ],
1997, unless the Company, in its sole discretion, extends the Exchange Offer, in
which case the term "Expiration Date" shall mean the latest date and time to
which the Exchange Offer is extended.
In order to extend the Exchange Offer, the Company will notify the Exchange
Agent of any extension by oral or written notice and will make a public
announcement thereof, each prior to 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date.
The Company reserves the right, in its sole discretion, (i) to delay accepting
any Old Notes, (ii) to extend the Exchange Offer, (iii) to terminate the
Exchange Offer by giving oral or written notice of such delay, extension or
termination to the Exchange Agent, or (iv) to amend the terms of the Exchange
Offer in any manner. Any such delay in acceptance, extension, termination or
amendment will be followed as promptly as practicable by a public announcement
thereof. If the Exchange Offer is amended in a manner determined by the Company
to constitute a material change, the Company will promptly disclose such
amendments by means of a prospectus supplement that will be distributed to the
registered holders of Old Notes, and the Company will extend the Exchange Offer
for a period of five to ten business days, depending upon the significance of
the amendment and the manner of disclosure to the registered holders, if the
Exchange Offer would otherwise expire during such five to ten business day
period.
Without limiting the manner in which the Company may choose to make public
announcement of any delay, extension, termination or amendment of the Exchange
Offer, the Company shall not have an obligation to publish, advertise, or
otherwise communicate any such public announcement, other than by making a
timely release to the Dow Jones News Service.
Interest
Interest on the Exchange Notes shall accrue from the last Interest Payment Date
on which interest was paid on the Old Notes so surrendered, or, if no interest
has been paid on such Old Notes, from April 17, 1996. No interest will be paid
on the Old Notes accepted for exchange.
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Procedures for Tendering
Only a registered holder of Old Notes may tender such Old Notes in the Exchange
Offer. To tender in the Exchange Offer, a holder must complete, sign and date
the Letter of Transmittal, or a facsimile thereof, have the signatures thereon
guaranteed if required by the Letter of Transmittal, and mail or otherwise
deliver such Letter of Transmittal or such facsimile, together with the Old
Notes and any other required documents, to the Exchange Agent at the address set
forth below under "--Exchange Agent" for receipt prior to the Expiration Date;
provided, however, that in lieu of the foregoing, a holder may either (i) tender
the Old Notes pursuant to the procedure for book-entry tender set forth below,
or (ii) comply with the guaranteed delivery procedure set forth below.
The tender by a holder will constitute an agreement between such holder and the
Company in accordance with the terms and subject to the conditions set forth
herein and in the Letter of Transmittal.
THE METHOD OF DELIVERY OF OLD NOTES AND THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE
HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN
OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT ON OR BEFORE THE EXPIRATION
DATE. NO LETTER OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE COMPANY.
HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST
COMPANIES OR NOMINEES TO EFFECT THE ABOVE TRANSACTION FOR SUCH HOLDERS.
Any beneficial owner whose Old Notes are registered in the name of a broker,
dealer, commercial bank, trust company or other nominee and who wishes to tender
should contact the registered holder promptly and instruct such registered
holder to tender on such beneficial owner's behalf. See "Instructions to
Registered Holder from Beneficial Owner" included with the Letter of
Transmittal.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the case may
be, must be guaranteed by an Eligible Institution (as defined) unless the Old
Notes tendered pursuant thereto are tendered (i) by a registered holder who has
not completed the box entitled "Special Issuance Instructions" or "Special
Delivery Instructions" on the Letter of Transmittal, or (ii) for the account of
an Eligible Institution. In the event that signatures on a Letter of Transmittal
or a notice of withdrawal, as the case may be, are required to be guaranteed,
such guarantee must be by a member of one of the following signature guarantee
programs: the Securities Transfer Agents Medallion Program (STAMP), the New York
Stock Exchange Medallion Signature Program (MSP) and the Stock Exchange
Medallion Program (SEMP) (each, an "Eligible Institution").
If the Letter of Transmittal is signed by a person other than the registered
holder of any Old Notes listed therein, such Old Notes must be endorsed or
accompanied by a properly completed bond power, signed by such registered holder
as such registered holder's name appears on such Old Notes.
If the Letter of Transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and evidence satisfactory to the
Company of their authority to so act must be submitted with the Letter of
Transmittal.
All questions as to the validity, form, eligibility (including time of receipt),
acceptance and withdrawal of tendered Old Notes will be determined by the
Company, in its sole discretion, which determination will be final and binding.
The Company reserves the absolute right to reject any and all Old Notes not
properly tendered or any Old Notes the Company's acceptance of which would, in
the opinion of counsel for the Company, be unlawful. The Company also reserves
the right to waive any defects, irregularities or conditions of tender as to
particular Old Notes. The Company's interpretation of the terms and conditions
of the Exchange Offer (including the instructions in the Letter of Transmittal)
will be final and binding on all parties. Unless waived, any defects or
irregularities in connection with tenders of Old Notes must be cured within such
time as the Company shall determine. Although the Company intends to notify
holders of defects or irregularities with respect to tenders of Old Notes,
neither the Company, the Guarantors, the Exchange Agent nor any other person
shall incur any liability for failure to give such notification. Tenders of Old
Notes will not be deemed to have been made until such defects or irregularities
have been cured or waived. Any Old Notes received by the Exchange Agent that are
not validly tendered and as to which the defects or irregularities have not been
cured or waived will be returned by the Exchange Agent to the tendering
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holders, unless otherwise provided in the Letter of Transmittal, as soon as
practicable following the Expiration Date.
By executing the Letter of Transmittal, each registered holder will represent to
the Company, among other things, that (i) the Exchange Notes to be acquired by
the holder and any beneficial owner(s) of Old Notes ("Beneficial Owner(s)") in
connection with the Exchange Offer are being acquired by the holder and any
Beneficial Owner(s) in the ordinary course of business of the holder and any
Beneficial Owner(s), (ii) at the time of the consummation of the Exchange Offer
the holder and each Beneficial Owner are not engaging in, do not intend to
engage in, and have no arrangement or understanding with any person to
participate, in the distribution of the Exchange Notes in violation of the
provisions of the Securities Act, (iii) the holder and each Beneficial Owner
acknowledge and agree that any person participating in the Exchange Offer for
the purpose of distributing the Exchange Notes must comply with the registration
and prospectus delivery requirements of the Securities Act in connection with a
secondary resale transaction of the Exchange Notes acquired by such person and
cannot rely on the position of the Staff of the Commission set forth in
no-action letters that are discussed under "Plan of Distribution", (iv) the
holder and each Beneficial Owner understands that a secondary resale transaction
described in clause (iii) above should be covered by an effective registration
statement containing the selling securityholder information required by Item 507
or 508, as applicable, of Regulation S-K of the Commission, and (v) neither the
holder nor any Beneficial Owner(s) is an "affiliate," as defined under Rule 405
of the Securities Act, of the Company except as otherwise disclosed to the
Company in writing.
Exchanging Book-Entry Old Notes
The Exchange Agent and DTC have confirmed that any financial institution that
has an account with DTC (a "Participant") may utilize DTC's Automated Tender
Offer Program ("ATOP") to tender Old Notes.
The Exchange Agent will request that DTC establish an account with respect to
the Old Notes for purposes of the Exchange Offer within two business days after
the date of the Exchange Offer. Any Participant may make book-entry delivery of
Old Notes by causing DTC to transfer such Old Notes into such Exchange Agent's
account in accordance with DTC's ATOP procedures for transfer. However, the
exchange for the Old Notes so tendered will only be made after timely
confirmation (a "Book-Entry Confirmation") of such book-entry transfer of Old
Notes into the Exchange Agent's account, and timely receipt by the Exchange
Agent of an Agent's Message (as defined) and any other documents required by the
Letter of Transmittal. The term "Agent's Message" means a message, transmitted
by DTC and received by the Exchange Agent and forming part of a Book-Entry
Confirmation, which states that DTC has received an express acknowledgment from
a Participant tendering Old Notes which are the subject of such Book-Entry
Confirmation that such Participant has received and agrees to be bound by the
terms of the Letter of Transmittal, and that the Company may enforce such
agreement against such Participant.
The method of delivery of Old Notes is at the option and risk of the tendering
holder and, except as otherwise provided in the Letter of Transmittal, the
delivery will be deemed to be made only when actually received by the Exchange
Agent.
Guaranteed Delivery Procedures
Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available, or (ii) who cannot deliver their Old Notes, the Letter of
Transmittal or any other required documents to the Exchange Agent prior to the
Expiration Date or (iii) who cannot comply with the procedure for book-entry
tender on a timely basis, may effect a tender if:
(a) The tender is made through an Eligible Institution;
(b) On or prior to the Expiration Date, the Exchange Agent receives
from such Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery) setting
forth the name and address of the holder, the certificate number(s) of such Old
Notes and the principal amount of the Old Notes being tendered, stating that the
tender is being made thereby and guaranteeing that, within five New York Stock
Exchange trading days after the execution of the Notice of Guaranteed Delivery,
the Letter of Transmittal (or facsimile thereof) together with the
certificate(s) representing the Old Notes and any other documents required by
the Letter of Transmittal will be deposited by the Eligible Institution with the
Exchange Agent; and
(c) Such properly completed and executed Letter of Transmittal (or
facsimile thereof), as well as the certificate(s) representing all tendered Old
Notes in proper form for transfer and all other documents
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<PAGE>
required by the Letter of Transmittal, are received by the Exchange Agent within
five New York Stock Exchange trading days after the execution of the Notice of
Guaranteed Delivery.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be sent
to holders who wish to tender their Old Notes according to the guaranteed
delivery procedures set forth above.
Withdrawal of Tenders
Except as otherwise provided herein, Old Notes tendered pursuant to the Exchange
Offer may be withdrawn at any time on or prior to the Expiration Date.
To withdraw a tender of Old Notes in the Exchange Offer, a written or facsimile
transmission notice of withdrawal must be received by the Exchange Agent at its
address set forth herein on or prior to the Expiration Date. Any such notice of
withdrawal must (i) specify the name of the person having deposited the Old
Notes to be withdrawn (the "Depositor"), (ii) identify the Old Notes to be
withdrawn (including the certificate number or numbers (except in the case of
book-entry tenders) and principal amount at maturity (regardless of the means of
tendering) of such Old Notes), (iii) be signed by the holder in the same manner
as the original signature on the Letter of Transmittal by which such Old Notes
were tendered (including any required signature guarantees) or be accompanied by
documents of transfer sufficient to have the Trustee with respect to the Old
Notes register the transfer of such Old Notes into the name of the Depositor
withdrawing the tender, and (iv) specify the name in which any such Old Notes
are to be registered, if different from that of the Depositor. If the Old Notes
have been tendered pursuant to the procedure for book-entry tender set forth
above under "Exchanging Book-Entry Old Notes," a notice of withdrawal must
specify, in lieu of certificate numbers, the name and account number at DTC to
be credited with the withdrawn Old Notes. All questions as to the validity, form
and eligibility (including time of receipt) of such notices will be determined
by the Company in its sole discretion, which determination shall be final and
binding on all parties. Any Old Notes so withdrawn will be deemed not to have
been validly tendered for purposes of the Exchange Offer and no Exchange Notes
will be issued with respect thereto unless the Old Notes so withdrawn are
validly retendered. Properly withdrawn Old Notes may be retendered by following
one of the procedures described above under "Procedures for Tendering" at any
time on or prior to the Expiration Date.
Any Old Notes which have been tendered but which are not accepted for exchange
due to rejection of tender or termination of the Exchange Offer, or which have
been validly withdrawn, will be returned as soon as practicable to the holder
thereof without cost to such holder.
Exchange Agent
First Union National Bank of Virginia has been appointed as Exchange Agent for
the Exchange Offer. Questions and requests for assistance, requests for
additional copies of this Prospectus or the Letter of Transmittal and requests
for Notices of Guaranteed Delivery should be directed to the Exchange Agent at
804/ or addressed as follows:
--------
[TO COME FROM FIRST UNION]
Fees and Expenses
The expenses of soliciting tenders will be borne by the Company. The principal
solicitations are being made by mail; however, additional solicitations may be
made by telegraph, telephone or in person by officers and regular employees of
the Company and its affiliates.
The Company has not retained any dealer-manager in connection with the Exchange
Offer and will not make any payments to brokers, dealers or others soliciting
acceptance of the Exchange Offer. The Company, however, will pay the Exchange
Agent reasonable and customary fees for its services and will reimburse it for
its reasonable out-of-pocket expenses in connection therewith.
The cash expenses incurred and to be incurred in connection with the Exchange
Offer will be paid by the Company and are estimated in the aggregate to be
approximately $75,000. Such expenses include fees and expenses of the Exchange
Agent and Trustee, accounting and legal fees, filing fees under the Securities
Act and state securities laws, and printing costs, among others.
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Effect on Holders of Old Notes
Old Notes which are not exchanged for Exchange Notes pursuant to the Exchange
Offer will remain restricted securities under the Securities Act. Accordingly,
such Old Notes may be resold only (i) to a person who the seller reasonably
believes is a "qualified institutional buyer" as defined in Rule 144A under the
Securities Act ("QIB") in a transaction meeting the requirements of Rule 144A,
in a transaction meeting the requirements of Rule 144 under the Securities Act,
outside the U.S. to a foreign person in a transaction meeting the requirements
of Rule 904 under the Securities Act or in accordance with another exemption
from the registration requirements of the Securities Act (and based upon an
opinion of counsel if the Company so requests), (ii) to the Company or (iii)
pursuant to an effective registration statement, and, in each case, in
accordance with any applicable securities laws of any State of the United States
or any other applicable jurisdiction. Certain holders prohibited from
participating in the Exchange Offer may have certain other registration rights
under the Registration Rights Agreements. See "Prospectus Summary--The Exchange
Offer--Registration Rights Agreements."
Accounting Treatment
The Exchange Notes will be recorded at the same carrying value of the Old Notes
as reflected in the Company's accounting records on the date of the Exchange.
Accordingly, no gain or loss for accounting purposes will be recognized by the
Company. The expenses of the Exchange Offer will be amortized by the Company
over the term of the Exchange Notes.
DESCRIPTION OF EXCHANGE NOTES
As used below in this "Description of Exchange Notes" section, the "Company"
means Tultex Corporation but not any of its subsidiaries. The Exchange Notes are
to be issued under an Indenture dated as of April 15, 1997 (the "Indenture"),
between the Company, the Guarantors and First Union National Bank of Virginia,
as Trustee (the "Trustee"). The terms of the Exchange Notes include those stated
in the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"). The New Exchange
Notes are subject to all such terms, and holders of the Exchange Notes are
referred to the Indenture and the Trust Indenture Act for a statement thereof.
The statements under this caption relating to the Exchange Notes, the Indenture
and the Registration Rights Agreement are summaries and do not purport to be
complete, and where reference is made to particular provisions of the Indenture
or the Registration Rights Agreement, which have been filed as exhibits to the
Registration Statement, such provisions, including the definitions of certain
terms, are qualified in their entirety by such reference.
General
The Exchange Notes will be general unsecured obligations of the Company, will be
limited to $75 million aggregate principal amount and will rank pari passu in
right of payment with all other indebtedness of the Company that is not, by its
terms, expressly subordinated in right of payment to the Exchange Notes. The
Exchange Notes will be guaranteed on a joint and several basis by each of the
Guarantors pursuant to the Guarantees described below. The Guarantees will be
general unsecured obligations of the Guarantors and will rank pari passu in
right of payment with all other indebtedness of the Guarantors that is not, by
its terms, expressly subordinated in right of payment to the Guarantees. At
April 5, 1997, as adjusted to give effect to the transactions described under
"Use of Proceeds," the total indebtedness of the Company would have been
approximately $247.0 million, none of which would have been subordinated to the
Exchange Notes. Secured creditors of the Company or any Guarantor will have a
claim on the assets which secure the obligations of the Company or such
Guarantor, as the case may be, prior to claims of holders of the Exchange Notes
against those assets. At December 28, 1996, as adjusted to give effect to the
transactions described under "Use of Proceeds," the Company and the Guarantors
had no secured indebtedness.
The Exchange Notes will mature on April 15, 2007 and will bear interest at the
rate per annum shown on the front cover of this Offering Memorandum from April
17, 1997 or from the most recent interest payment date to which interest has
been paid or provided for. Interest will be payable semi-annually on April 15
and October 15 of each year, commencing October 15, 1997, to the Person in whose
name a Note is registered at the close of business on the preceding April 1 or
October 1 (each, a "Record Date"), as the case may be. Interest on the Exchange
Notes will be computed on the basis of a 360-day year of twelve 30-day months.
Holders must surrender the Exchange Notes to the paying agent for the Exchange
Notes to collect principal payments. The Company will pay principal and interest
by check and may mail interest checks to a Holder's registered address.
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The Exchange Notes will be issued only in fully registered form, without
coupons, in denominations of $1,000 and any integral multiple thereof. No
service charge will be made for any registration of transfer or exchange of
Exchange Notes, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Initially, the Trustee will act as paying agent and registrar for the Exchange
Notes. The Exchange Notes may be presented for Registration of transfer and
exchange at the offices of the registrar for the Exchange Notes.
Redemption
The Exchange Notes will be subject to redemption, at the option of the Company,
in whole or in part, at any time on or after April 15, 2002 and prior to
maturity, upon not less than 30 nor more than 60 days' notice mailed to each
Holder of Exchange Notes to be redeemed at his address appearing in the register
for the Exchange Notes, in amounts of $1,000 or an integral multiple of $1,000,
at the following redemption prices (expressed as percentages of principal
amount) plus accrued interest to but excluding the date fixed for redemption
(subject to the right of Holders of record on the relevant Record Date to
receive interest due on an interest payment date that is on or prior to the date
fixed for redemption), if redeemed during the 12-month period beginning of the
years indicated:
<TABLE>
<CAPTION>
Year Redemption Price
---- ----------------
<S> <C>
2002 104.813%
2003 103.208
2004 101.604
2005 and thereafter 100.000
</TABLE>
If less than all the Exchange Notes are to be redeemed, the Trustee shall
select, in such manner as it shall deem fair and appropriate, the particular
Exchange Notes to be redeemed or any portion thereof that is an integral
multiple of $1,000.
The Exchange Notes will not have the benefit of any sinking fund.
The Guarantees
Each of the Guarantors will unconditionally guarantee on a joint and several
basis all of the Company's obligations under the Exchange Notes, including its
obligations to pay principal, premium, if any, and interest with respect to the
Exchange Notes. The obligations of each Guarantor are limited to the maximum
amount which, after giving effect to all other contingent and fixed liabilities
of such Guarantor and after giving effect to any collections from or payments
made by or on behalf of any other Guarantor in respect of the obligations of
such other Guarantor under its Guarantee or pursuant to its contribution
obligations under the Indenture, will result in the obligations of such
Guarantor under the Guarantee not constituting a fraudulent conveyance or
fraudulent transfer under federal or state law. Each Guarantor that makes a
payment or distribution under a Guarantee shall be entitled to a contribution
from each other Guarantor in an amount pro rata, based on the net assets of each
Guarantor determined in accordance with GAAP. Except as provided in "Certain
Covenants" below, the Company is not restricted from selling or otherwise
disposing of any of the Guarantors.
The Indenture provides that each Wholly Owned Subsidiary of the Company in
existence on the Issue Date and each Material Subsidiary whether formed or
acquired after the Issue Date will become a Guarantor, provided that, any
Material Subsidiary acquired after the Issue Date which is prohibited from
entering into a Guarantee pursuant to restrictions contained in any debt
instrument or other agreement in existence at the time such Material Subsidiary
was so acquired and not entered into in anticipation or contemplation of such
acquisition shall not be required to become a Guarantor so long as any such
restriction is in existence and to the extent of any such restriction.
The Indenture provides that if the Exchange Notes are defeased in accordance
with the terms of the Indenture, or if all or substantially all of the assets of
any Guarantor or all of the capital stock of any Guarantor is sold (including by
issuance or otherwise) by the Company or any of its Subsidiaries in a
transaction constituting an Asset Disposition, and if (x) the Net Available
Proceeds from such Asset Disposition are used in accordance with the covenant
"--Limitation on Certain Asset Dispositions" or (y) the Company delivers to the
Trustee an Officers' Certificate to the effect that the Net Available Proceeds
from such Asset Disposition shall be used in accordance with the covenant
"--Limitation on Certain Asset Dispositions" and within the time limits
specified by such covenant, then such Guarantor (in the event of a sale or other
disposition of all of the capital stock of such Guarantor) or the corporation
acquiring such assets (in the event of a
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sale or other disposition of all or substantially all of the assets of such
Guarantor) shall be released and discharged of its Guarantee obligations.
Separate financial statements of the Guarantors are not included herein because
such Guarantors are jointly and severally liable with respect to the Company's
obligations pursuant to the Exchange Notes, and the aggregate net assets,
earnings and equity of the Guarantors and the Company are substantially
equivalent to the net assets, earnings and equity of the Company on a
consolidated basis.
Covenants
The Indenture contains, among others, the following covenants:
Limitation on Indebtedness
The Indenture provides that the Company will not, and will not permit any of its
Subsidiaries to, Incur any Indebtedness except, subject to the provisions set
forth below under "--Additional Limitation on Subsidiary Indebtedness": (i)
Indebtedness of the Company or its Subsidiaries, if immediately after giving
effect to the Incurrence of such Indebtedness and the receipt and application of
the net proceeds thereof, the Consolidated Cash Flow Ratio of the Company for
the four full fiscal quarters for which quarterly or annual financial statements
are available next preceding the Incurrence of such Indebtedness, calculated on
a pro forma basis as if such Indebtedness had been Incurred at the beginning of
such four full fiscal quarters, would be greater than 2.00 to 1 if such
Indebtedness is Incurred on or before December 31, 1997 and 2.25 to 1 if such
Indebtedness is Incurred after December 31, 1997; (ii) Indebtedness of the
Company, and guarantees of such Indebtedness by any Guarantor, Incurred under
the Senior Credit Facility in an aggregate principal amount at any one time not
to exceed the greater of (x) $187.5 million or (y) the sum of (A) 80% of
Eligible Accounts Receivable and (B) 65% of Eligible Inventory; (iii)
Indebtedness owed by the Company to any Wholly Owned Subsidiary of the Company
(provided that such Indebtedness is at all times held by a Person which is a
Wholly Owned Subsidiary of the Company) or Indebtedness owed by a Subsidiary of
the Company to the Company or a Wholly Owned Subsidiary of the Company (provided
that such Indebtedness is at all times held by the Company or a Person which is
a Wholly Owned Subsidiary of the Company); provided, however, upon either (x)
the transfer or other disposition by such Wholly Owned Subsidiary or the Company
of any Indebtedness so permitted under this clause (iii) to a Person other than
the Company or another Wholly Owned Subsidiary of the Company or (y) the
issuance (other than directors' qualifying shares), sale, transfer or other
disposition of shares of Capital Stock or other ownership interests (including
by consolidation or merger) of such Wholly Owned Subsidiary to a Person other
than the Company or another such Wholly Owned Subsidiary of the Company, the
provisions of this clause (iii) shall no longer be applicable to such
Indebtedness and such Indebtedness shall be deemed to have been Incurred at the
time of any such issuance, sale, transfer or other disposition, as the case may
be; (iv) Indebtedness incurred by a Person prior to the time (x) such Person
becomes a Subsidiary of the Company, (y) such Person merges into or consolidates
with a Subsidiary of the Company or (z) another Subsidiary of the Company merges
into or consolidates with such Person (in a transaction in which such Person
becomes a Subsidiary of the Company), which Indebtedness was not Incurred in
anticipation or contemplation of such transaction and was outstanding prior to
such transaction; (v) Indebtedness of the Company or its Subsidiaries under any
interest rate or currency swap agreement to the extent entered into to hedge any
other Indebtedness permitted under the Indenture; (vi) Capital Lease Obligations
of the Company or its Subsidiaries Incurred with respect to a Sale and Leaseback
Transaction which was made in accordance with the provisions of the Indenture
described under "--Limitation on Sale and Leaseback Transactions"; (vii)
Indebtedness Incurred to renew, extend, refinance or refund (collectively for
purposes of this clause (vii) to "refund") any Indebtedness outstanding on the
Issue Date and Indebtedness Incurred under the prior clause (i) or the Exchange
Notes; provided, however, that (x) such Indebtedness does not exceed the
principal amount of Indebtedness so refunded plus the amount of any premium
required to be paid in connection with such refunding pursuant to the terms of
the Indebtedness refunded or the amount of any premium reasonably determined by
the Company as necessary to accomplish such refunding by means of a tender
offer, exchange offer or privately negotiated repurchase, plus the expenses of
the Company or such Subsidiary Incurred in connection therewith and (y)(A) in
the case of any refunding of Indebtedness which is pari passu with the Exchange
Notes, such refunding Indebtedness is made pari passu with or subordinate in
right of payment to the Exchange Notes, and, in the case of any refunding of
Indebtedness which is subordinate in right of payment to the Exchange Notes,
such refunding Indebtedness is subordinate in right of payment to the Exchange
Notes on terms no less favorable to the Holders than those contained in the
Indebtedness being refunded and (B) in either case, the refunding Indebtedness
by its terms, or by the terms of any agreement or instrument pursuant to which
such Indebtedness is issued, does not have an Average Life that is less than the
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remaining Average Life of the Indebtedness being refunded and does not permit
redemption or other retirement (including pursuant to any required offer to
purchase to be made by the Company or a Subsidiary of the Company) of such
Indebtedness at the option of the holder thereof prior to the final stated
maturity of the Indebtedness being refunded, other than a redemption or other
retirement at the option of the holder of such Indebtedness (including pursuant
to a required offer to purchase made by the Company or a Subsidiary of the
Company) which is conditioned upon a change of control of the Company pursuant
to provisions substantially similar to those contained in the Indenture
described under "--Change of Control" below; (viii) Indebtedness of the Company
or its Subsidiaries Incurred for the purpose of financing all or any part of the
purchase price or the cost of construction or improvement of any property,
provided that the aggregate principal amount of such Indebtedness does not
exceed 100% of such purchase price or cost and any Lien associated with such
Indebtedness complies with clause (iv) of the "Limitation on Liens" covenant;
(ix) Indebtedness of the Company or its Subsidiaries, not otherwise permitted to
be Incurred pursuant to clauses (i) through (viii) above which, together with
any other outstanding Indebtedness Incurred pursuant to this clause (ix), has an
aggregate principal amount not in excess of $10 million at any time outstanding;
and (x) Indebtedness of the Company and its Subsidiaries under the Exchange
Notes and the Guarantees.
Additional Limitation on Subsidiary Indebtedness
The Indenture provides that, in addition to the provisions of the Indenture
described under "--Limitation on Indebtedness," the Company will not permit any
of its Subsidiaries to Incur any Indebtedness (other than the guarantee of
Indebtedness under the Senior Credit Facility and the 1995 Notes) in an amount
which, when aggregated with (A) all Indebtedness (other than any Indebtedness
included in the following clause (B) or (C)) secured by Liens permitted by the
provisions of the Indenture described in clause (viii) under "--Limitation on
Liens" and then outstanding, (B) all Capital Lease Obligations of the Company
and its Subsidiaries Incurred in compliance with the provisions of the Indenture
described in "--Limitation on Indebtedness" and then outstanding, and (C) all
other Indebtedness of Subsidiaries of the Company (other than the guarantee of
Indebtedness under the Senior Credit Facility and the 1995 Notes) Incurred in
compliance with "--Limitation on Indebtedness" and then outstanding, would
exceed 10% of Consolidated Net Tangible Assets.
Limitation on Restricted Payments
The Indenture provides that the Company will not, and will not permit any of its
Subsidiaries to, (i) directly or indirectly, declare or pay any dividend, or
make any distribution of any kind or character (whether in cash, property or
securities), in respect of any class of its Capital Stock or to the holders
thereof, excluding any (x) dividends or distributions payable solely in shares
of its Capital Stock (other than Disqualified Stock) or in options, warrants or
other rights to acquire its Capital Stock (other than Disqualified Stock), or
(y) in the case of any Subsidiary of the Company, dividends or distributions
payable to the Company or a Subsidiary of the Company, (ii) directly or
indirectly, purchase, redeem or otherwise acquire or retire for value shares of
Capital Stock of the Company or any of its Subsidiaries, any options, warrants
or rights to purchase or acquire shares of Capital Stock of the Company or any
of its Subsidiaries or any securities convertible or exchangeable into shares of
Capital Stock of the Company or any of its Subsidiaries, excluding any such
shares of Capital Stock, options, warrants, rights or securities which are owned
by the Company or a Subsidiary of the Company, (iii) make any Investment in
(other than a Permitted Investment), or payment on a guarantee of any obligation
of, any Person, other than the Company or a Wholly Owned Subsidiary of the
Company, or (iv) redeem, defease, repurchase, retire or otherwise acquire or
retire for value, prior to any scheduled maturity, repayment or sinking fund
payment, Indebtedness which is subordinate in right of payment to the Exchange
Notes (each of clauses (i) through (iv) being a "Restricted Payment") if at the
time thereof: (1) an Event of Default, or an event that with the passing of time
or giving of notice, or both, would constitute an Event of Default, shall have
occurred and be continuing, or (2) upon giving effect to such Restricted
Payment, the Company could not incur at least $1.00 of additional Indebtedness
pursuant to the terms of the Indenture described in clause (i) of "--Limitation
on Indebtedness" above, or (3) upon giving effect to such Restricted Payment,
the aggregate of all Restricted Payments made on or after March 23, 1995 exceeds
the sum of: (a) 50% of cumulative Consolidated Net Income of the Company (or, in
the case Consolidated Net Income of the Company shall be negative, less 100% of
such deficit) since April 1, 1995 through the last day of the fiscal quarter for
which financial statements are available; plus (b) 100% of the aggregate net
proceeds received after March 23, 1995, including the fair market value of
property other than cash (determined in good faith by the Board of Directors of
the Company as evidenced by a resolution of such Board of Directors filed with
the Trustee), from the issuance of Capital Stock (other than Disqualified Stock)
of the Company and warrants, rights or options on Capital Stock (other than
Disqualified Stock) of the Company and the principal amount of Indebtedness that
has been converted into or exchanged
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for Capital Stock (other than Disqualified Stock) of the Company which
Indebtedness was incurred after the Issue Date; plus (c) in the case of the
disposition or repayment of any Investment constituting a Restricted Payment
made after March 23, 1995 (other than any Investment made pursuant to clause
(vi) of the following paragraph), an amount equal to the lesser of the return of
capital with respect to such Investment and the cost of such Investment, in
either case, less the cost of the disposition of such Investment, provided that
at the time any such Investment is made the Company delivers to the Trustee a
resolution of its Board of Directors to the effect that, for purposes of this
"Limitation on Restricted Payments" covenant, such Investment constitutes a
Restricted Payment made after the Issue Date (other than an Investment made
pursuant to clause (vi) of the following paragraph); plus (d) $4 million.
The foregoing provision will not be violated by (i) reason of any dividend on
any class of Capital Stock of the Company or any Subsidiary of the Company, paid
within 60 days after the declaration thereof if, on the date when the dividend
was declared, the Company or such Subsidiary, as the case may be, could have
paid such dividend in accordance with the provisions of the Indenture, (ii) the
renewal, extension, refunding or refinancing of any Indebtedness otherwise
permitted pursuant to the terms of the Indenture described in clause (vii) of
Limitation on Indebtedness," (iii) the exchange or conversion of any
Indebtedness of the Company or any Subsidiary of the Company for or into Capital
Stock of the Company (other than Disqualified Stock of the Company), (iv) any
payments, loans or other advances made pursuant to any employee benefit plans
(including plans for the benefit of directors) or employment agreements or other
compensation arrangements, in each case as approved by the Board of Directors of
the Company in its good faith judgment evidenced by a resolution of such Board
of Directors filed with the Trustee, (v) the redemption of the Company's rights
issued pursuant to the Rights Agreement dated as of March 20, 1990, between the
Company and Sovran Bank, N.A., as Rights Agent, as in existence on the Issue
Date or (vi) so long as no Default or Event of Default has occurred and is
continuing, additional Investments constituting Restricted Payments in an
aggregate outstanding amount (valued at the cost thereof) not to exceed at any
time 5% of Consolidated Net Tangible Assets. Each Restricted Payment described
in clauses (i), (iv) and (v) of the previous sentence shall be taken into
account for purposes of computing the aggregate amount of all Restricted
Payments pursuant to clause (3) above.
Limitations Concerning Distributions and Transfers by Subsidiaries
The Indenture provides that the Company will not, and will not permit any of its
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist any consensual encumbrance or restriction on the ability of any Subsidiary
of the Company (i) to pay, directly or indirectly, dividends or make any other
distributions in respect of its Capital Stock or pay any Indebtedness or other
obligation owed to the Company or any Subsidiary of the Company, (ii) to make
loans or advances to the Company or any Subsidiary of the Company or (iii) to
transfer any of its property or assets to the Company or any Subsidiary of the
Company except for such encumbrances or restrictions existing under or by reason
of (a) any agreement in effect on the Issue Date, (b) an agreement relating to
any Indebtedness Incurred by such Subsidiary prior to the date on which such
Subsidiary was acquired by the Company and outstanding on such date and not
Incurred in anticipation or contemplation of becoming a Subsidiary and provided
such encumbrance or restriction shall not apply to any assets of the Company or
its Subsidiaries other than such Subsidiary, (c) customary provisions contained
in an agreement which has been entered into for the sale or disposition of all
or substantially all of the Capital Stock or assets of such Subsidiary, or (d)
an agreement effecting a renewal, exchange, refunding or extension of
Indebtedness incurred pursuant to an agreement referred to in clause (a) or (b)
above; provided, however, that the provisions contained in such renewal,
exchange, refunding or extension agreement relating to such encumbrance or
restriction are no more restrictive in any material respect than the provisions
contained in the agreement the subject thereof in the reasonable judgment of the
Board of Directors of the Company as evidenced by a resolution of such Board of
Directors filed with the Trustee.
Limitation on Liens
The Indenture provides that the Company will not, and will not permit any of its
Subsidiaries to, Incur any Lien on or with respect to any property or assets of
the Company or any Subsidiary of the Company owned on the Issue Date or
thereafter acquired to secure Indebtedness without making, or causing such
Subsidiary to make, effective provision for securing the Exchange Notes (and, if
the Company shall so determine, any other Indebtedness of the Company or such
Subsidiary, including Indebtedness which is subordinate in right of payment to
the Exchange Notes, provided, that Liens securing the Exchange Notes and any
Indebtedness pari passu with the Exchange Notes are senior to such Liens
securing such subordinated Indebtedness) equally and ratably with such
Indebtedness or, in the event such Indebtedness is subordinate in right of
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payment to the Exchange Notes, prior to such Indebtedness, as to such property
or assets for so long as such Indebtedness shall be so secured. The foregoing
restrictions shall not apply to (i) Liens in respect of Indebtedness existing on
the Issue Date; (ii) Liens securing only the Exchange Notes; (iii) Liens in
favor of the Company; (iv) Liens to secure Indebtedness Incurred for the purpose
of financing all or any part of the purchase price or the cost of construction
or improvement of the property subject to such Liens; provided that (a) the
aggregate principal amount of any Indebtedness secured by such a Lien does not
exceed 100% of such purchase price or cost, (b) such Lien does not extend to or
cover any other property other than such item of property and any improvements
on such item, (c) the Indebtedness secured by such Lien is incurred by the
Company or its Subsidiary within 180 days of the acquisition, construction or
improvement of such property and (d) the incurrence of such Indebtedness is
permitted by the provisions of the Indenture described under "--Limitation on
Indebtedness" and "Additional Limitation on Subsidiary Indebtedness"; (v) Liens
on property existing immediately prior to the time of acquisition thereof (and
not created in anticipation or contemplation of the financing of such
acquisition); (vi) Liens on property of a Person existing at the time such
Person is merged with or into or consolidated with the Company or any Subsidiary
of the Company (and not created in anticipation or contemplation thereof); (vii)
Liens on property of the Company or any Subsidiary of the Company in favor of
the United States of America, any state thereof or any instrumentality of either
to secure payments pursuant to any contract or statute; (viii) Liens securing an
aggregate principal amount of Indebtedness at any one time outstanding which,
when taken together with (A) all Capital Lease Obligations of the Company and
its Subsidiaries Incurred in compliance with "Limitation on Indebtedness" and
Additional Limitation on Subsidiary Indebtedness" and then outstanding and (B)
all other Indebtedness of Subsidiaries of the Company (other than the guarantee
of Indebtedness under the Senior Credit Facility and the 1995 Notes) Incurred in
compliance with the provisions of the Indenture described under "--Limitation on
Indebtedness" and "--Additional Limitation on Subsidiary Indebtedness" and then
outstanding, would not exceed 10% of Consolidated Net Tangible Assets; and (ix)
Liens to secure Indebtedness Incurred to extend, renew, refinance or refund (or
successive extensions, renewals, refinancings or refundings), in whole or in
part, any Indebtedness secured by Liens referred to in the foregoing clause (i)
so long as such Lien does not extend to any other property and the principal
amount of Indebtedness so secured is not increased except for the amount of any
premium required to be paid in connection with such refinancing pursuant to the
terms of the Indebtedness refinanced or the amount of any premium reasonably
determined by the Company as necessary to accomplish such refinancing by means
of a tender offer, exchange offer or privately negotiated repurchase, plus the
expenses of the Company or such Subsidiary incurred in connection with such
refinancing.
Limitation on Certain Asset Dispositions
The Indenture provides that the Company will not, and will not permit any of its
Subsidiaries to, make one or more Asset Dispositions for aggregate consideration
of, or in respect of assets having an aggregate fair market value of, $5 million
or more in any 12-month period, unless: (i) the Company or the Subsidiary, as
the case may be, receives consideration for such Asset Disposition at least
equal to the fair market value of the assets sold or disposed of as determined
by the Board of Directors of the Company in good faith and evidenced by a
resolution of such Board of Directors filed with the Trustee; (ii) not less than
75% of the consideration for the disposition consists of cash or readily
marketable cash equivalents or the assumption of Indebtedness of the Company or
such Subsidiary or other obligations relating to such assets (and release of the
Company or such Subsidiary from all liability on the Indebtedness or other
obligations assumed); and (iii) all Net Available Proceeds, less any amounts
invested within 360 days of such Asset Disposition in assets related to the
business of the Company (including the Capital Stock of another Person (other
than the Company or any Person that is a Subsidiary of the Company immediately
prior to such investment) provided that immediately after giving effect to any
such investment (and not prior thereto) such Person shall be a Subsidiary of the
Company), are applied either (A) to an Offer to Purchase outstanding Exchange
Notes at 100% of their principal amount plus accrued interest to the Purchase
Date or (B) to the permanent reduction and repayment of Indebtedness then
outstanding under the Senior Credit Facility, to the repayment of other
Indebtedness that is not subordinated in right of payment to the Exchange Notes
and to the purchase of Exchange Notes pursuant to an Offer to Purchase
outstanding Exchange Notes at 100% of their principal amount plus accrued
interest to the date of purchase, provided, that (x) any Net Available Proceeds
not applied to the repayment of Indebtedness under the Senior Credit Facility or
other Indebtedness not subordinated in right of payment to the Exchange Notes in
accordance with subclause (B) of this clause (iii) shall be added to the Net
Available Proceeds to be used for an Offer to Purchase outstanding Exchange
Notes and (y) the Company may defer making any Offer to Purchase outstanding
Exchange Notes until there are aggregate unutilized Net Available Proceeds equal
to or in excess of $5 million resulting from one or more Asset Dispositions (at
which time, the entire unutilized Net Available Proceeds, and not just the
amount in excess of $5 million, shall be applied as required pursuant to this
paragraph). Any repayment of Indebtedness in accordance with the previous
sentence shall be made pro rata, based on the principal amount
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(or, in the case of Indebtedness having unamortized discount, the accredited
value thereof) of such Indebtedness outstanding. Any remaining Net Available
Proceeds following the completion of the Offer to Purchase may be used by the
Company for any other purpose (subject to the other provisions of the Indenture)
and the amount of Net Available Proceeds then required to be otherwise applied
in accordance with this covenant shall be reset to zero, subject to any
subsequent Asset Disposition. These provisions will not apply to a transaction
consummated in compliance with the provisions of the Indenture described under
Mergers, Consolidations and Certain Sales of Assets" and "--Limitation on Sale
and Leaseback Transactions" below.
In the event that the Company makes an Offer to Purchase the Exchange Notes, the
Company intends to comply with any applicable securities laws and regulations,
including any applicable requirements of Section 14(e) of, and Rule 14e-1 under,
the Exchange Act, and any violation of the provisions of the Indenture relating
to such Offer to Purchase occurring as a result of such compliance shall not be
deemed an Event of Default or an event that with the passing of time or giving
of notice, or both, would constitute an Event of Default.
Limitation on Sale and Leaseback Transactions
The Indenture provides that the Company will not, and will not permit any of its
Subsidiaries to, enter into any Sale and Leaseback Transaction (except for a
period not exceeding 30 months) unless the Company or such Subsidiary, as the
case may be, applies the net proceeds of the property sold pursuant to the Sale
and Leaseback Transaction as if such net proceeds were Net Available Proceeds
subject to disposition as provided above under "--Limitation on Certain Asset
Dispositions."
Limitation on Issuance and Sale of Capital Stock of Subsidiaries
The Indenture provides that the Company (a) will not, and will not permit any
Subsidiary of the Company to, transfer, convey, sell or otherwise dispose of any
shares of Capital Stock of such Subsidiary or any other Subsidiary (other than
to the Company or a Wholly Owned Subsidiary of the Company) except that the
Company and any Subsidiary may, in any single transaction, sell all, but not
less than all, of the issued and outstanding Capital Stock of any Subsidiary to
any Person, subject to complying with the provisions of the conditions described
above under "--Limitation on Certain Asset Dispositions" and (b) will not permit
any Subsidiary of the Company to issue shares of its Capital Stock (other than
directors' qualifying shares), or securities convertible into, or warrants,
rights or options to subscribe for or purchase shares of, its Capital Stock to
any Person other than to the Company or a Wholly Owned Subsidiary of the
Company.
Transactions with Affiliates and Related Persons
The Indenture provides that the Company will not, and will not permit any of its
Subsidiaries to, enter into any transaction with an Affiliate or Related Person
of the Company (other than the Company or a Subsidiary of the Company),
including, without limitation, the purchase, sale, lease or exchange of
property, the rendering of any service, or the making of any guarantee, loan,
advance or Investment, either directly or indirectly, involving aggregate
consideration in excess of $500,000, unless (i) a majority of the disinterested
directors of the Board of Directors of the Company determines, in its good faith
judgment evidenced by a resolution of such Board of Directors filed with the
Trustee, that such transaction is in the best interests of the Company or such
Subsidiary, as the case may be; and (ii) such transaction is, in the opinion of
a majority of the disinterested directors of the Board of Directors of the
Company evidenced by a resolution of such Board of Directors filed with the
Trustee, on terms no less favorable to the Company or such Subsidiary, as the
case may be, than those that could be obtained in a comparable arm's length
transaction with an entity that is not an Affiliate or a Related Person.
Change of Control
Within 30 days following the date of the consummation of a transaction resulting
in a Change of Control, the Company will commence an Offer to Purchase all
outstanding Exchange Notes at a purchase price equal to 101% of their principal
amount plus accrued interest to the date of purchase. Such Offer to Purchase
will be consummated not earlier than 30 days and not later than 60 days after
the commencement thereof. A "Change of Control" will be deemed to have occurred
in the event that (whether or not otherwise permitted by the Indenture) after
the Issue Date (a) any Person or any Persons acting together that would
constitute a group (for purposes of Section 13(d) of the Exchange Act, or any
successor provision thereto) (a "Group"),
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together with any Affiliates or Related Persons thereof, shall beneficially own
(as defined in Rule 13d-3 under the Exchange Act, or any successor provision
thereto) at least 40% of the Voting Stock of the Company; (b) any sale, lease or
other transfer (in one transaction or a series of related transactions) by the
Company or any of its Subsidiaries of all or substantially all of the
consolidated assets of the Company to any Person (other than a Wholly Owned
Subsidiary of the Company); (c) Continuing Directors cease to constitute at
least a majority of the Board of Directors of the Company; or (d) the
stockholders of the Company approve any plan or proposal for the liquidation or
dissolution of the Company.
In the event that the Company makes an Offer to Purchase the Exchange Notes, the
Company intends to comply with any applicable securities laws and regulations,
including any applicable requirements of Section 14(e) of, and Rule 14e-1 under,
the Exchange Act and any violation of the provisions of the Indenture relating
to such Offer to Purchase occurring as a result of such compliance shall not be
deemed an Event of Default or an event that with the passing of time or giving
of notice, or both, would constitute an Event of Default.
Provision of Financial Information
Whether or not the Company is subject to Section 13(a) or 15(d) of the Exchange
Act, or any successor provision thereto, the Company shall file with the
Commission the annual reports, quarterly reports and other documents which the
Company would have been required to file with the Commission pursuant to such
Section 13(a) or 15(d) or any successor provision thereto if the Company were so
required, such documents to be filed with the Commission on or prior to the
respective dates (the "Required Filing Dates") by which the Company would have
been required so to file such documents if the Company were so required. The
Company shall also in any event (a) within 15 days of each Required Filing Date
(i) transmit by mail to all Holders, as their names and addresses appear in the
Note Register, without cost to such Holders, and (ii) file with the Trustee,
copies of the annual reports, quarterly reports and other documents which the
Company is required to file with the Commission pursuant to the preceding
sentence, and (b) if, notwithstanding the preceding sentence, filing such
documents by the Company with the Commission is not permitted under the Exchange
Act, promptly upon written request supply copies of such documents to any
prospective Holder.
Mergers, Consolidations and Certain Sales of Assets
Neither the Company nor any Subsidiary will consolidate or merge with or into
any Person, and the Company will not, and will not permit any of its
Subsidiaries to, sell, lease, convey or otherwise dispose of all or
substantially all of the Company's consolidated assets (as an entirety or
substantially an entirety in one transaction or a series of related
transactions, including by way of liquidation or dissolution) to any Person
unless, in each such case: (i) the entity formed by or surviving any such
consolidation or merger (if other than the Company or such Subsidiary, as the
case may be), or to which such sale, lease, conveyance or other disposition
shall have been made (the "Surviving Entity"), is a corporation organized and
existing under the laws of the United States, any state thereof or the District
of Columbia; (ii) the Surviving Entity assumes by supplemental indenture all of
the obligations of the Company or such Subsidiary, as the case may be, on the
Exchange Notes or such Subsidiary's Guarantee, as the case may be, and under the
Indenture; (iii) immediately after giving effect to such transaction and the use
of any net proceeds therefrom on a pro forma basis, the Consolidated Net Worth
of the Company or the Surviving Entity (in the case of a transaction involving
the Company), as the case may be, would be at least equal to the Consolidated
Net Worth of the Company immediately prior to such transaction; (iv) immediately
after giving effect to such transaction and the use of any net proceeds
therefrom on a pro forma basis, the Company or the Surviving Entity (in the case
of a transaction involving the Company), as the case may be, could incur at
least $1.00 of Indebtedness pursuant to clause (i) of the "Limitation on
Indebtedness" covenant; (v) immediately before and after giving effect to such
transaction and treating any Indebtedness which becomes an obligation of the
Company or any of its Subsidiaries as a result of such transaction as having
been incurred by the Company or such Subsidiary, as the case may be, at the time
of the transaction, no Event of Default or event that with the passing of time
or the giving of notice, or both, would constitute an Event of Default shall
have occurred and be continuing; and (vi) if, as a result of any such
transaction, property or assets of the Company or a Subsidiary would become
subject to a Lien not excepted from the provisions of the Indenture described
under "--Limitation on Liens" above, the Company, any such Subsidiary or the
Surviving Entity, as the case may be, shall have secured the Exchange Notes as
required by said covenant. The provisions of this paragraph shall not apply to
any merger of a Subsidiary of the Company with or into the Company or a Wholly
Owned Subsidiary of the Company or any transaction pursuant to which a
Guarantor's Guarantee is to be released in accordance with the terms of the
Guarantee and the Indenture in connection with any transaction complying with
the provisions of the Indenture described under "--Limitation on Certain Asset
Dispositions."
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Events of Default
The following are Events of Default under the Indenture: (a) failure to pay
principal of (or premium, if any, on) any Note when due; (b) failure to pay any
interest on any Note when due, and such failure continues for a period of 30
days; (c) default in the payment of principal of and interest on Exchange Notes
required to be purchased pursuant to an Offer to Purchase as described under
"--Change of Control" and "--Limitation on Certain Asset Dispositions" when due
and payable; (d) failure to perform or comply with any of the provisions
described under "--Mergers, Consolidations and Certain Sales of Assets"; (e)
failure to perform any other covenant or agreement of the Company under the
Indenture or the Exchange Notes (other than a covenant or agreement referred to
in the foregoing clauses ((a), (b), (c) or (d)) and such failure continues for
30 days after written notice to the Company by the Trustee or Holders of at
least 25% in aggregate principal amount of outstanding Exchange Notes; (f)
default under the terms of one or more instruments evidencing or securing
Indebtedness for money borrowed by the Company or any Subsidiary of the Company
having an outstanding principal amount of $5 million or more individually or in
the aggregate which results in the acceleration of the payment of such
Indebtedness or which shall constitute the failure to pay principal when due at
the stated maturity of such Indebtedness; (g) the rendering of a final judgment
or judgments (not subject to appeal) against the Company or any Subsidiary of
the Company in an amount of $5 million or more which remains undischarged or
unstayed for a period of 60 days after the date on which the right to appeal has
expired; (h) certain events of bankruptcy, insolvency or reorganization
affecting the Company or any Material Subsidiary; and (i) the Guarantee of any
Guarantor which is a Material Subsidiary ceases to be in full force and effect
(other than in accordance with the terms of such Guarantee and the Indenture) or
is declared null and void and unenforceable or found to be invalid or any
Guarantor which is a Material Subsidiary denies its liability under its
Guarantee (other than by reason of a release of such Guarantor from its
Guarantee in accordance with the terms of the Indenture and the Guarantee).
Subject to the provisions of the Indenture relating to the duties of the
Trustee, in case an Event of Default (as defined) shall occur and be continuing,
the Trustee will be under no obligation to exercise any of its rights or powers
under the Indenture at the request or direction of any of the Holders, unless
such Holders shall have offered to the Trustee reasonable indemnity. Subject to
such provisions for the indemnification of the Trustee, the Holders of a
majority in aggregate principal amount of the outstanding Exchange Notes will
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power
conferred on the Trustee.
If an Event of Default (other than an Event of Default with respect to the
Company described in clause (h)) shall occur and be continuing, either the
Trustee or the Holders of at least 25% in aggregate principal amount of the
outstanding Exchange Notes may accelerate the maturity of all Exchange Notes;
provided, however, that after such acceleration, but before a judgment or decree
based on acceleration, the Holders of a majority in aggregate principal amount
of outstanding Exchange Notes may, under certain circumstances, rescind and
annul such acceleration if all Events of Default, other than the non-payment of
accelerated principal, have been cured or waived as provided in the Indenture.
If an Event of Default specified in clause (h) above with respect to the Company
occurs, the outstanding Exchange Notes will ipso facto become immediately due
and payable without any declaration or other act on the part of the Trustee or
any Holder. For information as to waiver of defaults, see "--Modification and
Waiver."
No Holder of any Note will have any right to institute any proceeding judicial
or otherwise with respect to the Indenture or for any remedy thereunder, unless
such Holder shall have previously given to the Trustee written notice of a
continuing Event of Default and unless the Holders of at least 25% in aggregate
principal amount of the outstanding Exchange Notes shall have made written
request, and offered reasonable indemnity, to the Trustee to institute such
proceeding as Trustee, and the Trustee shall not have received from the Holders
of a majority in aggregate principal amount of the outstanding Exchange Notes a
direction inconsistent with such request within 60 days after receipt of such
notice and shall have failed to institute such proceeding within such 60 days.
However, such limitations do not apply to a suit instituted by a Holder of a
Note for enforcement of payment of the principal of and premium, if any, or
interest on such Note on or after the respective due dates expressed in such
Note.
The Company will be required to furnish to the Trustee annually a statement as
to the performance by it of certain of its obligations under the Indenture and
as to any default in such performance.
Defeasance or Covenant Defeasance
The Company may, at its option and at any time, elect to have the respective
obligations of the Company and the Guarantors discharged in accordance with the
provisions set forth below with respect to
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the Exchange Notes then outstanding. Such defeasance means that the Company
shall be deemed to have paid and discharged the entire Indebtedness represented
by such outstanding Exchange Notes and the Company and the Guarantors shall be
deemed to have satisfied all their respective other obligations under the
Exchange Notes, the Guarantees and the Indenture, except for (i) the rights of
holders of such outstanding Exchange Notes to receive payments in respect of the
principal of, premium, if any, and interest on such Exchange Notes when such
payments are due, (ii) the Company's and the Guarantors' respective obligations
with respect to the Exchange Notes concerning issuing temporary Exchange Notes,
registration of transfer or exchange of Exchange Notes, mutilated, destroyed,
lost or stolen Exchange Notes and the maintenance of an office or agency for
payment and money for security payments held in trust, (iii) the rights, powers,
trusts, duties and immunities of the Trustee, and (iv) the defeasance provisions
of the Indenture. In addition, the Company may, at its option and at any time,
elect to have the respective obligations of the Company and the Guarantors
released with respect to certain covenants in the Indenture, some of which are
described above ("covenant defeasance"), and any omission to comply with such
obligations shall not constitute a Default or an Event of Default with respect
to the Exchange Notes. In the event covenant defeasance occurs, the events
described in clause (e) under "Events of Default" will no longer constitute an
Event of Default with respect to the Exchange Notes.
In order to exercise either defeasance or covenant defeasance, (i) the Company
must irrevocably deposit with the Trustee, in trust, for the benefit of the
holders of the Exchange Notes, cash in U.S. dollars, U.S. Government
Obligations, or a combination thereof, in such amounts as will be sufficient
without reinvestment of any interest received on such funds, in the opinion of a
nationally recognized firm of independent public accountants, to pay the
principal of, premium, if any, and interest on such outstanding Exchange Notes
on the stated maturity of such principal and each installment of interest; (ii)
in the case of defeasance, the Company shall have delivered to the Trustee an
opinion of counsel stating that (A) the Company has received from, or there has
been published by, the Internal Revenue Service a ruling or (B) since the Issue
Date, there has been a change in the applicable federal income tax law, in
either case to the effect that, and based thereon such opinion of counsel shall
confirm that, the holders of the outstanding Exchange Notes will not recognize
income, gain or loss for federal income tax purposes as a result of such
defeasance and will be subject to federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such defeasance
had not occurred; (iii) in the case of covenant defeasance, the Company shall
have delivered to the Trustee an opinion of counsel to the effect that the
holders of the outstanding Exchange Notes will not recognize income, gain or
loss for federal income tax purposes as a result of such covenant defeasance and
will be subject to federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such covenant defeasance
had not occurred; (iv) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit; (v) such defeasance or covenant
defeasance shall not result in a breach or violation of, or constitute a default
under, the Indenture or any other material agreement or instrument to which the
Company is a party or by which it is bound; (vi) in the case of defeasance or
covenant defeasance, the Company shall have delivered to the Trustee an opinion
of counsel to the effect that after the 91st day following the deposit, the
trust funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar law affecting creditors' rights generally
and that such defeasance or covenant defeasance will not result in the Trustee
or the trust arising from such deposit constituting an Investment Company as
defined in the Investment Company Act of 1940, as amended; and (vii) the Company
shall have delivered to the Trustee an officers' certificate and an opinion of
counsel each stating that all conditions precedent provided for relating to
either the defeasance or the covenant defeasance, as the case may be, have been
complied with.
Governing Law
The Indenture, the Exchange Notes and the Guarantees are governed by the laws of
the State of New York without regard to principles of conflicts of laws.
Modification and Waiver
Modifications and amendments of the Indenture may be made by the Company and the
Trustee with the consent of the Holders of a majority in aggregate principal
amount of the outstanding Exchange Notes; provided, however, that no such
modification or amendment may, without the consent of the Holder of each Note
affected thereby, (a) change the Stated Maturity of the principal of or any
installment of interest on any Note, (b) reduce the principal amount of (or the
premium) or interest on any Note, (c) change the place or currency of payment of
principal of (or premium) or interest on any Note, (d) impair the right to
institute suit for the enforcement of any payment on or with respect to any Note
or any Guarantee, (e) reduce the
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above-stated percentage of outstanding Exchange Notes necessary to modify or
amend the Indenture, (f) reduce the percentage of aggregate principal amount of
outstanding Exchange Notes necessary for waiver of compliance with any provision
of the Indenture or for waiver of any default, (g) modify any provisions of the
Indenture relating to the modification and amendment of the Indenture or the
waiver of past defaults or covenants, except as otherwise specified, (h) modify
the ranking or priority of the Exchange Notes or the Guarantee of any Guarantor
which is a Material Subsidiary, (i) release any Guarantor which is a Material
Subsidiary from any of its obligations under its Guarantee or the Indenture
otherwise than in accordance with the terms of the Indenture, or (j) modify the
provisions relating to any Offer to Purchase required under the "Limitation on
Certain Asset Dispositions" or "Change of Control" covenants contained in the
Indenture in a manner materially adverse to the Holders thereof.
The Holders of a majority in aggregate principal amount of the outstanding
Exchange Notes, on behalf of all Holders of Exchange Notes, may waive compliance
by the Company with certain restrictive provisions of the Indenture. Subject to
certain rights of the Trustee, as provided in the Indenture, the Holders of a
majority in aggregate principal amount of the outstanding Exchange Notes, on
behalf of all Holders of Exchange Notes, may waive any past default under the
Indenture, except a default in the payment of principal, premium or interest or
a default arising from failure to purchase any Note tendered pursuant to an
Offer to Purchase.
The Trustee
The Indenture provides that, except during the continuance of an Event of
Default, the Trustee will perform only such duties as are specifically set forth
in the Indenture. During the existence of an Event of Default, the Trustee will
exercise such rights and powers vested in it under the Indenture and use the
same degree of care and skill in their exercise as a prudent person would
exercise under the circumstances in the conduct of such person's own affairs.
The Indenture and provisions of the Trust Indenture Act incorporated by
reference therein contain limitations on the rights of the Trustee, should it
become a creditor of the Company, any Guarantor or any other obligor upon the
Exchange Notes, to obtain payment of claims in certain cases or to realize on
certain property received by it in respect of any such claim as security or
otherwise. The Trustee is permitted to engage in other transactions with the
Company or an Affiliate of the Company; provided, however, that if it acquires
any conflicting interest (as defined in the Indenture or in the Trust Indenture
Act), it must eliminate such conflict or resign.
Book-Entry; Delivery and Form
The certificates representing the Exchange Notes will be issued in fully
registered form without interest coupons.
Exchange Notes will be represented by a single, permanent global Note in
definitive, fully registered form without interest coupons (the "Global Note")
and will be deposited with the Trustee as custodian for and registered in the
name of a nominee of the Depositary.
Institutional accredited investors who are not qualified institutional buyers
("Non-Global Purchasers") will be issued Exchange Notes in registered form
without coupons ("Certificated Exchange Notes") who originally purchased Old
Notes. Upon the transfer of Certificated Exchange Notes initially issued to a
Non-Global Purchaser either to a qualified institutional buyer or in accordance
with Regulation S, such Certificated Exchange Notes will, unless the relevant
Global Note has previously been exchanged in whole for Certificated Exchange
Notes, be exchanged for an interest in a Global Note.
The Global Notes
Upon the issuance of the Global Note, the Depositary or its custodian will
credit, on its internal system, the respective principal amount of the
individual beneficial interests represented by such Global Note to the accounts
of persons who have accounts with such depositary. Ownership of beneficial
interests in a Global Note will be limited to persons who have accounts with the
Depositary ("participants") or persons who hold interests through participants.
Ownership of beneficial interests in a Global Note will be shown on, and the
transfer of that ownership will be effected only through, records maintained by
the Depositary or its nominee (with respect to interests of participants) and
the records of participants (with respect to interests of persons other than
participants). Qualified institutional buyers may hold their interests in a
Global Note directly
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through the Depositary if they are participants in such system, or indirectly
through organizations which are participants in such system.
So long as the Depositary, or its nominee, is the registered holder of a Global
Note, the Depositary or such nominee, as the case may be, will be considered the
sole owner or holder of the Exchange Notes represented by such Global Note for
all purposes under the Indenture and the Exchange Notes. No beneficial owner of
an interest in a Global Note will be able to transfer that interest except in
accordance with the procedures provided for under "Notice to Investors," as well
as the Depositary's applicable procedures and, if applicable, those of Euroclear
and Cedel.
Payments of the principal of, and interest on, the Global Note will be made to
the Depositary or its nominee, as the case may be, as the registered owner
thereof. None of the Company, the Trustee or any Paying Agent will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the Global Notes
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
The Company expects that the Depositary or its nominee, upon receipt of any
payment of principal or interest in respect of a Global Note will credit
participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of such Global Note as
shown on the records of the Depositary or its nominee. The Company also expects
that payments by participants to owners of beneficial interests in such Global
Note held through such participants will be governed by standing instructions
and customary practices, as is now the case with securities held for the
accounts of customers registered in the name of nominees for such customers.
Such payments will be the responsibility of such participants. Transfers
between participants in the Depositary will be effected in the ordinary way in
accordance with the Depositary rules and will be settled in same-day funds.
The Depositary has advised the Company that it will take any action permitted to
be taken by a holder of Exchange Notes (including the presentation of Exchange
Notes for exchange as described below) only at the direction of one or more
participants to whose accounts an interest in the Global Notes is credited and
only in respect of such portion of the aggregate principal amount of Exchange
Notes as to which such participant or participants has or have given such
direction.
The Depositary has advised the Company as follows: the Depositary is a limited
purpose trust Company organized under the laws of the State of New York, a
"banking organization" within the meaning of New York Banking Law, a member of
the Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code and a "Clearing Agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. The Depositary was created to
hold securities for its participants and facilitate the clearance and settlement
of securities transactions between participants through electronic book-entry
changes in accounts of its participants, thereby eliminating the need for
physical movement of certificates. Participants include securities brokers and
dealers, banks, trust companies and clearing corporations and certain other
organizations. Indirect access to the Depositary system is available to others
such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a participant, either directly or
indirectly ("indirect participants").
Although the Depositary, has agreed to the foregoing procedures in order to
facilitate transfers of interests in the Global Notes among participants of the
Depositary, it is under no obligation to perform or continue to perform such
procedures, and such procedures may be discontinued at any time. None of the
Company, the Guarantors or the Trustee will have any responsibility for the
performance by the Depositary or its participants or indirect participants of
their respective obligations under the rules and procedures governing their
operations.
Certificated Notes
If the Depositary is at any time unwilling or unable to continue as a depositary
for the Global Notes and a successor depositary is not appointed by the Company
within 90 days, the Company will issue certificated notes in exchange for the
Global Notes which will bear the legend referred to under the heading "Notice to
Investors."
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Registration Rights
The Company and the Guarantors have agreed with the Initial Purchasers, for the
benefit of the holders of the Old Notes, that the Company and the Guarantors
will use their best respective efforts to, and at their cost, file and cause to
become effective a registration statement with respect to a registered offer to
exchange the Old Notes for an issue of notes of the Company with terms identical
to the Old Notes and guaranteed by the Guarantors with terms identical to the
Guarantee (the "Exchange Notes"). Upon such registration statement being
declared effective, the Company shall offer the Exchange Notes in return for
surrender of the Exchange Notes. Such offer shall remain open for not less than
30 days after the date notice of the exchange offer is mailed to holders of the
Exchange Notes. For each Note surrendered to the Company under the exchange
offer, the holder will receive an Exchange Note of equal principal amount. In
the event that applicable interpretations of the staff of the Commission do not
permit the Company to effect such an exchange offer, the Company and the
Guarantors shall, at their cost, use their respective best efforts to cause to
become effective a shelf registration statement with respect to resales of the
Exchange Notes and to keep such registration statement effective until [two]
years after the Issue Date. The Company shall, in the event of such a shelf
registration, provide to each holder copies of the prospectus, notify each
holder when a registration statement for the Exchange Notes has become effective
and take certain other actions as are required to permit resales of the Exchange
Notes. In the event that (i) the registration statement relating to the exchange
offer is not filed with the Commission on or prior to the 60th day following the
Issue Date, (ii) such registration statement is not declared effective by the
Commission on or prior to the 120th day following the Issue Date of the Exchange
Notes, or (iii) the exchange offer is not consummated or a registration
statement with respect to resale of the Exchange Notes is not declared effective
on or prior to the 150th day following the date of original issuance of the
Exchange Notes (each such event referred to in clauses (i) through (iii), a
"Registration Default"), then the Company will pay additional interest (in
addition to the interest otherwise due on the Exchange Notes) to each holder of
Exchange Notes during the first 90-day period immediately following the
occurrence of each such Registration Default in an amount equal to 0.25% per
annum. The amount of interest will increase by an additional 0.25% per annum for
each subsequent 90-day period until such Registration Default is cured, up to a
maximum amount of additional interest of 1.00% per annum. Such additional
interest will cease accruing on such Exchange Notes when the Registration
Default has been cured.
Certain Definitions
Set forth below is a summary of certain of the defined terms used in the
Indenture. Reference is made to the Indenture for the full definition of all
such terms, as well as any other terms used herein for which no definition is
provided.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with any specified Person. For purposes of this definition, "control"
when used with respect to any Person means the power to direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Asset Disposition" means any sale, transfer or other disposition of (i) shares
of Capital Stock of a Subsidiary of the Company (other than directors'
qualifying shares) or (ii) property or assets of the Company or any Subsidiary
of the Company; provided, however, that an Asset Disposition shall not include
(a) any sale, transfer or other disposition of shares of Capital Stock, property
or assets by a Subsidiary of the Company to the Company or to another Subsidiary
of the Company, (b) any sale, transfer or other disposition of defaulted
receivables for collection or any sale, transfer or other disposition of
property or assets in the ordinary course of business or (c) any isolated sale,
transfer or other disposition that does not involve aggregate consideration in
excess of $250,000 individually.
"Average Life" means, as of the date of determination, with respect to any
Indebtedness for borrowed money or Preferred Stock, the quotient obtained by
dividing (i) the sum of the products of the number of years from the date of
determination to the dates of each successive scheduled principal or liquidation
value payments of such Indebtedness or Preferred Stock, respectively, and the
amount of such principal or liquidation value payments, by (ii) the sum of all
such principal or liquidation value payments.
"Capital Lease Obligations" of any Person means the obligations to pay rent or
other amounts under a lease of (or other Indebtedness arrangements conveying the
right to use) real or personal property of such Person which are required to be
classified and accounted for as a capital lease or liability on the face of a
balance sheet of such Person in accordance with GAAP. The amount of such
obligations shall be the capitalized
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amount thereof in accordance with GAAP and the stated maturity thereof shall be
the date of the last payment of rent or any other amount due under such lease
prior to the first date upon which such lease may be terminated by the lessee
without payment of a penalty.
"Capital Stock" of any Person means any and all shares, interests,
participations or other equivalents (however designated) of corporate stock of
such Person (including any Preferred Stock outstanding on the Issue Date).
"Common Stock" of any Person means Capital Stock of such Person that does not
rank prior, as to the payment of dividends or as to the distribution of assets
upon any voluntary or involuntary liquidation, dissolution or winding up of such
Person, to shares of Capital Stock of any other class of such Person.
"Consolidated Cash Flow Available for Fixed Charges" of any Person means for any
period the Consolidated Net Income of such Person for such period increased by
the sum of (i) Consolidated Interest Expense of such Person for such period,
plus (ii) Consolidated Income Tax Expense of such Person for such period, plus
(iii) the consolidated depreciation and amortization expense included in the
income statement of such Person for such period, plus (iv) other non-cash
charges of such Person for such period deducted from consolidated revenues in
determining Consolidated Net Income for such period, minus (v) non-cash items
(including the partial or entire reversal of reserves taken in prior periods) of
such Person for such period increasing consolidated revenues in determining
Consolidated Net Income for such period.
"Consolidated Cash Flow Ratio" of any Person means for any period the ratio of
(i) Consolidated Cash Flow Available for Fixed Charges of such Person for such
period to (ii) the sum of (A) Consolidated Interest Expense of such Person for
such period, plus (B) the annual interest expense with respect to any
Indebtedness proposed to be Incurred by such Person or its Subsidiaries, minus
(C) Consolidated Interest Expense of such Person to the extent included in
clause (ii)(A) with respect to any Indebtedness that will no longer be
outstanding as a result of the Incurrence of the Indebtedness proposed to be
Incurred, plus (D) the annual interest expense with respect to any other
Indebtedness Incurred by such Person or its Subsidiaries since the end of such
period to the extent not included in clause (ii)(A), minus (E) Consolidated
Interest Expense of such Person to the extent included in clause (ii)(A) with
respect to any Indebtedness that no longer is outstanding as a result of the
Incurrence of the Indebtedness referred to in clause (ii)(D); provided, however,
that in making such computation, the Consolidated Interest Expense of such
Person attributable to interest on any Indebtedness bearing a floating interest
rate shall be computed on a pro forma basis as if the rate in effect on the date
of computation (after giving effect to any hedge in respect of such Indebtedness
that will, by its terms, remain in effect until the earlier of the maturity of
such Indebtedness or the date one year after the date of such determination) had
been the applicable rate for the entire period; provided further that, in the
event such Person or any of its Subsidiaries has made any Asset Dispositions or
acquisitions of assets not in the ordinary course of business (including
acquisitions of other Persons by merger, consolidation or purchase of Capital
Stock) during or after such period, such computation shall be made on a pro
forma basis as if the Asset Dispositions or acquisitions had taken place on the
first day of such period. Calculations of pro forma amounts in accordance with
this definition shall be done in accordance with Rule 11-02 of Regulation S-X
under the Securities Act of 1933 or any successor provision.
"Consolidated Income Tax Expense" of any Person means for any period the
consolidated provision for income taxes of such Person for such period
calculated on a consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" for any Person means for any period the
consolidated interest expense included in a consolidated income statement
(without deduction of interest income) of such Person for such period calculated
on a consolidated basis in accordance with GAAP, plus cash dividends declared on
any Preferred Stock (other than any Preferred Stock of the Company outstanding
on the Issue Date). For purposes of this definition, the amount of any cash
dividends declared will be deemed to be equal to the amount of such dividends
multiplied by a fraction, the numerator of which is one and the denominator of
which is one minus the maximum statutory combined Federal, state, local and
foreign income tax rate then applicable to such Person and its Subsidiaries
(expressed as a decimal between one and zero), on a consolidated basis.
"Consolidated Net Income" of any Person means for any period the consolidated
net income (or loss) of such Person for such period determined on a consolidated
basis in accordance with GAAP; provided that there shall be excluded therefrom
(a) the net income (or loss) of any Person acquired by such Person or a
Subsidiary of such Person in a pooling-of-interests transaction for any period
prior to the date of such transaction, (b) the net income (but not net loss) of
any Subsidiary of such Person which is subject to restrictions which prevent or
limit the payment of dividends or the making of distributions to such Person to
the extent of such restrictions, (c) the net income of any Person that is not a
Subsidiary of such Person
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except to the extent of the amount of dividends or other distributions actually
paid in cash to such Person by such other Person during such period, (d) gains
or losses on Asset Dispositions by such Person or its Subsidiaries and (e) all
extraordinary gains and extraordinary losses determined in accordance with GAAP.
"Consolidated Net Tangible Assets" means, at any date, the consolidated book
value as shown by the accounting books and records of the Company and its
Subsidiaries of all their property, both real and personal, less (i) the book
value of all their licenses, patents, patent applications, copyrights,
trademarks, trade names, goodwill, non-compete agreements or organizational
expenses and other intangibles, (ii) unamortized Indebtedness, discount and
expenses, (iii) all reserves for depreciation, obsolescence, depletion and
amortization of their properties and (iv) all other proper reserves which in
accordance with GAAP should be provided in connection with the business
conducted by the Company and its Subsidiaries.
"Consolidated Net Worth" of any Person means the consolidated stockholders'
equity of such Person, determined on a consolidated basis in accordance with
GAAP, less (without duplication) amounts attributable to Disqualified Stock of
such Person.
"Continuing Director" means a director who either was a member of the Board of
Directors of the Company on the Issue Date or who became a director of the
Company subsequent to the Issue Date and whose election, or nomination for
election by the Company's stockholders, was duly approved by a majority of the
Continuing Directors than on the Board of Directors of the Company, either by a
specific vote or by approval of the proxy statement issued by the Company on
behalf of the entire Board of Directors of the Company in which such individual
is named as nominee for director.
"Default" means any event that is, or after notice or lapse of time or both
would become, an Event of Default.
"Disqualified Stock" of any Person means any Capital Stock of such Person which,
by its terms (or by the terms of any security into which it is convertible or
for which it is exchangeable), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the holder thereof, in whole or in part, on or
prior to the final maturity of the Exchange Notes; provided that any Preferred
Stock of the Company outstanding on the Issue Date shall not be deemed
Disqualified Stock.
"Eligible Accounts Receivable" means the face value of all "eligible
receivables" of the Company and its Subsidiaries party to any credit agreement
constituting the Senior Credit Facility (as such term is defined for purposes of
such credit agreement).
"Eligible Inventory" means the face value of all "eligible inventory" of the
Company and its Subsidiaries party to any credit agreement constituting the
Senior Credit Facility (as such term is defined for purposes of such credit
agreement).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"GAAP" means generally accepted accounting principles, consistently applied, as
in effect on the Issue Date in the United States of America, as set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as is approved by a significant segment of the accounting
profession.
"guarantee" by any Person means any obligation, contingent or otherwise, of such
Person guaranteeing any Indebtedness of any other Person (the "primary obligor")
in any manner, whether directly or indirectly, and including, without
limitation, any obligation of such Person (i) to purchase or pay (or advance or
supply funds for the purchase or payment of) such Indebtedness or to purchase
(or to advance or supply funds for the purchase of) any security for the payment
of such Indebtedness, (ii) to purchase property, securities or services for the
purpose of assuring the holder of such Indebtedness of the payment of such
Indebtedness, or (iii) to maintain working capital, equity capital or other
financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Indebtedness (and "guaranteed,"
"guaranteeing" and "guarantor" shall have meanings correlative to the
foregoing); provided, however, that the guarantee by any Person shall not
include endorsements by such Person for collection or deposit, in either case,
in the ordinary course of business.
"Guarantee" means the guarantee of the Exchange Notes by each Guarantor under
the Indenture.
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"Guarantors" means (i) each of Dominion Stores, Inc., Tultex International,
Inc., LogoAthletic, Inc., LogoAthletic/Headwear, Inc., AKOM, Ltd., Tultex
Canada, Inc. and SweatJet Incorporated and (ii) each Material Subsidiary,
whether formed or acquired after the Issue Date provided that, any Material
Subsidiary acquired after the Issue Date which is prohibited from entering into
a Guarantee pursuant to restrictions contained in any debt instrument or other
agreements in existence at the time such Material Subsidiary was so acquired and
not entered into in anticipation or contemplation of such acquisition shall not
be required to become a Guarantor so long as any such restriction is in
existence and to the extent of any such restriction.
"Incur" means, with respect to any Indebtedness or other obligation of any
Person, to create, issue, incur (including by conversion, exchange or
otherwise), assume, guarantee or otherwise become liable in respect of such
Indebtedness or other obligation or the recording, as required pursuant to GAAP
or otherwise, of any such Indebtedness or other obligation on the balance sheet
of such Person (and "Incurrence," "Incurred," "Incurrable" and "Incurring" shall
have meanings correlative to the foregoing). Indebtedness of any Person or any
of its Subsidiaries existing at the time such Person becomes a Subsidiary of the
Company (or is merged into or consolidates with the Company or any of its
Subsidiaries), whether or not such Indebtedness was incurred in connection with,
or in contemplation of, such Person becoming a Subsidiary of the Company (or
being merged into or consolidated with the Company or any of its Subsidiaries),
shall be deemed Incurred at the time any such Person becomes a Subsidiary of the
Company or merges into or consolidates with the Company or any of its
Subsidiaries.
"Indebtedness" means (without duplication), with respect to any Person, whether
recourse is to all or a portion of the assets of such Person and whether or not
contingent, (i) every obligation of such Person for money borrowed, (ii) every
obligation of such Person evidenced by bonds, debentures, notes or other similar
instruments, including obligations incurred in connection with the acquisition
of property, assets or businesses, (iii) every reimbursement obligation of such
Person with respect to letters of credit, bankers' acceptances or similar
facilities issued for the account of such Person, (iv) every obligation of such
Person issued or assumed as the deferred purchase price of property or services
(but excluding trade accounts payable or accrued liabilities arising in the
ordinary course of business which are not overdue or which are being contested
in good faith), (v) every Capital Lease Obligation of such Person, (vi) every
net obligation under interest rate swap or similar agreements or foreign
currency hedge, exchange or similar agreements of such Person, and (vii) every
obligation of the type referred to in clauses (i) through (vi) of another Person
and all dividends of another Person the payment of which, in either case, such
Person has guaranteed or for which such Person is responsible or liable,
directly or indirectly, as obligor, guarantor or otherwise. Indebtedness shall
include the liquidation preference and any mandatory redemption payment
obligations in respect of any Disqualified Stock of the Company, and any
Preferred Stock of a Subsidiary of the Company. Indebtedness shall never be
calculated taking into account any cash and cash equivalents held by such
Person.
"Investment" by any Person means any direct or indirect loan, advance or other
extension of credit or capital contribution to (by means of transfers of cash or
other property to others or payments for property or services for the account or
use of others, or otherwise), or purchase or acquisition of Capital Stock,
bonds, notes, debentures or other securities or evidence of Indebtedness issued
by any other Person.
"Issue Date" means the original issue date of the Exchange Notes.
"Lien" means, with respect to any property or assets, any mortgage or deed of
trust, pledge, hypothecation, assignment, security interest, lien, charge,
easement (other than any easement not materially impairing usefulness or
marketability), encumbrance, preference, priority or other security agreement
with respect to such property or assets (including, without limitation, any
conditional sale or other title retention agreement having substantially the
same economic effect as any of the foregoing).
"Material Subsidiary" means any Subsidiary of the Company which would constitute
a "significant subsidiary" of the Company as defined in Rule 1-02 of Regulation
S-X promulgated by the Commission except that for purposes of this definition
all reference therein to ten (10) percent shall be deemed to be references to
five (5) percent.
"Net Available Proceeds" from any Asset Disposition by any Person means cash or
readily marketable cash equivalents received (including by way of sale or
discounting of a note, installment receivable or other receivable, but excluding
any other consideration received in the form of assumption by the acquiree of
Indebtedness or other obligations relating to such properties or assets or
received in any other noncash form) therefrom by such Person, net of (i) all
legal, title and recording tax expenses, commissions and other fees and expenses
Incurred and all federal, state, foreign and local taxes required to be accrued
as a liability as a consequence of such Asset Disposition, (ii) all payments
made by such Person or its Subsidiaries on any
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Indebtedness which is secured by such assets in accordance with the terms of any
Lien upon or with respect to such assets or which must by the terms of such
Lien, or in order to obtain a necessary consent to such Asset Disposition or by
applicable law, be repaid out of the proceeds from such Asset Disposition, (iii)
all payments made with respect to liabilities associated with the assets which
are the subject of the Asset Disposition, including, without limitation, trade
payables and other accrued liabilities, (iv) appropriate amounts to be provided
by such Person or any Subsidiary thereof, as the case may be, as a reserve in
accordance with GAAP against any liabilities associated with such assets and
retained by such Person or any Subsidiary thereof, as the case may be, after
such Asset Disposition, including, without limitation, liabilities under any
indemnification obligations and severance and other employee termination costs
associated with such Asset Disposition, until such time as such amounts are no
longer reserved or such reserve is no longer necessary (at which time any
remaining amounts will become Net Available Proceeds to be allocated in
accordance with the provisions of clause (iii) of "Limitation on Certain Asset
Dispositions"), and (v) all distributions and other payments made to minority
interest holders in Subsidiaries of such Person or joint ventures as a result of
such Asset Disposition.
"Offer to Purchase" means a written offer (the "Offer") sent by the Company by
first class mail, postage prepaid, to each Holder at his address appearing in
the register for the Exchange Notes on the date of the Offer offering to
purchase up to the principal amount of Exchange Notes specified in such Offer at
the purchase price specified in such Offer (as determined pursuant to the
Indenture). Unless otherwise required by applicable law, the Offer shall specify
an expiration date (the "Expiration Date") of the Offer to Purchase which shall
be not less than 30 days or more than 60 days after the date of such Offer and a
settlement date (the "Purchase Date") for purchase of Exchange Notes within five
Business Days after the Expiration Date. The Company shall notify the Trustee at
least 15 Business Days (or such shorter period as is acceptable to the Trustee)
prior to the mailing of the Offer of the Company's obligation to make an Offer
to Purchase, and the Offer shall be mailed by the Company or, at the Company's
request, by the Trustee in the name and at the expense of the Company. The Offer
shall contain all the information required by applicable law to be included
therein. The Offer shall contain all instructions and materials necessary to
enable such Holders to tender Exchange Notes pursuant to the Offer to Purchase.
The Offer shall also state:
(1) the Section of the Indenture pursuant to which the Offer to Purchase
is being made;
(2) the Expiration Date and the Purchase Date;
(3) the aggregate principal amount of the outstanding Exchange Notes
offered to be purchased by the Company pursuant to the Offer to Purchase
(including, if less than 100%, the manner by which such amount has been
determined pursuant to the Section of the Indenture requiring the Offer to
Purchase) (the "Purchase Amount");
(4) the purchase price to be paid by the Company for each $1,000 aggregate
principal amount of Exchange Notes accepted for payment (as specified
pursuant to the Indenture) (the "Purchase Price");
(5) that the Holder may tender all or any portion of the Exchange Notes
registered in the name of such Holder and that any portion of a Note
tendered must be tendered in an integral multiple of $1,000 principal
amount;
(6) the place or places where Exchange Notes are to be surrendered for
tender pursuant to the Offer to Purchase;
(7) that interest on any Note not tendered or tendered but not purchased by
the Company pursuant to the Offer to Purchase will continue to accrue;
(8) that on the Purchase Date the Purchase Price will become due and
payable upon each Note being accepted for payment pursuant to the Offer to
Purchase and that interest thereon shall cease to accrue on and after the
Purchase Date;
(9) that each Holder electing to tender all or any portion of a Note
pursuant to the Offer to Purchase will be required to surrender such Note
at the place or places specified in the Offer prior to the close of
business on the Expiration Date (such Note being, if the Company or the
Trustee so requires, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the Trustee
duly executed by, the Holder thereof or his attorney duly authorized in
writing);
(10) that Holders will be entitled to withdraw all or any portion of
Exchange Notes tendered if the Company (or its Paying Agent) receives, not
later than the close of business on the fifth Business Day
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next preceding the Expiration Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Note the Holder tendered, the certificate number of the Note
the Holder tendered and a statement that such Holder is withdrawing all or
a portion of his tender;
(11) that (a) if Exchange Notes in an aggregate principal amount less than
or equal to the Purchase Amount are duly tendered and not withdrawn
pursuant to the Offer to Purchase, the Company shall purchase all such
Exchange Notes and (b) if Exchange Notes in an aggregate principal amount
in excess of the Purchase Amount are tendered and not withdrawn pursuant to
the Offer to Purchase, the Company shall purchase Exchange Notes having an
aggregate principal amount equal to the Purchase Amount on a pro rata basis
(with such adjustments as may be deemed appropriate so that only Exchange
Notes in denominations of $1,000 or integral multiples thereof shall be
purchased); and
(12) that in the case of any Holder whose Note is purchased only in part,
the Company shall execute, the Guarantors shall execute the Guarantee
endorsed thereon and the Trustee shall authenticate and deliver to the
Holder of such Note without service charge, a new Note or Exchange Notes of
any authorized denomination as requested by such Holder, in an aggregate
principal amount equal to and in exchange for the unpurchased portion of
the Note so tendered.
An Offer to Purchase shall be governed by and effected in accordance with the
provisions above pertaining to any Offer.
"Permitted Investments" means (i) Investments in marketable direct obligations
issued or guaranteed by the United States of America, or any governmental entity
or agency or political subdivision thereof (provided that the good faith and
credit of the United States of America is pledged in support thereof), maturing
within one year of the date of purchase; (ii) Investments in commercial paper
issued by corporations, each of which shall have a consolidated net worth of at
least $500,000,000, maturing within 180 days from the date of the original issue
thereof, and rated "P-1" or better by Moody's Investors Service or "A-1" or
better by Standard & Poor's Corporation or an equivalent rating or better by any
other nationally recognized securities rating agency; (iii) Investments in
certificates of deposit issued or acceptances accepted by or guaranteed by any
bank or trust company organized under the laws of the United States of America
or any state thereof or the District of Columbia, in each case having capital,
surplus and undivided profits totalling more than $500,000,000, maturing within
one year of the date of purchase; (iv) Investments representing Capital Stock or
obligations issued to the Company or any of its Subsidiaries in the course of
the good faith settlement of claims against any other Person or by reason of a
composition or readjustment of debt or a reorganization of any debtor of the
Company or any of its Subsidiaries; (v) deposits, including interest-bearing
deposits, maintained in the ordinary course of business in banks; and (vi) any
acquisition of the Capital Stock of any Person provided that after giving effect
to any such acquisition such Person shall become a Subsidiary of the Company.
"Person" means any individual, corporation, limited or general partnership,
joint venture, association, joint stock company, trust, unincorporated
organization or government or any agency or political subdivision
thereof.
"Preferred Stock", as applied to the Capital Stock of any Person, means Capital
Stock of such Person of any class or classes (however designated) that ranks
prior, as to the payment of dividends or as to the distribution of assets upon
any voluntary or involuntary liquidation, dissolution or winding up of such
Person, to shares of Capital Stock of any other class of such Person.
"Related Person" of any Person means any other Person directly or indirectly
owning (a) 5% or more of the outstanding Common Stock of such Person (or, in the
case of a Person that is not a corporation, 5% or more of the equity interest in
such Person) or (b) 5% or more of the combined voting power of the Voting Stock
of such Person.
"Sale and Leaseback Transaction" of any Person means an arrangement with any
lender or investor or to which such lender or investor is a party providing for
the leasing by such Person of any property or asset of such Person which has
been or is being sold or transferred by such Person more than 270 days after the
acquisition thereof or the completion of construction or commencement of
operation thereof to such lender or investor or to any Person to whom funds have
been or are to be advanced by such lender or investor on the security of such
property or asset. The stated maturity of such arrangement shall be the date of
the last payment of rent or any other amount due under such arrangement prior to
the first date on which such arrangement may be terminated by the lessee without
payment of a penalty.
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"Senior Credit Facility" means the Credit Agreement, dated as of March 8, 1995,
among the Company as borrower thereunder, any Subsidiaries of the Company as
guarantors thereunder and NationsBank, N.A., as agent on behalf of itself and
the other lenders named therein, including any deferrals, renewals, extensions,
replacements, refinancings or refundings thereof, or amendments, modifications
or supplements thereto and any agreement providing therefor whether by or with
the same or any other lender, creditors, group of lenders or group of creditors.
"Subsidiary" of any Person means (i) a corporation more than 50% of the
outstanding Voting Stock of which is owned, directly or indirectly, by such
Person or by one or more other Subsidiaries of such Person or by such Person and
one or more other Subsidiaries thereof or (ii) any other Person (other than a
corporation) in which such Person, or one or more other Subsidiaries of such
Person or such Person and one or more other Subsidiaries thereof, directly or
indirectly, has at least a majority ownership and voting power relating to the
policies, management and affairs thereof.
"Voting Stock" of any Person means the Capital Stock of such Person which
ordinarily has voting power for the election of directors (or persons performing
similar functions) of such Person, whether at all times or only so long as no
senior class of securities has such voting power by reason of any contingency.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such Person all of
the outstanding Capital Stock or other ownership interests of which (other than
directors' qualifying shares) shall at the time be owned by such Person or by
one or more Wholly Owned Subsidiaries of such Person or by such Person and one
or more Wholly Owned Subsidiaries of such Person.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a discussion of certain material United States federal income
tax consequences of the Exchange Offer and the acquisition, ownership and
disposition of the Exchange Notes. Unless otherwise stated, this discussion
addresses the United States federal income tax consequences to persons that hold
Exchange Notes as capital assets, and that are (i) citizens or residents of the
United States, (ii) corporations, partnerships or other entities created or
organized in or under the laws of the United States or any political subdivision
thereof or therein, (iii) estates the income of which is subject to United
States federal income tax regardless of its source, or (iv) trusts the
administration of which is subject to the primary supervision of a court within
the United States and for which one or more United States fiduciaries have the
authority to control all substantial decisions ("U.S. Holders"). This discussion
does not purport to address specific tax consequences that may be relevant to
particular persons (including, for example, financial institutions, broker-
dealers, insurance companies, tax-exempt organizations, and person in special
situations, such as those who hold Exchange Notes as part of a straddle, hedge,
conversion transaction, or other integrated investment). Except for the
discussion under the heading "Foreign Holders," this discussion does not address
tax consequences to persons that have a "functional currency" other than the
U.S. dollar. In addition, this discussion does not address United States federal
alternative minimum tax consequences or any aspect of state, local or foreign
taxation. This discussion is based upon the Internal Revenue Code of 1986, as
amended (the "Code"), the Treasury Department regulations promulgated
thereunder, and administrative and judicial interpretations thereof, all of
which are subject to change, possibly on a retroactive basis.
PROSPECTIVE HOLDERS OF THE EXCHANGE NOTES ARE URGED TO CONSULT THEIR TAX
ADVISORS CONCERNING THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES TO
THEM OF THE EXCHANGE OFFER AND OF ACQUIRING, OWNING AND DISPOSING OF THE
EXCHANGE NOTES, AS WELL AS THE APPLICATION OF STATE, LOCAL AND FOREIGN
INCOME AND OTHER TAX LAWS.
Exchange of Notes Pursuant to Exchange Offer
The exchange of Old Notes for Exchange Notes should not be a taxable event for
United States federal income tax purposes. Accordingly, the Exchange Notes
should have the same issue price as the Old Notes, and a holder should have the
same adjusted tax basis and holding period for Exchange Notes as the holder had
for the Old Notes immediately before the exchange.
Interest Income
A U.S. Holder will recognize ordinary income when it receives or accrues
interest on Exchange Notes in accordance with such U.S. Holder's method of tax
accounting. The Old Notes were not issued with, and
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consequently the Exchange Notes are not to be considered as issued with,
"original issue discount" within the meaning of Section 1273 of the Code. A U.S.
Holder that purchases an Exchange Note at a discount that exceeds a statutorily
defined de minimis amount will be subject to the "market discount" rules of the
Code, and a U.S. Holder that purchases an Exchange Note at a premium will be
subject to the bond premium amortization rules of the Code.
Disposition of Exchange Notes
If a U.S. Holder sells or otherwise disposes of an Exchange Note in a taxable
transaction (including redemption or retirement of the Exchange Note), the U.S.
Holder will recognize gain or loss equal to the difference between the amount
realized on the sale (excluding any such amount attributable to accrued but
previously unrecognized interest, which will be taxable as ordinary interest
income) and the U.S. Holder's adjusted tax basis in the Exchange Note. A U.S.
Holder's adjusted tax basis in an Exchange Note generally will be equal to the
amount the U.S. Holder paid to purchase the Exchange Note, (i) increased by any
unpaid interest that has accrued on the Exchange Note and any accrued market
discount that, in each case, has previously been included by such U.S. Holder in
taxable income, and (ii) decreased by any bond premium previously amortized and
any principal payments previously received by such U.S. Holder with respect to
the Exchange Note. Subject to the market discount rules, any such gain or loss
will be capital gain or loss, long-term or short-term depending upon whether the
U.S. Holder has held the Exchange Note for more than one year. Subject to
certain limited exceptions, capital losses cannot be used to offset ordinary
income.
Foreign Holders
For purposes of this discussion, a "Foreign Holder" is any holder of an Exchange
Note other than a U.S. Holder.
A Foreign Holder generally will not be subject to United States federal
withholding tax on interest paid on an Exchange Note so long as the Foreign
Holder (i) is not actually or constructively a "10 percent shareholder" of the
Company or a "controlled foreign corporation" with respect to which the Company
is a "related person" within the meaning of the Code, and (ii) provides an
appropriate statement, signed under penalties of perjury, certifying that the
beneficial owner of the Exchange Note is a Foreign Holder and providing the
Foreign Holder's name and address. If the information provided in this statement
changes, the Foreign Holder must so inform the payor within 30 days of such
change. The statement generally must be provided in the year a payment occurs or
in either of the two preceding years. If the foregoing conditions are not
satisfied, then interest paid on the Exchange Notes will be subject to United
States withholding tax at a rate of 30%, unless such rate is reduced or
eliminated pursuant to an applicable tax treaty.
Any capital gain a Foreign Holder realizes on the sale, redemption, retirement
or other taxable disposition of an Exchange Note will be exempt from United
States federal income and withholding tax, provided that (i) the gain is not
effectively connected with the Foreign Holder's conduct of a trade or business
in the United States, (ii) in the case of a Foreign Holder that is an
individual, the Foreign Holder is not present in the United States for 183 days
or more in the taxable year of the disposition and (iii) the Foreign Holder is
not subject to tax pursuant to the provisions of U.S. tax law applicable to
certain U.S. expatriates.
If the interest, gain or other income a Foreign Holder recognizes on an Exchange
Note is effectively connected with the Foreign Holder's conduct of a trade or
business in the United States, the Foreign Holder (although exempt from the
withholding tax previously discussed if an appropriate statement is furnished)
generally will be subject to United States federal income tax on the interest,
gain or other income at regular federal income tax rates. In addition, if the
Foreign Holder is a foreign corporation, it may be subject to a branch profits
tax equal to 30% of its "effectively connected earnings and profits," as
adjusted for certain items, unless it qualifies for a lower rate under an
applicable tax treaty.
Information Reporting and Backup Withholding
The Company or other payor will be required to report annually to the IRS, and
to each U.S. Holder of record, the amount of interest paid on the Exchange Notes
(and the amount of tax, if any, withheld) for each calendar year, except
interest paid to exempt holders (generally, corporations and tax-exempt
entities). Each U.S. Holder subject to the reporting requirements will be
required to provide, under penalties of perjury, a certificate containing the
U.S. Holder's name, address, correct federal taxpayer identification number and
a statement that the U.S. Holder is not subject to backup withholding. Should a
nonexempt U.S. Holder fail to provide the required certificate, the Company or
other payor will be required to withhold 31% of the interest
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and other payments on the Exchange Notes otherwise payable to the U.S. Holder
and to remit the withheld amount to the IRS as a payment against the U.S.
Holder's federal income tax liability.
A Foreign Holder will generally be exempt from backup withholding and
information reporting requirements, but may be required to comply with
certification and identification procedures in order to obtain an exemption from
backup withholding and information reporting. Any amount paid as backup
withholding will be creditable against the Foreign Holder's U.S. Federal income
tax liability.
PLAN OF DISTRIBUTION
Prior to the Exchange Offer, there has been no market for the Old Notes. The Old
Notes are eligible for trading in the Private Offerings, Resales and Trading
through Automatic Linkages ("PORTAL") market. There can be no assurance that an
active trading market will develop for, or as to the liquidity of, any of the
Notes.
With respect to resales of Exchange Notes, based on an interpretation by the
staff of the Commission set forth in no-action letters issued to third parties,
the Company believes that any holder or beneficial owner (other than a person
that is an affiliate of the Company within the meaning of Rule 405 under the
Securities Act or a "broker" or "dealer" registered under the Exchange Act) who
exchanges Old Notes for Exchange Notes in the ordinary course of business and
who is not participating, does not intend to participate, and has no arrangement
or understanding with any person to participate, in the distribution of the
Exchange Notes, will be allowed to resell the Exchange Notes to the public
without further registration under the Securities Act and without delivering to
the purchasers of the Exchange Notes a prospectus that satisfies the
requirements of Section 10 thereof. However, if any holder or beneficial owner
acquires Exchange Notes in the Exchange Offer for the purpose of distributing or
participating in a distribution of the Exchange Notes, such holder or beneficial
owner cannot rely on the position of the staff of the Commission enunciated in
Exxon Capital Holdings Corporation (available May 13, 1988) or similar no-action
letters or any similar interpretive letters and must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with a secondary resale transaction, unless an exemption from
registration is otherwise available.
As contemplated by the above no-action letters and the Registration Rights
Agreement, each holder accepting the Exchange Offer is required to represent to
the Company in the Letter of Transmittal that (i) the Exchange Notes to be
acquired by the holder and any beneficial owners of Old Notes in connection with
the Exchange Offer are being acquired in the ordinary course of business of the
holder and any beneficial owners, (ii) that at the time of the consummation of
the Exchange Offer the holder and each beneficial owner are not engaging, do not
intend to engage and have no arrangements or understanding with any person to
participate in the distribution of the Exchange Notes in violation of the
provisions of the Securities Act, (iii) the holder and each beneficial owner
acknowledge and agree that any person participating in the Exchange Offer for
the purpose of distributing the Exchange Notes must comply with the registration
and prospectus delivery requirements of the Securities Act in connection with a
secondary resale transaction of the Exchange Notes acquired by such person and
cannot rely on the position of the Staff of the Commission set forth in no-
action letters that are discussed herein above, (iv) the holder and each
beneficial owner understands that a secondary resale transaction described in
clause (iii) above should be covered by an effective registration statement
containing the selling securityholder information required by Item 507 or 508,
as applicable, of Regulation S-K of the Commission, and (v) neither the holder
nor any beneficial owner(s) is an "affiliate," as defined under Rule 405 of the
Securities Act, of the Company except as otherwise disclosed to the Company in
writing.
Any broker or dealer registered under the Exchange Act (each a "Broker-Dealer")
who holds Old Notes that were acquired for its own account as a result of
market-making activities or other trading activities (other than Old Notes
acquired directly from the Company or any affiliate of the Company) may exchange
such Old Notes for Exchange Notes pursuant to the Exchange Offer; however, such
Broker-Dealer may be deemed an underwriter within the meaning of the Securities
Act and, therefore, must deliver a prospectus meeting the requirements of the
Securities Act in connection with any resales of the Exchange Notes received by
it in the Exchange Offer, which prospectus delivery requirement may be satisfied
by the delivery by such Broker-Dealer of this Prospectus. Any Broker-Dealer
participating in the Exchange Offer will be required to acknowledge that it will
deliver a prospectus meeting the requirements of the Securities Act in
connection with any resales of Exchange Notes received by it in the Exchange
Offer. However only Broker-Dealers who exchange Old Notes that were acquired for
their own account as a result of market-making activities or other trading
activities (other than Old Notes acquired directly from the Company or any
affiliate of the Company), may use this Prospectus to satisfy the prospectus
delivery requirements of the Securities Act. The
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delivery by a Broker-Dealer of a prospectus in connection with resales of
Exchange Notes shall not be deemed to be an admission by such Broker-Dealer that
it is an underwriter within the meaning of the Securities Act.
LEGAL MATTERS
The validity of the Exchange Notes will be passed upon for the Company by Hunton
& Williams, Richmond, Virginia. Lathan M. Ewers, Jr., a partner of Hunton &
Williams, is a director of the Company.
EXPERTS
The financial statements incorporated in this Prospectus by reference to the
Annual Report on Form 10-K for the year ended December 28, 1996, have been so
incorporated in reliance on the report of Price Waterhouse LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Officers and Directors
The Virginia Stock Corporation Act permits, and the Company's Articles
of Incorporation (the "Articles") require, indemnification of the Company's
directors and officers in a variety of circumstances that may include
liabilities under the Securities Act of 1933, as amended (the "Securities Act").
Under sections 13.1-697 and 13.1-702 of the Virginia Stock Corporation Act, a
Virginia corporation is generally authorized to indemnify its directors and
officers in civil or criminal actions if they acted in good faith and, in the
case of criminal actions, had no reasonable cause to believe that the conduct
was unlawful. The Company's Articles require indemnification of any person with
respect to certain liabilities incurred in connection with any proceeding to
which that person is made a party by reason of (i) his service to the Company as
a director or officer, or (ii) his service as director, officer, trustee or
partner to some other enterprise at the request of the Company, except in the
case of willful misconduct or a knowing violation of criminal law. In addition,
the Company carries insurance on behalf of directors, officers, employees and
agents that may cover liabilities under the Securities Act. As permitted by the
Virginia Stock Corporation Act, the Company's Articles provide that in any
proceeding brought by a shareholder of the Company in the right of the Company
or brought by or on behalf of shareholders of the Company, no director or
officer of the Company shall be liable to the Company or its shareholders for
monetary damages with respect to any transaction, occurrence or course of
conduct, whether prior or subsequent to the effective date of such Articles,
except for liability resulting from such person having engaged in willful
misconduct or a knowing violation of the criminal law or any federal or state
securities law.
Item 21. Exhibits and Financial Statement Schedules
Exhibit
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4.1 Indenture between Tultex Corporation and the Guarantors, and First Union
National Bank of Virginia, as Trustee, relating to the Notes
4.2 Form of Certificate of Note (included as Exhibit A to Exhibit 4.1)
--------- -----------
4.3 Registration Rights Agreement for the Notes
5.1 Opinion of Hunton & Williams to Tultex Corporation as to legality of the
Exchange Notes and the Guarantees of the Subsidiaries of Tultex
Corporation
8.1 Opinion of Hunton & Williams as to certain federal income tax matters
12.1 Computation of ratio of earnings to fixed charges
23.1 Consent of Price Waterhouse LLP
23.2 Consent of Hunton & Williams (included in Exhibit 5.1)
24.1 Power of Attorney of certain officers and directors of Tultex Corporation
and Subsidiaries (included on the appropriate Signature Page)
25.1 Form T-1 Statement of Eligibility of First Union National Bank of Virginia
to act as trustee for the Exchange Notes
99.1 Form of Letter of Transmittal
99.2 Form of Notice of Guaranteed Delivery
99.3 Form of Exchange Agent Agreement
II-1
<PAGE>
Item 22. Undertakings
(a) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that, in the opinion of the Securities and
Exchange Commission, such indemnification is against the public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against liabilities (other than the payment of the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
(c) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of
prospectus filed as part of this registration statement in reliance
upon Rule 430A and contained in a form of prospectus filed by the
Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
(d) The undersigned Registrant hereby undertakes to respond to
requests for information that is incorporated by reference into the Prospectus
pursuant to Item 4, 10(b), 11 or 13 of this form, within one business day of
receipt of such request, and to send the incorporated documents by first class
mail or other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the registration statement
through the date of responding to the request.
(e) The undersigned registrant hereby undertakes to supply by
means of a post-effective amendment concerning a transaction, and the company
being acquired involved therein, that was not the subject of and included in the
registration statement when it became effective.
II-2
<PAGE>
SIGNATURE OF REGISTRANT
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Martinsville, Commonwealth of Virginia, on June 13, 1997.
TULTEX CORPORATION
(Registrant)
By: /s/ Charles W. Davies, Jr.
---------------------------------
Charles W. Davies, Jr.
President and Chief
Executive Officer
SIGNATURES AND POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on June 13, 1997. Each of the directors and/or officers of
Tultex Corporation whose signature appears below hereby appoints O. Randolph
Rollins, Suzanne H. Wood and Lathan M. Ewers, Jr., and each of them severally,
as his attorney-in-fact to sign in his name and behalf, in any and all
capacities stated below and to file with the Commission, any and all amendments,
including post-effective amendments to this registration statement, making such
changes in the registration statement as appropriate, and generally to do all
such things in their behalf in their capacities as officers and directors to
enable Tultex Corporation to comply with the provisions of the Securities Act of
1933, and all requirements of the Securities and Exchange Commission.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ John M. Franck Chairman of the Board
- --------------------------------
John M. Franck
/s/ Charles W. Davies, Jr. President and Chief Executive Officer
- -------------------------------- (Principal Executive Officer)
Charles W. Davies, Jr.
/s/ Suzanne H. Wood Vice President and Chief Financial Officer
- -------------------------------- (Principal Financial Officer)
Suzanne H. Wood
/s/ Jeffrey F. Kies Controller (Principal Accounting Officer)
- --------------------------------
Jeffrey F. Kies
/s/ Seth P. Bernstein Director
- --------------------------------
Seth P. Bernstein
/s/ Lathan M. Ewers, Jr. Director
- --------------------------------
Lathan M. Ewers, Jr.
</TABLE>
II-3
<PAGE>
<TABLE>
<S> <C>
/s/ H. Richard Hunnicutt, Jr. Director
- --------------------------------
H. Richard Hunnicutt, Jr.
/s/ F. Kenneth Iverson Director
- --------------------------------
F. Kenneth Iverson
/s/ Bruce M. Jacobson Director
- --------------------------------
Bruce M. Jacobson
/s/ Richard M. Simmons, Jr. Director
- --------------------------------
Richard M. Simmons, Jr.
</TABLE>
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Co-Registrant has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Martinsville, State of
Virginia, on June 13, 1997.
AKOM, LTD.
(Co-Registrant)
By /s/ Charles W. Davies, Jr.
-----------------------------------
Charles W. Davies, Jr.
President and Chief
Executive Officer
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities indicated
on June 13, 1997. Each of the directors and/or officers of AKOM, Ltd. whose
signature appears below hereby appoints O. Randolph Rollins, Suzanne H. Wood and
Lathan M. Ewers, Jr., and each of them severally, as his attorney-in-fact to
sign in his name and behalf, in any and all capacities stated below, and to file
with the Commission any and all amendments, including post-effective amendments,
to this registration statement, making such changes in the registration
statement as appropriate, and generally to do all such things in their behalf in
their capacities as officers and directors to enable AKOM, Ltd. to comply with
the provisions of the Securities Act of 1933, and all requirements of the
Securities and Exchange Commission.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ Charles W. Davies, Jr. President and Director (Principal Executive Officer)
- ------------------------------
Charles W. Davies, Jr.
/s/ R. H. Gehman Treasurer (Principal Financial and Chief Accounting
- ------------------------------ Officer)
R. H. Gehman
/s/ B. Alvin Ratliff Director
- ------------------------------
B. Alvin Ratliff
/s/ O. Randolph Rollins Director
- ------------------------------
O. Randolph Rollins
</TABLE>
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Co-Registrant has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Martinsville, State of
Virginia, June 13, 1997.
DOMINION STORES, INC.
(Co-Registrant)
By /s/ Walter J. Caruba
-----------------------------
Walter J. Caruba
President
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities indicated
on June 13, 1997. Each of the directors and/or officers of Dominion Stores, Inc.
whose signature appears below hereby appoints O. Randolph Rollins, Suzanne H.
Wood and Lathan M. Ewers, Jr., and each of them severally, as his
attorney-in-fact to sign in his name and behalf, in any and all capacities
stated below, and to file with the Commission any and all amendments, including
post-effective amendments, to this registration statement, making such changes
in the registration statement as appropriate, and generally to do all such
things in their behalf in their capacities as officers and directors to enable
Dominion Stores, Inc. to comply with the provisions of the Securities Act of
1933, and all requirements of the Securities and Exchange Commission.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ Walter J. Caruba President and Director (Principal Executive Officer)
- -----------------------------
Walter J. Caruba
/s/ R. H. Gehman Treasurer (Principal Financial and Accounting Officer)
- -----------------------------
R. H. Gehman
/s/ Charles W. Davies, Jr. Director
- -----------------------------
Charles W. Davies, Jr.
/s/ O. Randolph Rollins Director
- -----------------------------
O. Randolph Rollins
/s/ John J. Smith Director
- -----------------------------
John J. Smith
/s/ Suzanne H. Wood Director
- -----------------------------
Suzanne H. Wood
</TABLE>
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Co-Registrant has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Martinsville, State of
Virginia, on June 13, 1997.
TULTEX INTERNATIONAL, INC.
(Co-Registrant)
By /s/ Walter J. Caruba
----------------------------
Walter J. Caruba
President
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities indicated
on June 13, 1997. Each of the directors and/or officers of Tultex International,
Inc. whose signature appears below hereby appoints O. Randolph Rollins, Suzanne
H. Wood and Lathan M. Ewers, Jr., and each of them severally, as his
attorney-in-fact to sign in his name and behalf, in any and all capacities
stated below, and to file with the Commission any and all amendments, including
post-effective amendments, to this registration statement, making such changes
in the registration statement as appropriate, and generally to do all such
things in their behalf in their capacities as officers and directors to enable
Tultex International, Inc. to comply with the provisions of the Securities Act
of 1933, and all requirements of the Securities and Exchange Commission.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ Walter J. Caruba President and Director (Principal Executive Officer)
- ----------------------------
Walter J. Caruba
/s/ R. H. Gehman Treasurer (Principal Financial and Accounting Officer)
- ----------------------------
R. H. Gehman
/s/ Charles W. Davies, Jr. Director
- ----------------------------
Charles W. Davies, Jr.
/s/ O. Randolph Rollins Director
- ----------------------------
O. Randolph Rollins
/s/ John J. Smith Director
- ----------------------------
John J. Smith
</TABLE>
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Co-Registrant has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Indianapolis, Indiana, on
June 13, 1997.
LOGOATHLETIC, INC.
(Co-Registrant)
By /s/ Thomas K. Shine
-----------------------------
Thomas K. Shine
President and Chief
Executive Officer
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities indicated
on June 13, 1997. Each of the directors and/or officers of LogoAthletic, Inc.
whose signature appears below hereby appoints O. Randolph Rollins, Suzanne H.
Wood and Lathan M. Ewers, Jr., and each of them severally, as his
attorney-in-fact to sign in his name and behalf, in any and all capacities
stated below, and to file with the Commission any and all amendments, including
post-effective amendments, to this registration statement, making such changes
in the registration statement as appropriate, and generally to do all such
things in their behalf in their capacities as officers and directors to enable
LogoAthletic, Inc. to comply with the provisions of the Securities Act of 1933,
and all requirements of the Securities and Exchange Commission.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ Thomas K. Shine President and Director (Principal Executive Officer)
- -----------------------------
Thomas K. Shine
/s/ Suzanne H. Wood Chief Financial Officer (Principal Financial Officer)
- -----------------------------
Suzanne H. Wood
/s/ J. A. Lewis Controller, Secretary and Treasurer
- -----------------------------
J. A. Lewis (Principal Accounting Officer)
/s/ Charles W. Davies, Jr. Director
- -----------------------------
Charles W. Davies, Jr.
/s/ Michael R. Kistler Director
- -----------------------------
Michael R. Kistler
Director
- -----------------------------
B. Alvin Ratliff
/s/ O. Randolph Rollins Director
- -----------------------------
O. Randolph Rollins
/s/ Walter J. Caruba Director
- -----------------------------
Walter J. Caruba
</TABLE>
II-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Co-Registrant has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Mattapoisett,
Commonwealth of Massachusetts, on June 13, 1997.
LOGOATHLETIC/HEADWEAR, INC.
(Co-Registrant)
By /s/ Gregg Browne
---------------------------
Gregg Browne
President
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities indicated
on June 13, 1997. Each of the directors and/or officers of
LogoAthletic/Headwear, Inc. whose signature appears below hereby appoints O.
Randolph Rollins, Suzanne H. Wood and Lathan M. Ewers, Jr., and each of them
severally, as his attorney-in-fact to sign in his name and behalf, in any and
all capacities stated below, and to file with the Commission any and all
amendments, including post-effective amendments, to this registration statement,
making such changes in the registration statement as appropriate, and generally
to do all such things in their behalf in their capacities as officers and
directors to enable LogoAthletic/Headwear, Inc. to comply with the provisions of
the Securities Act of 1933, and all requirements of the Securities and Exchange
Commission.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ Gregg Browne President (Principal Executive Officer)
- -----------------------------
Gregg Browne
/s/ Suzanne H. Wood Chief Financial Officer (Principal Financial Officer)
- -----------------------------
Suzanne H. Wood
/s/ Richard Bednarz Controller (Principal Accounting Officer)
- -----------------------------
Richard Bednarz
/s/ Charles W. Davies, Jr. Director
- -----------------------------
Charles W. Davies, Jr.
/s/ Michael R. Kistler Director
- -----------------------------
Michael R. Kistler
Director
- -----------------------------
B. Alvin Ratliff
/s/ Thomas K. Shine Director
- -----------------------------
Thomas K. Shine
Director
- -----------------------------
O. Randolph Rollins
/s/ Walter J. Caruba Director
- -----------------------------
Walter J. Caruba
</TABLE>
II-9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Co-Registrant has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Martinsville, State of
Virginia, on June 13, 1997.
TULTEX CANADA, INC.
(Co-Registrant)
By /s/ Anthony J. Pichirallo
---------------------------------
Anthony J. Pichirallo
Chairman of the Board and
President
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities indicated
on June 13, 1997. Each of the directors and/or officers of Tultex Canada, Inc.
whose signature appears below hereby appoints O. Randolph Rollins, Suzanne H.
Wood and Lathan M. Ewers, Jr., and each of them severally, as his
attorney-in-fact to sign in his name and behalf, in any and all capacities
stated below, and to file with the Commission any and all amendments, including
post-effective amendments, to this registration statement, making such changes
in the registration statement as appropriate, and generally to do all such
things in their behalf in their capacities as officers and directors to enable
Tultex Canada, Inc. to comply with the provisions of the Securities Act of 1933,
and all requirements of the Securities and Exchange Commission.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ Anthony J. Pichirallo Chairman of the Board and President
- ------------------------------ (Principal Executive Officer)
Anthony J. Pichirallo
/s/ O. Randolph Rollins Vice President and Director
- ------------------------------ (Principal Financial Officer)
O. Randolph Rollins
/s/ Eric Delfs Treasurer (Principal Accounting Officer)
- ------------------------------
Eric Delfs
/s/ Charles W. Davies, Jr. Director
- ------------------------------
Charles W. Davies, Jr.
</TABLE>
II-10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Co-Registrant has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Martinsville, State of
Virginia, on June 13, 1997.
SWEATJET, INC.
(Co-Registrant)
By /s/ Charles W. Davies, Jr.
-------------------------------------
Charles W. Davies, Jr.
President and Chief Executive Officer
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities indicated
on June 13th, 1997. Each of the directors and/or officers of Sweatjet, Inc.
whose signature appears below hereby appoints O. Randolph Rollins, Suzanne H.
Wood and Lathan M. Ewers, Jr., and each of them severally, as his
attorney-in-fact to sign in his name and behalf, in any and all capacities
stated below, and to file with the Commission any and all amendments, including
post-effective amendments, to this registration statement, making such changes
in the registration statement as appropriate, and generally to do all such
things in their behalf in their capacities as officers and directors to enable
Sweatjet, Inc. to comply with the provisions of the Securities Act of 1933, and
all requirements of the Securities and Exchange Commission.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ Charles W. Davies President and Director (Principal Executive Officer)
- ------------------------------
Charles W. Davies
/s/ Suzanne H. Wood Chief Financial Officer (Principal Financial Officer)
- ------------------------------
Suzanne H. Wood
/s/ R. H. Gehman Treasurer (Principal Accounting Officer)
- ------------------------------
R. H. Gehman
/s/ Walter J. Caruba Director
- ------------------------------
Walter J. Caruba
/s/ O. Randolph Rollins Director
- ------------------------------
O. Randolph Rollins
/s/ B. Alvin Ratliff Director
- ------------------------------
B. Alvin Ratliff
/s/ John J. Smith Director
- ------------------------------
John J. Smith
</TABLE>
II-11
<PAGE>
EXHIBIT 4.1
================================================================================
Indenture
Dated as of April 15, 1997
among
TULTEX CORPORATION
as Issuer
AKOM, LTD.,
DOMINION STORES, INC.,
LOGOATHLETIC, INC.,
LOGOATHLETIC/HEADWEAR, INC.,
SWEATJET INCORPORATED,
TULTEX CANADA, INC. and
TULTEX INTERNATIONAL, INC.,
as Guarantors
and
FIRST UNION NATIONAL BANK OF VIRGINIA
as Trustee
--------------
$75,000,000
9 5/8% Senior Notes due 2007
================================================================================
<PAGE>
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
Trust Indenture Indenture
Act Section Section
- --------------- ---------
<S> <C>
(S)310(a)(1) .......................................................... 509
(a)(2) .......................................................... 509
(a)(3) .......................................................... Not Applicable
(a)(4) .......................................................... Not Applicable
(a)(5) .......................................................... Not Applicable
(b) ............................................................. 508, 510
(c) ............................................................. Not Applicable
(S)311(a) ............................................................. 513
(b) ............................................................. 513
(c) ............................................................. Not Applicable
(S)312(a) ............................................................. 601, 602(a)
(b) ............................................................. 602(b)
(c) ............................................................. 602(c)
(S)313(a) ............................................................. 603(a)
(b) ............................................................. 603(a)
(c) ............................................................. 603(a)
(d) ............................................................. 603(b)
(S)314(a) ............................................................. 604
(b) ............................................................. Not Applicable
(c)(1) .......................................................... 102
(c)(2) .......................................................... 102
(c)(3) .......................................................... Not Applicable
(d) ............................................................. Not Applicable
(e) ............................................................. 102
(S)315(a) ............................................................. 501
(b) ............................................................. 502
(c) ............................................................. 501
(d) ............................................................. 501
(d)(1) .......................................................... 501
(d)(2) .......................................................... 501
(d)(3) .......................................................... 501
(e) ............................................................. 414
(S)316(a) ............................................................. 101
(a)(1)(A) ....................................................... 412
(a)(1)(B) ....................................................... 413
(a)(2) .......................................................... Not Applicable
(b) ............................................................. 408
(S)317(a)(1) .......................................................... 403
(a)(2) .......................................................... 404
(b) ............................................................. 903
(S)318(a) ............................................................. 105
</TABLE>
- -----------------
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of the Indenture.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE ONE
Definitions and Other Provisions of General Application
<S> <C> <C>
SECTION 101. Definitions...................................................................... 1
SECTION 102. Compliance Certificates and
Opinions......................................................................18
SECTION 103. Form of Documents Delivered to
Trustee.......................................................................19
SECTION 104. Notices..........................................................................19
SECTION 105. Conflict with Trust Indenture Act................................................20
SECTION 106. Effect of Headings and Table of
Contents......................................................................20
SECTION 107. Successors and Assigns...........................................................21
SECTION 108. Separability Clause..............................................................21
SECTION 109. Benefits of Indenture............................................................21
SECTION 110. Governing Law....................................................................21
SECTION 111. Legal Holidays...................................................................21
SECTION 112. Agent for Service; Submission to
Jurisdiction; Waiver of
Immunities....................................................................21
SECTION 113. No Recourse Against Others.......................................................22
SECTION 114. Rules by Trustee and Agents......................................................22
SECTION 115. No Adverse Interpretation of Other
Agreements....................................................................22
SECTION 116. Trustee as Paying Agent and
Security Registrar............................................................23
SECTION 117. Acceptance of Trust..............................................................23
ARTICLE TWO
The Securities
SECTION 201. Form and Dating..................................................................23
SECTION 202. Execution and Authentication.....................................................25
SECTION 203. Registrar and Paying Agent.......................................................26
SECTION 204. Paying Agent To Hold Money in
Trust.........................................................................26
SECTION 205. Securityholder Lists.............................................................26
SECTION 206. Transfer and Exchange............................................................27
SECTION 207. Replacement Securities...........................................................36
</TABLE>
- -----------------
Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
-i-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 208. Temporary Securities.............................................................37
SECTION 209. Cancellation.....................................................................38
SECTION 210. Defaulted Interest...............................................................38
SECTION 211. CUSIP or CINS Number.............................................................39
SECTION 212. Payments of Interest.............................................................39
ARTICLE THREE
Satisfaction and Discharge
SECTION 301. Satisfaction and Discharge of
Indenture.....................................................................40
SECTION 302. Application of Trust Money.......................................................41
ARTICLE FOUR
Remedies
SECTION 401. Events of Default................................................................42
SECTION 402. Acceleration of Maturity;
Rescission and Annulment......................................................44
SECTION 403. Collection of Indebtedness and
Suits for Enforcement by
Trustee.......................................................................45
SECTION 404. Trustee May File Proofs of Claim.................................................46
SECTION 405. Trustee May Enforce Claims Without
Possession of Securities......................................................46
SECTION 406. Application of Money Collected...................................................47
SECTION 407. Limitation on Suits..............................................................47
SECTION 408. Unconditional Right of Holders To
Receive Principal, Premium and
Interest......................................................................48
SECTION 409. Restoration of Rights and Remedies...............................................48
SECTION 410. Rights and Remedies Cumulative...................................................48
SECTION 411. Delay or Omission Not Waiver.....................................................49
SECTION 412. Control by Holders...............................................................49
SECTION 413. Waiver of Past Defaults..........................................................49
SECTION 414. Undertaking for Costs............................................................50
SECTION 415. Waiver of Stay or Extension Laws.................................................50
ARTICLE FIVE
The Trustee
SECTION 501. Certain Duties and
Responsibilities..............................................................51
SECTION 502. Notice of Default................................................................51
SECTION 503. Certain Rights of Trustee........................................................51
SECTION 504. Not Responsible for Issuance of
Securities....................................................................52
</TABLE>
-ii-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 505. May Hold Securities..............................................................53
SECTION 506. Money Held in Trust..............................................................53
SECTION 507. Compensation and Reimbursement...................................................53
SECTION 508. Disqualification; Conflicting
Interests.....................................................................54
SECTION 509. Corporate Trustee Required;
Eligibility...................................................................54
SECTION 510. Resignation and Removal;
Appointment of Successor......................................................54
SECTION 511. Acceptance of Appointment by
Successor.....................................................................55
SECTION 512. Merger, Conversion, Consolidation
or Succession to Business.....................................................56
SECTION 513. Preferential Collection of Claims
Against the Company and Any
Guarantor.....................................................................56
ARTICLE SIX
Holders' Lists and Reports by Trustee and the Company
SECTION 601. Company To Furnish Trustee Names
and Addresses of Holders......................................................57
SECTION 602. Preservation of Information;
Communication to Holders......................................................57
SECTION 603. Reports by Trustee...............................................................58
SECTION 604. Reports by Company...............................................................58
ARTICLE SEVEN
Consolidation and Merger
SECTION 701. Mergers, Consolidations and Certain
Sales of Assets...............................................................58
SECTION 702. Successor Substituted............................................................60
ARTICLE EIGHT
Supplemental Indentures
SECTION 801. Supplemental Indentures Without
Consent of Holders............................................................60
SECTION 802. Supplemental Indentures with
Consent of Holders............................................................61
SECTION 803. Execution of Supplemental
Indentures....................................................................62
SECTION 804. Effect of Supplemental Indentures................................................62
SECTION 805. Conformity with Trust Indenture
Act...........................................................................63
</TABLE>
-iii-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 806. Reference in Securities to
Supplemental Indentures.....................................63
SECTION 807. Revocation and Effect of Consents..............................63
ARTICLE NINE
Covenants
SECTION 901. Payment of Principal, Premium and
Interest....................................................64
SECTION 902. Maintenance of Office or Agency................................64
SECTION 903. Money for Security Payments To Be
Held in Trust...............................................65
SECTION 904. Existence......................................................66
SECTION 905. Maintenance of Properties......................................67
SECTION 906. Payment of Taxes and Other Claims..............................67
SECTION 907. Maintenance of Insurance.......................................67
SECTION 908. Limitation on Indebtedness.....................................68
SECTION 909. Additional Limitation on Subsidiary
Indebtedness................................................70
SECTION 910. Limitation on Restricted Payments..............................70
SECTION 911. Limitations Concerning
Distributions and Transfers by
Subsidiaries................................................73
SECTION 912. Limitation on Liens............................................73
SECTION 913. Limitation on Sale and Leaseback
Transactions................................................75
SECTION 914. Limitation on Issuance and Sale of
Capital Stock of Subsidiaries...............................75
SECTION 915. Transactions with Affiliates and
Related Persons.............................................75
SECTION 916. Limitation on Certain Asset
Dispositions................................................76
SECTION 917. Change of Control..............................................78
SECTION 918. Provision of Financial Information.............................78
SECTION 919. Statement by Officers as to
Default; Compliance
Certificates................................................80
SECTION 920. Special Covenants of the
Guarantors..................................................80
ARTICLE TEN
Redemption of Securities
SECTION 1001. Right of Redemption............................................81
SECTION 1002. Applicability of Article.......................................81
SECTION 1003. Election To Redeem; Notice to
Trustee.....................................................81
</TABLE>
-iv-
<PAGE>
<TABLE>
<CAPTION>
Page
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<S> <C> <C>
SECTION 1004. Selection by Trustee of Securities
To Be Redeemed..............................................81
SECTION 1005. Notice of Redemption...........................................82
SECTION 1006. Deposit of Redemption Price....................................82
SECTION 1007. Securities Payable on Redemption
Date........................................................83
SECTION 1008. Securities Redeemed in Part....................................83
ARTICLE ELEVEN
Guarantee
SECTION 1101. Unconditional Guarantee........................................83
SECTION 1102. Severability...................................................84
SECTION 1103. Release of a Guarantor.........................................84
SECTION 1104. Limitation of Guarantor's
Liability...................................................85
SECTION 1105. Contribution...................................................85
SECTION 1106. Execution of Guarantee.........................................86
SECTION 1107. Additional Guarantors..........................................86
SECTION 1108. Subordination of Subrogation and
Other Rights................................................87
ARTICLE TWELVE
Defeasance and Covenant Defeasance
SECTION 1201. Defeasance and Covenant Defeasance.............................87
SECTION 1202. Application of Trust Money.....................................90
SECTION 1203. Reinstatement..................................................90
SIGNATURES
EXHIBIT A - Form of Security................................................ A-1
EXHIBIT B - Form of Certificate of Transfer................................. B-1
EXHIBIT C - Form of Certificate of Exchange................................. C-1
</TABLE>
-v-
<PAGE>
INDENTURE, dated as of April 15, 1997, among TULTEX CORPORATION, a
Virginia corporation, AKOM, LTD., a Cayman Islands, British West Indies
corporation, DOMINION STORES, INC., a Virginia corporation, LOGOATHLETIC, INC.,
a Virginia corporation, LOGOATHLETIC/HEADWEAR, INC., a Massachusetts
corporation, SWEATJET INCORPORATED, a Virginia corporation, TULTEX CANADA, INC.,
a Canadian corporation, TULTEX INTERNATIONAL, INC., a Virginia corporation, and
FIRST UNION NATIONAL BANK OF VIRGINIA, as trustee.
Each party hereto agrees as follows for the benefit of each other
party and for the equal and ratable benefit of the Holders of the Company's
9 5/8% Senior Notes due 2007:
ARTICLE ONE
Definitions and Other Provisions
of General Application
SECTION 101. Definitions.
-----------
For purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article and include plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP;
(4) all references to dollars or "$" are to U.S. dollars;
(5) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision; and
(6) provisions apply to successive events and transactions.
"Additional Interest" shall have the meaning set forth in the
Registration Rights Agreement.
<PAGE>
-2-
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Agent" means any Registrar, Paying Agent or co-Registrar. See Section
203.
"Applicable Procedures" means with respect to any transfer or exchange
of interests in a Global Security, the rules and procedures of DTC, Euroclear or
Cedel that apply to such transfer or exchange.
"Asset Disposition" means any sale, transfer or other disposition of
(i) shares of Capital Stock of a Subsidiary of the Company (other than
directors' qualifying shares) or (ii) property or assets of the Company or any
Subsidiary of the Company; provided, however, that an Asset Disposition shall
-------- -------
not include (a) any sale, transfer or other disposition of shares of Capital
Stock, property or assets by a Subsidiary of the Company to the Company or to
another Subsidiary of the Company, (b) any sale, transfer or other disposition
of defaulted receivables for collection or any sale, transfer or other
disposition of property or assets in the ordinary course of business or (c) any
isolated sale, transfer or other disposition that does not involve aggregate
consideration in excess of $250,000 individually.
"Average Life" means, as of the date of determination, with respect
to any Indebtedness for borrowed money or Preferred Stock, the quotient obtained
by dividing (i) the sum of the products of the number of years from the date of
determination to the dates of each successive scheduled principal or
liquidation value payments of such Indebtedness or Preferred Stock,
respectively, and the amount of such principal or liquidation value payments,
by (ii) the sum of all such principal or liquidation value payments.
"Board of Directors" of any Person means either the board of directors
of such Person or any duly authorized committee of that board.
"Board Resolution" of any Person means a copy of a resolution
certified by the Secretary or an Assistant Secretary of such Person to have been
duly adopted by the Board of Directors of such Person and to be in full force
and effect on the date of such certification, and delivered to the Trustee.
<PAGE>
-3-
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in The City of New
York, New York or the Commonwealth of Virginia are authorized or obligated by
law or executive order to close.
"Capital Lease Obligations" of any Person means the obligations to pay
rent or other amounts under a lease of (or other Indebtedness arrangements
conveying the right to use) real or personal property of such Person which are
required to be classified and accounted for as a capital lease or liability on
the face of a balance sheet of such Person in accordance with GAAP. The amount
of such obligations shall be the capitalized amount thereof in accordance with
GAAP and the stated maturity thereof shall be the date of the last payment of
rent or any other amount due under such lease prior to the first date upon which
such lease may be terminated by the lessee without payment of a penalty.
"Capital Stock" of any Person means any and all shares, interests,
participations or other equivalents (however designated) of corporate stock of
such Person (including any Preferred Stock outstanding on the Issue Date).
"Cedel" means Cedel Bank, societe anonyme.
"Change of Control" has the meaning specified in Section 917.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act, or, if at any time
after the execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"Common Stock" of any Person means Capital Stock of such Person that
does not rank prior, as to the payment of dividends or as to the distribution of
assets upon any voluntary or involuntary liquidation, dissolution or winding up
of such Person, to shares of Capital Stock of any other class of such Person.
"Company" means Tultex Corporation, a Virginia corporation, and any
successor thereof.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman of the Board, its President or
a Vice President, and by its Treasurer, an Assistant Treasurer, its Secretary or
an Assistant Secretary, and delivered to the Trustee.
<PAGE>
-4-
"Consolidated Cash Flow Available for Fixed Charges" of any Person
means for any period the Consolidated Net Income of such Person for such period
increased by the sum of (i) Consolidated Interest Expense of such Person for
such period, plus (ii) Consolidated Income Tax Expense of such Person for such
period, plus (iii) the consolidated depreciation and amortization expense
included in the income statement of such Person for such period, plus (iv) other
non-cash charges of such Person for such period deducted from consolidated
revenues in determining Consolidated Net Income for such period, minus (v) non-
cash items (including the partial or entire reversal of reserves taken in prior
periods) of such Person for such period increasing consolidated revenues in
determining Consolidated Net Income for such period.
"Consolidated Cash Flow Ratio" of any Person means for any period the
ratio of (i) Consolidated Cash Flow Available for Fixed Charges of such Person
for such period to (ii) the sum of (A) Consolidated Interest Expense of such
Person for such period, plus (B) the annual interest expense with respect to any
Indebtedness proposed to be Incurred by such Person or its Subsidiaries, minus
(C) Consolidated Interest Expense of such Person to the extent included in
clause (ii)(A) with respect to any Indebtedness that will no longer be out-
standing as a result of the Incurrence of the Indebtedness proposed to be
Incurred, plus (D) the annual interest expense with respect to any other
Indebtedness Incurred by such Person or its Subsidiaries since the end of such
period to the extent not included in clause (ii)(A), minus (E) Consolidated
Interest Expense of such Person to the extent included in clause (ii)(A) with
respect to any Indebtedness that no longer is outstanding as a result of the
Incurrence of the Indebtedness referred to in clause (ii)(D); provided, however,
-------- -------
that in making such computation, the Consolidated Interest Expense of such
Person attributable to interest on any Indebtedness bearing a floating interest
rate shall be computed on a pro forma basis as if the rate in effect on the date
of computation (after giving effect to any hedge in respect of such Indebtedness
that will, by its terms, remain in effect until the earlier of the maturity of
such Indebtedness or the date one year after the date of such determination) had
been the applicable rate for the entire period; provided further that, in the
-------- -------
event such Person or its Subsidiaries has made Asset Dispositions or
acquisitions of assets not in the ordinary course of business (including
acquisitions of other Persons by merger, consolidation or purchase of Capital
Stock) during or after such period, such computation shall be made on a pro
forma basis as if the Asset Dispositions or acquisitions had taken place on the
first day of such period. Calculations of pro forma amounts in accordance with
this definition shall be done in accordance with Rule 11-02 of Regulation S-X
under the Securities Act or any successor provision.
<PAGE>
-5-
"Consolidated Income Tax Expense" of any Person means for any period
the consolidated provision for income taxes of such Person for such period
calculated on a consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" for any Person means for any period
the consolidated interest expense included in a consolidated income statement
(without deduction of interest income) of such Person for such period calculated
on a consolidated basis in accordance with GAAP, plus cash dividends declared
on any Preferred Stock (other than any Preferred Stock of the Company
outstanding on the Issue Date). For purposes of this definition, the amount of
any cash dividends declared will be deemed to be equal to the amount of such
dividends multiplied by a fraction, the numerator of which is one and the de-
nominator of which is one minus the maximum statutory combined Federal, state,
local and foreign income tax rate then applicable to such Person and its
Subsidiaries (expressed as a decimal between one and zero), on a consolidated
basis.
"Consolidated Net Income" of any Person means for any period the
consolidated net income (or loss) of such Person for such period determined on a
consolidated basis in accordance with GAAP; provided that there shall be
--------
excluded therefrom (a) the net income (or loss) of any Person acquired by such
Person or a Subsidiary of such Person in a pooling-of-interests transaction for
any period prior to the date of such transaction, (b) the net income (but not
net loss) of any Subsidiary of such Person which is subject to restrictions
which prevent or limit the payment of dividends or the making of distributions
to such Person to the extent of such restrictions, (c) the net income of any
Person that is not a Subsidiary of such Person except to the extent of the
amount of dividends or other distributions actually paid in cash to such Person
by such other Person during such period, (d) gains or losses on Asset
Dispositions by such Person or its Subsidiaries and (e) all extraordinary gains
and extraordinary losses determined in accordance with GAAP.
"Consolidated Net Tangible Assets" means, at any date, the
consolidated book value as shown by the accounting books and records of the
Company and its Subsidiaries of all their property, both real and personal, less
(i) the book value of all their licenses, patents, patent applications, copy-
rights, trademarks, trade names, goodwill, non-compete agreements or
organizational expenses and other intangibles, (ii) unamortized Indebtedness
discount and expenses, (iii) all reserves for depreciation, obsolescence,
depletion and amortization of their properties and (iv) all other proper
reserves which in accordance with GAAP should be provided in connection with the
business conducted by the Company and its Subsidiaries.
<PAGE>
-6-
"Consolidated Net Worth" of any Person means the consolidated
stockholders' equity of such Person, determined on a consolidated basis in
accordance with GAAP, less (without duplication) amounts attributable to
Disqualified Stock of such Person.
"Continuing Director" means a director who either was a member of the
Board of Directors of the Company on the Issue Date or who became a director of
the Company subsequent to the Issue Date and whose election, or nomination for
election by the Company's stockholders, was duly approved by a majority of the
Continuing Directors then on the Board of Directors of the Company, either by a
specific vote or by approval of the proxy statement issued by the Company on
behalf of the entire Board of Directors of the Company in which such individual
is named as nominee for director.
"Corporate Trust Office" means the principal office of the Trustee in
Richmond, Virginia at which at any particular time its corporate trust business
shall be administered.
"corporation" means a corporation, association, company, joint-stock
company, partnership or business trust.
"Default" means any event that is, or after notice or lapse of time or
both would become, an Event of Default.
"Defaulted Interest" has the meaning specified in Section 210.
"Disqualified Stock" of any Person means any Capital Stock of such
Person which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the option of the holder thereof,
in whole or in part, on or prior to the final Stated Maturity of the Securities;
provided that any Preferred Stock of the Company outstanding on the Issue Date
shall not be deemed Disqualified Stock.
"DTC" means The Depository Trust Company or its successors.
"Eligible Accounts Receivable" means the face value of all "eligible
receivables" of the Company and its Subsidiaries party to any credit agreement
constituting the Senior Credit Facility (as such term is defined for purposes of
such credit agreement).
"Eligible Inventory" means the face value of all "eligible inventory"
of the Company and its Subsidiaries party
<PAGE>
-7-
to any credit agreement constituting the Senior Credit Facility (as such term is
defined for purposes of such credit agreement).
"Euroclear" means Morgan Guaranty Trust Company of New York (Brussels
Office) as operator of the Euroclear system.
"Event of Default" has the meaning specified in Section 401.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Registration Statement" shall have the meaning set forth in
the Registration Rights Agreement.
"Expiration Date" has the meaning specified in the definition of
"Offer to Purchase".
"GAAP" means generally accepted accounting principles, consistently
applied, as in effect on the Issue Date in the United States of America, as set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as is approved by a significant segment of the
accounting profession.
"Global Security" means the global security, without coupons,
representing all or a portion of the Securities deposited with DTC
substantially in the form of Exhibit A attached hereto.
"guarantee" by any Person means any obligation, contingent or
otherwise, of such Person guaranteeing any Indebtedness of any other Person
(the "primary obligor") in any manner, whether directly or indirectly, and
including, without limitation, any obligation of such Person (i) to purchase or
pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or to purchase (or to advance or supply funds for the purchase of)
any security for the payment of such Indebtedness, (ii) to purchase property,
securities or services for the purpose of assuring the holder of such
Indebtedness of the payment of such Indebtedness, or (iii) to maintain working
capital, equity capital or other financial statement condition or the liquidity
of the primary obligor so as to enable the primary obligor to pay such
Indebtedness (and "guaranteed", "guaranteeing" and "guarantor" shall have
meanings correlative to the foregoing); provided, however, that the guarantee by
-------- -------
any Person shall not include endorsements by such Person for collection or
deposit, in either case, in the ordinary course of business.
<PAGE>
-8-
"Guarantee" means (i) the guarantee of each Guarantor set
forth in the Securities and Article Eleven and (ii) any additional guarantee of
the Securities executed by any Material Subsidiary.
"Guarantors" means (i) each of AKOM, Ltd., Dominion Stores,
Inc., LogoAthletic, Inc., LogoAthletic/Headwear Inc., SweatJet Incorporated,
Tultex Canada, Inc., and Tultex International, Inc. and (ii) each Material
Subsidiary formed or acquired after the Issue Date that becomes a Guarantor of
the Securities pursuant to Section 1107.
"Holder" or "Securityholder" means a Person in whose name a
Security is registered in the Security Register.
"Incur" means, with respect to any Indebtedness or other
obligation of any Person, to create, issue, incur (including by conversion,
exchange or otherwise), assume, guarantee or otherwise become liable in respect
of such Indebtedness or other obligation or the recording, as required pursuant
to GAAP or otherwise, of any such Indebtedness or other obligation on the
balance sheet of such Person (and "Incurrence", "Incurred", "Incurrable" and
"Incurring" shall have meanings correlative to the foregoing). Indebtedness of
any Person or any of its Subsidiaries existing at the time such Person becomes
a Subsidiary of the Company (or is merged into or consolidates with the Company
or any of its Subsidiaries), whether or not such Indebtedness was incurred in
connection with, or in contemplation of, such Person becoming a Subsidiary of
the Company (or being merged into or consolidated with the Company or any of
its Subsidiaries), shall be deemed Incurred at the time any such Person becomes
a Subsidiary of the Company or merges into or consolidates with the Company or
any of its Subsidiaries.
"Indebtedness" means (without duplication), with respect to
any Person, whether recourse is to all or a portion of the assets of such Person
and whether or not contingent, (i) every obligation of such Person for money
borrowed, (ii) every obligation of such Person evidenced by bonds, debentures,
notes or other similar instruments, including obligations Incurred in
connection with the acquisition of property, assets or businesses, (iii) every
reimbursement obligation of such Person with respect to letters of credit,
bankers' acceptances or similar facilities issued for the account of such
Person, (iv) every obligation of such Person issued or assumed as the deferred
purchase price of property or services (but excluding trade accounts payable or
accrued liabilities arising in the ordinary course of business which are not
overdue or which are being contested in good faith), (v) every Capital Lease
Obligation of such Person, (vi) every net obligation under interest rate swap
or similar agreements or foreign cur-
<PAGE>
-9-
rency hedge, exchange or similar agreements of such Person, and (vii) every
obligation of the type referred to in clauses (i) through (vi) of another Person
and all dividends of another Person the payment of which, in either case, such
Person has guaranteed or for which such Person is responsible or liable,
directly or indirectly, as obligor, guarantor or otherwise. Indebtedness shall
include the liquidation preference and any mandatory redemption payment
obligations in respect of any Disqualified Stock of the Company and any
Preferred Stock of a Subsidiary of the Company. Indebtedness shall never be
calculated taking into account any cash and cash equivalents held by such
Person.
"Indenture" means this instrument as originally executed or
as it may from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof.
"Initial Global Securities" means the Regulation S Global
Security and the 144A Global Security, each of which contains a Securities Act
Legend.
"Initial Securities" means the Securities containing
a Securities Act Legend.
"Institutional Accredited Investors" means an institution
that is an "accredited investor" as that term is defined in Rule 501(a)(1), (2),
(3) or (7) of Regulation D promulgated under the Securities Act.
"Interest Payment Date" means the Stated Maturity of
an installment of interest on the Securities.
"Investment" by any Person means any direct or indirect loan,
advance or other extension of credit or capital contribution to (by means of
transfers of cash or other property to others or payments for property or
services for the account or use of others, or otherwise), or purchase or
acquisition of Capital Stock, bonds, notes, debentures or other securities or
evidence of Indebtedness issued by any other Person.
"Issue Date" means the original issue date of the Securities.
"Lien" means, with respect to any property or assets, any
mortgage or deed of trust, pledge, hypothecation, assignment, security
interest, lien, charge, easement (other than any easement not materially
impairing usefulness or marketability), encumbrance, preference, priority or
other security agreement with respect to such property or assets (including,
without limitation, any conditional sale or other title retention
<PAGE>
-10-
agreement having substantially the same economic effect as any of the
foregoing).
"Material Subsidiary" means any Subsidiary of the Company
which would constitute a "significant subsidiary" of the Company as defined in
Rule 1-02 of Regulation S-X promulgated by the Commission except that for
purposes of this definition all references therein to ten (10) percent shall be
deemed to be references to five (5) percent.
"Maturity", when used with respect to any Security, means the
date on which the principal of such Security becomes due and payable as therein
or herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption or otherwise.
"Net Available Proceeds" from any Asset Disposition by any
Person means cash or readily marketable cash equivalents received (including by
way of sale or discounting of a note, installment receivable or other
receivable, but excluding any other consideration received in the form of
assumption by the acquiree of Indebtedness or other obligations relating to such
properties or assets or received in any other noncash form) therefrom by such
Person, net of (i) all legal, title and recording tax expenses, commissions and
other fees and expenses Incurred and all federal, state, foreign and local taxes
required to be accrued as a liability as a consequence of such Asset
Disposition, (ii) all payments made by such Person or its Subsidiaries on any
Indebtedness which is secured by such assets in accordance with the terms of
any Lien upon or with respect to such assets or which must by the terms of such
Lien, or in order to obtain a necessary consent to such Asset Disposition or by
applicable law, be repaid out of the proceeds from such Asset Disposition, (iii)
all payments made with respect to liabilities associated with the assets which
are the subject of the Asset Disposition, including, without limitation, trade
payables and other accrued liabilities, (iv) appropriate amounts to be provided
by such Person or any Subsidiary thereof, as the case may be, as a reserve in
accordance with GAAP against any liabilities associated with such assets and
retained by such Person or any Subsidiary thereof, as the case may be, after
such Asset Disposition, including, without limitation, liabilities under any
indemnification obligations and severance and other employee termination costs
associated with such Asset Disposition, until such time as such amounts are no
longer reserved or such reserve is no longer necessary (at which time any
remaining amounts will become Net Available Proceeds to be allocated in
accordance with the provisions of clause (iii) of Section 916(a)), and (v) all
distributions and other payments made to minority interest holders in Subsidiar-
ies of such Person or joint ventures as a result of such Asset Disposition.
<PAGE>
-11-
"1995 Notes" means the Senior Notes issued under the Indenture
dated as of March 15, 1995 among the Company, the guarantors named therein and
First Union National Bank of Virginia, as trustee.
"Offer" has the meaning specified in the definition
of Offer to Purchase.
"Offer to Purchase" means a written offer (the "Offer") sent
by the Company by first class mail, postage prepaid, to each Holder at his
address appearing in the Security Register on the date of the Offer offering to
purchase up to the principal amount of Securities specified in such Offer at the
purchase price specified in such Offer (as determined pursuant to this
Indenture). Unless otherwise required by applicable law, the Offer shall specify
an expiration date (the "Expiration Date") of the Offer to Purchase which shall
be not less than 30 days or more than 60 days after the date of such Offer and a
settlement date (the "Purchase Date") for purchase of Securities within five
Business Days after the Expiration Date. The Company shall notify the Trustee at
least 15 Business Days (or such shorter period as is acceptable to the Trustee)
prior to the mailing of the Offer of the Company's obligation to make an Offer
to Purchase, and the Offer shall be mailed by the Company or, at the Company's
request, by the Trustee in the name and at the expense of the Company. The Offer
shall contain all information required by applicable law to be included therein.
The Offer shall contain all instructions and materials necessary to enable such
Holders to tender Securities pursuant to the Offer to Purchase. The Offer shall
also state:
(1) the Section of this Indenture pursuant to which the Offer
to Purchase is being made;
(2) the Expiration Date and the Purchase Date;
(3) the aggregate principal amount of outstanding Securities
offered to be purchased by the Company pursuant to the Offer to
Purchase (including, if less than 100%, the manner by which such has
been determined pursuant to the Section hereof requiring the Offer to
Purchase) (the "Purchase Amount");
(4) the purchase price to be paid by the Company for each
$1,000 aggregate principal amount of Securities accepted for payment
(as specified pursuant to this Indenture) (the "Purchase Price");
(5) that the Holder may tender all or any portion of the
Securities registered in the name of such Holder and
<PAGE>
-12-
that any portion of a Security tendered must be tendered in an integral
multiple of $1,000 principal amount;
(6) the place or places where Securities are to be
surrendered for tender pursuant to the Offer to Purchase;
(7) that interest on any Security not tendered or
tendered but not purchased by the Company pursuant to the Offer to
Purchase will continue to accrue;
(8) that on the Purchase Date the Purchase Price will become
due and payable upon each Security being accepted for payment pursuant
to the Offer to Purchase and that interest thereon shall cease to
accrue on and after the Purchase Date;
(9) that each Holder electing to tender a Security pursuant to
the Offer to Purchase will be required to surrender such Security at
the place or places specified in the Offer prior to the close of
business on the Expiration Date (such Security being, if the Company or
the Trustee so requires, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the
Trustee duly executed by, the Holder thereof or his attorney duly
authorized in writing);
(10) that Holders will be entitled to withdraw all or any
portion of Securities tendered if the Company (or its Paying Agent)
receives, not later than the close of business on the fifth Business
Day next preceding the Expiration Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the
principal amount of the Security the Holder tendered, the certificate
number of the Security the Holder tendered and a statement that such
Holder is withdrawing all or a portion of his tender;
(11) that (a) if Securities in an aggregate principal amount
less than or equal to the Purchase Amount are duly tendered and not
withdrawn pursuant to the Offer to Purchase, the Company shall
purchase all such Securities and (b) if Securities in an aggregate
principal amount in excess of the Purchase Amount are tendered and not
withdrawn pursuant to the Offer to Purchase, the Company shall pur-
chase Securities having an aggregate principal amount equal to the
Purchase Amount on a pro rata basis (with such adjustments as may be
deemed appropriate so that only Securities in denominations of $1,000
or integral multiples thereof shall be purchased) among tendering
Holders; and
<PAGE>
-13-
(12) that in the case of any Holder whose Security is
purchased only in part, the Company shall execute, the Guarantors shall
execute the Guarantee endorsed thereon and the Trustee shall
authenticate and deliver to the Holder of such Security without service
charge, a new Security or Securities of any authorized denomination as
requested by such Holder, in an aggregate principal amount equal to
and in exchange for the unpurchased portion of the Security so
tendered.
Any Offer to Purchase shall be governed by and effected in
accordance with the Offer for such Offer to Purchase.
"Officers' Certificate" means a certificate signed by the
Chairman of the Board, the President or a Vice President, and by the Treasurer,
an Assistant Treasurer, the Secretary or an Assistant Secretary, of the Company,
and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who
may be counsel for the Company, and who shall be reasonably acceptable to the
Trustee.
"Outstanding", when used with respect to Securities, means, as
of the date of determination, all Securities theretofore authenticated and
delivered under this Indenture, except:
(i) Securities theretofore canceled by the Trustee or
delivered to the Trustee for cancellation;
(ii) Securities with respect to which the Company has effected
defeasance and/or covenant defeasance as provided in Article Twelve,
except to the extent provided in Article Twelve;
(iii) Securities in lieu of which other Securities have been
authenticated and delivered pursuant to Section 207, other than any
such Securities in respect of which there shall have been presented to
the Trustee proof satisfactory to it that such Securities are held by
a bona fide purchaser in whose hands such Securities are valid
obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
- -------- -------
principal amount of outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company, any Guarantor or any other obligor upon the Securities or any
Affiliate of the Company, any Guarantor or of such other obligor shall be
disregarded and deemed not to be outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any such request,
demand, authorization,
<PAGE>
-14-
direction, notice, consent or waiver, only Securities which the Trustee knows to
be so owned shall be so disregarded.
"Paying Agent" means any Person authorized by the Company to
pay the principal of (and premium, if any) or interest on any Securities on
behalf of the Company.
"Permitted Investments" means (i) Investments in marketable
direct obligations issued or guaranteed by the United States of America, or any
governmental entity or agency or political subdivision thereof (provided that
the full faith and credit of the United States of America is pledged in support
thereof), maturing within one year of the date of purchase; (ii) Investments in
commercial paper issued by corporations, each of which shall have a consolidated
net worth of at least $500,000,000, maturing within 180 days from the date of
the original issue thereof, and rated "P-1" or better by Moody's Investors
Service or "A-1" or better by Standard & Poor's Corporation or an equivalent
rating or better by any other nationally recognized securities rating agency;
(iii) Investments in certificates of deposit issued or acceptances accepted by
or guaranteed by any bank or trust company organized under the laws of the
United States of America or any state thereof or the District of Columbia, in
each case having capital, surplus and undivided profits totaling more than
$500,000,000, maturing within one year of the date of purchase; (iv) Investments
representing Capital Stock or obligations issued to the Company or any of its
Subsidiaries in the course of the good faith settlement of claims against any
other Person or by reason of a composition or readjustment of debt or a
reorganization of any debtor of the Company or any of its Subsidiaries; (v)
deposits, including interest-bearing deposits, maintained in the ordinary course
of business in banks; and (vi) any acquisition of the Capital Stock of any
Person provided that after giving effect to any such acquisition such Person
shall become a Subsidiary of the Company.
"Person" means any individual, corporation, limited or general
partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Preferred Stock", as applied to the Capital Stock of any
Person, means Capital Stock of such Person of any class or classes (however
designated) that ranks prior, as to the payment of dividends or as to the
distribution of assets upon any voluntary or involuntary liquidation,
dissolution or winding up of such Person, to shares of Capital Stock of any
other class of such Person.
"Private Exchange Securities" shall have the meaning set forth
in the Registration Rights Agreement.
<PAGE>
-15-
"Purchase Amount" has the meaning specified in the definition
of Offer to Purchase.
"Purchase Date" has the meaning specified in the definition of
Offer to Purchase.
"Purchase Price" has the meaning specified in the definition
of Offer to Purchase.
"QIB" means a "qualified institutional buyer" as defined in
Rule 144A.
"Redemption Date", when used with respect to any Security to
be redeemed, means the date fixed for such redemption by or pursuant to this
Indenture and such Security.
"Redemption Price", when used with respect to any Security to
be redeemed, means the price at which it is to be redeemed pursuant to this
Indenture and such Security.
"Registration Rights Agreement" means the Registration Rights
Agreement dated the date hereof among the Company, the Guarantors, J.P. Morgan
Securities Inc. and NationsBanc Capital Markets Inc.
"Regular Record Date" for the interest payable on any Interest
Payment Date means the April 1 or October 1 (whether or not a Business Day), as
the case may be, next preceding such Interest Payment Date.
"Regulation S" means Regulation S promulgated under the
Securities Act (including any successor regulation thereto) as it may be amended
from time to time.
"Related Person" of any Person means any other Person directly
or indirectly owning (a) 5% or more of the outstanding Common Stock of such
Person (or, in the case of a Person that is not a corporation, 5% or more of the
equity interest in such Person) or (b) 5% or more of the combined voting power
of the Voting Stock of such Person.
"Required Filing Dates" has the meaning specified in
Section 918.
"Responsible Officer", when used with respect to the Trustee,
means any officer of the Trustee including without limitation any vice
president, any assistant vice president, any trust officer, any assistant
secretary or any other officer of the Trustee customarily performing functions
similar to those performed by any of the above designated officers and also
means, with respect to a particular corporate trust matter, any other officer
to whom such matter is referred because
<PAGE>
-16-
of his knowledge of and familiarity with the particular subject.
"Restricted Payments" has the meaning specified in Section
910.
"Restricted Physical Security" means a Physical Security
containing a Securities Act Legend.
"Rule 144" shall have the meaning set forth in the
Registration Rights Agreement.
"Rule 144A" shall have the meaning set forth in the
Registration Rights Agreement.
"Sale and Leaseback Transaction" of any Person means an
arrangement with any lender or investor or to which such lender or investor is a
party providing for the leasing by such Person of any property or asset of such
Person which has been or is being sold or transferred by such Person more than
270 days after the acquisition thereof or the completion of construction or
commencement of operation thereof to such lender or investor or to any Person to
whom funds have been or are to be advanced by such lender or investor on the
security of such property or asset. The stated maturity of such arrangement
shall be the date of the last payment of rent or any other amount due under such
arrangement prior to the first date on which such arrangement may be terminated
by the lessee without payment of a penalty.
"Securities" means the Company's 9 5/8% Senior Notes due 2007
issued under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Credit Facility" means the Credit Agreement, dated as
of March 8, 1995, among the Company as borrower thereunder, any Subsidiaries of
the Company as guarantors thereunder and NationsBank, N.A., as agent on behalf
of itself and the other lenders named therein, including any deferrals,
renewals, extensions, replacements, refinancings or refundings thereof, or
amendments, modifications or supplements thereto and any agreement providing
therefor whether by or with the same or any other lenders, creditors, group of
lenders or group of creditors.
"Shelf Registration Statement" shall have the meaning set
forth in the Registration Rights Agreement.
<PAGE>
-17-
"Special Record Date" for the payment of any Defaulted
Interest means a date fixed by the Trustee pursuant to Section 210.
"Stated Maturity", when used with respect to any Security or
any installment of interest thereon, means the date specified in such Security
as the fixed date on which the principal of such Security or such installment
of interest is due and payable, respectively.
"Subsidiary" of any Person means (i) a corporation more than
50% of the outstanding Voting Stock of which is owned, directly or indirectly,
by such Person or by one or more other Subsidiaries of such Person or by such
Person and one or more Subsidiaries thereof or (ii) any other Person (other than
a corporation) in which such Person, or one or more other Subsidiaries of such
Person or such Person and one or more other Subsidiaries thereof, directly or
indirectly, has at least a majority ownership and voting power relating to the
policies, management and affairs thereof.
"Surviving Entity" has the meaning set forth in Section 701.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended.
"Trustee" means the Person named as such in this Indenture
until a successor Trustee shall have become such pursuant to the applicable
provisions of this Indenture, and there after "Trustee" shall mean such
successor Trustee.
"United States Government Obligations" means direct
obligations of the United States for the payment of which the full faith and
credit of the United States is pledged.
"Unrestricted Global Securities" means one or more Global
Securities that do not and are not required to bear the Securities Act Legend.
"Unrestricted Physical Securities" means one or more Physical
Securities that do not and are not required to bear the Securities Act Legend.
"Unrestricted Securities" means the Securities that do not and
are not required to bear the Securities Act Legend.
"Vice President", when used with respect to the Company or
the Trustee, means any vice president, whether or not designated by a number or
a word or words added before or after the title "vice president".
<PAGE>
-18-
"Voting Stock" of any Person means the Capital Stock of such
Person which ordinarily has voting power for the election of directors (or
persons performing similar functions) of such Person, whether at all times or
only so long as no senior class of securities has such voting power by reason of
any contingency.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of
such Person all of the outstanding Capital Stock or other ownership interests of
which (other than directors' qualifying shares) shall at the time be owned by
such Person or by one or more Wholly Owned Subsidiaries of such Person or by
such Person and one or more Wholly Owned Subsidiaries of such Person.
SECTION 102. Compliance Certificates and Opinions.
------------------------------------
Upon any application or request by the Company to the Trustee
to take any action under any provision of this Indenture, the Company shall
furnish to the Trustee such certificates and opinions as may be required under
the Trust Indenture Act. Each such certificate or opinion shall be given in the
form of an Officers' Certificate, if to be given by an officer of the Company,
or an Opinion of Counsel, if to be given by counsel, and shall comply with the
requirements of the Trust Indenture Act and any other requirement set forth in
this Indenture.
Every certificate or opinion with respect to compliance with
a condition or covenant provided for in this Indenture shall include
(1) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions
herein relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such individual,
he has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
<PAGE>
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SECTION 103. Form of Documents Delivered to Trustee.
--------------------------------------
In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate of an officer of the Company may be based,
insofar as it relates to legal matters, upon an opinion of counsel, unless such
officer knows, or in the exercise of reasonable care should know, that the
opinion with respect to the matters upon which his certificate is based is
erroneous. Any such opinion of counsel may be based, insofar as it relates to
factual matters, upon a certificate or opinion of, or representations by, an
officer or officers of the Company stating the information with respect to such
factual matters, unless such counsel knows, or in the exercise of reasonable
care should know, that the certificate or opinion or representations with
respect to such matters are erroneous.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be consolidated
and form one instrument.
SECTION 104. Notices.
-------
(a) Any notice or communication by the Company or any Guarantor or by
the Trustee to any party hereto shall be duly given if in writing and delivered
in person or mailed by first class mail (registered or certified, return receipt
requested), facsimile or overnight air courier guaranteeing next day delivery,
to such other party's address.
If to the Company or to any Guarantor:
Tultex Corporation
101 Commonwealth Boulevard
Martinsville, Virginia 24112
Facsimile No.: (540) 634-2611
Attention: Suzanne Wood, Chief Financial
Officer
<PAGE>
-20-
If to the Trustee:
First Union National Bank Of Virginia,
901 East Cary Street
Richmond, Virginia 23219
Facsimile No.: (804) 788-9661
Attention: Corporate Trust Department
(b) The Company, any Guarantor or the Trustee, by notice to
the other parties hereto, may designate additional or different addresses for
subsequent notices or communications.
(c) All notices and communications will be deemed to have been
duly given: at the time delivered by hand, if personally delivered; five
Business Days after being deposited in the mail, if mailed; when receipt
acknowledged, if sent by facsimile; and the next Business Day after timely
delivery to the courier, if sent by overnight air courier guaranteeing next day
delivery.
(d) Any notice or communication to a Holder will be mailed by
first-class, postage-prepaid mail, return receipt requested, to the Holder's
address shown on the Security Register. Failure to mail a notice or
communication to a Holder or any defect in it will not affect its sufficiency
with respect to other Holders.
(e) If a notice or communication is mailed in the manner
provided above within the time prescribed, it is duly given, whether or not the
addressee receives it.
(f) If the Company mails a notice or communication to Holders,
it will mail a copy to the Trustee at the same time.
SECTION 105. Conflict with Trust Indenture Act.
---------------------------------
If any provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act that is required thereunder to be part of
and govern this Indenture, the latter provision shall control. If any provision
of this Indenture modifies or excludes any provision of the Trust Indenture
Act that may be so modified or excluded, the latter provision shall be deemed
to apply to this Indenture as so modified or to be excluded, as the case may be.
SECTION 106. Effect of Headings and Table of Contents.
----------------------------------------
The Article and Section headings herein and the Table of
Contents are for convenience only and shall not affect the construction hereof.
<PAGE>
-21-
SECTION 107. Successors and Assigns.
----------------------
All covenants and agreements in this Indenture by the Company
or any Guarantor shall bind its respective successors and assigns, whether so
expressed or not.
SECTION 108. Separability Clause.
-------------------
In case any provision in this Indenture or in the Securities
or Guarantees shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
SECTION 109. Benefits of Indenture.
---------------------
Nothing in this Indenture or in the Securities or Guarantees,
express or implied, shall give to any Person, other than the parties hereto and
their successors hereunder and the Holders of Securities, any benefit or any
legal or equitable right, remedy or claim under this Indenture.
SECTION 110. Governing Law.
-------------
This Indenture, the Securities and the Guarantees endorsed
thereon shall be governed by and construed in accordance with the laws of the
State of New York without regard to principles of conflicts of law.
SECTION 111. Legal Holidays.
--------------
In any case where any Interest Payment Date, Redemption Date,
Purchase Date or Stated Maturity of any Security shall not be a Business Day,
then (notwithstanding any other provision of this Indenture or of the
Securities) payment of interest or principal (and premium, if any) need not be
made on such date, but may be made on the next succeeding Business Day with the
same force and effect as if made on the Interest Payment Date, Redemption Date
or Purchase Date, or at the Stated Maturity, as the case may be, provided that
--------
no interest shall accrue for the period from and after such Interest Payment
Date, Redemption Date or Purchase Date or Stated Maturity, as the case may be.
SECTION 112. Agent for Service; Submission to Jurisdiction; Waiver of
--------------------------------------------------------
Immunities.
----------
By the execution and delivery of this Indenture, each
Guarantor (i) hereby irrevocably designates and appoints the Company as its
authorized agent upon which process may be served in any suit or proceeding
arising out of or relating to the Securities, the Guarantees or this Indenture
that may be
<PAGE>
-22-
instituted in any Federal or State court in the Borough of Manhattan, The City
of New York or brought under Federal or State securities laws or brought by the
Trustee (whether in its individual capacity or in its capacity as a trustee
hereunder), and the Company, by execution and delivery of this Indenture, hereby
accepts such designation, (ii) submits to the jurisdiction of any such court in
any such suit or proceeding, and (iii) agrees that service of process upon the
Company and written notice of said service to such Guarantor (mailed or
delivered to it at the address specified in Section 104) shall be deemed in
every respect effective service of process upon such Guarantor in any such suit
or proceeding. The Company further agrees to take any and all action, including
the filing of this Indenture and the execution and filing of any and all other
documents and instruments, as may be necessary to continue such designation and
appointment of the Company in full force and effect so long as this Indenture
shall be in full force and effect and so long as any of the Securities shall be
outstanding.
To the extent that any Guarantor has or hereafter may acquire
any immunity from jurisdiction of any court or from any legal process (whether
through service of notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property, such
Guarantor hereby irrevocably waives such immunity in respect of its respective
obligations under this Indenture, the Securities and the Guarantees to the
fullest extent permitted by law.
SECTION 113. No Recourse Against Others.
--------------------------
A director, officer, employee or shareholder, as such, of the
Company or any Guarantor shall not have liability for any obligations of the
Company or any Guarantor under the Securities, the Guarantees or this Indenture
or for any claim based on, in respect of or by reason of such obligations or
their creation. By accepting a Security, each Holder shall waive and release all
such liability. The waiver and release shall be part of the consideration for
the issue of the Securities.
SECTION 114. Rules by Trustee and Agents.
---------------------------
The Trustee may make reasonable rules for action by or at a
meeting of Holders. The Security Registrar or Paying Agent may make reasonable
rules and set reasonable requirements for its functions.
SECTION 115. No Adverse Interpretation of Other Agreements.
---------------------------------------------
This Indenture may not be used to interpret another
indenture, loan or debt agreement of the Company or any Guaran-
<PAGE>
-23-
tor. Any such indenture, loan or debt agreement may not be used to interpret
this Indenture. This writing constitutes the entire agreement of the parties
with respect to the subject matter hereof. Unless expressly otherwise indicated
herein, an action or transaction permitted by one provision hereof must
nonetheless comply with all other applicable provisions hereof; and any action
or transaction not permitted by any provision of this Indenture will not be
permitted regardless of whether any other provision hereof might permit such
action or transaction.
SECTION 116. Trustee as Paying Agent and Security Registrar.
----------------------------------------------
The Company initially appoints the Trustee as Paying
Agent and Security Registrar.
SECTION 117. Acceptance of Trust.
-------------------
First Union National Bank of Virginia, the Trustee named
herein, hereby accepts the trusts in this Indenture declared and provided, upon
the terms and conditions hereinabove set forth.
ARTICLE TWO
The Securities
SECTION 201. Form and Dating.
---------------
(a) Global Securities. Securities offered and sold to QIBs in
-----------------
reliance on Rule 144A shall be issued initially substantially in the form of
Exhibit A hereto in the name of Cede & Co. as nominee of DTC, duly executed by
the Company and authenticated by the Trustee as hereinafter provided. Any such
Security shall be referred to herein as the "144A Global Security." Securities
offered and sold in reliance on Regulation S shall be issued initially
substantially in the form of Exhibit A hereto in the name of Cede & Co. as
nominee of DTC, duly executed by the Company and authenticated by the Trustee as
hereinafter provided. Any such Security shall be referred to herein as the
"Regulation S Global Security." Unrestricted Global Securities shall be issued
initially in accordance with Sections 206(b)(iv), 206(c)(ii) and 206(e) in the
name of Cede & Co. as nominee of DTC, duly executed by the Company and
authenticated by the Trustee as hereinafter provided. The aggregate principal
amount of each of the Global Security may from time to time be increased or
decreased by adjustments made on the records of the Trustee as hereinafter
provided.
<PAGE>
-24-
Each Global Security shall represent such of the outstanding
Securities as shall be specified therein and each shall provide that it shall
represent the aggregate principal amount of outstanding Securities from time to
time endorsed thereon and that the aggregate principal amount of outstanding
Securities represented thereby may from time to time be reduced or increased, as
appropriate, to reflect exchanges, redemptions and transfers of interests
therein in accordance with the terms of this Indenture. Any endorsement of a
Global Security to reflect the amount of any increase or decrease in the
principal amount of outstanding Securities represented thereby shall be made by
the Trustee in accordance with reasonable instructions given by the Holder
thereof as required by Section 206 hereof.
Upon the issuance of the Global Security to DTC, DTC shall
credit, on its internal book-entry registration and transfer system, its
Participant's accounts with the respective interests owned by such Participants.
Interests in the Global Securities shall be limited to Participants, including
Euroclear and Cedel, and indirect Participants.
The Participants shall not have any rights either under this
Indenture or under any Global Security with respect to such Global Security held
on their behalf by DTC, and DTC may be treated by the Company, the Trustee and
any agent of the Company or the Trustee as the absolute owner of such Global Se-
curity for the purpose of receiving payment of or on account of the principal of
and, subject to the provisions of this Indenture, interest and Additional
Interest, if any, on the Global Securities and for all other purposes.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Trustee or any agent of the Company or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by DTC or impair,
as between DTC and its Participants, the operation of customary practices of
DTC governing the exercise of the rights of an owner of a beneficial interest in
any Global Security.
The provisions of the "Operating Procedures of the Euroclear
System" and "Terms and Conditions Governing Use of Euroclear" and the "General
Terms and Conditions of Cedel Bank" and "Customer Handbook" of Cedel, as in
effect from time to time, shall be applicable to interests in the Regulation S
Global Security that are held by the Participants through Euroclear or Cedel.
(b) Physical Securities. Securities offered and sold to
-------------------
Institutional Accredited Investors who are not also QIBs shall be issued
initially substantially in the form of Exhibit A hereto, in certificated form
and issued in the names of the purchasers thereof (or their nominees), duly
executed by the Company and authenticated by the Trustee as hereinafter
<PAGE>
-25-
provided. Such Securities, together with any Securities subsequently issued,
whether pursuant to the terms of Section 206 hereof or otherwise, that are not
Global Securities, shall be referred to herein as the "Physical Securities."
(c) Securities. The provisions of the form of Securities
----------
contained in Exhibit A hereto are incorporated herein by reference. The
Securities and the Trustee's Certificates of Authentication shall be
substantially in the form of Exhibit A hereto. The Securities may have
notations, legends or endorsements required by law, stock exchange rule or
usage. The Company shall approve the form of the Securities and any notation,
legend or endorsement (including notations relating to the Guarantee) on them.
If required, the Securities may bear the appropriate legend regarding original
issue discount for federal income tax purposes. Each Security shall be dated the
date of its authentication. The terms and provisions contained in the Securities
shall constitute, and are hereby expressly made, a part of this Indenture.
SECTION 202. Execution and Authentication.
----------------------------
Two Officers of the Company shall sign the Securities for the
Company by manual or facsimile signature.
If an Officer whose signature is on a Security no longer holds
that office at the time the Trustee authenticates the Security, the Security
shall be valid nevertheless.
A Security shall not be valid until an authorized officer of
the Trustee manually signs the certificate of authentication on the Security.
The signature shall be conclusive evidence that the Security has been
authenticated under this Indenture.
The Trustee shall authenticate (i) Initial Securities for
issue on the Issue Date in the aggregate principal amount of $75,000,000,
(ii) Private Exchange Securities form time to time only in exchange for a like
principal amount of Initial Securities and (iii) Unrestricted Securities from
time to time only in exchange for a like principal amount of Initial Securities,
in each case upon a written order signed by an Officer of the Company. The order
shall be based upon a Board Resolution of the Company to similar effect filed
with the Trustee and shall specify the amount of Securities to be authenticated
and the date on which the original issue of Securities is to be authenticated.
The order shall also provide instructions concerning registration, amounts for
each Holder and delivery. The aggregate principal amount of Securities
outstanding at any time may not exceed $75,000,000 except as provided in
Section 207. The Securities shall be issued only in registered form,
<PAGE>
-26-
without coupons and only in denominations of $1,000 and any integral multiple
thereof.
SECTION 203. Registrar and Paying Agent.
--------------------------
The Company shall maintain an office or agency where
Securities may be presented for registration of transfer or for exchange
("Registrar") and an office or agency where Securities may be presented for
---------
payment ("Paying Agent"). The Company may have one or more co-Registrars and one
------------
or more additional paying agents. The term "Paying Agent" includes any
additional paying agent.
The Company shall enter into an appropriate agency agreement
with any Agent not a party to this Indenture. The agreement shall implement the
provisions of this Indenture that relate to such Agent and shall, if required,
incorporate the provisions of the TIA. The Company shall notify the Trustee of
the name and address of any such Agent. If the Company fails to maintain a
Registrar or Paying Agent, the Trustee shall act as such and shall be entitled
to appropriate compensation in accordance with the provisions of Section 507.
The Company initially appoints the Trustee as Registrar and
Paying Agent. The Company shall give written notice to the Trustee in the event
that the Company decides to act as Registrar.
SECTION 204. Paying Agent To Hold Money in Trust.
-----------------------------------
The Company shall require each Paying Agent to agree in
writing to hold in trust for the benefit of Securityholders or the Trustee all
money held by the Paying Agent for the payment of principal of or interest on
the Securities (whether such money has been paid to it by the Company or any
other obligor on the Securities), and the Company and the Paying Agent shall
each notify the Trustee of any default by the Company (or any other obligor on
the Securities) in making any such payment. The Company at any time may require
a Paying Agent to pay all money held by it to the Trustee and account for any
funds disbursed and the Trustee may at any time during the continuance of any
payment default, upon written request to a Paying Agent, require such Paying
Agent to pay all money held by it to the Trustee and to account for any funds
disbursed. Upon making such payment the Paying Agent shall have no further li-
ability for the money delivered to the Trustee.
SECTION 205. Securityholder Lists.
--------------------
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of Securityholders. If the Trustee is
<PAGE>
-27-
not the Registrar, the Company shall furnish to the Trustee at least five
Business Days before each Interest Payment Date and at such other times as the
Trustee may request in writing a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of Securityholders.
SECTION 206. Transfer and Exchange.
---------------------
(a) Transfer and Exchange of Global Securities. Transfer of
------------------------------------------
the Global Securities shall be by delivery. Global Securities will be exchanged
by the Company for Physical Securities only (i) if DTC notifies the Company
that it is unwilling or unable to continue to act as depositary with respect to
the Global Securities or ceases to be a clearing agency registered under the
Exchange Act and, in either case, a successor depositary registered as a
clearing agency under the Exchange Act is not appointed by the Company within
120 days, (ii) at any time if the Company in its sole discretion determines that
the Global Securities (in whole but not in part) should be exchanged for
Physical Securities or (iii) if the owner of an interest in the Global
Securities requests such Physical Securities, following an Event of Default
under this Indenture, in a writing delivered through DTC to the Trustee.
Upon the occurrence of any of the events specified in the
previous paragraph, Physical Securities shall be issued in such names as DTC
shall instruct the Trustee and the Trustee shall cause the aggregate principal
amount of the applicable Global Security to be reduced accordingly and direct
DTC to make a corresponding reduction in its book-entry system. The Company
shall execute and the Trustee shall authenticate and deliver to the Person
designated in such instructions a Physical Security in the appropriate
principal amount. The Trustee shall deliver such Physical Securities to the
Persons in whose names such Securities are so registered. Physical Securities
issued in exchange for an Initial Global Security pursuant to this Section
206(a) shall bear the Securities Act Legend and shall be subject to all
restrictions on transfer contained therein. Global Securities may also be
exchanged or replaced, in whole or in part, as provided in Sections 207 and 208.
Every Security authenticated and delivered in exchange for, or in lieu of, a
Global Security or any portion thereof, pursuant to Section 207 or 208, shall be
authenticated and delivered in the form of, and shall be, a Global Security. A
Global Security may not be exchanged for another Security other than as
provided in this Section 206(a).
(b) Transfer and Exchange of Interests in Global Securities.
-------------------------------------------------------
The transfer and exchange of interests in Global Securities shall be effected
through DTC, in accordance with this Indenture and the procedures of DTC
therefor. Interests in Initial Global Securities shall be subject to
restrictions
<PAGE>
-28-
on transfer comparable to those set forth herein to the extent required by the
Securities Act. The Trustee shall have no obligation to ascertain DTC's
compliance with any such restrictions on transfer. Transfers of interests in
Global Securities shall also require compliance with subparagraph (i) below, as
well as one or more of the other following subparagraphs as applicable:
(i) All Transfers and Exchanges of Interests in Global
--------------------------------------------------
Securities. In connection with all transfers and exchanges of interests
----------
in Global Securities (other than transfers of interests in a Global
Security to Persons who take delivery thereof in the form of an
interest in the same Global Security), the transferor of such interest
must deliver to the Registrar (1) instructions given in accordance with
the Applicable Procedures from a Participant or an indirect
Participant directing DTC to credit or cause to be credited an interest
in the specified Global Security in an amount equal to the interest to
be transferred or exchanged, (2) a written order given in accordance
with the Applicable Procedures containing information regarding the
Participant account to be credited with such increase and (3)
instructions given by the Holder of the Global Security to effect the
transfer referred to in (1) and (2) above.
(ii) Transfer of Interests in the Same Initial Global
------------------------------------------------
Security. Interests in any Initial Global Security may be transferred
--------
to Persons who take delivery thereof in the form of an interest in the
same Initial Global Security in accordance with the transfer
restrictions set forth in Section 206(f) hereof.
(iii) Transfer of Interests to Another Initial Global
-----------------------------------------------
Security. Interests in any Initial Global Security may be transferred
--------
to Persons who take delivery thereof in the form of an interest in
another Initial Global Security if the Registrar receives the
following:
(A) if the transferee will take delivery in the form
of an interest in the 144A Global Security, then the
transferor must deliver a certificate in the form of Exhibit B
hereto, including the certifications in item 1 thereof; or
(B) if the transferee will take delivery in the form
of an interest in the Regulation S Global Security, then the
transferor must deliver a certificate in the form of Exhibit B
hereto, including the certifications in item 2 thereof.
<PAGE>
-29-
(iv) Transfer and Exchange of Interests in Initial Global
----------------------------------------------------
Security for Interests in an Unrestricted Global Security. Interests in
---------------------------------------------------------
any Initial Global Security may be exchanged by the holder thereof for
an interest in the Unrestricted Global Security or transferred to a
Person who takes delivery thereof in the form of an interest in the
Unrestricted Global Security if:
(A) such exchange or transfer is effected pursuant to
the Exchange Registration Statement in accordance with the
Registration Rights Agreement;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration
Rights Agreement; or
(C) the Registrar receives the following:
(1) if the holder of such an interest in an Initial
Global Security proposes to exchange it for an interest
in the Unrestricted Global Security, a certificate from
such Holder in the form of Exhibit C hereto, including
the certifications in item 1(a) thereof;
(2) if the holder of such an interest in an Initial
Global Security proposes to transfer it to a Person who
shall take delivery thereof in the form of an interest
in an Unrestricted Global Security, a certificate in the
form of Exhibit B hereto, including the certification in
item 4 thereof; and
(3) in each such case set forth in this paragraph
(C), an Opinion of Counsel in form reasonably acceptable
to the Company, to the effect that such exchange or
transfer is in compliance with the Securities Act and,
that the restrictions on transfer contained herein and
in Section 206(f) hereof are not required in order to
maintain compliance with the Securities Act.
If any such transfer is effected pursuant to paragraph (B) above at a
time when an Unrestricted Global Security has not yet been issued, the
Company shall issue and, upon receipt of an authentication order in
accordance with Section 202, the Trustee shall authenticate one or
more Unrestricted Global Securities in an aggregate principal amount
equal to the principal amount of interests in the Initial Global
Security transferred pursuant to paragraph (B) above.
<PAGE>
-30-
(v) Notation by the Trustee of Transfer of Interests Among
------------------------------------------------------
Global Securities. Upon satisfaction of the requirements for transfer
-----------------
of interests in Global Securities pursuant to clauses (iii) or (iv)
above, the Trustee shall reduce or cause to be reduced the aggregate
principal amount of the relevant Global Security from which the
interests are being transferred, and increase or cause to be increased
the aggregate principal amount of the Global Security to which the
interests are being transferred, in each case, by the principal amount
so transferred and shall direct DTC to make corresponding adjustments
in its book-entry system. No transfer of interests of a Global Security
shall be effected until, and any transferee pursuant thereto shall
succeed to the rights of a holder of such interests only when, the
Registrar has made appropriate adjustments to the applicable Global
Security in accordance with this paragraph.
(c) Transfer or Exchange of Physical Securities for
-----------------------------------------------
Interests in a Global Security.
- ------------------------------
(i) If any Holder of Physical Securities required to contain
the Securities Act Legend proposes to exchange such Securities for an
interest in a Global Security or to transfer such Physical Securities
to a Person who takes delivery thereof in the form of an interest in a
Global Security, then, upon receipt by the Registrar of the following
documentation (all of which may be submitted by facsimile):
(A) if the Holder of such Physical Registered Securities
proposes to exchange such Securities for an interest in an
Initial Global Security, a certificate from such Holder in
the form of Exhibit C hereto, including the certifications
in item 2 thereof;
(B) if such Physical Securities are being transferred to
a QIB in accordance with Rule 144A under the Securities
Act, a certificate to the effect set forth in Exhibit B
hereto, including the certifications in item 1 thereof; or
(C) if such Physical Securities are being transferred to
a Non-U.S. Person (as defined in Regulation S) in an
offshore transaction in accordance with Rule 904 under the
Securities Act, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item 2
thereof;
the Trustee shall cancel the Physical Securities, increase or cause to
be increased the aggregate principal amount
<PAGE>
-31-
of, in the case of clause (B) above, the 144A Global Security, in the
case of clause (C) above, the Regulation S Global Security, and direct
DTC to make a corresponding increase in its book-entry system.
(ii) A Holder of Physical Securities required to contain the
Securities Act Legend may exchange such Securities for an interest in
the Unrestricted Global Security or transfer such Restricted Physical
Securities to a Person who takes delivery thereof in the form of an
interest in the Unrestricted Global Security only:
(A) if such exchange or transfer is effected pursuant
to the Exchange Registration Statement in accordance with the
Registration Rights Agreement;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration
Rights Agreement;
(C) upon receipt by the Registrar of the following
documentation (all of which may be submitted by facsimile):
(1) if the Holder of such Physical Securities
proposes to exchange such Securities for an interest in
the Unrestricted Global Security, a certificate from
such Holder in the form of Exhibit C hereto, including
the certifications in item 1(b) thereof;
(2) the Holder of such Registered Securities
proposes to transfer such Securities to a Person who
shall take delivery thereof in the form of an interest
in the Unrestricted Global Security, a certificate in
the form of Exhibit B hereto, including the
certifications in item 4 thereof; and
(3) in each such case set forth in this paragraph
(C), an Opinion of Counsel in form reasonably acceptable
to the Company, to the effect that such exchange or
transfer is in compliance with the Securities Act and
that the restrictions on transfer contained herein and
in Section 206(f) hereof are not required in order to
maintain compliance with the Securities Act.
If any such transfer is effected pursuant to paragraph (B) above at a
time when an Unrestricted Global Security has not yet been issued, the
Company shall issue and, upon receipt of an authentication order in
accordance with Sec-
<PAGE>
-32-
tion 202, the Trustee shall authenticate (i) one or more Unrestricted
Global Securities in an aggregate principal amount equal to the
principal amount of Physical Securities transferred pursuant to
paragraph (B) above.
(d) Transfer and Exchange of Physical Securities.
--------------------------------------------
(i) Transfer of a Physical Security to Another Physical
---------------------------------------------------
Security. Following the occurrence of one or more of the events
--------
specified in Section 206(a), a Physical Security may be transferred to
Persons who take delivery thereof in the form of another Physical
Security if the Registrar receives the following:
(A) if the transfer is being effected pursuant to and in
accordance with Rule 144A, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the
certifications in item 3(a) thereof; or
(B) if the transfer is being effected pursuant to and in
accordance with Regulation S, then the transferor must deliver
a certificate in the form of Exhibit B hereto, including the
certifications in item 3(b) thereof.
(ii) Transfer and Exchange of Restricted Physical Security
-----------------------------------------------------
for Physical Security Which Does Not Bear the Securities Act Legend.
-------------------------------------------------------------------
Following the occurrence of one or more of the events specified in
Section 206(a), a Restricted Physical Security may be exchanged by the
Holder thereof for a Physical Security or transferred to a Person who
takes delivery thereof in the form of a Physical Security which does
not bear the Securities Act Legend if:
(A) such exchange or transfer is effected pursuant to the
Exchange Registration Statement in accordance with the
Registration Rights Agreement;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration
Rights Agreement; or
(C) the Registrar receives a certificate from such Holder
in the form of Exhibit C hereto, including the certifications
in item 1(c) thereof and an Opinion of Counsel in form
reasonably acceptable to the Company, to the effect that such
exchange or transfer is in compliance with the Securities Act
and, that the restrictions on transfer contained herein and in
Section 206(f) hereof are not required
<PAGE>
-33-
in order to maintain compliance with the Securities Act.
(iii) Exchange of Physical Securities. When Physical
-------------------------------
Securities are presented by a Holder to the Registrar with a request to
register the exchange of such Physical Securities for an equal
principal amount of Physical Securities of other authorized
denominations, the Registrar shall make the exchange as requested only
if the Physical Securities are endorsed or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly
executed by such Holder or by his attorney duly authorized in writing
and shall be issued only in the name of such Holder or its nominee. The
Physical Securities issued in exchange for Physical Securities shall
bear the Securities Act Legend and shall be subject to all restrictions
on transfer contained herein in each case to the same extent as the
Physical Securities so exchanged.
(iv) Return of Physical Securities. In the event of a
-----------------------------
transfer pursuant to clauses (i) or (ii) above and the Holder thereof
as delivered certificates representing an aggregate principal amount of
Securities in excess of that to be transferred, the Company shall
execute and the Trustee shall authenticate and deliver to the Holder of
such Security without service charge, a new Physical Security or
Securities of any authorized denomination requested by the Holder, in
an aggregate principal amount equal to the portion of the Security not
so transferred.
(e) Exchange Offer. Upon the occurrence of the Exchange
--------------
Offer (as defined in the Registration Rights Agreement) in accordance with the
Registration Rights Agreement, the Company shall issue and, upon receipt of an
authentication order in accordance with Section 202, the Trustee shall
authenticate one or more Unrestricted Global Securities in an aggregate
principal amount equal to the principal amount of the interests in the Initial
Global Securities and Restricted Physical Securities tendered for acceptance by
persons participating therein. Concurrently with the issuance of such
Securities, the Trustee shall cause the aggregate principal amount of the
applicable Initial Global Securities to be reduced accordingly and direct DTC to
make a corresponding reduction in its book-entry system. The Trustee shall
cancel any Restricted Physical Certificates in accordance with Section 209
hereof.
In the case that one or more of the events specified in
Section 206(a) have occurred, upon the occurrence of such Exchange Offer, the
Company shall issue and, upon receipt of an authentication order in accordance
with Section 202, the Trustee shall authenticate Unrestricted Physical
Securities in an aggregate principal amount equal to the principal amount of the
<PAGE>
-34-
Restricted Physical Securities tendered for acceptance by persons participating
therein.
(f) Legends.
-------
Each Initial Global Security and each Restricted Physical
Security shall bear the legend (the "Securities Act Legend") in substantially
---------------------
the following form:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE SECURITY
EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON
THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT
PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED
HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY MAY
BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a) TO A PERSON
WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
(AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT OR (c) OUTSIDE
THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT, (2) TO THE COMPANY
OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH
CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE
HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE
RESTRICTIONS SET FORTH IN (A) ABOVE."
(g) Global Security Legend. Each Global Security shall bear
----------------------
a legend in substantially the following form:
"UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR
SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED
EXCEPT AS A WHOLE BY THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC") TO A NOMINEE OF DTC, OR BY ANY SUCH NOMINEE OF DTC,
OR BY DTC TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITORY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESEN-
<PAGE>
-35-
TATIVE OF DTC, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC). ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS
GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH
THE RESTRICTIONS SET FORTH IN SECTION 206 OF THE INDENTURE."
(h) Cancellation and/or Adjustment of Global Securities. At
---------------------------------------------------
such time as all interests in the Global Securities have been exchanged for
Physical Securities, all Global Securities shall be returned to or retained and
canceled by the Trustee in accordance with Section 209 hereof. At any time prior
to such cancellation, if any interest in a Global Security is exchanged for an
interest in another Global Security or for Physical Securities, the principal
amount of Securities represented by such Global Security shall be reduced
accordingly and an endorsement shall be made on such Global Security, by the
Trustee to reflect such reduction.
(i) General Provisions Relating to All Transfers and
------------------------------------------------
Exchanges.
- ---------
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate Global
Securities and Physical Securities upon a written order signed by an
Officer of the Company or at the Registrar's request.
(ii) No service charge shall be made to a Holder for any
registration of transfer or exchange, but the Company may require
payment of a sum sufficient to cover any stamp or transfer tax or
similar governmental charge payable in connection therewith (other than
any such stamp or transfer taxes or similar governmental charge
payable upon exchange or transfer pursuant to Sections 208, 806, 916,
917 and 1008 hereof).
(iii) All Global Securities and Physical Securities issued
upon any registration of transfer or exchange of
<PAGE>
-36-
Global Securities or Physical Securities shall be the valid obligations
of the Company, evidencing the same debt, and entitled to the same
benefits under this Indenture, as the Global Securities or Physical
Securities surrendered upon such registration of transfer or exchange.
(iv) The Company shall not be required (A) to issue, to
register the transfer of or to exchange Securities during a period
beginning at the opening of business 15 days before the day of any
selection of Securities for redemption under Section 1004 hereof and
ending at the close of business on the day of selection, (B) to
register the transfer of or to exchange any Security so selected for
redemption in whole or in part, except the unredeemed portion of any
Security being redeemed in part or (C) to register the transfer of or
to exchange a Security between a record date and the next succeeding
Interest Payment Date.
(v) Prior to due presentment for the registration of a
transfer of any Security, the Trustee, any Agent and the Company may
deem and treat the Person in whose name any Security is registered as
the absolute owner of such Security for the purpose of receiving
payment of principal of and interest on such Securities and for all
other purposes, and none of the Trustee, any Agent or the Company
shall be affected by notice to the contrary.
SECTION 207. Replacement Securities.
----------------------
If any mutilated Security is surrendered to the Trustee, the
Company shall execute, the Guarantors shall execute their Guarantee endorsed
thereon and the Trustee shall authenticate and deliver in exchange therefor a
new Security of like tenor and principal amount and bearing a number not
contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee
(i) evidence to their satisfaction of the destruction, loss or theft of any
Security and (ii) such security or indemnity as may be reasonably required by
them to save each of them, the Guarantors and any agent of any of them harmless,
then, in the absence of notice to the Company or the Trustee that such Security
has been acquired by a bona fide purchaser, the Company shall execute and upon
its request the Trustee shall authenticate and deliver, in lieu of any such
destroyed, lost or stolen Security, a new Security of like tenor and principal
amount, having endorsed thereon the Guarantee of the Guarantors, duly executed
by the Guarantors, and bearing a number not contemporaneously outstanding.
Upon the issuance of any new Security under this Section, the
Company may require the payment of a sum sufficient
<PAGE>
-37-
to cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Trustee)
connected therewith.
Every new Security issued pursuant to this Section in lieu of
any destroyed, lost or stolen Security, and the Guarantee endorsed thereon,
shall constitute an original additional contractual obligation of the Company
and the Guarantors whether or not the destroyed, lost or stolen Security shall
be at any time enforceable by anyone, and shall be entitled to all the benefits
of this Indenture equally and proportionately with any and all other Securities
duly issued hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 208. Temporary Securities.
--------------------
Pending the preparation of definitive Securities, the Company
may execute and, upon Company Order, the Trustee shall authenticate and deliver,
temporary Securities which are printed, lithographed typewritten, mimeographed
or otherwise produced, in any authorized denomination, substantially of the
tenor of the definitive Securities in lieu of which they are issued and having
endorsed thereon the Guarantees substantially of the tenor of the definitive
Guarantees in lieu of which they are issued, duly executed by the Guarantors,
and with such appropriate insertions, omissions, substitutions and other
variations as the officers executing such Securities and the Guarantees may
determine, as evidenced by their execution of such Securities and Guarantees.
If temporary Securities are issued, the Company will cause
definitive Securities to be prepared without unreasonable delay. After the
preparation of definitive Securities, the temporary Securities shall be
exchangeable for definitive Securities upon surrender of the temporary
Securities at any office or agency of the Company designated pursuant to Section
902, without charge to the Holder. Upon surrender for cancellation of any one or
more temporary Securities the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a like principal amount of
definitive Securities of authorized denominations and like tenor having endorsed
thereon Guarantees executed by the Guarantors. Until so exchanged the temporary
Securities shall in all respects be entitled to the same benefits under this
Indenture as definitive Securities.
<PAGE>
-38-
SECTION 209. Cancellation.
------------
All Securities surrendered for payment, redemption or
registration of transfer or exchange shall, if surrendered to any Person other
than the Trustee, be delivered to the Trustee and shall be promptly canceled by
it. The Company may at any time deliver to the Trustee for cancellation any
Securities previously authenticated and delivered hereunder which the Com pany
may have acquired in any manner whatsoever, and all Securities so delivered
shall be promptly canceled by the Trustee. No Securities shall be authenticated
in lieu of or in exchange for any Securities canceled as provided in this
Section, except as expressly permitted by this Indenture. All canceled
Securities held by the Trustee shall be destroyed by the Trustee and upon the
Company's written request, the Trustee shall deliver a certificate of
destruction to the Company.
SECTION 210. Defaulted Interest.
------------------
Any interest on any Security which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the Holder
on the relevant Regular Record Date by virtue of having been such Holder, and
such Defaulted Interest may be paid by the Company, at its election in each
case, as provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Securities (or their
respective Predecessor Securities) are registered at the close of
business on a Special Record Date for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The Company
shall notify the Trustee in writing of the amount of Defaulted Interest
proposed to be paid on each Security and the date of the proposed
payment, and at the same time the Company shall deposit with the
Trustee an amount of money equal to the aggregate amount proposed to be
paid in respect of such Defaulted Interest or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date of the
proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as in this
clause provided. Thereupon the Trustee shall fix a Special Record Date
for the payment of such Defaulted Interest which shall be not more
than 15 days prior to the date of the proposed payment. The Trustee
shall promptly notify the Company of such Special Record Date and, in
the name and at the expense of the Company, shall cause notice of the
proposed payment of such Defaulted Interest and the Special Record Date
therefor to be mailed, first-class postage prepaid, to each Holder at
his address as it appears in the Security Regis-
<PAGE>
-39-
ter, not less than five Business Days prior to such Special Record
Date. Notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor having been so mailed, such Defaulted
Interest shall be paid not later than the fifteenth day after such
Special Record Date to the Persons in whose names the Securities (or
their respective Predecessor Securities) are registered at the close
of business on such Special Record Date.
(2) The Company may make payment of any Defaulted
Interest in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Securities may be
listed, and upon such notice as may be required by such exchange, if,
after notice given by the Company to the Trustee of the proposed
payment pursuant to this clause, such manner of payments shall be
deemed practicable by the Trustee.
SECTION 211. CUSIP or CINS Number.
--------------------
The Company in issuing the Securities may use a "CUSIP" or
"CINS" number, and if so, such CUSIP or CINS number shall be included in notices
of redemption or exchange as a convenience to Holders; provided that any such
--------
notice may state that no representation is made as to the correctness or
accuracy of the CUSIP or CINS number printed in the notice or on the Securities,
and that reliance may be placed only on the other identification numbers printed
on the Securities. The Company will promptly notify the Trustee of any change in
the CUSIP or CINS number.
SECTION 212. Payments of Interest.
--------------------
(a) The Holder of a Physical Security at the close of business
on the regular record date with respect to any Interest Payment Date shall be
entitled to receive the interest and Additional Interest, if any, payable on
such Interest Payment Date notwithstanding any transfer or exchange of such
Physical Security subsequent to the regular record date and prior to such
Interest Payment Date, except if and to the extent the Company shall default in
the payment of the interest or Additional Interest due on such Interest Payment
Date, in which case such Defaulted Interest and Additional Interest, if any,
shall be paid in accordance with Section 210; provided that, in the event of an
exchange of a Physical Security for a beneficial interest in any Global Security
subsequent to a regular record date or any special record date and prior to or
on the related Interest Payment Date or other payment date under Section 210,
any payment of the interest and Additional Interest payable on such payment
date with respect to any such Physical Security shall be made to the Person in
whose name
<PAGE>
-40-
such Physical Security was registered on such record date. Payments of interest
on the Global Securities will be made to the Holder of the Global Security on
each Interest Payment Date; provided that, in the event of an exchange of all or
a portion of a Global Security for Physical Security subsequent to the regular
record date or any special record date and prior to or on the related Interest
Payment Date or other payment date under Section 210 any payment of interest or
Additional Interest payable on such Interest Payment Date or other payment date
with respect to the Physical Security shall be made to the Holder of the Global
Security.
(b) The Trustee shall pay interest and Additional Interest, if
any, to DTC, with respect to any Global Security held by DTC, on the applicable
Interest Payment Date in accordance with instructions received from DTC at
least five Business Days before the applicable Interest Payment Date.
ARTICLE THREE
Satisfaction and Discharge
SECTION 301. Satisfaction and Discharge of Indenture.
---------------------------------------
This Indenture shall cease to be of further effect (except as
to any surviving rights of registration of transfer or exchange of Securities
herein expressly provided for), and the Trustee, on demand of and at the expense
of the Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when
(1) either
(A) all Securities theretofore authenticated and
delivered (other than (i) Securities which have been
destroyed, lost or stolen and which have been replaced or paid
as provided in Section 207 and (ii) Securities for whose
payment money has thereto fore been deposited in trust or
segregated and held in trust by the Company and thereafter
repaid to the Company or discharged from such trust, as
provided in Section 903) have been delivered to the Trustee
for cancellation; or
(B) all such Securities not theretofore delivered to
the Trustee for cancellation
(i) have become due and payable, or
<PAGE>
-41-
(ii) will become due and payable at their Stated
Maturity within one year, or
(iii) are to be called for redemption within one
year under arrangements satisfactory to the Trustee for the
giving of notice of redemption by the Trustee in the name, and
at the expense, of the Company,
and the Company in the case of (i), (ii) or (iii) above has
irrevocably deposited or caused to be irrevocably deposited
with the Trustee as trust funds in trust for the purpose an
amount in cash sufficient to pay and discharge the entire
indebtedness on such Securities not theretofore delivered to
the Trustee for cancellation, for principal (and premium, if
any) and interest to the date of such deposit (in the case of
Securities which have become due and payable) or to the Stated
Maturity or Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other
sums payable hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions precedent herein provided for relating to the satisfaction
and discharge of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture pursuant to
this Article Three, the obligations of the Company to the Trustee under Section
507, and, if money shall have been deposited with the Trustee pursuant to
subclause (B) of clause (1) of this Section, the obligations of the Trustee
under Section 302 and the last paragraph of Section 903 shall survive.
SECTION 302. Application of Trust Money.
--------------------------
Subject to the provisions of the last paragraph of Section
903, all money deposited with the Trustee pursuant to Section 301 shall be held
in trust and applied by it, in accordance with the provisions of the Securities
and this Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest for whose payment such money has been deposited with the
Trustee.
<PAGE>
-42-
ARTICLE FOUR
Remedies
SECTION 401. Events of Default.
-----------------
"Event of Default", whenever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
(1) failure to pay the principal of (or premium, if any,
on) any Security when due; or
(2) failure to pay any interest on any Security when due,
and such failure continues for a period of 30 days; or
(3) default, on the applicable Purchase Date, in the
purchase of Securities required to be purchased by the Company pursuant
to an Offer to Purchase; or
(4) failure to perform or to comply with any of the
provisions of Section 701; or
(5) failure to perform any covenant or agreement of the
Company in this Indenture or the Securities (other than a covenant or
agreement referred to in the foregoing clause (1), (2), (3) or (4)) and
such failure continues for the period and after the notice specified
below; or
(6) default under the terms of one or more instruments
evidencing or securing Indebtedness for money borrowed by the Company
or any Subsidiary of the Company having an outstanding principal
amount of $5 million or more individually or in the aggregate, which
results in the acceleration of the payment of such Indebtedness or
which shall constitute the failure to pay principal when due at the
stated maturity of such Indebtedness; or
(7) the rendering of a final judgment or judgments (not
subject to appeal) against the Company or any Subsidiary of the
Company in an aggregate amount of $5 million or more which remains
undischarged or unstayed for a period of 60 days after the date on
which the right to appeal has expired; or
(8) the entry by a court having jurisdiction in the
premises of (A) a decree or order for relief in respect of
<PAGE>
-43-
the Company or any Material Subsidiary in an involuntary case or
proceeding under any applicable U.S. Federal or State or other
bankruptcy, insolvency, reorganization or other similar law or (B) a
decree or order adjudging the Company or any Material Subsidiary a
bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or composition of or in
respect of the Company or any Material Subsidiary under any applicable
U.S. Federal or State or other law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other similar
official of the Company or any Material Subsidiary or of any
substantial part of the property of the Company or any Material
Subsidiary, or ordering the winding up or liquidation of the affairs of
the Company or any Material Subsidiary, and the continuance of any such
decree or order for relief or any such other decree or order unstayed
and in effect for a period of 30 consecutive days; or
(9) the commencement by the Company or any Material
Subsidiary of a voluntary case or proceeding under any applicable U.S.
Federal or State or other bankruptcy, insolvency, reorganization or
other similar law or of any other case or proceeding to be adjudicated
a bankrupt or insolvent, or the consent by the Company or any Material
Subsidiary to the entry of a decree or order for relief in respect of
the Company or any Material Subsidiary in an involuntary case or
proceeding under any applicable U.S. Federal or State or other
bankruptcy, insolvency, reorganization or other similar law or to the
commencement of any bankruptcy or insolvency case or proceeding against
the Company or any Material Subsidiary, or the filing by the Company or
any Material Subsidiary of a petition or answer or consent seeking
reorganization or relief under any applicable U.S. Federal or State,
Canadian federal or provincial or other applicable law, or the consent
by the Company or any Material Subsidiary to the filing of such
petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator or similar
official of the Company or any Material Subsidiary or of any
substantial part of the property of the Company or any Material
Subsidiary, or the making by the Company or any Material Subsidiary of
an assignment for the benefit of creditors, or the admission by the
Company or any Material Subsidiary in writing of its inability to pay
its debts generally as they become due; and
(10) the Guarantee of any Guarantor which is a Material
Subsidiary ceases to be in full force and effect (other than in
accordance with the terms of such Guarantee and this Indenture) or is
declared null and void and unenforceable or found to be invalid or any
Guarantor which is
<PAGE>
-44-
a Material Subsidiary denies its liability under its Guarantee (other
than by reason of a release of such Guarantor from its Guarantee in
accordance with the terms of such Guarantee and this Indenture).
A Default under Section 401(5) hereof is not an Event of
Default until the Trustee notifies the Company, or the Holders of at least 25%
in aggregate principal amount of the outstanding Securities notify the Company
and the Trustee, of the Default and the Company does not cure the Default within
30 days after receipt of the notice. The notice must specify the Default, demand
that it be remedied and state that the notice is a "Notice of Default." If such
Default is cured within such time period, it ceases.
SECTION 402. Acceleration of Maturity; Rescission and Annulment.
--------------------------------------------------
If an Event of Default (other than an Event of Default with
respect to the Company specified in Section 401(8) or (9)) occurs and is
continuing, the Trustee or the Holders of not less than 25% in aggregate
principal amount of the out standing Securities may declare the principal of all
the Securities to be due and payable immediately, by a notice in writing to
the Company (and to the Trustee if given by Holders), and upon any such
declaration such principal and any accrued interest shall become immediately due
and payable. If an Event of Default with respect to the Company specified in
Section 401(8) or (9) occurs, the principal of and any accrued interest on the
Securities then outstanding shall ipso facto become immediately due and payable
---- -----
without any declaration or other act on the part of the Trustee or any Holder.
At any time after such a declaration of acceleration has been
made and before a judgment or decree for payment of the money due has been
obtained by the Trustee as hereinafter in this Article provided, the Holders of
a majority in aggregate principal amount of the outstanding Securities, by
written notice to the Company and the Trustee, may rescind and annul such
declaration and its consequences if
(1) the Company has paid or deposited or caused to be paid
or deposited with the Trustee a sum sufficient to pay
(A) all overdue interest on all Securities,
(B) the principal of (and premium, if any, on) any
Securities which have become due otherwise than by such
declaration of acceleration (including any Securities required
to have been purchased on the Purchase Date pursuant to an
Offer to Purchase made
<PAGE>
-45-
by the Company) and interest thereon at the rate provided by
the Securities,
(C) interest upon overdue interest at the rate provided
by the Securities, and
(D) all sums paid or advanced by the Trustee hereunder
and the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel;
and
(2) all Events of Default, other than the nonpayment of the
principal of Securities which have become due solely by such
declaration of acceleration, have been cured or waived as provided in
Section 413.
No such rescission shall affect any subsequent Default or
impair any right consequent thereon.
SECTION 403. Collection of Indebtedness and Suits for Enforcement by Trustee.
---------------------------------------------------------------
The Company covenants that if
(1) Default is made in the payment of any interest on any
Security when such interest becomes due and payable and such Default
continues for a period of 30 days, or
(2) Default is made in the payment of the principal of (or
premium, if any, on) any Security at the Maturity thereof or, with
respect to any Security required to have been purchased pursuant to an
Offer to Purchase made by the Company, at the Purchase Date thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal (and premium, if any) and interest, and interest on
any overdue principal (and premium, if any) and on any overdue interest, at the
rate provided by the Securities, and, in addition thereto, such further amount
as shall be sufficient to cover the costs and expenses of collection, including
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such
demand, the Trustee, in its own name and as trustee of an express trust, may
institute a judicial proceeding for the collection of the sums so due and
unpaid, may prosecute such proceeding to judgment or final decree and may
enforce the
<PAGE>
-46-
same against the Company, any Guarantor or any other obligor upon the Securities
and collect the moneys adjudged or decreed to be payable in the manner provided
by law out of the property of the Company, any Guarantor or any other obligor
upon the Securities, wherever situated.
If an Event of Default occurs and is continuing, the Trustee
may in its discretion proceed to protect and enforce its rights and the rights
of the Holders by such appropriate judicial proceedings as the Trustee shall
deem most effectual to protect and enforce any such rights, whether for the
specific enforcement of any covenant or agreement in this Indenture or in aid
of the exercise of any power granted herein, or to enforce any other proper
remedy.
SECTION 404. Trustee May File Proofs of Claim.
--------------------------------
In case of any judicial proceeding relative to the Company,
any Guarantor or any other obligor upon the Securities, its property or its
creditors, the Trustee shall be entitled and empowered, by intervention in such
proceeding or otherwise, to take any and all actions authorized under the Trust
Indenture Act in order to have claims of the Holders and the Trustee allowed in
any such proceeding. In particular, the Trustee shall be authorized to collect
and receive any moneys or other property payable or deliverable on any such
claims and to distribute the same, and any custodian, receiver, assignee,
trustee, liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 507.
No provision of this Indenture shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Securities or the rights of any Holder thereof or to authorize the
Trustee in vote in respect of the claim of any Holder in any such proceeding.
SECTION 405. Trustee May Enforce Claims Without Possession of Securities.
-----------------------------------------------------------
All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the possession
of any of the Securities or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought in
its
<PAGE>
-47-
own name as trustee of an express trust, and any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.
SECTION 406. Application of Money Collected.
------------------------------
Any money collected by the Trustee pursuant to this Article
shall be applied in the following order, at the date or dates fixed by the
Trustee and, in case of the distribution of such money on account of principal
(or premium, if any) or interest, upon presentation of the Securities and the
notation thereon of the payment if only partially paid and upon surrender
thereof if fully paid;
FIRST: To the payment of all amounts due the Trustee under
Section 507; and
SECOND: To the payment of the amounts then due and unpaid for
principal of (and premium, if any) and interest on the Securities in
respect of which or for the benefit of which such money has been
collected, ratably, without preference or priority of any kind,
according to the amounts due and payable on such Securities for
principal (and premium, if any) and interest, respectively.
SECTION 407. Limitation on Suits.
-------------------
Subject to Section 408, no Holder of any Security shall have
any right to institute any proceeding, judicial or otherwise, with respect to
this Indenture, the Guarantees or the Securities or for any other remedy
hereunder, unless
(1) such Holder has previously given written notice to the
Trustee of a continuing Event of Default;
(2) the Holders of not less than 25% in aggregate principal
amount of the outstanding Securities shall have made written request to
the Trustee to institute proceedings in respect of such Event of
Default in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute any such
proceeding; and
<PAGE>
-48-
(5) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders of
a majority in aggregate principal amount of the outstanding Securities;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
SECTION 408. Unconditional Right of Holders To Receive Principal, Premium and
----------------------------------------------------------------
Interest.
--------
Notwithstanding any other provision in this Indenture, the
Holder of any Security shall have the right, which is absolute and
unconditional, to receive payment of the principal of (and premium, if any) and
(subject to Section 210) interest on such Security on the respective Stated
Maturities expressed in such Security (or, in the case of redemption, on the
Redemption Date or in the case of an Offer to Purchase made by the Company and
required to be accepted as to such Security, on the Purchase Date) and to
institute suit for the enforcement of any such payment, and such rights shall
not be impaired without the consent of such Holder.
SECTION 409. Restoration of Rights and Remedies.
----------------------------------
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
determined adversely to the Trustee or to such Holder, then and in every such
case, subject to any determination in such proceeding, the Company, the
Guarantors, the Trustee and the Holders shall be restored severally and
respectively to their former positions hereunder and thereafter all rights and
remedies of the Trustee and the Holders shall continue as though no such
proceeding had been instituted.
SECTION 410. Rights and Remedies Cumulative.
------------------------------
Except as otherwise provided with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities as described in
Section 207, no right or remedy herein conferred upon or reserved to the Trustee
or to the Holders is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
<PAGE>
-49-
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 411. Delay or Omission Not Waiver.
----------------------------
No delay or omission of the Trustee or of any Holder to exercise any
right or remedy accruing upon any Event of Default shall impair any such right
or remedy or constitute a waiver of any such Event of Default or an acquiescence
therein. Every right and remedy given by this Article or by law to the Trustee
or to the Holders may be exercised from time to time, and as often as may be
deemed expedient, by the Trustee or by the Holders, as the case may be.
SECTION 412. Control by Holders.
------------------
The Holders of a majority in aggregate principal amount of the
outstanding Securities shall have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee, provided that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture,
(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction, and
(3) the Trustee may refuse to follow any direction that the Trustee
determines in good faith is unduly prejudicial to the rights of other
Holders or would involve the Trustee in personal liability.
The Trustee shall be entitled to indemnification reasonably satisfactory to it
against losses or expenses caused by the taking of such action.
SECTION 413. Waiver of Past Defaults.
-----------------------
The Holders of not less than a majority in aggregate principal amount
of the outstanding Securities may on behalf of the Holders of all the Securities
waive any past Default hereunder and its consequences, except a Default
(1) in the payment of the principal of (or premium, if any) or
interest on any Security (including any Security which is required to have
been purchased pursuant to an Offer to Purchase which has been made by the
Company), or
<PAGE>
-50-
(2) in respect of a covenant or provision hereof which under Article
Eight cannot be modified or amended without the consent of the Holder of
each outstanding Security affected.
Upon any such waiver, such Default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereon.
SECTION 414. Undertaking for Costs.
---------------------
In any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken, suffered or
omitted by it as Trustee, a court may require any party litigant in such suit to
file an undertaking to pay the costs of such suit, and may assess costs against
any such party litigant, in the manner and to the extent provided in the Trust
Indenture Act. This Section 414 shall not apply to a suit by the Trustee, a suit
by a Holder or Holders of more than 10% in aggregate principal amount of the
outstanding Securities or any suit instituted by any Holder to receive the
payment of the principal of (and premium, if any) or interest on any Security on
or after the respective Stated Maturities expressed in such Security (or, in the
case of redemption, on the Redemption Date or, in the case of an Offer to
Purchase made by the Company and required to be accepted as to such Security, on
the Purchase Date).
SECTION 415. Waiver of Stay or Extension Laws.
--------------------------------
Each of the Company and the Guarantors covenants (to the extent that
it may lawfully do so) that it will not at any time insist upon, or plead, or in
any manner whatsoever claim or take the benefit or advantage of, any stay or
extension law wherever enacted, now or at any time hereafter in force, which may
affect the covenants or the performance of this Indenture; and each of the
Company and the Guarantors (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantages of any such law and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted.
<PAGE>
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ARTICLE FIVE
The Trustee
SECTION 501. Certain Duties and Responsibilities.
-----------------------------------
The duties and responsibilities of the Trustee shall be as provided by
Section 315 of the Trust Indenture Act (or any successor section of the Trust
Indenture Act which sets forth the duties and responsibilities of trustees under
the Trust Indenture Act). Notwithstanding the foregoing, no provision of this
Indenture shall require the Trustee to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of its duties hereunder,
or in the exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not assured to it. Whether or not therein expressly
so provided, every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section.
SECTION 502. Notice of Default.
-----------------
If a Default occurs and is known to the Trustee, the Trustee shall,
subject to the provisions of the next sentence, give the Holders notice of such
Default. Except in the case of a Default described in Section 401(1), (2) or
(3), the Trustee may withhold the notice if and so long as a committee of its
Responsible Officers in good faith determines that withholding the notice is in
the interest of the Holders.
SECTION 503. Certain Rights of Trustee.
-------------------------
Subject to the provisions of Section 501:
(1) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or presented
by the proper party or parties;
(2) any request or direction of the Company mentioned herein shall
be sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors of the Company may be sufficiently
evidenced by a Board Resolution of the Company;
<PAGE>
-52-
(3) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, rely upon an Officers' Certificate;
(4) the Trustee may consult with counsel and the written advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;
(5) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction
of any of the Holders pursuant to this Indenture, unless such Holders shall
have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by it in compliance
with such request or direction;
(6) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further inquiry
or investigation into such facts or matters as it may see fit, and, if the
Trustee shall determine to make such further inquiry or investigation, it
shall be entitled to examine the books, records and premises of the Company
or any Guarantor, personally or by agent or attorney during normal business
hours; and
(7) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder.
SECTION 504. Not Responsible for Issuance of Securities.
-------------------------------------------
The Trustee makes no representations as to the validity or
sufficiency of this Indenture or of the Securities or of the Guarantees endorsed
thereon (except for the Trustee's certificate of authentication) or the ability
of the Company or the Guarantors to discharge their respective obligations here
under, including payment when due of the principal of, premium
<PAGE>
-53-
if any, and interest on the Securities. The Trustee shall not be accountable for
the use or application by the Company of the proceeds thereof.
SECTION 505. May Hold Securities.
-------------------
The Trustee, any Paying Agent or any Security Registrar or any other
agent for the Company or any Guarantor, in its individual or any other capacity,
may become the owner or pledgee of Securities and, subject to Sections 508 and
513, may otherwise deal with the Company or any Guarantor with the same rights
it would have if it were not Trustee, Paying Agent, Security Registrar or such
other agent, as the case may be.
SECTION 506. Money Held in Trust.
-------------------
Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except as
otherwise agreed with the Company or any Guarantor.
SECTION 507. Compensation and Reimbursement.
------------------------------
Each of the Company and the Guarantors agrees, jointly and severally,
(1) to pay to the Trustee from time to time reasonable compensation
for all services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee
of an express trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision of
this Indenture (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad
faith; and
(3) to indemnify the Trustee for, and to hold it harmless against,
any loss, liability or expense (including reasonable attorneys' fees)
incurred without negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of this trust, including
the costs and expenses of defending itself against any claim or liability
in connection with the exercise or performance of any of its powers or
duties hereunder.
<PAGE>
-54-
To secure the Company's and the Guarantors' payment obligations in
this Section 507, the Trustee shall have a lien prior to the Securities on all
money or property held or collected by the Trustee, except that held in trust
to pay the principal of or premium, if any, or interest on particular
Securities.
Both the Company's and the Guarantors' payment obligations pursuant to
this Section 507 shall survive the discharge of this Indenture. When the
Trustee incurs expenses after the occurrence of an Event of Default specified
in Section 501(8) or (9), the expenses are intended to constitute expenses of
administration under any bankruptcy law.
SECTION 508. Disqualification; Conflicting Interests.
---------------------------------------
If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture.
SECTION 509. Corporate Trustee Required; Eligibility.
---------------------------------------
There shall at all times be a Trustee hereunder which shall be a
Person that is eligible pursuant to the Trust Indenture Act to act as such and
has a combined capital and surplus of at least $150,000,000. If such Person
publishes reports of condition at least annually, pursuant to law or to the
requirements of any supervising or examining authority, then for the purposes
of this Section, the combined capital and surplus of such Person shall be deemed
to be its combined capital and surplus as set forth in its most recent report
of condition so published. If at any time the Trustee shall cease to be eligi-
ble in accordance with the provisions of this Section, it shall resign
immediately in the manner and with the effect hereinafter specified in this
Article.
SECTION 510. Resignation and Removal; Appointment of
Successor.
---------------------------------------
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 511.
(b) The Trustee may resign at any time by giving written notice
thereof to the Company and the Guarantors. If an instrument of acceptance by a
successor Trustee shall not have been delivered to the Trustee within 30 days
after the giving of such notice of resignation, the resigning Trustee may
<PAGE>
-55-
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
(c) The Trustee may be removed at any time by Holders of a majority in
aggregate principal amount of the outstanding Securities.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 508 after written
request therefor by the Company or by any Holder, or
(2) the Trustee shall cease to be eligible under Section 509 and shall
fail to resign after written request therefor by the Company or by any
Holder, or
(3) the Trustee shall become incapable of acting or shall be adjudged
a bankrupt or insolvent or a receiver of the Trustee or of its property
shall be appointed or any public officer shall take charge or control of the
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation,
then, in any such case, (i) the Company by a Board Resolution may remove the
Trustee, or (ii) subject to Section 514, any Holder may, on behalf of himself
and all other Holders, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, the
Company, by a Board Resolution, shall promptly appoint a successor Trustee.
Within one year after the successor Trustee takes office the Holders of a
majority in aggregate principal amount of the outstanding Securities may
appoint a successor Trustee to replace the successor Trustee appointed by the
Company.
(f) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee to all
Holders in the manner provided in Section 104. Each notice shall include the
name of the successor Trustee and the address of its Corporate Trust Office.
SECTION 511. Acceptance of Appointment by Successor.
--------------------------------------
Every successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Company and the Guarantors and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee shall become effective and such successor
<PAGE>
-56-
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Trustee; but, on
request of the Company or any Guarantor or the successor Trustee, such retiring
Trustee shall, upon payment of its charges, execute and deliver an instrument
transferring to such successor Trustee all the rights, powers and trusts of the
retiring Trustee and shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee hereunder subject
to the lien provided in Section 507. Upon request of any such successor Trustee,
the Company and the Guarantors shall execute any and all instruments for more
fully and certainly vesting in and confirming to such successor Trustee all such
rights, powers and trusts.
No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible under
this Article.
SECTION 512. Merger, Conversion, Consolidation or
Succession to Business.
------------------------------------
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to all or substantially all the corporate trust busi-
ness of the Trustee, shall be the successor of the Trustee hereunder, provided
such corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been authenticated,
but not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Securities so authenticated with the same effect
as if such successor Trustee had itself authenticated such Securities.
SECTION 513. Preferential Collection of Claims Against
the Company and Any Guarantor.
-----------------------------------------
If and when the Trustee shall be or become a creditor of the Company,
any Guarantor or any other obligor upon the Securities, the Trustee shall be
subject to the provisions of the Trust Indenture Act regarding the collection of
claims against the Company, such Guarantor or any such other obligor.
<PAGE>
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ARTICLE SIX
Holders' Lists and Reports by Trustee and the Company
SECTION 601. Company To Furnish Trustee Names and
Addresses of Holders.
------------------------------------
The Company will furnish or cause to be furnished to the Trustee
(a) semiannually, not more than 15 days prior to each Interest Payment
Date, a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Holders as of such Regular Record Date; and
(b) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Company of any such request, a list of
similar form and content as of a date not more than 15 days prior to the
time such list is furnished;
excluding from any such list, names and addresses received by the Trustee in its
- ---------
capacity as Security Registrar.
SECTION 602. Preservation of Information;
Communication to Holders.
----------------------------
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 601 and the names and
addresses of Holders received by the Trustee in its capacity as Security Regis-
trar. The Trustee may destroy any list furnished to it as provided in Section
601 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Securities and the
corresponding rights and duties of the Trustee shall be provided by the Trust
Indenture Act.
(c) Every Holder of Securities, by receiving and holding the same,
agrees with the Company, the Guarantors and the Trustee that none of the
Company, any Guarantor, the Trustee nor any agent of any of them shall be held
accountable by reason of any disclosure of information as to the names and ad-
dresses of Holders made pursuant to the Trust Indenture Act.
<PAGE>
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SECTION 603. Reports by Trustee.
------------------
(a) The Trustee shall transmit to Holders such reports concerning the
Trustee and its actions under this Indenture as may be required pursuant to the
Trust Indenture Act at the times and in the manner provided pursuant thereto.
(b) A copy of each such report shall, at the time of such transmission
to Holders, be filed by the Trustee with each stock exchange upon which the
Securities are listed, with the Commission, with the Company and each Guarantor.
The Company will notify the Trustee when the Securities are listed on any stock
exchange and of any delisting thereof.
SECTION 604. Reports by Company.
------------------
The Company and the Guarantors shall file with the Trustee and the
Commission, and transmit to Holders, such information, documents and other
reports, and such summaries thereof, as may be required pursuant to the Trust
Indenture Act at the times and in the manner provided pursuant to the Trust
Indenture Act; provided that any such information, documents or reports required
to be filed with Commission pursuant to Section 13 or 15(d) of the Exchange Act
shall be filed with the Trustee within 15 days after the same is so required to
be filed with the Commission.
ARTICLE SEVEN
Consolidation and Merger
SECTION 701. Mergers, Consolidations and Certain
Sales of Assets.
-----------------------------------
Neither the Company nor any Subsidiary will consolidate or merge with
or into any Person, and the Company will not, and will not permit any of its
Subsidiaries to, sell, lease, convey or otherwise dispose of all or
substantially all of the Company's consolidated assets (as an entirety or sub-
stantially an entirety in one transaction or a series of related transactions,
including by way of liquidation or dissolution) to any Person unless, in each
such case:
(i) the entity formed by or surviving any such consolidation or
merger (if other than the Company or such Subsidiary, as the case may be),
or to which such sale, lease, conveyance or other disposition shall have
been made (the "Surviving Entity"), is a corporation organized and existing
under the laws of the United States, any state thereof or the District of
Columbia;
<PAGE>
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(ii) the Surviving Entity assumes by supplemental indenture all of
the obligations of the Company or such Subsidiary, as the case may be, on
the Securities or such Subsidiary's Guarantee, as the case may be, and under
this Indenture;
(iii) immediately after giving effect to such transaction and the
use of any net proceeds therefrom on a pro forma basis, the Consolidated Net
Worth of the Company or the Surviving Entity (in the case of a transaction
involving the Company), as the case may be, would be at least equal to the
Consolidated Net Worth of the Company immediately prior to such
transaction;
(iv) immediately after giving effect to such transaction and the
use of any net proceeds therefrom on a pro forma basis, the Company or the
Surviving Entity (in the case of a transaction involving the Company), as
the case may be, could incur at least $1.00 of Indebtedness pursuant to
clause (a)(i) of Section 908;
(v) immediately before and after giving effect to such transaction
and treating any Indebtedness which becomes an obligation of the Company or
any of its Subsidiaries as a result of such transaction as having been In-
curred by the Company or such Subsidiary, as the case may be, at the time of
the transaction, no Default or Event of Default shall have occurred and be
continuing; and
(vi) if, as a result of any such transaction, property or assets of
the Company or a Subsidiary of the Company would become subject to a Lien
not excepted from the provisions described under Section 912, the Company,
any such Subsidiary or the Surviving Entity, as the case may be, shall have
secured the Securities as required by said Section 912.
The provisions of this Section 701 shall not apply to any
consolidation or merger of a Subsidiary of the Company with or into the Company
or a Wholly Owned Subsidiary of the Company or any transaction pursuant to which
a Guarantor's Guarantee is to be released in accordance with the terms of
Section 1103 in connection with any transaction complying with the provisions of
Section 916.
The Company or any Guarantor, as the case may be, will deliver to
the Trustee prior to consummation of the proposed transaction an Officers'
Certificate that the transaction upon consummation thereof would comply with all
of the requirements of this Section.
<PAGE>
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SECTION 702. Successor Substituted.
---------------------
Upon any consolidation of the Company or any Subsidiary of the
Company with, or merger of the Company or any such Subsidiary into, any other
Person or any sale, lease, conveyance or other disposition of all or
substantially all of the Company's consolidated assets (as an entirety or
substantially as an entirety in one transaction or a series of related trans-
actions, including by way of liquidation or dissolution) in accordance with
Section 701, upon the execution of a supplemental indenture by the Surviving
Entity in form and substance satisfactory to the Trustee (as evidenced by the
Trustee's execution thereof), the Surviving Entity shall succeed to, and be
substituted for, and may exercise every right and power of and shall assume all
obligations of, the Company or such Subsidiary, as the case may be, under this
Indenture and the Securities or the Guarantees, as the case may be, with the
same effect as if such Surviving Entity had been named as the Company or such
Subsidiary, as the case may be, herein, and thereafter, except in the case of a
lease, the predecessor Person shall be relieved of all obligations and covenants
under this Indenture and the Securities or the Guarantees, as the case may be.
ARTICLE EIGHT
Supplemental Indentures
SECTION 801. Supplemental Indentures Without Consent
of Holders.
---------------------------------------
Without the consent of any Holders, the Company and the Guarantors,
when authorized by respective Board Resolutions, and the Trustee, at any time
and from time to time, may enter into one or more indentures supplemental
hereto, in form satisfactory to the Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the Company and
the assumption by any such successor of the covenants of the Company herein
and in the Securities; or
(2) to evidence the succession of another Person to any Guarantor and
the assumption by any such successor of the covenants of such Guarantor
herein and in the Guarantees; or
(3) to add to the covenants of the Company or the Guarantors for the
benefit of the Holders, or to surrender any right or power herein conferred
upon the Company or any Guarantor; or
<PAGE>
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(4) to secure the Securities pursuant to the requirements of
Section 912 or otherwise; or
(5) to comply with any requirements of the Commission in order to
effect and maintain the qualification of this Indenture under the Trust
Indenture Act; or
(6) to cure any ambiguity; or
(7) to make any other change that does not adversely affect the rights
of any Holder; or
(8) to reflect the release of a Guarantor from its obligations with
respect to its Guarantee in accordance with the provisions of Section 1103
and to add a Guarantor pursuant to the requirements of Section 1107.
After an amendment by supplemental indenture under this Section, the
Company will mail to the Holders a notice describing the amendment; provided,
that, the failure to mail such notice will not affect the validity of any such
supplemental indenture.
SECTION 802. Supplemental Indentures with Consent of Holders.
-----------------------------------------------
With the consent of the Holders of not less than a majority in
aggregate principal amount of the outstanding Securities, the Company and the
Guarantors, when authorized by respective Board Resolutions, and the Trustee
may enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of modifying in any manner the rights of the
Holders under this Indenture; provided, however, that no such supplemental
-------- -------
indenture shall, without the consent of the Holder of each outstanding Security
affected thereby,
(1) change the Stated Maturity of the principal of, or any installment
of interest on, any Security, or reduce the principal amount thereof or the
rate of interest thereon or any premium payable thereon, or change the place
of payment where, or the coin or currency in which, any Security or any
principal, premium or interest thereon is payable, or impair the right to
institute suit for the enforcement of any such payment on or after the
Stated Maturity thereof (or, in the case of redemption, on or after the
Redemption Date or, in the case of an Offer to Purchase, on or after the
applicable Purchase Date), or
(2) reduce the percentage in principal amount of the outstanding
Securities, the consent of whose Holders is
<PAGE>
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required for any such supplemental indenture, or the consent of whose
Holders is required for any waiver provided for in this Indenture, or
(3) modify any of the provisions of this Section or Section 413,
except to increase any such percentage or to provide that certain other
provisions of this Indenture cannot be modified or waived without the
consent of the Holder of each outstanding Security affected thereby, or
(4) modify the ranking or priority of the Securities or the Guarantee
of any Guarantor which is a Material Subsidiary, or release any Guarantor
which is a Material Subsidiary from any of its obligations under its
Guarantee or this Indenture otherwise than in accordance with the terms of
this Indenture, or
(5) modify the provisions relating to any Offer to Purchase (including
any related definitions) required under Section 916 or Section 917 in a
manner materially adverse to the Holders thereof.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such consent approves the substance thereof.
SECTION 803. Execution of Supplemental Indentures.
------------------------------------
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 501) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture, that such supplemental indenture
complies with the terms of this Indenture and that such supplemental indenture
is enforceable against the Company, the Guarantors or their respective
successors as applicable, in accordance with its terms. The Trustee may, but
shall not be obligated to, enter into any such supplemental indenture which
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise.
SECTION 804. Effect of Supplemental Indentures.
---------------------------------
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purpose; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
<PAGE>
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SECTION 805. Conformity with Trust Indenture Act.
-----------------------------------
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act.
SECTION 806. Reference in Securities to Supplemental Indentures.
--------------------------------------------------
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company and the Guarantors
shall so determine, new Securities and the Guarantees endorsed thereon so
modified as to conform, in the opinion of the Company and the Guarantors, to
any such supplemental indenture may be prepared and executed by the Company and
the Guarantors and authenticated and delivered by the Trustee in exchange for
outstanding Securities.
SECTION 807. Revocation and Effect of Consents.
---------------------------------
(a) Until a supplemental indenture becomes effective, a consent to
it by a Holder of a Security is a continuing consent by the Holder and every
subsequent Holder of a Security or portion of a Security that evidences the same
debt as the consenting Holder's Security, even if notation of the consent is not
made on any Security. However, any such Holder or subsequent Holder may revoke
the consent as to such Holder's Security or portion of a Security if the
Trustee receives written notice of revocation before the date the supplemental
indenture becomes effective. A supplemental indenture becomes effective in
accordance with its terms and thereafter binds every Holder.
(b) The Company may, but will not be obligated to, fix a record date
for the purpose of determining the Holders entitled to consent to any
supplemental indenture. If a record date is fixed, then notwithstanding the
provisions of clause (a) of this Section, those Persons who were Holders at such
record date (or their duly designated proxies), and only those Persons, will be
entitled to consent to such supplemental indenture or to revoke any consent
previously given, whether or not such Persons continue to be Holders after such
record date. No consent will be valid or effective for more than 90 days after
such record date unless consents from Holders of the principal amount of
Securities required hereunder for such supplemental indenture to be effective
have also been given and not revoked within such 90-day period.
<PAGE>
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ARTICLE NINE
Covenants
SECTION 901. Payment of Principal, Premium and Interest.
------------------------------------------
The Company will duly and punctually pay the principal of (and
premium, if any) and interest (including Additional Interest, if any) on the
Securities in accordance with and at the interest rates specified by the terms
of the Securities and this Indenture.
In the event the Company is not the Paying Agent, principal, premium,
if any, and interest will be considered paid on the date due if the Trustee or
Paying Agent holds on that date money deposited by the Company designated for
and sufficient to pay all principal, premium, if any, and interest then due. In
the event the Company, any of its Subsidiaries or any Affiliate of the Company
or any of its Subsidiaries is the Paying Agent, principal and interest will be
considered paid on the date actual payment is mailed or delivered to the Holders
entitled to such payments.
The Company shall pay interest on overdue principal at the same rate
per annum borne by the Securities. The Company shall pay interest on overdue
installments of interest at the same rate per annum borne by the Securities, to
the extent lawful.
SECTION 902. Maintenance of Office or Agency.
-------------------------------
The Company and the Guarantors will maintain in the Borough of
Manhattan, The City of New York, an office or agency where Securities may be
presented or surrendered for payment, where Securities may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Company and the Guarantors in respect of the Securities, any Guarantee
endorsed on the Securities and this Indenture may be served. The Company and the
Guarantors will give prompt written notice to the Trustee of the location, and
any change in the location, of such office or agency. If at any time the Company
or any Guarantor shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the address of the
Trustee set forth in Section 104. The Company and the Guarantors hereby
initially designate the office of First Union National Bank, 40 Broad Street,
Fifth Floor, Suite 550, New York, New York 10004, as their office or agency in
the Borough of Manhattan, The City of New York, to receive all such presenta-
<PAGE>
-65-
tions, surrenders, notices or demands until changed as permitted in this
Indenture.
The Company may also from time to time designate one or more other
offices or agencies (in or outside the Borough of Manhattan, The City of New
York) where the Securities may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations; provided, however,
-------- -------
that no such designation or rescission shall in any manner relieve the Company
or any Guarantor of their obligation to maintain an office or agency in the
Borough of Manhattan, The City of New York, for such purposes. The Company will
give prompt written notice to the Trustee of any such designation or rescission
and of any change in the location of any such other office or agency.
SECTION 903. Money for Security Payments To Be Held in Trust.
-----------------------------------------------
If the Company shall at any time act as its own Paying Agent, it
will, on or before each due date of the principal of (and premium, if any) or
interest on any of the Securities, segregate and hold in trust for the benefit
of the Persons entitled thereto a sum sufficient to pay the principal (and pre-
mium, if any) or interest so becoming due until such sums shall be paid to such
Persons or otherwise disposed of as herein provided and will promptly notify
the Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents, it will, on
or before each due date of the principal of (and premium, if any) or interest on
any Securities, deposit with a Paying Agent a sum sufficient to pay the
principal (and premium, if any) or interest so becoming due, such sum to be held
in trust for the benefit of the Persons entitled to such principal, premium or
interest, and (unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of its action or failure so to act.
The Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will:
(1) hold all sums held by it for the payment of the principal of (and
premium, if any) or interest on Securities in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided;
<PAGE>
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(2) give the Trustee notice of any Default by the Company (or any
other obligor upon the Securities) in the making of any payment of principal
(and premium, if any) or interest; and
(3) at any time during the continuance of any such Default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent, as the case may be; and, upon such payment by any Paying
Agent to the Trustee, such Paying Agent shall be released from all further
liability with respect to such money.
Any money or United States Government Obligations deposited with the
Trustee or any Paying Agent, or then held by the Company, in trust for the
payment of the principal of (and premium, if any) or interest on any Security
and remaining unclaimed for two years after such principal (and premium, if
any) or interest has become due and payable shall be paid to the Company on
Company Request, or (if then held by the Company) shall be discharged from such
trust; and the Holder of such Security shall thereafter, as an unsecured general
creditor, look only to the Company and the Guarantors for payment thereof, and
all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall thereupon
cease; provided, however, that the Trustee or such Paying Agent, before being
-------- -------
required to make any such repayment in excess of $50,000, may at the expense of
the Company cause to be published once, in a newspaper published in the English
language, customarily published on each Business Day and of general circulation
in The City of New York, notice that such money remains unclaimed and that,
after a date specified therein, which shall not be less than 30 days from the
date of such publication, any unclaimed balance of such money then remaining
will be repaid to the Company.
SECTION 904. Existence.
---------
Subject to Article Seven and Section 916, the Company will do or cause
to be done all things necessary to, and will cause each of its Subsidiaries to,
preserve and keep in full force and effect its respective existence, rights
(charter and statutory) and franchises; provided, however, that neither the
-------- -------
<PAGE>
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Company nor any of its Subsidiaries shall be required to preserve any such
right or franchise if the Board of Directors of the Company in good faith shall
determine that the preservation thereof is no longer desirable in the conduct of
the business of the Company or such Subsidiary, as the case may be, and that the
loss thereof is not disadvantageous in any material respect to the Holders.
SECTION 905. Maintenance of Properties.
-------------------------
The Company will cause all material properties used or useful in the
conduct of its business or the business of any Subsidiary of the Company to be
maintained and kept in good condition, repair and working order and supplied
with all necessary equipment and will cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereof, all as in the
judgment of the Company may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all times;
provided, however, that nothing in this Section shall prevent the Company from
- -------- -------
discontinuing the operation or maintenance of any of such properties if such
discontinuance is, as determined by the Company in good faith, desirable in the
conduct of its business or the business of any Subsidiary and not
disadvantageous in any material respect to the Holders.
SECTION 906. Payment of Taxes and Other Claims.
---------------------------------
The Company will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, all (i) taxes, assessments and
governmental charges levied or imposed upon the Company or any of its
Subsidiaries or upon the income, profits or property of the Company or any of
its Subsidiaries and (ii) lawful claims for labor, materials and supplies
which, in each case, if unpaid, might by law become a material liability or
Lien upon any property of the Company or any of its Subsidiaries; provided,
--------
however, that the Company shall not be required to pay or discharge or cause to
- -------
be paid or discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings promptly instituted and diligently conducted and for which an
adequate reserve has been established to the extent required by GAAP.
SECTION 907. Maintenance of Insurance.
------------------------
The Company shall, and shall cause each of its Subsidiaries to, keep
at all times all of their properties which are of an insurable nature insured
against loss or damage with insurers believed by the Company to be responsible
to the extent that property of similar character is usually so insured by
corporations similarly situated and owning like properties
<PAGE>
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in accordance with good business practice. The Company shall, and shall cause
each of its Subsidiaries to, use the proceeds from any such insurance policy to
invest in the business of the Company or such Subsidiary, as the case may be, or
otherwise as the Board of Directors of the Company shall determine in its good
faith judgment.
SECTION 908. Limitation on Indebtedness.
--------------------------
(a) The Company will not, and will not permit any of its Subsidiaries
to, Incur any Indebtedness except, subject to the provisions set forth in
Section 909: (i) Indebtedness of the Company or its Subsidiaries, if immediately
after giving effect to the Incurrence of such Indebtedness and the receipt and
application of the net proceeds thereof, the Consolidated Cash Flow Ratio of the
Company for the four full fiscal quarters for which quarterly or annual
financial statements are available next preceding the Incurrence of such
Indebtedness, calculated on a pro forma basis as if such Indebtedness had been
incurred at the beginning of such four full fiscal quarters, would be greater
than 2.00 to 1 if such Indebtedness is Incurred on or before December 31, 1997
and 2.25 to 1 if such Indebtedness is Incurred after December 31, 1997; (ii)
Indebtedness of the Company, and guarantees of such Indebtedness by any
Guarantor, Incurred under the Senior Credit Facility in an aggregate principal
amount at any one time not to exceed the greater of (x) $187.5 million or (y)
the sum of (A) 80% of Eligible Accounts Receivable and (B) 65% of Eligible
Inventory; (iii) Indebtedness owed by the Company to any Wholly Owned Subsidiary
of the Company (provided that such Indebtedness is at all times held by a
--------
Person which is a Wholly Owned Subsidiary of the Company) or Indebtedness owed
by a Subsidiary of the Company to the Company or a Wholly Owned Subsidiary of
the Company (provided that such Indebtedness is at all times held by the Company
--------
or a Person which is a Wholly Owned Subsidiary of the Company); provided,
--------
however, upon either (x) the transfer or other disposition by such Wholly Owned
- -------
Subsidiary or the Company of any Indebtedness so permitted under this clause
(iii) to a Person other than the Company or another Wholly Owned Subsidiary of
the Company or (y) the issuance (other than directors' qualifying shares), sale,
transfer or other disposition of shares of Capital Stock or other ownership
interests (including by consolidation or merger) of such Wholly Owned Subsidiary
to a Person other than the Company or another such Wholly Owned Subsidiary of
the Company, the provisions of this clause (iii) shall no longer be applicable
to such Indebtedness and such Indebtedness shall be deemed to have been
Incurred at the time of any such issuance, sale, transfer or other disposition,
as the case may be; (iv) Indebtedness Incurred by a Person prior to the time
(x) such Person becomes a Subsidiary of the Company, (y) such Person merges into
or consolidates with a Subsidiary of the Company or (z) another Sub-
<PAGE>
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sidiary of the Company merges into or consolidates with such Person (in a
transaction in which such Person becomes a Subsidiary of the Company), which
Indebtedness was not Incurred in anticipation or contemplation of such
transaction and was outstanding prior to such transaction; (v) Indebtedness of
the Company or its Subsidiaries under any interest rate or currency swap
agreement to the extent entered into to hedge any other Indebtedness permitted
under this Indenture; (vi) Capital Lease Obligations of the Company or its
Subsidiaries Incurred with respect to a Sale and Leaseback Transaction which was
made in accordance with the provisions of Section 913; (vii) Indebtedness
Incurred to renew, extend, refinance or refund (collectively for purposes of
this clause (vii), to "refund") any Indebtedness outstanding on the Issue Date
and Indebtedness Incurred under the prior clause (i) or the Securities;
provided, however, that (x) such Indebtedness does not exceed the principal
- -------- -------
amount of Indebtedness so refunded plus the amount of any premium required to be
paid in connection with such refunding pursuant to the terms of the Indebtedness
refunded or the amount of any premium reasonably determined by the Company as
necessary to accomplish such refunding by means of a tender offer, exchange
offer or privately negotiated repurchase, plus the expenses of the Company or
such Subsidiary Incurred in connection therewith and (y)(A) in the case of any
refunding of Indebtedness which is pari passu with the Securities, such
---- -----
refunding Indebtedness is made pari passu with or subordinate in right of
---- -----
payment to the Securities, and, in the case of any refunding of Indebtedness
which is subordinate in right of payment to the Securities, such refunding
Indebtedness is subordinate in right of payment to the Securities on terms no
less favorable to the Holders than those contained in the Indebtedness being
refunded and (B) in either case, the refunding Indebted ness by its terms, or by
the terms of any agreement or instrument pursuant to which such Indebtedness is
issued, does not have an Average Life that is less than the remaining Average
Life of the Indebtedness being refunded and does not permit redemption or other
retirement (including pursuant to any required offer to purchase to be made by
the Company or a Subsidiary of the Company) of such Indebtedness at the option
of the holder thereof prior to the final stated maturity of the Indebtedness
being refunded, other than a redemption or other retirement at the option of the
holder of such Indebtedness (including pursuant to a required offer to purchase
made by the Company or a Subsidiary of the Company) which is conditioned upon a
change of control of the Company pursuant to provisions substantially similar to
those contained in Section 917; (viii) Indebtedness of the Company or its
Subsidiaries Incurred for the purpose of financing all or any part of the
purchase price or the cost of construction or improvement of any property,
provided that the aggregate principal amount of such Indebtedness does not
- --------
exceed 100% of such purchase price or cost and any Lien associated with such
Indebtedness complies with
<PAGE>
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clause (iv) of Section 912; (ix) Indebtedness of the Company or its Subsidiaries
not otherwise permitted to be Incurred pursuant to clauses (i) through (viii)
above which, together with any other outstanding Indebtedness Incurred pursuant
to this clause (ix), has an aggregate principal amount not in excess of $10
million at any time outstanding; and (x) Indebtedness of the Company and its
Subsidiaries under the Securities and the Guarantees.
(b) The Company will not, and the Company will not cause or
permit any Guarantor to, directly or indirectly, Incur any Indebtedness that
purports to be by its terms (or by the terms of any agreement governing such
Indebtedness) subordinated in right of payment to any other Indebtedness of the
Company or of such Guarantor, as the case may be, unless such Indebtedness is
also by its terms (or by the terms of any agreement governing such
Indebtedness) made expressly subordinated in right of payment to the Securities
or the Guarantee of such Guarantor, as the case may be, to the same extent and
in the same manner as such Indebtedness is subordinated to such other
Indebtedness of the Company or such Guarantor, as the case may be.
SECTION 909. Additional Limitation on Subsidiary
Indebtedness.
-----------------------------------
In addition to the restrictions on the Incurrence of Indebtedness set
forth in Section 908, the Company will not permit any of its Subsidiaries to
Incur any Indebtedness (other than the guarantee of Indebtedness under the
Senior Credit Facility and the 1995 Notes) in an amount which, when aggregated
with (A) all Indebtedness (other than any Indebtedness included in the following
clause (B) or (C)) secured by Liens permitted by the provisions of clause (viii)
of Section 912 and then outstanding, (B) all Capital Lease Obligations of the
Company and its Subsidiaries Incurred in compliance with the provisions of
Section 908 and then outstanding, and (C) all other Indebtedness of
Subsidiaries of the Company (other than the guarantee of Indebtedness under the
Senior Credit Facility and the 1995 Notes) Incurred in compliance with Section
908 and then outstanding, would exceed 10% of Consolidated Net Tangible Assets.
SECTION 910. Limitation on Restricted Payments.
---------------------------------
The Company will not, and will not permit any of its Subsidiaries to,
(i) directly or indirectly, declare or pay any dividend, or make any
distribution of any kind or character (whether in cash, property or securities),
in respect of any class of its Capital Stock or to the holders thereof,
excluding any (x) dividends or distributions payable solely in shares of its
Capital Stock (other than Disqualified Stock) or in options, warrants or other
rights to acquire its Capital Stock
<PAGE>
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(other than Disqualified Stock), or (y) in the case of any Subsidiary of the
Company, dividends or distributions payable to the Company or a Subsidiary of
the Company, (ii) directly or indirectly, purchase, redeem or otherwise acquire
or retire for value shares of Capital Stock of the Company or any of its
Subsidiaries, any options, warrants or rights to purchase or acquire shares of
Capital Stock of the Company or any of its Subsidiaries or any securities
convertible or exchangeable into shares of Capital Stock of the Company or any
of its Subsidiaries, excluding any such shares of Capital Stock, options,
warrants, rights or securities which are owned by the Company or a Subsidiary of
the Company, (iii) make any Investment in (other than a Permitted Investment),
or payment on a guarantee of any obligation of, any Person, other than the
Company or a Wholly Owned Subsidiary of the Company, or (iv) redeem, defease,
repurchase, retire or otherwise acquire or retire for value, prior to any
scheduled maturity, repayment or sinking fund payment, Indebtedness which is
subordinate in right of payment to the Securities (each of clauses (i) through
(iv) being a "Restricted Payment") if at the time thereof:
(1) an Event of Default, or a Default, shall have occurred and be
continuing, or
(2) upon giving effect to such Restricted Payment, the Company could
not Incur at least $1.00 of additional Indebtedness pursuant to clause (i)
of Section 908, or
(3) upon giving effect to such Restricted Payment, the aggregate of
all Restricted Payments made after March 23, 1995 exceeds the sum of:
(a) 50% of cumulative Consolidated Net Income of the Company (or,
in the case Consolidated Net Income of the Company shall be negative,
less 100% of such deficit) since April 1, 1995 through the last day of
the fiscal quarter for which financial statements are available; plus
(b) 100% of the aggregate net proceeds received after March 23,
1995, including the fair market value of property other than cash
(determined in good faith by the Board of Directors of the Company as
evidenced by a resolution of such Board of Directors filed with the
Trustee), from the issuance of Capital Stock (other than Disqualified
Stock) of the Company and warrants, rights or options on Capital Stock
(other than Disqualified Stock) of the Company and the principal
amount of Indebtedness that has been converted into or exchanged for
Capital Stock (other than Disqualified Stock) of the Company which
Indebtedness was Incurred after the Issue Date; plus
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(c) in the case of the disposition or repayment of any Investment
constituting a Restricted Payment made after March 23, 1995 (other
than any Investment made pursuant to clause (vi) of the following
paragraph), an amount equal to the lesser of the return of capital
with respect to such Investment and the cost of such Investment, in
either case, less the cost of the disposition of such Investment,
provided that at the time any such Investment is made the Company
--------
delivers to the Trustee a resolution of its Board of Directors to the
effect that, for purposes of this Section, such Investment constitutes
a Restricted Payment made after the Issue Date (other than an
Investment made pursuant to clause (vi) of the following paragraph);
plus
(d) $4 million.
The foregoing provision will not be violated by (i) reason of any
dividend on any class of the Capital Stock of the Company or any Subsidiary of
the Company paid within 60 days after the declaration thereof if, on the date
when the dividend was declared, the Company or such Subsidiary, as the case may
be, could have paid such dividend in accordance with the provisions of this
Indenture, (ii) the renewal, extension, refunding or refinancing of any
Indebtedness otherwise permitted pursuant to clause (vii) of Section 908, (iii)
the exchange or conversion of any Indebtedness of the Company or any Subsidiary
of the Company for or into Capital Stock of the Company (other than Disqualified
Stock of the Company), (iv) any payments, loans or other advances made pursuant
to any employee benefit plans (including plans for the benefit of directors) or
employment agreements or other compensation arrangements, in each case as
approved by the Board of Directors of the Company in its good faith judgment
evidenced by a resolution of such Board of Directors filed with the Trustee, (v)
the redemption of the Company's rights issued pursuant to the Rights Agreement
dated as of March 20, 1990, between the Company and Sovran Bank, N.A., as Rights
Agent, as in existence on the Issue Date or (vi) so long as no Default or Event
of Default has occurred and is continuing, additional Investments constituting
Restricted Payments in an aggregate outstanding amount (valued at the cost
thereof) not to exceed at any time 5% of Consolidated Net Tangible Assets. Each
Restricted Payment described in clauses (i), (iv) and (v) of the previous
sentence shall be taken into account for purposes of computing the aggregate
amount of all Restricted Payments pursuant to clause (3) of the first paragraph
of this Section.
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SECTION 911. Limitations Concerning Distributions and Transfers by
-----------------------------------------------------
Subsidiaries.
------------
The Company will not, and will not permit any of its Subsidiaries to,
directly or indirectly, create or otherwise cause or suffer to exist any
consensual encumbrance or restriction on the ability of any Subsidiary of the
Company (i) to pay, directly or indirectly, dividends or make any other dis-
tributions in respect of its Capital Stock or pay any Indebtedness or other
obligation owed to the Company or any Subsidiary of the Company, (ii) to make
loans or advances to the Company or any Subsidiary of the Company or (iii) to
transfer any of its property or assets to the Company or any Subsidiary of the
Company except for such encumbrances or restrictions existing under or by reason
of (a) any agreement in effect on the Issue Date, (b) an agreement relating to
any Indebtedness Incurred by such Subsidiary prior to the date on which such
Subsidiary was acquired by the Company and outstanding on such date and not
Incurred in anticipation or contemplation of becoming a Subsidiary and provided
such encumbrance or restriction shall not apply to any assets of the Company or
its Subsidiaries other than such Subsidiary, (c) customary provisions contained
in an agreement which has been entered into for the sale or disposition of all
or substantially all of the Capital Stock or assets of such Subsidiary, or (d)
an agreement effecting a renewal, exchange, refunding or extension of
Indebtedness Incurred pursuant to an agreement referred to in clause (a) or (b)
above; provided, however, that the provisions contained in such renewal,
-------- -------
exchange, refunding or extension agreement relating to such encumbrance or
restriction are no more restrictive in any material respect than the provisions
contained in the agreement the subject thereof in the reasonable judgment of the
Board of Directors of the Company as evidenced by a resolution of such Board of
Directors filed with the Trustee.
SECTION 912. Limitation on Liens.
-------------------
The Company will not, and will not permit any of its Subsidiaries to,
Incur any Lien on or with respect to any property or assets of the Company or
any Subsidiary of the Company owned on the Issue Date or thereafter acquired to
secure Indebtedness without making, or causing such Subsidiary to make,
effective provision for securing the Securities (and, if the Company shall so
determine, any other Indebtedness of the Company or such Subsidiary, including
Indebtedness which is subordinate in right of payment to the Securities,
provided that Liens securing the Securities and any Indebtedness pari passu with
- -------- ---- -----
the Securities are senior to such Liens securing such subordinated
Indebtedness) equally and ratably with such Indebtedness or, in the event such
Indebtedness is subordinate in right of payment to the Securities, prior to such
Indebtedness, as to
<PAGE>
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such property or assets for so long as such Indebtedness shall be so secured.
The foregoing restrictions shall not apply to (i) Liens in
respect of Indebtedness existing on the Issue Date; (ii) Liens securing only the
Securities; (iii) Liens in favor of the Company; (iv) Liens to secure
Indebtedness Incurred for the purpose of financing all or any part of the pur-
chase price or the cost of construction or improvement of the property subject
to such Liens; provided that (a) the aggregate principal amount of any
--------
Indebtedness secured by such a Lien does not exceed 100% of such purchase price
or cost, (b) such Lien does not extend to or cover any other property other than
such item of property and any improvements on such item, (c) the Indebtedness
secured by such Lien is Incurred by the Company or its Subsidiary within 180
days of the acquisition, construction or improvement of such property and (d)
the Incurrence of such Indebtedness is permitted by Sections 908 and 909; (v)
Liens on property existing immediately prior to the time of acquisition thereof
(and not created in anticipation or contemplation of the financing of such
acquisition); (vi) Liens on property of a Person existing at the time such
Person is merged with or into or consolidated with the Company or any Subsidiary
of the Company (and not created in anticipation or contemplation thereof); (vii)
Liens on property of the Company or any Subsidiary of the Company in favor of
the United States of America, any state thereof or any instrumentality of either
to secure payments pursuant to any contract or statute; (viii) Liens securing an
aggregate principal amount of Indebtedness at any one time outstanding which,
when taken together with (A) all Capital Lease Obligations of the Company and
its Subsidiaries Incurred in compliance with Sections 908 and 909 and then
outstanding and (B) all other Indebtedness of Subsidiaries of the Company
(other than the guarantee of Indebtedness under the Senior Credit Facility and
the 1995 Notes) Incurred in compliance with Sections 908 and 909 and then
outstanding, would not exceed 10% of Consolidated Net Tangible Assets; and (ix)
Liens to secure Indebtedness Incurred to extend, renew, refinance or refund (or
successive extensions, renewals, refinancings or refundings), in whole or in
part, any Indebtedness secured by Liens referred to in the foregoing clause (i)
so long as such Lien does not extend to any other property and the principal
amount of Indebtedness so secured is not increased except for the amount of any
premium required to be paid in connection with such refinancing pursuant to the
terms of the Indebtedness refinanced or the amount of any premium reasonably
determined by the Company as necessary to accomplish such refinancing by means
of a tender offer, exchange offer or privately negotiated repurchase, plus the
expenses of the Company or such Subsidiary Incurred in connection with such
refinancing.
<PAGE>
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SECTION 913. Limitation on Sale and Leaseback
Transactions.
--------------------------------
The Company will not, and will not permit any of its Subsidiaries to,
enter into any Sale and Leaseback Transaction (except for a period not exceeding
30 months) unless the Company or such Subsidiary applies the net proceeds of
the property sold pursuant to the Sale and Leaseback Transaction as if such net
proceeds were Net Available Proceeds subject to disposition as provided in
Section 916.
SECTION 914. Limitation on Issuance and Sale of
Capital Stock of Subsidiaries.
----------------------------------
The Company (a) will not, and will not permit any Subsidiary of the
Company to, transfer, convey, sell or other wise dispose of any shares of
Capital Stock of such Subsidiary or any other Subsidiary (other than to the
Company or a Wholly Owned Subsidiary of the Company) except that the Company and
any Subsidiary may, in any single transaction, sell all, but not less than all,
of the issued and outstanding Capital Stock of any Subsidiary to any Person,
subject to complying with the provisions of Section 916, and (b) will not permit
any Subsidiary of the Company to issue shares of its Capital Stock (other than
directors' qualifying shares), or securities convertible into, or warrants,
rights or options to subscribe for or purchase shares of, its Capital Stock to
any Person other than to the Company or a Wholly Owned Subsidiary of the
Company.
SECTION 915. Transactions with Affiliates and Related
Persons.
----------------------------------------
The Company will not, and will not permit any of its Subsidiaries to,
enter into any transaction with an Affiliate or Related Person of the Company
(other than the Company or a Subsidiary of the Company), including, without
limitation, the purchase, sale, lease or exchange of property, the rendering of
any service, or the making of any guarantee, loan, advance or Investment, either
directly or indirectly, involving aggregate consideration in excess of $500,000,
unless (i) a majority of the disinterested directors of the Board of Directors
of the Company determines, in its good faith judgment evidenced by a resolution
of such Board of Directors filed with the Trustee, that such transaction is in
the best interests of the Company or such Subsidiary, as the case may be; and
(ii) such transaction is, in the opinion of a majority of the disinterested di-
rectors of the Board of Directors of the Company evidenced by a resolution of
such Board of Directors filed with the Trustee, on terms no less favorable to
the Company or such Subsidiary, as the case may be, than those that could be
obtained in a comparable arm's length transaction with an entity that is not an
Affiliate or a Related Person.
<PAGE>
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SECTION 916. Limitation on Certain Asset Dispositions.
----------------------------------------
(a) The Company will not, and will not permit any of its Subsidiaries
to, make one or more Asset Dispositions for aggregate consideration of, or in
respect of assets having an aggregate fair market value of, $5 million or more
in any 12-month period, unless:
(i) the Company or the Subsidiary, as the case may be, receives
consideration for such Asset Disposition at least equal to the fair market
value of the assets sold or disposed of as determined by the Board of
Directors of the Company in good faith and evidenced by a resolution of such
Board of Directors filed with the Trustee;
(ii) not less than 75% of the consideration for the disposition
consists of cash or readily marketable cash equivalents or the assumption of
Indebtedness of the Company or such Subsidiary or other obligations relating
to such assets (and release of the Company or such Subsidiary from all
liability on the Indebtedness or other obligations assumed); and
(iii) all Net Available Proceeds, less any amounts invested within 360
days of such Asset Disposition in assets related to the business of the
Company (including the Capital Stock of another Person (other than the
Company or any Person that is a Subsidiary of the Company immediately prior
to such investment), provided that immediately after giving effect to any
--------
such investment (and not prior thereto) such Person shall be a Subsidiary of
the Company), are applied either (A) to an Offer to Purchase outstanding
Securities at 100% of their principal amount plus accrued interest to the
Purchase Date or (B) to the permanent reduction and repayment of
Indebtedness then out standing under the Senior Credit Facility, to the
repayment of other Indebtedness that is not subordinated in right of payment
to the Securities and to the purchase of Securities pursuant to an Offer to
Purchase outstanding Securities at 100% of their principal amount plus
accrued interest to the Purchase Date, provided that (x) any Net Available
--------
Proceeds not applied to the repayment of Indebtedness under the Senior
Credit Facility or other Indebtedness not subordinated in right of payment
to the Securities in accordance with subclause (B) of this clause
(iii) shall be added to the Net Available Proceeds to be used for an Offer
to Purchase outstanding Securities and (y) the Company may defer making any
Offer to Purchase out standing Securities until there are aggregate
unutilized Net Available Proceeds equal to or in excess of $5 million
resulting from one or more Asset Dispositions (at which time, the entire
unutilized Net Available Proceeds, and
<PAGE>
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not just the amount in excess of $5 million, shall be applied as
required pursuant to this paragraph).
Any repayment of Indebtedness in accordance with the foregoing subclause (B) of
clause (iii) shall be made pro rata, based on the principal amount (or, in the
--------
case of Indebtedness having unamortized discount, the accreted value thereof) of
such Indebtedness outstanding. Any remaining Net Available Proceeds following
the completion of the Offer to Purchase may be used by the Company for any other
purpose (subject to the other provisions of this Indenture) and the amount of
Net Available Proceeds then required to be otherwise applied in accordance with
this Section shall be reset to zero, subject to any subsequent Asset
Disposition.
In the event that the Company makes an Offer to Purchase the
Securities, the Company intends to comply with any applicable securities laws
and regulations, including any applicable requirements of Section 14(e) of, and
Rule 14e-1 under, the Exchange Act, and any violation of the provisions of this
Indenture relating to such Offer to Purchase occurring as a result of such
compliance shall not be deemed an Event of Default or a Default.
(b) The Company will mail the Offer for an Offer to Purchase required
pursuant to Section 915(a) not more than 365 days after consummation of the
Asset Disposition resulting in the Offer to Purchase. Each Holder shall be
entitled to tender all or any portion of the Securities owned by such Holder
pursuant to the Offer to Purchase, subject to the requirement that any portion
of a Security tendered must be tendered in an integral multiple of $1,000
principal amount and subject to any proration of the Offer among tendering
Holders if the aggregate amount of Securities tendered exceeds the Net Available
Proceeds.
(c) Not later than the date of the Offer with respect to an Offer to
Purchase pursuant to this Section 915, the Company shall deliver to the Trustee
an Officers' Certificate as to the Purchase Amount.
On or prior to the Purchase Date specified in the Offer to Purchase,
the Company shall (i) accept for payment (on a pro rata basis, if necessary)
Securities or portions thereof validly tendered pursuant to the Offer, (ii)
deposit with the Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 903) money sufficient
to pay the Purchase Price of all Securities or portions thereof so accepted and
(iii) deliver or cause to be delivered to the Trustee all Securities so accepted
together with an Officers' Certificate stating the Securities or portions
thereof accepted for payment by the Company. The Paying
<PAGE>
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Agent (or the Company, if so acting) shall promptly mail or deliver to Holders
of Securities so accepted payment in an amount equal to the Purchase Price for
such Securities, and the Trustee shall promptly authenticate and mail or
deliver to each Holder a new Security or Securities equal in principal amount to
any unpurchased portion of the Security surrendered as requested by the Holder.
Any Security not accepted for payment shall be promptly mailed or delivered by
the Company to the Holder thereof. The Company shall publicly announce the re-
sults of the Offer on or as soon as practicable after the Purchase Date.
(d) Notwithstanding the foregoing, this Section 916 shall not
apply to any Asset Disposition consummated in compliance with the provisions of
Section 701 or 913 (with respect to an asset leased for a period not exceeding
30 months pursuant to a Sale and Leaseback Transaction).
SECTION 917. Change of Control.
-----------------
(a) The Company shall, within 30 days following the date of
the consummation of a transaction resulting in a Change of Control, mail an
Offer with respect to an Offer to Purchase all outstanding Securities at a
purchase price equal to 101% of their aggregate principal amount plus accrued
interest to the Purchase Date. Each Holder shall be entitled to tender all or
any portion of the Securities owned by such Holder pursuant to the Offer to
Purchase, subject to the requirement that any portion of a Security tendered
must be tendered in an integral multiple of $1,000 principal amount.
(b) On or prior to the Purchase Date specified in the Offer to
Purchase, the Company shall (i) accept for payment all Securities or portions
thereof validly tendered pursuant to the Offer, (ii) deposit with the Paying
Agent (or, if the Company is acting as its own Paying Agent, segregate and hold
in trust as provided in Section 903) money sufficient to pay the Purchase Price
of all Securities or portions thereof so accepted and (iii) deliver or cause to
be delivered to the Trustee all Securities so accepted together with an
Officers' Certificate stating the Securities or portions thereof accepted for
payment by the Company. The Paying Agent (or the Company, if so acting) shall
promptly mail or deliver to Holders of Securities so accepted payment in an
amount equal to the Purchase Price for such Securities, and the Trustee shall
promptly authenticate and mail or deliver to each Holder a new Security or
Securities equal in principal amount to any unpurchased portion of the Security
surrendered as requested by the Holder. Any Security not accepted for payment
shall be promptly mailed or delivered by the Company to the Holder thereof. The
Company shall publicly announce the results of the Offer on or as soon as
practicable after the Purchase Date.
<PAGE>
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(c) A "Change of Control" will be deemed to have occurred in the
event that (whether or not otherwise permitted by this Indenture) after the
Issue Date (a) any Person or any Persons acting together that would constitute
a "group" (for purposes of Section 13(d) of the Exchange Act, or any successor
provision thereto) (a "Group"), together with any Affiliates or Related Persons
thereof, shall beneficially own (as defined in Rule 13d-3 under the Exchange
Act, or any successor provision thereto) at least 40% of the Voting Stock of the
Company; (b) any sale, lease or other transfer (in one transaction or a series
of related transactions) by the Company or any of its Subsidiaries of all or
substantially all of the consolidated assets of the Company to any Person
(other than a Wholly Owned Subsidiary of the Company); (c) Continuing Directors
cease to constitute at least a majority of the Board of Directors of the
Company; or (d) the stockholders of the Company approve any plan or proposal for
the liquidation or dissolution of the Company.
In the event that the Company makes an Offer to Purchase the
Securities, the Company intends to comply with any applicable securities laws
and regulations, including any applicable requirements of Section 14(e) of, and
Rule 14e-1 under, the Exchange Act and any violation of the provisions of this
Indenture relating to such Offer to Purchase occurring as a result of such
compliance shall not be deemed a Default or an Event of Default.
SECTION 918. Provision of Financial Information.
----------------------------------
Whether or not the Company is subject to Section 13(a) or
15(d) of the Exchange Act, or any successor provision thereto, the Company will
file with the Commission the annual reports, quarterly reports and other
documents which the Company would have been required to file with the
Commission pursuant to such Section 13(a) or 15(d) or any successor provision
thereto if the Company were so required, such documents to be filed with the
Commission on or prior to the respective dates (the "Required Filing Dates") by
which the Company would have been required so to file such documents if the
Company were so required. The Company will also in any event (a) within 15 days
of each Required Filing Date (i) transmit by mail to all Holders, as their names
and addresses appear in the Security Register, without cost to such Holders, and
(ii) file with the Trustee, copies of the annual reports, quarterly reports and
other documents which the Company is required to file with the Commission
pursuant to the preceding sentence, and (b) if, notwithstanding the preceding
sentence, filing such documents by the Company with the Commission is not
permitted under the Exchange Act, promptly upon written request supply copies
of such documents to any prospective Holder. The Company will also comply with
Section 314(a) of the Trust Indenture Act.
<PAGE>
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SECTION 919. Statement by Officers as to Default; Compliance Certificates.
-------------------------------------------------------------
(a) The Company will deliver to the Trustee, within 90 days
after the end of each fiscal year of the Company ending after the Issue Date, an
Officers' Certificate stating that a review of the activities of the Company and
its Subsidiaries has been made under the supervision of the signing officers
with a view to determining whether the Company and each of the Guarantors has
kept, observed, performed and fulfilled its obligations under this Indenture,
and further stating, as to each such officer signing such certificate, that, to
the best of his knowledge, the Company and each of the Guarantors have kept,
observed, performed and fulfilled each and every covenant contained in this
Indenture and there is not existing any Default or Event of Default (or, if a
Default or Event of Default shall have occurred, describing all such Defaults or
Events of Default of which he may have knowledge and what action the Company
and each of the Guarantors are taking or propose to take with respect thereto).
For purposes of this paragraph, such compliance shall be determined without
regard to any period of grace or requirement of notice. The first certificate to
be delivered by the Company pursuant to this Section 919 shall be for the fiscal
year ending on or about the end of December 1997.
(b) The Company shall deliver to the Trustee, as soon as
possible after the Company becomes aware of the occurrence of a Default or
Event of Default, an Officers' Certificate setting forth the details of such
Default or Event of Default, and the action which the Company and the
Guarantors propose to take with respect thereto.
(c) So long as (and to the extent) not contrary to the then
current recommendations of the American Institute of Certified Public
Accountants, the Company shall deliver to the Trustee within 90 days after the
end of each fiscal year a written statement by the Company's independent public
accountants stating (A) that their audit examination has included a review of
the terms of this Indenture, the Securities and the Guarantees as they relate to
accounting matters, and (B) whether, in connection with their audit examination,
any Default or Event of Default has come to their attention and, if such a
Default or Event of Default has come to their attention, specifying the nature
and period of the existence thereof.
SECTION 920. Special Covenants of the Guarantors.
-----------------------------------
Each Guarantor of the Securities issued under this Indenture will
comply with each of the covenants contained in this Indenture that impose
restrictions or obligations on such Guarantor (by virtue of being a Guarantor or
otherwise) not-
<PAGE>
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withstanding that the text of such covenant is worded as a restriction on or
obligation of the Company.
ARTICLE TEN
Redemption of Securities
SECTION 1001. Right of Redemption.
-------------------
The Securities may be redeemed at the election of the Company, as a
whole or from time to time in part, at the times and at the Redemption Prices
specified in the form of Security set forth in Exhibit A together with any
applicable accrued interest to the Redemption Date.
SECTION 1002. Applicability of Article.
------------------------
Redemption of Securities at the election of the Company, as permitted
by any provision of this Indenture, shall be made in accordance with such
provision and this Article.
SECTION 1003. Election To Redeem; Notice to Trustee.
-------------------------------------
The election of the Company to redeem any Securities pursuant to
Section 1001 shall be evidenced by a Board Resolution of the Company delivered
to the Trustee. In case of any redemption at the election of the Company of less
than all the Securities, the Company shall, at least 60 days prior to the
Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee of such Redemption Date and of
the principal amount of Securities to be redeemed.
SECTION 1004. Selection by Trustee of Securities To Be Redeemed.
-------------------------------------------------
If less than all the Securities are to be redeemed, the particular
Securities to be redeemed shall be selected not more than 60 days prior to the
Redemption Date by the Trustee, from all outstanding Securities not previously
called for redemption, by such method as the Trustee shall deem fair and
appropriate and which may provide for the selection for redemption of portions
(equal to $1,000 or any integral multiple thereof) of the principal amount of
Securities of a denomination larger than $1,000.
The Trustee shall promptly notify the Company and the Security
Registrar in writing of the Securities selected for redemption and, in the case
of any Securities selected for partial redemption, the principal amount thereof
to be redeemed.
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For all purposes of this Indenture, all provisions relating to the
redemption of Securities shall relate, in the case of any Securities redeemed or
to be redeemed only in part, to the portion of the principal amount of such
Securities which has been or is to be redeemed.
SECTION 1005. Notice of Redemption.
--------------------
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption
Date, to each Holder of Securities to be redeemed, at his address appearing in
the Security Register.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all the outstanding Securities are to be redeemed,
the identification (and, in the case of partial redemption, the principal
amounts) of the particular Securities to be redeemed,
(4) that on the Redemption Date the Redemption Price will become due
and payable upon each such Security to be redeemed and that, unless the
Company shall default in the payment of the Redemption Price and any
applicable accrued interest, interest thereon will cease to accrue on and
after said date, and
(5) the place or places where such Securities are to be surrendered
for payment of the Redemption Price.
Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.
SECTION 1006. Deposit of Redemption Price.
---------------------------
On or prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 903) an amount of
money sufficient to pay the Redemption Price of and accrued interest on all the
Securities which are to be redeemed on that date.
<PAGE>
-83-
SECTION 1007. Securities Payable on Redemption Date.
-------------------------------------
Notice of redemption having been given as aforesaid, the
Securities so to be redeemed shall, on the Redemption Date, become due and
payable at the Redemption Price therein specified, and from and after such date
(unless the Company shall default in the payment of the Redemption Price and any
applicable accrued interest) such Securities shall cease to bear interest.
Upon surrender of any such Security for redemption in accordance with said
notice, such Security shall be paid by the Paying Agent at the Redemption Price,
together with any applicable accrued interest to the Redemption Date.
If any Security called for redemption shall not be so paid
upon surrender thereof for redemption, the principal (and premium, if any) and
accrued interest on such unpaid principal shall, until paid, bear interest from
the Redemption Date at the rate provided by the Security.
SECTION 1008. Securities Redeemed in Part.
---------------------------
Upon surrender of a Security that is redeemed in part (with, if the
Company or the Trustee so requires, due endorsement by, or a written instrument
of transfer in form satisfactory to the Company and the Trustee duly executed
by, the Holder thereof or his attorney duly authorized in writing), the Company
shall execute, the Guarantors shall execute the Guarantee endorsed upon, and the
Trustee shall authenticate and deliver to the Holder of such Security without
service charge, a new Security or Securities, of any authorized denomination as
requested by such Holder, in aggregate principal amount equal to and in exchange
for the unredeemed portion of the principal of the Security so surrendered.
ARTICLE ELEVEN
Guarantee
SECTION 1101. Unconditional Guarantee.
-----------------------
Each Guarantor hereby unconditionally, jointly and severally,
guarantees (such guarantee to be referred to herein as the "Guarantee") to each
Holder of a Security authenticated and delivered by the Trustee and to the
Trustee and its successors and assigns that: the principal of, premium, if any,
and interest on the Securities will be promptly paid in full when due, subject
to any applicable grace period, whether at maturity, by acceleration or
otherwise, and interest on the overdue principal and premium, if any, Additional
Interest, if any, and interest on any overdue interest of the Securities and all
<PAGE>
-84-
other obligations of the Company to the Holders or the Trustee hereunder or
under the Securities will be promptly paid in full or performed, all in
accordance with the terms hereof and thereof; subject, however, to the
limitations set forth in Section 1104. Each Guarantor hereby agrees that its
obligations hereunder shall be unconditional, irrespective of the validity,
regularity or enforceability of the Securities or this Indenture, the absence
of any action to enforce the same, any waiver or consent by any Holder of the
Securities with respect to any provisions hereof or thereof, the recovery of any
judgment against the Company, any action to enforce the same or any other
circumstance which might otherwise constitute a legal or equitable discharge or
defense of a guarantor. Each Guarantor hereby waives diligence, presentment,
demand of payment, filing of claims with a court in the event of insolvency or
bankruptcy of the Company, any right to require a proceeding first against the
Company, protest, notice and all demands whatsoever and covenants that the
Guarantee will not be discharged except by complete performance of the
obligations contained in the Securities, this Indenture, and this Guarantee. If
any Holder or the Trustee is required by any court or otherwise to return to the
Company, any Guarantor, or any custodian, trustee, liquidator or other similar
official acting in relation to the Company or any Guarantor, any amount paid by
the Company or any Guarantor to the Trustee or such Holder, this Guarantee, to
the extent theretofore discharged, shall be reinstated in full force and
effect. Each Guarantor further agrees that, as between each Guarantor, on the
one hand, and the Holders and the Trustee, on the other hand, (x) the maturity
of the obligations guaranteed hereby may be accelerated as provided in Article
Four for the purpose of this Guarantee, notwithstanding any stay, injunction or
other prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any acceleration of such obligations
as provided in Article Four, such obligations (whether or not due and payable)
shall forthwith become due and payable by each Guarantor for the purpose of this
Guarantee.
SECTION 1102. Severability.
------------
In case any provision of this Guarantee shall be in valid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
SECTION 1103. Release of a Guarantor.
----------------------
If the Securities are defeased in accordance with the terms of
this Indenture, or if all or substantially all of the assets of any Guarantor or
all of the capital stock of any Guarantor is sold (including by issuance or
otherwise) by the Company or any of its Subsidiaries in a transaction constitut-
<PAGE>
-85-
ing an Asset Disposition, and if (x) the Net Available Proceeds from such Asset
Disposition are used in accordance with Section 916 or (y) the Company delivers
to the Trustee an Officers' Certificate covenanting that the Net Available
Proceeds from such Asset Disposition shall be used in accordance with Section
916 and within the time limits specified by such Section 916, then such
Guarantor (in the event of a sale or other disposition of all of the capital
stock of such Guarantor) or the corporation acquiring such assets (in the event
of a sale or other disposition of all or substantially all of the assets of such
Guarantor), shall be released and discharged from its obligations under this
Article Eleven without any further action required on the part of the Trustee
or any Holder. The Trustee shall, at the sole cost and expense of the Company
and upon receipt at the reasonable request of the Trustee of an Opinion of
Counsel that the provisions of this Section 1103 have been complied with,
deliver an appropriate instrument evidencing such release upon receipt of a
request by the Company accompanied by an Officers' Certificate certifying as to
the compliance with this Section. Any Guarantor not so released remains liable
for the full amount of principal of, premium, if any, and interest on the
Securities and the other obligations of the Company hereunder as provided in
this Article Eleven.
SECTION 1104. Limitation of Guarantor's Liability.
-----------------------------------
Each Guarantor, and by its acceptance hereof each Holder and
the Trustee, hereby confirms that it is the intention of all such parties that
the guarantee by such Guarantor pursuant to its Guarantee not constitute a
fraudulent transfer or conveyance for purposes of title 11 of the United States
Code, as amended, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent
Transfer Act or any similar U.S. Federal or state or other applicable law. To
effectuate the foregoing intention, the Holders and such Guarantor hereby
irrevocably agree that the obligations of such Guarantor under the Guarantee
shall be limited to the maximum amount which, after giving effect to all other
contingent and fixed liabilities of such Guarantor and after giving effect to
any collections from or payments made by or on behalf of any other Guarantor in
respect of the obligations of such other Guarantor under its Guarantee or
pursuant to Section 1105, will result in the obligations of such Guarantor under
the Guarantee not constituting a fraudulent transfer or conveyance.
SECTION 1105. Contribution.
------------
In order to provide for just and equitable contribution among
the Guarantors, the Guarantors agree, inter se, that in the event any payment or
--------
distribution is made by any Guarantor (a "Funding Guarantor") under the
Guarantee, such Funding Guarantor shall be entitled to a contribution from all
other
<PAGE>
-86-
Guarantors in a pro rata amount, based on the net assets of each Guarantor
--- ----
(including the Funding Guarantor), determined in accordance with GAAP, subject
to Section 1104, for all payments, damages and expenses incurred by that
Funding Guarantor in discharging the Company's obligations with respect to the
Securities or any other Guarantor's obligations with respect to the Guarantee.
SECTION 1106. Execution of Guarantee.
----------------------
To further evidence their Guarantee to the Holders, the Guarantors
hereby agree to execute the Guarantee in substantially the form set forth in
Exhibit A-1 to be endorsed on each Security ordered to be authenticated and
delivered by the Trustee. Each Guarantor hereby agrees that its Guarantee set
forth in Section 1101 shall remain in full force and effect notwithstanding any
failure to endorse on each Security a notation of such Guarantee. Each such
Guarantee shall be signed on behalf of each Guarantor by its Chairman of the
Board, its President or one of its Vice Presidents prior to the authentication
of the Security on which it is endorsed, and the delivery of such Security by
the Trustee, after the authentication thereof hereunder, shall constitute due
delivery of such Guarantee on behalf of such Guarantor. Such signature upon the
Guarantee may be manual or facsimile signature of such officer and may be
imprinted or otherwise reproduced on the Guarantee, and in case such officer who
shall have signed the Guarantee shall cease to be such officer before the
Security on which such Guarantee is endorsed shall have been authenticated and
delivered by the Trustee or disposed of by the Company, such Security
nevertheless may be authenticated and delivered or disposed of as though the
Person who signed the Guarantee had not ceased to be such officer of the
Guarantor.
SECTION 1107. Additional Guarantors.
---------------------
The Company shall cause each Material Subsidiary, whether formed or
acquired after the Issue Date, to execute and deliver to the Trustee, promptly
upon any such formation or acquisition (a) a supplemental indenture in form and
substance satisfactory to the Trustee which subjects such Material Subsidiary
to the provisions of this Indenture as a Guarantor, and (b) an Opinion of
Counsel to the effect that such supplemental indenture has been duly authorized
and executed by such Material Subsidiary and constitutes the legal, valid,
binding and enforceable obligation of such Material Subsidiary (subject to such
customary exceptions concerning fraudulent conveyance laws, creditors' rights
and equitable principles as may be acceptable to the Trustee in its discretion),
provided that any Material Subsidiary acquired after the Issue Date which is
- --------
prohibited from entering into a Guarantee pursuant to restrictions contained in
any debt instrument or other agreement in exis-
<PAGE>
-87-
tence at the time such Material Subsidiary was so acquired and not entered into
in anticipation or contemplation of such acquisition shall not be required to
comply with the foregoing provisions of this Section so long as any such
restriction is in existence and to the extent of any such restriction.
SECTION 1108. Subordination of Subrogation and Other
Rights.
--------------------------------------
Each Guarantor hereby agrees that any claim against the Company that
arises from the payment, performance or enforcement of such Guarantor's
obligations under its Guarantee or this Indenture, including, without
limitation, any right of subrogation, shall be subject and subordinate to, and
no payment with respect to any such claim of such Guarantor shall be made
before, the payment in full of all outstanding Securities in accordance with the
provisions provided therefor in this Indenture.
ARTICLE TWELVE
Defeasance and Covenant Defeasance
SECTION 1201. Defeasance and Covenant Defeasance.
----------------------------------
(a) The Company may, at its option and at any time, elect to have the
respective obligations of the Company and the Guarantors discharged with respect
to the outstanding Securities and the Guarantees (a "defeasance") by fulfilling
the applicable conditions of Section 1201(b). Such defeasance means that the
Company shall be deemed to have paid and discharged the entire Indebtedness
represented by the outstanding Securities, and the Company and the Guarantors
shall be deemed to have satisfied all their respective other obligations under
the Securities, the Guarantees and this Indenture (and the Trustee, at the
expense of the Company, shall execute proper instruments acknowledging the
same), except for the following, which shall survive unless otherwise terminated
or discharged hereunder: (i) the rights of Holders of outstanding Securities to
receive, solely from the trust fund described in Sections 1201(b) and 1202,
payments in respect of the principal of, premium, if any, and interest on such
Securities when such payments are due, (ii) the Company's and the Guarantors'
respective obligations with respect to the Securities concerning issuing
temporary Securities (Section 208), registration of transfer or exchange of
Securities (Section 206), mutilated, destroyed, lost or stolen Securities
(Section 207) and the maintenance of an office or agency for payment (Section
902) and money for security payments held in trust (Section 903), (iii) the
rights, powers, trusts, duties and immunities of the Trustee set forth in Arti-
<PAGE>
-88-
cles Five and Six and (iv) the defeasance provisions of this Article Twelve. In
addition, the Company may, at its option and at any time, elect to have the
respective obligations of the Company and the Guarantors released with respect
to any covenants contained in Sections 701, 904, 905, 906, 907, 908, 909, 910,
911, 912, 913, 914, 915, 916, 917 and 918 (a "covenant defeasance") by
fulfilling the applicable provisions of Section 1201(b) and such Securities
shall thereafter be deemed not to be outstanding for the purposes of any
direction, waiver, consent, declaration or any other act or action of the
Holders (and the consequences of any thereof) taken or to be taken in connection
with any of such covenants, but shall continue to be deemed outstanding for all
other purposes hereunder. For this purpose such covenant defeasance means with
re spect to such outstanding Securities that the Company and the Guarantors may
omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such Section or by reason of reference
in any such Section to any other provision herein or in any other document, and
such omission to comply with any such term, condition or limitation shall not
constitute a Default or an Event of Default with respect to the Securities. In
the event covenant defeasance occurs, the events described in clauses (4) and
(5) (as it applies to the covenants listed in the foregoing sentence) of Section
401 shall no longer constitute Events of Default with respect to the Securities.
Except as specified above, the remainder of this Indenture, the Securities and
the Guarantees shall be unaffected by such covenant defeasance.
(b) The following shall be the conditions to application
of this Section 1201:
(i) the Company shall have deposited or caused to be
deposited irrevocably with the Trustee as trust funds, in trust for the
benefit of the Holders of the Securities, cash in U.S. dollars,
non-callable United States Government Obligations, or a combination
thereof, in an amount sufficient without reinvestment of any interest
received on such funds, in the opinion of a nationally recognized firm
of independent public accountants expressed in a written certification
thereof delivered to the Trustee, to pay the principal of (premium, if
any) and each installment of interest on the outstanding Securities on
the Stated Maturity (including upon redemption) of such principal or
installment of interest;
(ii) in the case of defeasance, the Company shall have
delivered to the Trustee an Opinion of Counsel in the United States
stating that (A) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or (B) since the
date of this Indenture, there has been a change in the applicable
federal income
<PAGE>
-89-
tax law, in either case to the effect that, and based thereon such
Opinion of Counsel shall confirm that, the Holders of the outstanding
Securities will not recognize income, gain or loss for federal income
tax purposes as a result of such defeasance and will be subject to
federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such defea sance had not
occurred;
(iii) in the case of covenant defeasance, the Company shall
have delivered to the Trustee an Opinion of Counsel in the United
States to the effect that the Holders of the outstanding Securities
will not recognize income, gain or loss for federal income tax purposes
as a result of such covenant defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same
times as would have been the case if such covenant defeasance had not
occurred;
(iv) no Default or Event of Default shall have occurred and
be continuing on the date of such deposit;
(v) such defeasance or covenant defeasance shall not result
in a breach or violation of, or constitute a default under, this
Indenture or any other agreement or instrument to which the Company or
any Guarantor is a party or by which it is bound;
(vi) in the case of defeasance or covenant defeasance the
Company shall have delivered to the Trustee an Opinion of Counsel to
the effect that after the 91st day (or such other applicable date)
following the deposit, the trust funds will not be subject to the
effect of any applicable bankruptcy, insolvency, reorganization or
similar law affecting creditors' rights generally and that such
defeasance or covenant defeasance will not result in the Trustee or the
trust arising from such deposit constituting an Investment Company as
defined in the Investment Company Act of 1940, as amended; and
(vii) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for relating to either the defeasance or
the covenant defeasance, as the case may be, have been complied with.
(c) Notwithstanding defeasance or covenant defeasance in
accordance with this Section 1201, the obligations of the Trustee under Section
1202 shall survive.
<PAGE>
-90-
SECTION 1202. Application of Trust Money.
--------------------------
Subject to Section 903, the Trustee shall hold in trust all money or
United States Government Obligations deposited with it pursuant to Section
1201, and shall apply the deposited money and the money from United States
Government Obligations in accordance with this Indenture to the payment of
principal of, premium, if any, and interest on the Securities.
SECTION 1203. Reinstatement.
-------------
If the Trustee is unable to apply any money or United States
Government Obligations in accordance with Section 1201 by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Company's and the Guarantors' respective obligations under this Indenture, the
Securities and the Guarantees shall be revived and reinstated as though no
deposit had occurred pursuant to Section 1201 until such time as the Trustee is
permitted to apply all such money or United States Government Obligations in
accordance with Section 1201; provided that if the Company has made any payment
--------
of interest or premium on or principal of any Securities because of the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Securities to receive such payment from the money or
United States Government Obligations held by the Trustee.
---------------
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
<PAGE>
-91-
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed as of the day and year first above written.
TULTEX CORPORATION
By:
----------------------------
Name:
Title:
AKOM, LTD.
By:
----------------------------
Name:
Title:
DOMINION STORES, INC.
By:
----------------------------
Name:
Title:
LOGOATHLETIC, INC.
By:
----------------------------
Name:
Title:
LOGOATHLETIC/HEADWEAR, INC.
By:
----------------------------
Name:
Title:
SWEATJET INCORPORATED
By:
----------------------------
Name:
Title:
<PAGE>
-92-
TULTEX CANADA, INC.
By:
----------------------------
Name:
Title:
TULTEX INTERNATIONAL, INC.
By:
----------------------------
Name:
Title:
FIRST UNION NATIONAL BANK OF
VIRGINIA, as Trustee
By:
----------------------------
Name:
Title:
<PAGE>
EXHIBIT A
(FORM OF FACE OF SECURITY)
9 5/8% Senior Notes due 2007
No. $
------------ ---------
CUSIP NO. 899900AB0
Tultex Corporation, a corporation duly organized and existing under
the laws of Virginia (herein called the "Company", which term includes any
successor Person under the Indenture hereinafter referred to), for value
received, hereby promises to pay to _______________________, or registered
assigns, the principal sum of ___________________ Dollars on April 15, 2007, and
to pay interest thereon from April 17, 1997 or from the most recent Interest
Payment Date to which interest has been paid or duly provided for, semi-annually
on April 15 and October 15 in each year, commencing October 15, 1997, at the
rate of 9 5/8% per annum, until the principal hereof is paid or made available
for payment, and at the same rate per annum on any overdue principal and premium
and on any overdue installment of interest until paid. The interest so payable,
and punctually paid or duly provided for, on any Interest Payment Date will, as
provided in such Indenture, be paid to the Person in whose name this Security
(or one or more Predecessor Securities) is registered at the close of business
on the Regular Record Date for such interest, which shall be the April 1 or
October 1 (whether or not a Business Day), as the case may be, next preceding
such Interest Payment Date. Any such interest not so punctually paid or duly
provided for will forthwith cease to be payable to the Holder on such Regular
Record Date and may either be paid to the Person in whose name this Security
(or one or more Predecessor Securities) is registered at the close of business
on a Special Record Date for the payment of such Defaulted Interested to be
fixed by the Trustee, notice whereof shall be given to Holders of Securities not
less than five Business Days prior to such Special Record Date, or be paid at
any time in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Securities may be listed, and upon such
notice as may be required by such exchange, all as more fully provided in said
Indenture.
Payment of the principal of (and premium, if any) and any such
interest on this Security will be made at the office or agency of the Company
maintained for that purpose in the Borough of Manhattan, The City of New York,
in such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts; provided,
--------
however, that at the option of the Company payment of
- -------
<PAGE>
interest may be made by check mailed to the address of the Person entitled
thereto as such address shall appear in the Security Register.
Reference is hereby made to the further provisions of this
Security set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been
executed by the Trustee referred to on the reverse hereof by manual signature,
this Security shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed.
Dated:
TULTEX CORPORATION
By:
-------------------------
Title:
Attest:
- --------------------------
Certificate of Authentication:
This is one of the 9 5/8% Senior Notes due 2007 referred to
in the within-mentioned Indenture.
[ ], a Trustee
By: Date:
----------------------------------
Authorized Signatory
A-2
<PAGE>
(FORM OF REVERSE OF SECURITY)
This Security is one of a duly authorized issue of Securities
of the Company designated as its 9 5/8% Senior Notes due 2007 (herein called the
"Securities"), limited in aggregate principal amount to $75,000,000, issued and
to be issued under an Indenture, dated as of April 15, 1997 (herein called the
"Indenture"), among the Company, the Guarantors listed on the signature pages
thereto (herein collectively called the "Guarantors", which term includes any
successor Person, or additional Guarantor, under the Indenture) and First Union
National Bank of Virginia, as Trustee (herein called the "Trustee", which term
includes any successor trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Guarantors, the Trustee and the Holders of the Securities and
of the terms upon which the Securities are and the Guarantees endorsed thereon
are, and are to be, authenticated and delivered.
The Securities are subject to redemption upon not less than 30
nor more than 60 days' notice by mail, at any time on or after April 15, 2002,
as a whole or in part, at the election of the Company, at the following
Redemption Prices (expressed as percentages of the principal amount): If re-
deemed during the 12-month period beginning April 15 of the years indicated,
<TABLE>
<CAPTION>
Redemption
Year Price
- ---- ----------
<S> <C>
2002 104.813%
2003 103.208%
2004 101.604
2005 and thereafter 100.000
</TABLE>
and thereafter at a Redemption Price equal to 100% of the principal amount,
together in the case of any such redemption with accrued interest to the
Redemption Date.
The Securities do not have the benefit of any sinking fund
obligations.
In the event of redemption or purchase pursuant to an Offer to
Purchase of this Security in part only, a new Security or Securities for the
unredeemed or unpurchased portion hereof will be issued in the name of the
Holder hereof upon the cancellation hereof.
If an Event of Default shall occur and be continuing,
the principal of all the Securities may be declared due and
A-3
<PAGE>
payable in the manner and with the effect provided in the Indenture.
The Indenture provides that, subject to certain conditions,
if (i) certain Net Available Proceeds are available from an Asset Disposition or
(ii) a Change of Control occurs, the Company shall be required to make an Offer
to Purchase all or a specified portion of the Securities.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the Guarantors and the rights of the Holders of
the Securities under the Indenture at any time by the Company, the Guarantors
and the Trustee with the consent of the Holders of a majority in aggregate
principal amount of the Securities at the time outstanding. The Indenture also
contains provisions permitting the Holders of specified percentages in aggregate
principal amount of the Securities at the time outstanding, on behalf of the
Holders of all the Securities, to waive compliance by the Company and the
Guarantors with certain provisions of the Indenture and certain past Defaults
under the Indenture and their consequences. Any such consent or waiver by the
Holder of this Security shall be conclusive and binding upon such Holder and
upon all future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Security.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of (and
premium, if any) and interest on this Security at the times, place and rate, and
in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Security is registrable in
the Security Register, upon surrender of this Security for registration of
transfer at the office or agency of the Company in the Borough of Manhattan, The
City of New York, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Security Registrar duly
executed by, the Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Securities, of authorized denominations and for the
same aggregate principal amount, will be issued to the designated transferee or
transferees.
The Securities are issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof. As
provided in the Indenture and subject to
A-4
<PAGE>
certain limitations therein set forth, Securities are exchangeable for a like
aggregate principal amount of Securities of a different authorized denomination,
as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, the Guarantors, the Trustee and any agent of the Company,
the Guarantors or the Trustee may treat the Person in whose name this Security
is registered as the owner hereof for all purposes, whether or not this Security
be overdue, and none of the Company, any Guarantor, the Trustee or any such
agent shall be affected by notice to the contrary.
Interest on this Security shall be computed on the basis of a
360-day year of twelve 30-day months. Holders of record on a Regular Record Date
immediately prior to an Interest Payment Date shall be entitled to receive the
interest pay able on the Securities on such Interest Payment Date
notwithstanding any call for redemption of such Securities on a Redemption Date
which is to occur on or subsequent to such Interest Payment Date.
Customary abbreviations may be used in the name of a Holder or
an assignee, such as TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors
Act).
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Company has caused CUSIP numbers
to be printed on the Securities and has directed the Trustee to use CUSIP
numbers in notices of redemption as a convenience to Holders. No representation
is made as to the accuracy of such numbers either as printed on the Securities
or as contained in any notice of redemption and reliance may be placed only on
the other identification numbers placed thereon.
The Company will furnish to any Holder of record of Securities
upon written request and without charge a copy of the Indenture.
All terms used in this Security which are defined in the
Indenture shall have the meanings assigned to them in the Indenture.
A-5
<PAGE>
The Indenture, this Security and the Guarantees endorsed hereon shall
be governed by and construed in accordance with the laws of the State of New
York without regard to principles of conflicts of law.
A-6
<PAGE>
(FORM OF GUARANTEE)
GUARANTEE
The Guarantors (as defined in the Indenture referred to in the
Security upon which this notation is endorsed) hereby, jointly and severally,
unconditionally guarantee (such guarantee by each Guarantor being referred to
herein as the "Guarantee") the due and punctual payment of the principal of,
premium, if any, and interest on the Securities, whether at maturity, by
acceleration or otherwise, the due and punctual payment of interest on the
overdue principal, premium and interest, if any, on the Securities, and the due
and punctual performance of all other obligations of the Company to the Holders
or the Trustee, all in accordance with the terms set forth in Article Twelve of
the Indenture.
The Guarantee shall not be valid or obligatory for any purpose
until the certificate of authentication on the Securities upon which the
Guarantee is noted shall have been executed by the Trustee under the Indenture
by the manual signature of one of its authorized officers.
This Guarantee shall be governed by and construed in
accordance with the laws of the State of New York without regard to principles
of conflicts of law.
This Guarantee is subject to release upon the terms set forth
in the Indenture.
AKOM, LTD.
DOMINION STORES, INC.
LOGOATHLETIC, INC.
LOGOATHLETIC/HEADWEAR, INC.
SWEATJET INCORPORATED
TULTEX CANADA, INC.
TULTEX INTERNATIONAL, INC.
By:
-----------------------------
Name:
Title: An Authorized
Officer of Each of
the Above-Listed
Guarantors
A-7
<PAGE>
ASSIGNMENT FORM
If you the Holder want to assign this Security, fill in the
form below and have your signature guaranteed:
I or we assign and transfer this Security to:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type name, address and zip code and
social security or tax ID number of assignee)
and irrevocably appoint ,
------------------------------------------------------
agent to transfer this Security on the books of the Company.
The agent may substitute another to act for him.
Dated: Signed:
---------------------- --------------------------
(Sign exactly as name
appears on the other side
of this Security)
Signature Guarantee:
----------------------------------------------------------
A-8
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you the Holder want to elect to have this Security purchased by the Company,
check the box: |_|
If you want to elect to have only part of this Security purchased by the
Company, state the amount: $
----------------
Dated: Signed:
--------------------------- ---------------------------
(Sign exactly as name
appears on the other side
of this Security)
Signature Guarantee:
-----------------------------------------------------------
A-9
<PAGE>
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
Tultex Corporation
101 Commonwealth Boulevard
Martinsville, Virginia 24112
Attention:
[Name and Address of Registrar]
Re: 9 5/8% Senior Notes due 2007
Reference is hereby made to the Indenture, dated as of April
15, 1997 (the "Indenture"), among Tultex Corporation (the "Company"), the
Guarantors named therein (the "Guarantors") and First Union National Bank of
Virginia, as trustee. Capitalized terms used but not defined herein shall have
the meanings given to them in the Indenture.
________________, (the "Transferor") owns and proposes to
transfer the Security[s] specified in Annex A hereto in the principal amount of
$___ in such Security[s] (the "Transfer"), to ________ (the "Transferee"), as
further specified in Annex A hereto. In the event that Transferor holds
Physical Securities, this Certificate is accompanied by one or more certificates
aggregating at least the principal amount of Securities proposed to be
Transferred. In connection with the Transfer, the Transferor hereby certifies
that:
1. [_] Check if Transferee will take an Interest in the 144A Global Security.
---------------------------------------------------------------------
The Transfer is being effected pursuant to and in accordance with Rule 144A
under the United States Securities Act of 1933, as amended (the "Securities
Act"), and, accordingly, the Transferor hereby further certifies that the
Securities are being transferred to a Person that the Transferor reasonably
believes is purchasing the Securities for its own account, or for one or more
accounts with respect to which such Person exercises sole investment discretion,
and such Person and each such account is a "qualified institutional buyer"
within the meaning of Rule 144A in a transaction meeting the requirements of
Rule 144A and such Transfer is in compliance with any applicable blue sky
securities laws of any state of the United States. Upon consummation of the
proposed Transfer in accordance with the terms of the Indenture, the transferred
Security will be subject to the restrictions on transfer enumerated in the
Securities Act Legend and in the Indenture and the Securities Act.
<PAGE>
2. |_| Check if Transferee will take an Interest in the Regulation S Global
--------------------------------------------------------------------
Security pursuant to Regulation S. The Transfer is being effected pursuant to
- ---------------------------------
and in accordance with Rule 904 under the Securities Act and, accordingly, the
Transferor hereby further certifies that (i) the Transfer is not being made to
a person in the United States and (x) at the time the buy order was originated,
the Transferee was outside the United States or such Transferor and any Person
acting on its behalf reasonably believed and believes that the Transferee was
outside the United States or (y) the transaction was executed in, on or through
the facilities of a designated offshore securities market and neither such
Transferor nor any Person acting on its behalf knows that the transaction was
prearranged with a buyer in the United States, (ii) no directed selling efforts
have been made in contravention of the requirements of Rule 904(b) of Regulation
S under the Securities Act and (iii) the transaction is not part of a plan or
scheme to evade the registration requirements of the Securities Act. Upon
consummation of the proposed transfer in accordance with the terms of the
Indenture, the Security will be subject to the restrictions on Transfer
enumerated in the Securities Act Legend printed on the Regulation S Global
Security and in the Indenture and the Securities Act.
3. |_| Check and complete if Transferee will take delivery of a Restricted
-------------------------------------------------------------------
Physical Security pursuant to Rule 144A or Regulation S. One or more of the
- -------------------------------------------------------
events specified in Section 206(a) of the Indenture have occurred and the
Transfer is being effected in compliance with the transfer restrictions
applicable to Securities bearing the Securities Act Legend and pursuant to and
in accordance with the Securities Act, and accordingly the Transferor hereby
further certifies that (check one):
(a) |_| such Transfer is being effected pursuant to and in accordance
with Rule 144A under the Securities Act and the Transferor certifies to the
effect set forth in paragraph 1 above; or
(b) |_| such Transfer is being effected pursuant to and in accordance
with Rule 904 under the Securities Act and the Transferor certifies to the
effect set forth in paragraph 2 above.
4. |_| Check if Transferee will take an Interest in the Unrestricted Global
--------------------------------------------------------------------
Security. The Transfer is being effected pursuant to and in accordance with
- --------
Rule 144 under the Securities Act and in compliance with the transfer
restrictions contained in the Indenture, and the restrictions on transfer
contained in the Indenture and the Securities Act Legend are not required in
order to maintain compliance with the Securities Act. Upon consummation of the
proposed Transfer in accordance with the
B-2
<PAGE>
terms of the Indenture, the transfer Securities will no longer be subject to the
restrictions on transfer enumerated in the Securities Act Legend and in the
Indenture and the Securities Act.
5. [_] Check if Transferee will take an Interest in the Physical Global Security
-------------------------------------------------------------------------
that does not bear the Securities Act Legend. One or more of the events
- --------------------------------------------
specified in Section 206(a) of the Indenture have occurred and the Transfer is
being effected pursuant to and in accordance with Rule 144 under the Securities
Act and in compliance with the transfer restrictions contained in the Indenture,
and the restrictions on transfer contained in the Indenture and the Securities
Act Legend are not required in order to maintain compliance with the Securities
Act. Upon consummation of the proposed Transfer in accordance with the terms of
the Indenture, the transferred Securities will no longer be subject to the
restrictions on transfer enumerated in the Securities Act Legend and in the
Indenture and the Securities Act.
This certificate and the statements contained herein are made
for your benefit and the benefit of the Company and the Guarantors.
---------------------------------
[Insert Name of Transferor]
By:
-----------------------------
Name:
Title:
Dated:_________________
B-3
<PAGE>
FORM OF ANNEX A TO CERTIFICATE
OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) [_] Interests in the
(i) [_] 144A Global Security (CUSIP _____), or
(ii) [_] Regulation S Global Security (CINS _____).
(b) [_]Physical Security.
2. That the Transferee will hold:
[CHECK ONE]
(a) [_] Interests in the:
(i) [_] 144A Global Security (CUSIP _____), or
(ii) [_] Regulation S Global Security (CINS _____), or
(iii) [_] Unrestricted Global Security (CUSIP _____); or
(b) [_] Physical Securities that bear the Securities Act
Legend;
(c) [_] Physical Securities that do not bear the Securities
Act Legend;
in accordance with the terms of the Indenture.
B-4
<PAGE>
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
Tultex Corporation
101 Commonwealth Boulevard
Martinsville, Virginia 24112
Attention:
[Name and Address of Registrar]
Re: 9 5/8% Senior Notes due 2007
(CUSIP _______________)
Reference is hereby made to the Indenture, dated as of
April 15, 1997 (the "Indenture"), among Tultex Corporation (the "Company"), the
---------
Guarantors named therein (the "Guarantors") and First Union National Bank of
Virginia, as trustee. Capitalized terms used but not defined herein shall have
the meanings given to them in the Indenture.
__________, (the "Holder") owns and proposes to exchange the
------
Security[s] specified herein, in the principal amount of $___ in such
Security[s] (the "Exchange"). In the event Holder holds Physical Securities,
--------
this Certificate is accompanied by one or more certificates aggregating at
least the principal amount of Securities proposed to be Exchanged. In connection
with the Exchange, the Holder hereby certifies that:
1. Exchange of Restricted Physical Securities or Interests in the Initial
Global Security for Physical Securities that do not bear the Securities Act
Legend or Unrestricted Global Securities
(a) [_] Check if Exchange is from Initial Global Securities to the
----------------------------------------------------------
Unrestricted Global Security. In connection with the Exchange of the Holder's
- ----------------------------
Initial Global Security to the Unrestricted Global Security in an equal
principal amount, the Holder hereby certifies (i) the Unrestricted Global
Securities are being acquired for the Holder's own account without transfer,
(ii) such Exchange has been effected in compliance with the transfer
restrictions applicable to the Initial Global Securities and pursuant to and in
accordance with the Securities Act of 1933, as amended (the "Securities Act")
--------------
and (iii) the restrictions on transfer contained in the Indenture and the
Securities Act Legend are not required in order to maintain compliance with the
Securities Act.
<PAGE>
(b) [_] Check if Exchange is from Restricted Physical Securities to an
--------------------------------------------------------------
Interest in the Unrestricted Global Security. In connection with the Holder's
- --------------------------------------------
Exchange of Restricted Physical Securities for Interest in the Unrestricted
Global Security, (i) the Interest in the Unrestricted Global Security are being
acquired for the Holder's own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions applicable to
Restricted Physical Securities and pursuant to and in accordance with the
Securities Act and (iii) the restrictions on transfer contained in the
Indenture and the Securities Act Legend are not required in order to maintain
compliance with the Securities Act.
(c) [_] Check if Exchange is from Restricted Physical Securities to
-----------------------------------------------------------
Physical Securities that do not bear the Securities Act Legend. In connection
- --------------------------------------------------------------
with the Holder's Exchange of a Restricted Physical Security for Physical
Securities that do not bear the Securities Act Legend, the Holder hereby
certifies (i) the Physical Securities that do not bear the Securities Act Legend
are being acquired for the Holder's own account without transfer, (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to Restricted Physical Securities and pursuant to and in accordance
with the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Securities Act Legend are not required in order to maintain
compliance with the Securities Act and (iv) one or more of the events specified
in Section 206(a) of the Indenture have occurred.
2. [_] Check if Exchange is from Restricted Physical Securities to Interests in
------------------------------------------------------------------------
an Initial Global Security. In connection with the Exchange of the Holder's
- --------------------------
Restricted Physical Security for interests in the Initial Global Security in
the [CHECK ONE] [_] 144A Global Security, [_] Regulation S Global Security,
with an equal principal amount, (i) the interests in the Initial Global Security
are being acquired for the Holder's own account without transfer and (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to the Restricted Physical Security and pursuant to and in accordance
with the Securities Act. Upon consummation of the proposed Exchange in
accordance with the terms of the Indenture, the Initial Global Security issued
will be subject to the restrictions on transfer enumerated in the Securities Act
Legend printed on the Initial Global Securities and in the Indenture and the
Securities Act.
This certificate and the statements contained herein are made
for your benefit and the benefit of the Company and the Guarantors.
C-2
<PAGE>
------------------------------------
[Insert Name of Holder]
By:
---------------------------------
Name:
Title:
Dated:
---------------------
C-3
<PAGE>
Exhibit 4.3
REGISTRATION RIGHTS AGREEMENT
Dated as of April 15, 1997
among
TULTEX CORPORATION,
THE GUARANTORS NAMED HEREIN
and
J.P. MORGAN SECURITIES INC.
and
NATIONSBANC CAPITAL MARKETS, INC.
<PAGE>
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is dated as of
April 15, 1997, by and among TULTEX CORPORATION, a corporation formed under the
laws of the State of Virginia (the "Company"), AKOM, LTD., a Cayman Islands,
B.W.I. corporation, DOMINION STORES, INC., a Virginia corporation,
LOGOATHLETIC, INC., a Virginia corporation, LOGOATHLETIC/HEADWEAR, INC., a
Massachusetts corporation, SWEATJET INCORPORATED, a Virginia corporation, TULTEX
CANADA, INC., a Canadian corporation, and TULTEX INTERNATIONAL, INC., a Virginia
corporation (each a "Guarantor" and collectively the "Guarantors," and the
Company and the Guarantors are referred to herein collectively as the "Issuers")
and J.P. MORGAN SECURITIES INC. and NATIONSBANC CAPITAL MARKETS, INC. (collec-
tively, the "Initial Purchasers").
This Agreement is entered into in connection with the Purchase
Agreement, dated as of April 10, 1997, among the Issuers and the Initial
Purchasers (the "Purchase Agreement") relating to the sale by the Issuers to
the Initial Purchasers, severally, of $75,000,000 aggregate principal amount of
their 9 5/8% Senior Notes due 2007 (the "Notes"). In order to induce the Initial
Purchasers to enter into the Purchase Agreement, the Issuers have agreed to
provide the registration rights set forth in this Agreement for the equal
benefit of both of the Initial Purchasers and their direct and indirect
transferees. The execution and delivery of this Agreement is a condition to the
Initial Purchasers' obligation to purchase the Notes under the Purchase
Agreement.
The parties hereby agree as follows:
1. Definitions
-----------
As used in this Agreement, the following terms shall have the following
meanings:
Additional Interest: See Section 4.
-------------------
Advice: See Section 5.
------
Applicable Period: See Section 2(b).
-----------------
Closing Date: The Closing Date as defined in the Purchase Agreement.
------------
<PAGE>
-2-
Company: See the introductory paragraph to this Agreement.
-------
Consummation Date: The 150th day after the Closing.
-----------------
Effectiveness Date: The 120th day after the Closing Date.
------------------
Effectiveness Period: See Section 3(a).
--------------------
Event Date: See Section 4(b).
----------
Exchange Act: The Securities Exchange Act of 1934, as amended, and the
------------
rules and regulations of the SEC promulgated thereunder.
Exchange Offer: See Section 2(a).
--------------
Exchange Registration Statement: See Section 2(a).
-------------------------------
Exchange Securities: See Section 2(a).
-------------------
Filing Date: The 60th day after the Closing Date.
-----------
Guarantor: See the introductory paragraph to this Agreement.
---------
Holder: Any record holder of Registrable Securities.
------
Indemnified Person: See Section 7.
------------------
Indemnifying Person: See Section 7.
-------------------
Indenture: The Indenture, dated as of April 15, 1997, among the Company,
---------
the Guarantors and First Union National Bank of Virginia, as trustee, pursuant
to which the Notes are being issued, as amended or supplemented from time to
time in accordance with the terms thereof.
Initial Purchasers: See the introductory paragraph to this Agreement.
------------------
Initial Shelf Registration: See Section 3(a).
--------------------------
Inspectors: See Section 5(p).
----------
Issue Date: The original issue date of the Notes.
----------
<PAGE>
-3-
Issuers: See the introductory paragraph to this Agreement.
-------
NASD: See Section 5(t).
----
Notes: See the preamble to this Agreement.
-----
Participant: See Section 7.
-----------
Participating Broker-Dealer: See Section 2(b).
---------------------------
Person: An individual, corporation, limited or general partnership,
------
joint venture, association, joint stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
Private Exchange: See Section 2(b).
----------------
Private Exchange Securities: See Section 2(b).
---------------------------
Prospectus: The prospectus included in any Registration Statement
-----------
(including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by such
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.
Records: See Section 5(p).
-------
Registrable Securities: The Notes upon original issuance of the Notes
----------------------
and at all times subsequent thereto, each Exchange Security as to which
Section 2(c)(1)(i) hereof is applicable upon original issuance and at all times
subsequent thereto and, if issued, the Private Exchange Securities, until in the
case of any such Notes, Exchange Securities or Private Exchange Securities, as
the case may be, (i) a Registration Statement (other than, with respect to any
Exchange Security as to which Section 2(c)(1)(i) hereof is applicable, the
Exchange Registration Statement) covering such Notes, Exchange Securities or
Private Exchange Securities has been declared effective by the SEC and such
Notes, Exchange Securities or Private Exchange Securities, as the case may be,
have been disposed of in
<PAGE>
-4-
accordance with such effective Registration Statement, (ii) such Notes, Exchange
Securities or Private Exchange Securities, as the case may be, are sold in
compliance with Rule 144, or (iii) such Notes, Exchange Securities or Private
Exchange Securities, as the case may be, cease to be outstanding.
Registration Statement: Any registration statement of the Issuers,
----------------------
including, but not limited to, the Exchange Registration Statement, that covers
any of the Registrable Securities pursuant to the provisions of this Agreement,
including the Prospectus, amendments and supplements to such registration
statement, including post-effective amendments, all exhibits, and all material
incorporated by reference or deemed to be incorporated by reference in such
registration statement.
Rule 144: Rule 144 promulgated under the Securities Act, as such Rule
--------
may be amended from time to time, or any similar rule (other than Rule 144A) or
regulation hereafter adopted by the SEC providing for offers and sales of
securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer of such securities being
free of the registration and prospectus delivery requirements of the Securities
Act.
Rule 144A: Rule 144A promulgated under the Securities Act, as such Rule
---------
may be amended from time to time, or any similar rule (other than Rule 144) or
regulation hereafter adopted by the SEC.
Rule 415: Rule 415 promulgated under the Securities Act, as such Rule
--------
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.
SEC: The Securities and Exchange Commission.
---
Securities Act: The Securities Act of 1933, as amended, and the rules
--------------
and regulations of the SEC promulgated thereunder.
Shelf Notice: See Section 2(c).
------------
Shelf Registration: See Section 3(b).
------------------
Subsequent Shelf Registration: See Section 3(b).
-----------------------------
TIA: The Trust Indenture Act of 1939, as amended.
---
<PAGE>
-5-
Trustee: The trustee as defined in the Indenture and, if existent, the
-------
trustee under any indenture governing the Exchange Securities and Private
Exchange Securities (if any).
Underwritten registration or underwritten offering: A registration in
--------------------------------------------------
which securities of the Issuers are sold to an underwriter for reoffering to the
public.
2. Exchange Offer
--------------
(a) The Issuers agree to file with the SEC as soon as practicable after
the Closing Date, but in no event later than the Filing Date, an offer to
exchange (the "Exchange Offer") any and all of the Registrable Securities
for a like aggregate principal amount of debt securities of the Issuers
which are identical in all material respects to the Notes (the "Exchange
Securities") (and which are entitled to the benefits of a trust indenture
which is identical in all material respects to the Indenture (other than
such changes as are necessary to comply with any requirements of the SEC to
effect or maintain the qualification of such trust indenture under the TIA)
and which has been qualified under the TIA), except that the Exchange
Securities shall have been registered pursuant to an effective Registration
Statement under the Securities Act and shall contain no restrictive legend
thereon. The Issuers agree to use their reasonable best efforts to keep the
Exchange Offer open for at least 30 business days (or longer if required by
applicable law) after the date notice of the Exchange Offer is mailed to
Holders and to consummate the Exchange Offer on or prior to the
Effectiveness Date. The Exchange Offer will be registered under the
Securities Act on the appropriate form (the "Exchange Registration
Statement") and will comply with all applicable tender offer rules and
regulations under the Exchange Act. If after such Exchange Registration
Statement is initially declared effective by the SEC, the Exchange Offer or
the issuance of the Exchange Securities thereunder is interfered with by
any stop order, injunction or other order or requirement of the SEC or any
other governmental agency or court such Exchange Registration Statement
shall be deemed not to have become effective for purposes of this
Agreement. Each Holder who participates in the Exchange Offer will be
deemed to represent that any Exchange Securities received by it will be
acquired in the ordinary course of its business, that at the time of the
consummation of the Exchange Offer such Holder will have no arrangement
with any person to participate in the dis-
<PAGE>
-6-
tribution of the Exchange Securities in violation of the provisions of the
Securities Act, and that such Holder is not an affiliate of the Issuers
within the meaning of the Securities Act. Upon consummation of the Exchange
Offer in accordance with this Section 2, the provisions of this Agreement
shall continue to apply, mutatis, mutandis, solely with respect to
------- --------
Registrable Securities that are Private Exchange Securities and Exchange
Securities held by Participating Broker-Dealers, and the Issuers shall have
no further obligation to register Registrable Securities (other than
Private Exchange Securities and other than Exchange Securities as to which
clause (c)(1)(i) hereof applies) pursuant to Section 3 of this Agreement.
No securities other than the Exchange Securities shall be included in the
Exchange Registration Statement.
(b) The Issuers shall include within the Prospectus contained in the
Exchange Registration Statement one or more section(s) reasonably
acceptable to the Initial Purchasers, which shall contain a summary
statement of the positions taken or policies made by the Staff of the SEC
with respect to the potential "underwriter" status of any broker-dealer
that is the beneficial owner (as defined in Rule 13d-3 under the Exchange
Act) of Exchange Securities received by such broker-dealer in the Exchange
Offer (a "Participating Broker-Dealer"), whether such positions or policies
have been publicly disseminated by the Staff of the SEC or such positions
or policies, in the reasonable judgment of the Initial Purchasers,
represent the prevailing views of the Staff of the SEC. Such section(s)
shall also allow the use of the prospectus by all persons subject to the
prospectus delivery requirements of the Securities Act, including all
Participating Broker-Dealers, and include a statement describing the means
by which Participating Broker-Dealers may resell the Exchange Securities.
The Issuers shall use their reasonable best efforts to keep the Exchange
Registration Statement effective and to amend and supplement the Prospectus
contained therein in order to permit such Prospectus to be lawfully delivered by
all persons subject to the prospectus delivery requirements of the Securities
Act for such period of time as such persons must comply with such requirements
in order to resell the Exchange Securities, provided that such period shall not
exceed 180 days (or such longer period if extended pursuant to the last
paragraph of Section 5) (the "Applicable Period").
<PAGE>
-7-
If, prior to consummation of the Exchange Offer, an Initial Purchaser
holds any Notes acquired by it and having the status of an unsold allotment in
the initial distribution, the Issuers upon the request of such Initial Purchaser
shall, simultaneously with the delivery of the Exchange Securities in the
Exchange Offer, issue and deliver to each such Initial Purchaser, in exchange
(the "Private Exchange") for the Notes held by such Initial Purchaser, a like
principal amount of debt securities of the Issuers that are identical in all
material respects to the Exchange Securities (the "Private Exchange
Securities") (and which are issued pursuant to the same indenture as the
Exchange Securities) except for the placement of a restrictive legend on such
Private Exchange Securities. The Private Exchange Securities shall bear the same
CUSIP number as the Exchange Securities. Interest on the Exchange Securities and
Private Exchange Securities will accrue from the last interest payment date on
which interest was paid on the Notes surrendered in exchange therefor or, if no
interest has been paid on the Notes, from the Issue Date.
Any indenture under which the Exchange Securities or the Private
Exchange Securities will be issued shall provide that the holders of any of the
Exchange Securities and the Private Exchange Securities will vote and consent
together on all matters (to which such holders are entitled to vote or consent)
as one class and that none of the holders of the Exchange Securities and the
Private Exchange Securities will have the right to vote or consent as a separate
class on any matter (to which such holders are entitled to vote or consent).
(c) If (1) prior to the consummation of the Exchange Offer, the Issuers
reasonably determine in good faith or Holders of at least a majority in
aggregate principal amount of the Registrable Securities notify the Issuers
that they have reasonably determined in good faith that (i) in the opinion
of counsel, the Exchange Securities would not, upon receipt, be tradeable
by such Holders who are not affiliates of the Issuers without restriction
under the Securities Act and without restrictions under applicable blue
sky or state securities laws or (ii) in the opinion of counsel, the SEC is
unlikely to permit the consummation of the Exchange Offer and/or (2)
subsequent to the consummation of the Private Exchange, holders of at least
a majority in aggregate principal amount of the Private Exchange
Securities so request with respect to the Private Exchange Securities
and/or (3) the Exchange Offer is commenced and not consummated prior to the
45th day following the Consummation Date for any reason, then the
<PAGE>
-8-
Issuers shall promptly deliver to the Holders and the Trustee notice
thereof (the "Shelf Notice") and shall thereafter file an Initial Shelf
Registration as set forth in Section 3 (which only in the circumstances
contemplated by clause (2) of this sentence will relate solely to the
Private Exchange Securities) pursuant to Section 3. The parties hereto
agree that, following the delivery of a Shelf Notice to the Holders of
Registrable Securities (only in the circumstances contemplated by clauses
(1) and/or (3) of the preceding sentence), the Issuers shall not have any
further obligation to conduct the Exchange Offer or the Private Exchange
under this Section 2.
3. Shelf Registration
------------------
If a Shelf Notice is delivered as contemplated by Section 2(c), then:
(a) Initial Shelf Registration. The Issuers shall as promptly as
--------------------------
reasonably practicable prepare and file with the SEC a Registration
Statement for an offering to be made on a continuous basis pursuant to Rule
415 covering all of the Registrable Securities (the "Initial Shelf
Registration"). If the Issuers shall have not yet filed an Exchange Offer,
the Issuers shall use their reasonable best efforts to file with the SEC
the Initial Shelf Registration on or prior to the Filing Date. Otherwise,
the Issuers shall use their reasonable best efforts to file with the SEC
the Initial Shelf Registration within 60 days of the delivery of the Shelf
Notice. The Initial Shelf Registration shall be on Form S-1 or another
appropriate form permitting registration of such Registrable Securities
for resale by such holders in the manner or manners designated by them
(including, without limitation, one or more underwritten offerings). The
Issuers shall not permit any securities other than the Registrable
Securities to be included in the Initial Shelf Registration or any
Subsequent Shelf Registration. The Issuers shall use their reasonable best
efforts to cause the Initial Shelf Registration to be declared effective
under the Securities Act on or prior to the 120th day after the filing
thereof with the Commission and to keep the Initial Shelf Registration
continuously effective under the Securities Act until the date which is 24
months from the Issue Date (subject to extension pursuant to the last
paragraph of Section 5 hereof) (the "Effectiveness Period"), or such
shorter period ending when (i) all Registrable Securities covered by the
Initial Shelf Registration have been sold
<PAGE>
-9-
in the manner set forth and as contemplated in the Initial Shelf
Registration or (ii) a Subsequent Shelf Registration covering all of the
Registrable Securities has been declared effective under the Securities
Act.
(b) Subsequent Shelf Registrations. If the Initial Shelf Registration
------------------------------
or any Subsequent Shelf Registration ceases to be effective for any reason
at any time during the Effectiveness Period (other than because of the sale
of all of the securities registered thereunder), the Issuers shall use
their reasonable best efforts to obtain the prompt withdrawal of any order
suspending the effectiveness thereof, and in any event shall within 45
days of such cessation of effectiveness amend the Shelf Registration in a
manner reasonably expected to obtain the withdrawal of the order
suspending the effectiveness thereof, or file an additional "shelf"
Registration Statement pursuant to Rule 415 covering all of the
Registrable Securities (a "Subsequent Shelf Registration"). If a
Subsequent Shelf Registration is filed, the Issuers shall use their
reasonable best efforts to cause the Subsequent Shelf Registration to be
declared effective as soon as practicable after such filing and to keep
such Registration Statement continuously effective for a period equal to
the number of days in the Effectiveness Period less the aggregate number of
days during which the Initial Shelf Registration or any Subsequent Shelf
Registration was previously continuously effective. As used herein the term
"Shelf Registration" means the Initial Shelf Registration and any
Subsequent Shelf Registration.
(c) Supplements and Amendments. The Issuers shall promptly supplement
--------------------------
and amend the Shelf Registration if required by the rules, regulations or
instructions applicable to the registration form used for such Shelf Regis-
tration, if required by the Securities Act, or if reasonably requested by
the Holders of a majority in aggregate principal amount of the Registrable
Securities covered by such Registration Statement or by any underwriter of
such Registrable Securities.
4. Additional Interest
-------------------
(a) The Issuers and the Initial Purchasers agree that the Holders of
Registrable Securities will suffer damages if the Issuers fail to fulfill
their obligations under Section 2 or Section 3 hereof and that it would not
be feasible to ascertain the extent of such damages with
<PAGE>
-10-
precision. Accordingly, the Issuers agree to pay, as liquidated damages,
additional interest on the Registrable Securities ("Additional Interest")
under the circumstances and to the extent set forth below (each of which
shall be given independent effect and shall not be duplicative):
(i) if neither the Exchange Registration Statement nor the Initial
Shelf Registration has been filed on or prior to the Filing Date,
Additional Interest shall accrue on the Registrable Securities over and
above the stated interest at a rate of .25% per annum for the first 90 days
immediately following the Filing Date, such Additional Interest rate
increasing by an additional .25% per annum at the beginning of each
subsequent 90-day period;
(ii) if neither the Exchange Registration Statement nor the Initial
Shelf Registration is declared effective by the SEC on or prior to the
Effectiveness Date, Additional Interest shall be accrued on the
Registrable Securities included or which should have been included in such
Registration Statement over and above the stated interest at a rate of .25%
per annum for the first 90 days immediately following the day after the
Effectiveness Date, such Additional Interest rate increasing by an
additional .25% per annum at the beginning of each subsequent 90-day
period; and
(iii) if (A) the Issuers have not exchanged Exchange Securities for all
Notes validly tendered in accordance with the terms of the Exchange Offer
on or prior to the Consummation Date or (B) the Exchange Registration
Statement ceases to be effective at any time prior to the time that the
Exchange Offer is consummated or (C) if applicable, the Shelf Registration
has been declared effective and such Shelf Registration ceases to be
effective at any time during the Effectiveness Period, then Additional
Interest shall be accrued on the Registrable Securities (over and above any
interest otherwise payable on the Registrable Securities) at a rate of .25%
per annum for the first 90 days commencing on the (x) 166th day after the
Issue Date, in the case of (A) above, or (y) the day the Exchange
Registration Statement ceases to be effective in the case of (B) above, or
(z) the day such Shelf Registration ceases to be effective in the case of
(C) above, such Additional Interest rate increasing by an additional .25%
per annum at the beginning of each such subsequent 90-day period;
<PAGE>
-11-
provided, however, that the Additional Interest rate on the Registrable
- -------- -------
Securities may not exceed at any one time in the aggregate 1.0% per annum; and
provided, further, that (1) upon the filing of the Exchange Registration
- -------- -------
Statement or a Shelf Registration as required hereunder (in the case of clause
(i) of this Section 4), (2) upon the effectiveness of the Exchange Registration
Statement or the Shelf Registration as required hereunder (in the case of clause
(ii) of this Section 4), or (3) upon the exchange of Exchange Securities for all
Notes tendered (in the case of clause (iii)(A) of this Section 4), or upon the
effectiveness of the Exchange Registration Statement which had ceased to remain
effective (in the case of (iii)(B) of this Section 4), or upon the effectiveness
of the Shelf Registration which had ceased to remain effective (in the case of
(iii)(C) of this Section 4), Additional Interest on the Registrable Securities
as a result of such clause (or the relevant subclause thereof), as the case may
be, shall cease to accrue. It being understood and agreed that, notwithstanding
any provision to the contrary, so long as any Registrable Security is then
covered by an effective Shelf Registration Statement, no Additional Interest
shall accrue on such Registrable Security.
(b) The Issuers shall notify the Trustee within one business day after
each and every date on which an event occurs in respect of which Additional
Interest is required to be paid (an "Event Date"). The Issuers shall pay the
Additional Interest due on the Registrable Securities by depositing with the
Trustee, in trust, for the benefit of the Holders thereof, on or before the
applicable semi-annual interest payment date, immediately available funds in
sums sufficient to pay the Additional Interest then due to Holders of
Registrable Securities. The Additional Interest amount due shall be payable
on each interest payment date to the record Holder of Registrable Secu-
rities entitled to receive the interest payment to be made on such date as
set forth in the Indenture. The amount of Additional Interest will be
determined by multiplying the applicable Additional Interest rate by the
principal amount of the affected Registrable Securities of such Holders,
multiplied by a fraction, the numerator of which is the number of days such
Additional Interest rate was applicable during such period (determined on
the basis of a 360-day year comprised of twelve 30-day months and, in the
case of a partial month, the actual number of days elapsed), and, the
denominator of which is 360. Each obligation to pay Additional Interest
shall be deemed to accrue immediately following the occurrence of the
applicable Event Date. The parties hereto agree that the Addi-
<PAGE>
-12-
tional Interest provided for in this Section 4 constitutes a reasonable
estimate of the damages that may be incurred by Holders of Registrable
Securities by reason of the failure of a Shelf Registration or Exchange
Offer to be filed or declared effective, or a Shelf Registration to remain
effective, as the case may be, in accordance with this Section 4.
5. Registration Procedures
-----------------------
In connection with the registration of any Registrable Securities
pursuant to Sections 2 or 3 hereof, the Issuers shall effect such registrations
to permit the sale of such Registrable Securities in accordance with the
intended method or methods of disposition thereof, and pursuant thereto the
Issuers shall:
(a) Use their reasonable best efforts to prepare and file with the SEC,
as soon as practicable after the date hereof but in any event prior to the
Filing Date in the case of the Exchange Registration Statement and the 45th
day following the Consummation Date in the case of the Shelf Registration
Statement, a Registration Statement or Registration Statements as
prescribed by Section 2 or 3, and to use their reasonable best efforts to
cause each such Registration Statement to become effective and remain
effective as provided herein, provided that, if (1) such filing is pursuant
--------
to Section 3, or (2) a Prospectus contained in an Exchange Registration
Statement filed pursuant to Section 2 is required to be delivered under
the Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Securities during the Applicable Period, before filing any
Registration Statement or Prospectus or any amendments or supplements
thereto, the Issuers shall upon written request furnish to and afford the
Holders of the Registrable Securities (which in the case of Registrable
Securities in the form of global certificates shall be The Depository Trust
Company ("DTC")) and each such Participating Broker-Dealer, as the case
may be, covered by such Registration Statement, their counsel and the
managing underwriters, if any, a reasonable opportunity to review copies of
all such documents (including copies of any documents to be incorporated by
reference therein and all exhibits thereto) proposed to be filed.
(b) Prepare and file with the SEC such amendments and post-effective
amendments to each Shelf Registration or Exchange Registration Statement,
as the case may be, as
<PAGE>
-13-
may be necessary to keep such Registration Statement continuously
effective for the Effectiveness Period or the Applicable Period, as the
case may be; cause the related Prospectus to be supplemented by any
required Prospectus supplement, and as so supplemented to be filed
pursuant to Rule 424 (or any similar provisions then in force) under the
Securities Act; and comply with the provisions of the Securities Act, the
Exchange Act and the rules and regulations of the SEC promulgated
thereunder applicable to it with respect to the disposition of all
securities covered by such Registration Statement as so amended or in such
Prospectus as so supplemented and with respect to the subsequent resale
of any securities being sold by a Participating Broker-Dealer covered by
any such Prospectus; the Issuers shall not be deemed to have used their
reasonable best efforts to keep a Registration Statement effective during
the Applicable Period if the Issuers voluntarily take any action that
would result in selling Holders of the Registrable Securities covered
thereby or Participating Broker-Dealers seeking to sell Exchange
Securities not being able to sell such Registrable Securities or such
Exchange Securities during that period unless such action is required by
applicable law or unless the Issuers comply with this Agreement, including
without limitation, the provisions of paragraph 5(k) hereof and the last
paragraph of this Section 5.
(c) If (1) a Shelf Registration is filed pursuant to Section 3, or
(2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange
Securities during the Applicable Period, notify the selling Holders of
Registrable Securities, or each such Participating Broker-Dealer, as the
case may be, their counsel and the managing underwriters, if any, who
have provided the Issuers with their names and addresses promptly (but in
any event within two business days), and confirm such notice in writing,
(i) when a Prospectus or any Prospectus supplement or post-effective
amendment has been filed, and, with respect to a Registration Statement or
any post-effective amendment, when the same has become effective under
the Securities Act (including in such notice a written statement that any
Holder may, upon request, obtain, without charge, one conformed copy of
such Registration Statement or post-effective amendment including
financial statements and schedules, documents incorporated or deemed to be
incorporated by reference and exhibits),
<PAGE>
-14-
(ii) of the issuance by the SEC of any stop order suspending the
effectiveness of a Registration Statement or of any order preventing or
suspending the use of any preliminary prospectus or the initiation of any
proceedings for that purpose, (iii) of the receipt by the Issuers of any
notification with respect to the suspension of the qualification or
exemption from qualification of a Registration Statement or any of the
Registrable Securities or the Exchange Securities to be sold by any
Participating Broker-Dealer for offer or sale in any jurisdiction, or the
initiation or threatening of any proceeding for such purpose, (iv) of the
happening of any event or any information becoming known that makes any
statement made in such Registration Statement or related Prospectus or any
document incorporated or deemed to be incorporated therein by reference
untrue in any material respect or that requires the making of any changes
in such Registration Statement, Prospectus or documents so that, in the
case of the Registration Statement, it will not contain any untrue
statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading, and that in the case of the Prospectus, it will not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading, and (v) of the Issuers' reasonable determination that a post-
effective amendment to a Registration Statement would be appropriate.
(d) If (1) a Shelf Registration is filed pursuant to Section 3, or (2)
a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act
by any Participating Broker-Dealer who seeks to sell Exchange Securities
during the Applicable Period, use its reasonable best efforts to prevent
the issuance of any order suspending the effectiveness of a Registration
Statement or of any order preventing or suspending the use of a Prospectus
or suspending the qualification (or exemption from qualification) of any
of the Registrable Securities or the Exchange Securities to be sold by any
Participating Broker-Dealer, for sale in any jurisdiction, and, if any
such order is issued, to use its reasonable best efforts to obtain the
withdrawal of any such order at the earliest possible moment.
<PAGE>
-15-
(e) If a Shelf Registration is filed pursuant to Section 3 and if
requested by the managing underwriters, if any, or the Holders of a majority
in aggregate principal amount of the Registrable Securities being sold in
connection with an underwritten offering, (i) promptly incorporate in a
prospectus supplement or post-effective amendment such information as the
managing underwriters, if any, or such Holders or counsel reasonably request
to be included therein, or (ii) make all required filings of such prospectus
supplement or such post-effective amendment as soon as practicable after the
Issuers have received notification of the matters to be incorporated in such
prospectus supplement or post-effective amendment.
(f) If (1) a Shelf Registration is filed pursuant to Section 3, or (2)
a Prospectus contained in an Exchange Registration Statement filed pursuant
to Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, furnish to each selling Holder of Registrable Securities
and to each such Participating Broker-Dealer who so requests and to counsel
and each managing underwriter, if any, without charge, one conformed copy of
the Registration Statement or Statements and each post-effective amendment
thereto, including financial statements and schedules, and if requested, all
documents incorporated or deemed to be incorporated therein by reference and
all exhibits.
(g) If (1) a Shelf Registration is filed pursuant to Section 3, or (2)
a Prospectus contained in an Exchange Registration Statement filed pursuant
to Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, deliver to each selling Holder of Registrable Securities,
or each such Participating Broker-Dealer, as the case may be, their counsel,
and the underwriters, if any, without charge, as many copies of the
Prospectus or Prospectuses (including each form of preliminary prospectus)
and each amendment or supplement thereto and any documents incorporated by
reference therein as such Persons may reasonably request; and, subject to the
last paragraph of this Section 5, the Issuers hereby consent to the use of
such Prospectus and each amendment or supplement thereto by each of the
selling holders of Registrable Securities or each such Participating Broker-
Dealer, as the case may be, and the underwriters or agents, if any, and
dealers (if any), in
<PAGE>
-16-
connection with the offering and sale of the Registrable Securities covered
by or the sale by Participating Broker-Dealers of the Exchange Securities
pursuant to such Prospectus and any amendment or supplement thereto.
(h) Prior to any public offering of Registrable Securities or any
delivery of a Prospectus contained in the Exchange Registration Statement by
any Participating Broker-Dealer who seeks to sell Exchange Securities during
the Applicable Period, to use its reasonable best efforts to register or
qualify, and to cooperate with the selling Holders of Registrable Securities
or each such Participating Broker-Dealer, as the case may be, the
underwriters, if any, and their respective counsel in connection with the
registration or qualification (or exemption from such registration or
qualification) of such Registrable Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions within the United States as
any selling Holder, Participating Broker-Dealer, or the managing underwriters
reasonably request in writing, provided that where Exchange Securities held
--------
by Participating Broker-Dealers or Registrable Securities are offered other
than through an underwritten offering, the Issuers agree to cause their
counsel to perform Blue Sky investigations and file registrations and
qualifications required to be filed pursuant to this Section 5(h); keep each
such registration or qualification (or exemption therefrom) effective during
the period such Registration Statement is required to be kept effective and
do any and all other reasonable acts or things necessary or advisable to
enable the disposition in such jurisdictions of the Exchange Securities held
by Participating Broker-Dealers or the Registrable Securities covered by the
applicable Registration Statement, provided that no Issuer shall be required
--------
to (A) qualify generally to do business in any jurisdiction where it is not
then so qualified, (B) take any action that would subject it to general
service of process in any such jurisdiction where it is not then so subject
or (C) subject itself to taxation in excess of a nominal dollar amount in any
such jurisdiction.
(i) If a Shelf Registration is filed pursuant to Section 3, reasonably
cooperate with the selling Holders of Registrable Securities and the managing
underwriters, if any, to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold, which
certificates shall not bear any restrictive legends and shall be in a form
eligible for deposit with
<PAGE>
-17-
DTC; and enable such Registrable Securities to be registered in such names as
the managing underwriter or underwriters, if any, or Holders may request.
(j) Use its reasonable best efforts to cause the Registrable Securities
covered by the Registration Statement to be registered with or approved by
such other United States governmental agencies or authorities of the United
States as may be necessary to enable the seller or sellers thereof or the
underwriters, if any, to consummate the disposition of such Registrable
Securities, except as may be required solely as a consequence of the nature
of such selling Holder's business, in which case the Issuers will cooperate
in all reasonable respects with the filing of such Registration Statement and
the granting of such approvals.
(k) If (1) a Shelf Registration is filed pursuant to Section 3, or (2) a
Prospectus contained in an Exchange Registration Statement filed pursuant to
Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, upon the occurrence of any event contemplated by paragraph
5(c)(iv) or 5(c)(v) above, as promptly as practicable prepare and (subject to
Section 5(a) above) file with the SEC, solely at the expense of the Issuers,
a supplement or post-effective amendment to the Registration Statement or a
supplement to the related Prospectus or any document incorporated or deemed
to be incorporated therein by reference, or file any other required document
so that, as thereafter delivered to the purchasers of the Registrable
Securities being sold thereunder or to the purchasers of the Exchange
Securities to whom such Prospectus will be delivered by a Participating
Broker-Dealer, any such Prospectus will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(l) Use its reasonable best efforts to cause the Registrable Securities
covered by a Registration Statement or the Exchange Securities, as the case
may be, to be rated with the appropriate rating agencies, if so requested by
the Holders of a majority in aggregate principal amount of Registrable
Securities covered by such
<PAGE>
-18-
Registration Statement or the Exchange Securities, as the case may be, or the
managing underwriters, if any.
(m) Prior to the effective date of the first Registration Statement
relating to the Registrable Securities, (i) provide the Trustee with printed
certificates for the Registrable Securities in a form eligible for deposit
with DTC and (ii) provide a CUSIP number for the Registrable Securities.
(n) Use its best efforts to cause all Registrable Securities covered by
such Registration Statement or the Exchange Securities, as the case may be,
to be (i) listed on each securities exchange, if any, on which similar
securities issued by the Issuers are then listed, or (ii) authorized to be
quoted on the National Association of Securities Dealers Automated Quotation
System ("NASDAQ") or the National Market System of NASDAQ if similar
securities of the Issuers are so authorized.
(o) In connection with an underwritten offering of Registrable Securities
pursuant to a Shelf Registration, enter into an underwriting agreement as is
customary in underwritten offerings and take all such other actions as are
reasonably requested by the managing underwriters in order to expedite or
facilitate the registration or the disposition of such Registrable
Securities, and in such connection, (i) make such representations and
warranties to the underwriters, with respect to the business of the Company
and its subsidiaries, if any, and the Registration Statement, Prospectus and
documents, if any, incorporated or deemed to be incorporated by reference
therein, in each case, as are customarily made by issuers to underwriters in
underwritten offerings, and confirm the same if and when requested; (ii)
obtain an opinion of counsel to the Issuers and updates thereof in form and
substance reasonably satisfactory to the managing underwriters, addressed to
the underwriters covering the matters customarily covered in opinions
requested in underwritten offerings and such other matters as may be
reasonably requested by underwriters; (iii) obtain "cold comfort" letters and
updates thereof in form and substance reasonably satisfactory to the
managing underwriters from the independent certified public accountant(s) of
the Company (and, if necessary, any other independent certified public
accountants of any subsidiary of the Company or of any business acquired by
the Company for which financial statements and financial data are, or are
<PAGE>
-19-
required to be, included in the Registration Statement), addressed to each of
the underwriters, such letters to be in customary form and covering matters
of the type customarily covered in "cold comfort" letters in connection with
underwritten offerings and such other matters as may be reasonably requested
by underwriters; and (iv) if an underwriting agreement is entered into, the
same shall contain indemnification provisions and procedures no less
favorable than those set forth in Section 7 hereof (or such other provisions
and procedures acceptable to Holders of a majority in aggregate principal
amount of Registrable Securities covered by such Registration Statement and
the managing underwriters or agents) with respect to all parties to be
indemnified pursuant to said Section. The above shall be done at each
closing under such underwriting agreement, or as and to the extent required
thereunder.
(p) If (1) a Shelf Registration is filed pursuant to Section 3, or (2) a
Prospectus contained in an Exchange Registration Statement filed pursuant to
Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, make available for inspection by any selling Holder of
such Registrable Securities being sold, or each such Participating Broker-
Dealer, as the case may be, any underwriter participating in any such
disposition of Registrable Securities, if any, and any attorney, accountant
or other agent retained by any such selling holder or each such
Participating Broker-Dealer, as the case may be, or underwriter
(collectively, the "Inspectors"), at the offices where normally kept, during
reasonable business hours, all financial and other records, pertinent
corporate documents and properties of the Issuers (collectively, the
"Records"), as shall be reasonably necessary to enable them to exercise any
applicable due diligence responsibilities, and cause the officers, directors
and employees of the Issuers to supply all information in each case
reasonably requested by any such Inspector in connection with such
Registration Statement. Records determined in good faith by the Issuers to be
confidential shall not be disclosed by any Inspector notified of such
determination unless (i) the disclosure of such Records is necessary to avoid
or correct a misstatement or omission in such Registration Statement, (ii)
the release of such Records is ordered pursuant to a subpoena or other order
from a court of competent jurisdiction or (iii) the information in such
<PAGE>
-20-
Records has been made generally available to the public. Each selling Holder
of such Registrable Securities and each such Participating Broker-Dealer will
be required to agree that information obtained by it as a result of such
inspections shall be deemed confidential and shall not be used by it as the
basis for any market transactions in the securities of the Issuers unless and
until such is made generally available to the public. Each selling Holder of
such Registrable Securities and each such Participating Broker-Dealer will be
required to further agree that it will, upon learning that disclosure of such
Records is sought in a court of competent jurisdiction, give notice to the
Issuers and allow them at their own expense to undertake appropriate action
to prevent disclosure of the Records deemed confidential.
(q) Provide an indenture trustee for the Registrable Securities or the
Exchange Securities, as the case may be, and cause the Indenture or the trust
indenture provided for in Section 2(a), as the case may be, to be qualified
under the TIA not later than the effective date of the Exchange Offer or the
first Registration Statement relating to the Registrable Securities; and in
connection therewith, cooperate with the trustee under any such indenture
and the holders of the Registrable Securities, to effect such changes to such
indenture as may be required for such indenture to be so qualified in
accordance with the terms of the TIA; and execute, and use its reasonable
best efforts to cause such trustee to execute, all documents as may be
required to effect such changes, and all other forms and documents required
to be filed with the SEC to enable such indenture to be so qualified in a
timely manner.
(r) Comply in all material respects with all applicable rules and
regulations of the SEC and make generally available to its securityholders
earning statements satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder (or any similar rule promulgated under
the Securities Act) no later than 90 days after the end of any 12-month
period (i) commencing at the end of any fiscal quarter in which Registrable
Securities are sold to underwriters in a firm commitment or best efforts
underwritten offering and (ii) if not sold to underwriters in such an
offering, commencing on the first day of the first fiscal quarter of the
Issuers after the effective date of a Shelf Registration Statement, which
statements shall cover said 12-month periods.
<PAGE>
-21-
(s) If an Exchange Offer or a Private Exchange is to be consummated, upon
delivery of the Registrable Securities by Holders to the Issuers (or to such
other Person as directed by the Issuers) in exchange for the Exchange
Securities or the Private Exchange Securities, as the case may be, the
Issuers shall mark, or caused to be marked, on such Registrable Securities
that such Registrable Securities are being cancelled in exchange for the
Exchange Securities or the Private Exchange Securities, as the case may be;
in no event shall such Registrable Securities be marked as paid or otherwise
satisfied.
(t) Reasonably cooperate with each seller of Registrable Securities
covered by any Registration Statement and each underwriter, if any,
participating in the disposition of such Registrable Securities and their
respective counsel in connection with any filings required to be made with
the National Association of Securities Dealers, Inc. (the "NASD").
(u) Use its reasonable best efforts to take all other steps necessary to
effect the registration of the Registrable Securities covered by a
Registration Statement contemplated hereby.
The Issuers may require each seller of Registrable Securities or
Participating Broker-Dealer as to which any registration is being effected to
furnish to the Issuers such information regarding such seller or
Participating Broker-Dealer and the distribution of such Registrable
Securities or Exchange Securities to be sold by such Participating Broker-
Dealer, as the case may be, as the Issuers may, from time to time, reasonably
request. The Issuers may exclude from such registration the Registrable
Securities of any seller or Participating Broker-Dealer who unreasonably fails
to furnish such information within a reasonable time after receiving such
request. Each seller as to which any Shelf Registration is being effected is
deemed to agree to furnish promptly to the Issuers all information required to
be disclosed in order to make the information previously furnished to the
Issuers by such seller not materially misleading.
Each Holder of Registrable Securities and each Participating
Broker-Dealer agrees by acquisition of such Registrable Securities or
Exchange Securities to be sold by such Participating Broker-Dealer, as the
case may be, that, upon receipt of any notice from the Issuers of the
happening of any event of the kind described in Section 5(c)(ii), 5(c)(iii),
<PAGE>
-22-
5(c)(iv), or 5(c)(v), such Holder will forthwith discontinue disposition of
such Registrable Securities covered by such Registration Statement or
Prospectus or Exchange Securities to be sold by such Participating Broker-
Dealer, as the case may be, until such holder's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 5(k), or until it
is advised in writing (the "Advice") by the Issuers that the use of the
applicable Prospectus may be resumed, and has received copies of any
amendments or supplements thereto. In the event the Issuers shall give any
such notice, each of the Effectiveness Period and the Applicable Period
shall be extended by the number of days during such periods from and
including the date of the giving of such notice to and including the date
when each seller of Registrable Securities covered by such Registration
Statement or Exchange Securities to be sold by such Participating Broker-
Dealer, as the case may be, shall have received (x) the copies of the
supplemented or amended Prospectus contemplated by Section 5(k) or (y) the
Advice.
6. Registration Expenses
---------------------
(a) All fees and expenses incident to the performance of or compliance
with this Agreement by the Issuers shall be borne by the Issuers whether or
not the Exchange Offer or a Shelf Registration is filed or becomes effective,
including, without limitation, (i) all registration and filing fees
(including, without limitation, (A) fees with respect to filings required to
be made with the NASD in connection with an underwritten offering and (B)
fees and expenses of compliance with state securities or Blue Sky laws
(including, without limitation, reasonable fees and disbursements of counsel
in connection with Blue Sky qualifications of the Registrable Securities or
Exchange Securities and determination of the eligibility of the Registrable
Securities or Exchange Securities for investment under the laws of such
jurisdictions in the United States (x) where the holders of Registrable
Securities are located, in the case of the Exchange Securities, or (y) as
provided in Section 5(h), in the case of Registrable Securities or Exchange
Securities to be sold by a Participating Broker-Dealer during the Applicable
Period)), (ii) printing expenses (including, without limitation, expenses of
printing certificates for Registrable Securities or Exchange Securities in a
form eligible for deposit with DTC and of printing prospectuses if the
printing of prospectuses is requested by the managing underwriters, if any,
or, in respect of Registrable Securities or Exchange Securities to be sold by
any Participating Broker-Dealer
<PAGE>
-23-
during the Applicable Period, by the Holders of a majority in aggregate
principal amount of the Registrable Securities included in any Registration
Statement or of such Exchange Securities, as the case may be), (iii)
messenger, telephone and delivery expenses, (iv) fees and disbursements of
counsel for the Issuers and fees and disbursements of special counsel for
the sellers of Registrable Securities (subject to the provisions of Section
6(b)), (v) fees and disbursements of all independent certified public
accountants referred to in Section 5(o)(iii) (including, without limitation,
the expenses of any special audit and "cold comfort" letters required by or
incident to such performance), (vi) rating agency fees, (vii) Securities Act
liability insurance, if the Issuers desires such insurance, (viii) fees and
expenses of all other Persons retained by the Issuers, (ix) internal expenses
of the Issuers (including, without limitation, all salaries and
expenses of officers and employees of the Issuers performing legal or
accounting duties), (x) the expense of any annual audit, (xi) the fees and
expenses incurred in connection with the listing of the securities to be
registered on any securities exchange, if applicable, and (xii) the expenses
relating to printing, word processing and distributing all Registration
Statements, underwriting agreements, securities sales agreements, indentures
and any other documents necessary in order to comply with this Agreement.
(b) In connection with any Shelf Registration hereunder, the Issuers
shall reimburse the Holders of the Registrable Securities being registered
in such registration for the fees and disbursements of not more than one
counsel (in addition to appropriate local counsel) chosen by the Holders of a
majority in aggregate principal amount of the Registrable Securities to be
included in such Registration Statement. Such Holders shall be responsible
for any and all other out-of-pocket expenses of the Holders of Registrable
Securities incurred in connection with the registration of the Registrable
Securities.
7. Indemnification
---------------
The Issuers agree to indemnify and hold harmless each Holder of
Registrable Securities and each Participating Broker-Dealer selling Exchange
Securities during the Applicable Period, the officers and directors of each such
person, and each person, if any, who controls any such person within the meaning
of either Section 15 of the Securities Act or Sec-
<PAGE>
-24-
tion 20 of the Exchange Act (each, a "Participant"), from and against any and
all losses, claims, damages and liabilities (including, without limitation, the
reasonable legal fees and other expenses actually incurred in connection with
any suit, action or proceeding or any claim asserted) caused by any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement (or any amendment thereto) or Prospectus (as amended or
supplemented if the Issuers shall have furnished any amendments or supplements
thereto) or any preliminary prospectus, or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, except insofar as such losses, claims,
damages or liabilities are caused by any untrue statement or omission or alleged
untrue statement or omission made in reliance upon and in conformity with
information relating to any Participant furnished to the Company in writing by
such Participant expressly for use therein; provided that the foregoing
--------
indemnity with respect to any preliminary prospectus shall not inure to the
benefit of any Participant (or to the benefit of any person controlling such
Participant) from whom the person asserting any such losses, claims, damages or
liabilities purchased Registrable Securities or Exchange Securities if such
untrue statement or omission or alleged untrue statement or omission made in
such preliminary prospectus is eliminated or remedied in the related Prospectus
(as amended or supplemented if the Issuers shall have furnished any amendments
or supplements thereto) and a copy of the related Prospectus (as so amended or
supplemented) shall not have been furnished to such person at or prior to the
sale of such Registrable Securities or Exchange Securities, as the case may be,
to such person.
Each Participant will be required to agree, severally and not jointly,
to indemnify and hold harmless the Company, its directors, its officers and each
person who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from the Issuers to each Participant, but only with
reference to information relating to such Participant furnished to the Company
in writing by such Participant expressly for use in any Registration Statement
or Prospectus, any amendment or supplement thereto, or any preliminary
prospectus. The liability of any Participant under this paragraph shall in no
event exceed the proceeds received by such Participant from sales of Registrable
Securities giving rise to such obligations.
<PAGE>
-25-
If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, such person (the "Indemnified Person") shall promptly
notify the person against whom such indemnity may be sought (the "Indemnifying
Person") in writing, and the Indemnifying Person, upon request of the
Indemnified Person, shall retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Person may designate in such proceeding and shall pay the
reasonable fees and expenses actually incurred by such counsel related to
such proceeding, provided that the failure to so notify the Indemnifying
--------
Person shall not relieve it of any obligation or liability which it may have
hereunder or otherwise (unless and only to the extent that such failure directly
results in the loss or compromise of any material rights or defenses). In any
such proceeding, any Indemnified Person shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Person unless (i) the Indemnifying Person and the Indemnified
Person shall have mutually agreed to the contrary, (ii) the Indemnifying Person
has failed within a reasonable time to retain counsel reasonably satisfactory to
the Indemnified Person or (iii) the named parties in any such proceeding
(including any impleaded parties) include both the Indemnifying Person and the
Indemnified Person and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them. It
is understood that the Indemnifying Person shall not, in connection with any
proceeding or related proceeding in the same jurisdiction, be liable for the
fees and expenses of more than one separate firm (in addition to any local
counsel) for all Indemnified Persons, and that all such fees and expenses shall
be reimbursed as they are incurred. Any such separate firm for the Participants
and such control persons of Participants shall be designated in writing by
Participants who sold a majority in interest of Registrable Securities sold by
all such Participants and any such separate firm for the Issuers, their
directors, officers and such control persons of the Issuers shall be designated
in writing by the Issuers. The Indemnifying Person shall not be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final non-appealable judgment for the
plaintiff, the Indemnifying Person agrees to indemnify any Indemnified Person
from and against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an Indemnified Person
shall have
<PAGE>
-26-
requested an Indemnifying Person to reimburse the Indemnified Person for
reasonable fees and expenses actually incurred by counsel as contemplated by the
third sentence of this paragraph, the Indemnifying Person agrees that it shall
be liable for any settlement of any proceeding effected without its written
consent if (i) such settlement is entered into more than 30 days after receipt
by such Indemnifying Person of the aforesaid request and (ii) such Indemnifying
Person shall not have reimbursed the Indemnified Person in accordance with such
request prior to the date of such settlement; provided, however, that the
-------- -------
Indemnifying Person shall not be liable for any settlement effected without its
consent pursuant to this sentence if the Indemnifying Party is contesting, in
good faith, the request for reimbursement. No Indemnifying Person shall,
without the prior written consent of the Indemnified Person, effect any
settlement of any pending or threatened proceeding in respect of which any
Indemnified Person is or could have been a party and indemnity could have been
sought hereunder by such Indemnified Person, unless such settlement includes an
unconditional release of such Indemnified Person from all liability on claims
that are the subject matter of such proceeding.
If the Indemnification provided for in the first and second
paragraphs of this Section 7 is unavailable to an Indemnified Person in respect
of any losses, claims, damages or liabilities referred to therein, then each
Indemnifying Person under such paragraph, in lieu of indemnifying such
Indemnified Person thereunder, shall contribute to the amount paid or payable by
such Indemnified Person as a result of such losses, claims, damages or
liabilities in such proportion as is appropriate to reflect the relative fault
of the Issuers on the one hand and the Participants on the other in connection
with the statements or omissions that resulted in such losses, claims, damages
or liabilities, as well as any other relevant equitable considerations. The
relative fault of the Issuers on the one hand and the Participants on the other
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Issuers or by
the Participants and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The parties shall agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata allocation
--- ----
(even if the Participants were treated as one entity for such purpose) or by
any other method of allocation that does not take account of the equitable con-
<PAGE>
-27-
siderations referred to in the immediately preceding paragraph. The amount paid
or payable by an Indemnified Person as a result of the losses, claims, damages
and liabilities referred to in the immediately preceding paragraph shall be
deemed to include, subject to the limitations set forth above, any reasonable
legal or other expenses actually incurred by such Indemnified Person in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, in no event shall a
Participant be required to contribute any amount in excess of the amount by
which proceeds received by such Participant from sales of Registrable Securities
exceeds the amount of any damages that such Participant has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
The indemnity and contribution agreements contained in this Section
7 will be in addition to any liability which the Indemnifying Persons may
otherwise have to the Indemnified Persons referred to above.
8. Rule 144 and Rule 144A
----------------------
The Issuers covenant that they will file the reports required to be
filed by them under the Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder in a timely manner and, if at any time
the Issuers are not required to file such reports, they will, upon the request
of any Holder of Registrable Securities, make publicly available other
information so long as necessary to permit sales pursuant to Rule 144 and Rule
144A under the Securities Act. The Issuers further covenant that they will take
such further action as any Holder of Registrable Securities may reasonably
request, all to the extent required from time to time to enable such holder to
sell Registrable Securities without registration under the Securities Act within
the limitation of the exemptions provided by (a) Rule 144 and Rule 144A under
the Securities Act, as such Rules may be amended from time to time, or (b) any
similar rule or regulation hereafter adopted by the SEC.
9. Underwritten Registrations
--------------------------
If any of the Registrable Securities covered by any Shelf Registration
are to be sold in an underwritten offering,
<PAGE>
-28-
the investment banker or investment bankers and manager or managers that will
manage the offering will be selected by the Holders of a majority in aggregate
principal amount of such Registrable Securities included in such offering and
reasonably acceptable to the Issuers.
No Holder of Registrable Securities may participate in any underwritten
registration hereunder unless such Holder (a) agrees to sell such Holder's
Registrable Securities on the basis provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such arrangements and (b)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of such
underwriting arrangements.
10. Miscellaneous
-------------
(a) Remedies. In the event of a breach by the Issuers of any of their
--------
obligations under this Agreement, each Holder of Registrable Securities, in
addition to being entitled to exercise all rights provided herein, in the
Indenture or, in the case of the Initial Purchasers, in the Purchase
Agreement or granted by law, including recovery of damages, will be entitled
to specific performance of its rights under this Agreement. The Issuers agree
that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by any of them of any of the provisions of
this Agreement and hereby further agree that, in the event of any action for
specific performance in respect of such breach, the Issuers shall waive the
defense that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Issuers have not, as of the date
--------------------------
hereof, entered and shall not, after the date of this Agreement, enter into
any agreement with respect to any of their securities that is inconsistent
with the rights granted to the Holders of Registrable Securities in this
Agreement or otherwise conflicts with the provisions hereof. The Issuers
have not entered and will not enter into any agreement with respect to any of
their securities which will grant to any Person piggy-back rights with
respect to a Registration Statement.
(c) Adjustments Affecting Registrable Securities. The Issuers shall
not, directly or indirectly, take any action with respect to the Registrable
Securities as a class that would adversely affect the ability of the Holders
of Registrable Securities to include such Registrable
<PAGE>
-29-
Securities in a registration undertaken pursuant to this Agreement.
(d) Amendments and Waivers. The provisions of this Agreement, including
----------------------
the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions
hereof may not be given, unless the Issuers have obtained the written consent
of Holders of at least a majority of the then outstanding aggregate
principal amount of Registrable Securities. Notwithstanding the foregoing,
a waiver or consent to depart from the provisions hereof with respect to a
matter that relates exclusively to the rights of Holders of Registrable
Securities whose securities are being sold pursuant to a Registration
Statement and that does not directly or indirectly affect, impair, limit or
compromise the rights of other Holders of Registrable Securities may be given
by Holders of at least a majority in aggregate principal amount of the
Registrable Securities being sold by such Holders pursuant to such
Registration Statement, provided that the provisions of this sentence may not
--------
be amended, modified or supplemented except in accordance with the provisions
of the immediately preceding sentence.
(e) Notices. All notices and other communications (including without
-------
limitation any notices or other communications to the Trustee) provided for
or permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, next-day air courier or telecopier:
(i) if to a Holder of Registrable Securities, at the most current
address given by the Trustee to the Issuers; and
(ii) if to the Issuers, 101 Commonwealth Blvd, P.O. Box 5191,
Martinsville, Virginia 24115, Attention: O. Randolph Rollins; with a copy to
Hunton & Williams, Riverfront Plaza, East Tower, 951 East Byrd Street,
Richmond, Virginia 23219-4074, Attention: Lathan M. Ewers.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five business days after
being deposited in the mail, postage prepaid, if mailed; one business day after
being timely delivered to a next-day air courier; and when receipt is
acknowledged by the addressee, if telecopied.
<PAGE>
-30-
Copies of all such notices, demands or other communications shall
be concurrently delivered by the Person giving the same to the trustee under
the Indenture at the address specified in such Indenture.
(f) Successors and Assigns. This Agreement shall inure to the benefit
----------------------
of and be binding upon the successors and assigns of each of the parties,
including without limitation and without the need for an express assignment,
subsequent Holders of Registrable Securities; provided, that, with respect to
the indemnity and contribution agreements in Section 7, each Holder of
Registrable Securities subsequent to the Initial Purchasers shall be bound
by the terms thereof if such Holder elects to include Registrable Securities
in a Shelf Registration; provided, however, that this Agreement shall not
inure to the benefit of or be binding upon a successor or assign of a Holder
unless and to the extent such successor or assign holds Registrable
Securities.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS
MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(j) Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the
parties hereto shall use their best efforts to find and employ an alternative
means to achieve the same or substantially the same result as
<PAGE>
-31-
that contemplated by such term, provision, covenant or restriction. It is
hereby stipulated and declared to be the intention of the parties that they
would have executed the remaining terms, provisions, covenants and
restrictions without including any of such that may be hereafter declared
invalid, illegal, void or unenforceable.
(k) Entire Agreement. This Agreement, together with the Purchase
----------------
Agreement, is intended by the parties as a final expression of their
agreement, and is intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein and therein.
(l) Securities Held by the Issuers or Its Affiliates. Whenever the
------------------------------------------------
consent or approval of holders of a specified percentage of Registrable
Securities is required hereunder, Registrable Securities held by the Issuers
or any of their affiliates (as such term is defined in Rule 405 under the
Securities Act) shall not be counted in determining whether such consent or
approval was given by the Holders of such required percentage.
(m) Subsidiary Guarantor a Party. Immediately upon the designation of
----------------------------
any subsidiary of the Company as a Guarantor (as defined in the Indenture),
the Company shall cause such Guarantor to guarantee the obligations of the
Issuers hereunder (including, without limitation, the obligation to pay
Additional Interest, if any, pursuant to the terms of Section 4 hereof), by
executing and delivering to the Initial Purchaser an appropriate amendment
to this Agreement.
<PAGE>
-32-
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
TULTEX CORPORATION
By:
---------------------------------------
Name:
Title:
AKOM, LIMITED
By:
---------------------------------------
Name:
Title:
DOMINION STORES, INC.
By:
---------------------------------------
Name:
Title:
LOGOATHLETIC, INC.
By:
---------------------------------------
Name:
Title:
LOGOATHLETIC/HEADWEAR, INC.
By:
---------------------------------------
Name:
Title:
SWEATJET INCORPORATED
By:
---------------------------------------
Name:
Title:
TULTEX CANADA, INC.
By:
---------------------------------------
Name:
Title:
<PAGE>
-33-
TULTEX INTERNATIONAL, INC.
By:
---------------------------------------
Name:
Title:
J.P. MORGAN SECURITIES INC.
NATIONSBANC CAPITAL MARKETS, INC.
By: J.P. Morgan Securities Inc.
By:
---------------------------------------
Name:
Title:
<PAGE>
EXHIBIT 5.1
-----------
HUNTON & WILLIAMS
951 EAST BYRD STREET
RICHMOND, VA 23219
June 13, 1997
Board of Directors
Tultex Corporation
101 Commonwealth Boulevard
Martinsville, VA 24112
Registration Statement on Form S-4
Ladies and Gentlemen:
We are acting as counsel for Tultex Corporation (the "Company") in
connection with the registration under the Securities Act of 1933 of its 9 5/8%
Senior Notes due 2007 (the "Exchange Notes") and the Guarantees of its
Subsidiaries with respect to the Exchange Notes (the "Guarantees"). The
transaction in which the Exchange Notes and the Guarantees will be issued is
described in the Company's Registration Statement on Form S-4 (the "Registration
Statement"), expected to be filed with the Securities and Exchange Commission on
June 13, 1997. In connection with the filing of the Registration Statement, you
have requested our opinion concerning certain corporate matters.
We are of the opinion that:
1. The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the Commonwealth of
Virginia.
2. The Exchange Notes and the Guarantees have been duly authorized
and, when issued as described in the Registration Statement, will
be legally issued, fully paid and nonassessable.
We consent to the filing of this opinion with the Commission as an
exhibit to the Registration Statement and to the references to us in the
Prospectus included therein. In giving this consent, we do not admit that we are
within the category of persons whose consent is required by Section 7 of the
Securities Act of 1933 or the rules and regulations promulgated thereunder by
the Securities and Exchange Commission.
Very truly yours,
HUNTON & WILLIAMS
<PAGE>
EXHIBIT 8.1
-----------
HUNTON & WILLIAMS
951 EAST BYRD STREET
RICHMOND, VA 23219
June 13, 1997
Board of Directors
Tultex Corporation
101 Commonwealth Boulevard
Martinsville, VA 24112
Tultex Corporation--Exchange Offer
Certain Federal Income Tax Matters
Ladies and Gentlemen:
We are acted as counsel to Tultex Corporation (the "Company") in
connection with the preparation of a Registration Statement on Form S-4 (the
"Registration Statement") for the registration under the Securities Act of 1933,
as amended (the "Act"), of (1) $75,000,000 principal amount of its 9 5/8% Senior
Notes due 2007 (the "Exchange Notes), and (2) the Company's Subsidiaries'
related guarantee (the "Guarantees"). The Exchange Notes, and the Guarantees are
to be issued in order to effect the exchange of Exchange Notes for a like
principal amount of the Company's outstanding 9 5/8% Senior Notes due 2007.
We have reviewed copies of (1) the Registration Statement and the
prospectus included therein and (2) such other documents as we have deemed
necessary or appropriate as a basis for the opinion set forth below.
Based on the foregoing, we are of the opinion that the statements and
legal conclusions contained in the Registration Statement under the caption
"Certain United States Federal Income Tax Considerations" are correct and that
the discussion thereunder does not omit any material provision with respect to
the matters covered.
We consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving this consent, we do not admit that we are in
the category of persons whose consent is required by Section 7 of the Act or the
rules and regulations promulgated thereunder by the Securities and Exchange
Commission.
Very truly yours,
HUNTON & WILLIAMS
<PAGE>
EXHIBIT 12.1
------------
Tultex Corporation
Computation of Ratio of Earnings to Fixed Charges
(Amounts in Thousands)
<TABLE>
<CAPTION>
Quarter Ended Year Ended
------------- -----------------------------------------------------------------
April 5 Dec. 28 Dec. 30 Dec. 31 Jan. 1 Jan. 2
1997 1996 1995 1994(A) 1994 1993
--------- --------- --------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Income (loss) before income taxes
and extraordinary item ($6,952) $26,933 $8,948 $14,435 $9,091 $20,251
---------- ---------- ---------- ---------- ---------- ----------
Interest on indebtedness 5,453 21,742 21,952 18,151 16,996 13,540
Amortization of deferred debt
issue costs 0 0 0 1,774 268 106
Portion of rental expenses representative
of the interest factor (33%) 836 4,429 4,376 4,453 5,031 4,565
---------- ---------- ---------- ---------- ---------- ----------
Total fixed charges 6,289 26,171 26,328 24,378 22,295 18,211
---------- ---------- ---------- ---------- ---------- ----------
Income (loss) before income taxes and
extraordinary item and fixed charges ($663) $53,104 $35,276 $38,813 $31,386 $38,462
========== ========== ========== ========== ========== ==========
Ratio of earnings to fixed charges (B) 2.03 1.34 1.59 1.41 2.11
========== ========== ========== ========== ========== ==========
COMPUTATION OF PRO FORMA
RATIO OF EARNINGS TO FIXED
CHARGES AFTER ADJUSTMENT
FOR DEBT ISSUANCE
Income (loss) before income taxes and
extraordinary item and fixed
charges, as above ($663) $53,104
---------- ----------
Fixed charges, as above 6,289 26,171
Adjustments:
Estimated net increase in interest
expense from the financing 749 2,997
---------- ----------
Total pro forma charges $7,038 $29,168
---------- ----------
Pro forma ratio of earnings to fixed
charges (C) 1.82
---------- ----------
</TABLE>
(A) Included in earnings for the year ended December 31, 1994 was a
nonrecurring gain of $4,405 before income taxes related to the sale of
facilities. If such sale had not occurred, the ratio of earnings to fixed
charges would have been 1.41.
(B) Earnings did not cover fixed charges by $6,952 for the three months ended
April 5, 1997.
(C) On a pro forma basis, earnings did not cover fixed charges by $7,701 for
the three months ended April 5, 1997.
<PAGE>
EXHIBIT 23.1
------------
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-4 of Tultex
Corporation ("Tultex") of our report dated February 4, 1997, which appears on
page 19 of Tultex's 1996 Annual Report to Stockholders, which is incorporated by
reference in its Annual Report on Form 10-K for the year ended December 28,
1996. We also consent to the incorporation by reference of our report on the
Financial Statement Schedule, which appears on page F-1 of such Annual Report on
Form 10-K. We also consent to the references to us under the headings "Experts"
and "Selected Consolidated Financial Data" in such Prospectus. However, it
should be noted that Price Waterhouse LLP has not prepared or certified such
"Selected Consolidated Financial Data."
PRICE WATERHOUSE LLP
Winston-Salem, North Carolina
June 13, 1997
<PAGE>
Exhibit 25.1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM T-1
------------------------
STATEMENT OF ELIGIBILITY AND QUALIFICATION
UNDER THE TRUST INDENTURE ACT FOR 1939, AS AMENDED,
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
Check if an application to determine eligibility of a trustee pursuant to
Section 305(b) (2)
-----
------------------------
FIRST UNION NATIONAL BANK OF VIRGINIA
(Exact name of Trustee as specified in its charter)
213 SOUTH JEFFERSON STREET
ROANOKE, VIRGINIA 24011 54-
0211320
(Address of principal (I.R.S. Employer
executive office) (Zip Code) Identification No.)
Dante M. Monakil, (804) 788-9659
901 E. Cary Street, Richmond, Virginia 23219
------------------------
TULTEX CORPORATION
(Exact name of obligor as specified in its charter)
Virginia 54-0367896
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
101 Commonwealth Boulevard
Martinsville, VA 24112
(Address of principal executive offices) (Zip Code)
------------------------
TULTEX CORPORATION 9 5/8% SENIOR NOTES DUE 2007
(Title of the indenture securities)
================================================================================
<PAGE>
1. General information.
(a) The following are the names and addresses of each examining
or supervising authority to which the Trustee is subject:
The Comptroller of the Currency, Washington, D.C.
Federal Reserve Bank of Richmond, Richmond, Virginia.
Federal Deposit Insurance Corporation, Washington, D.C.
Securities and Exchange Commission, Division of Market
Regulation, Washington, D.C.
(b) The Trustee is authorized to exercise corporate trust powers.
2. Affiliations with obligor.
The obligor is not an affiliate of the Trustee.
3. Voting Securities of the Trustee.
Not applicable
(See answer to Item 13)
4. Trusteeships under other indentures.
Not applicable
(See answer to Item 13)
5. Interlocking directorates and similar relationships with the obligor
or underwriters.
Not applicable
(See answer to Item 13)
6. Voting securities of the Trustee owned by the obligor or its officials.
Not applicable
(See answer to Item 13)
7. Voting securities of the Trustee owned by underwriters or their
officials.
Not applicable
(See answer to Item 13)
8. Securities of the obligor owned or held by the Trustee.
Not applicable
(See answer to Item 13)
9. Securities of underwriters owned or held by the Trustee.
Not applicable
(See answer to Item 13)
2
<PAGE>
10. Ownership or holdings by the Trustee of voting securities of certain
affiliates or security holders of the obligor.
Not applicable
(See answer to Item 13)
11. Ownership of holders by the Trustee of any securities of a person
owning 50 percent or more of the voting securities of the obligor.
Not applicable
(See answer to Item 13)
12. Indebtedness of the obligor to the Trustee.
. Not applicable
(See answer to Item 13)
13. Defaults by the obligor.
A. None
B. None
14. Affiliations with the underwriters.
Not applicable
(See answer to Item 13)
15. Foreign trustee.
Trustee is a national banking association organized under the
laws of the United States.
16. List of Exhibits.
(1) Articles of Incorporation. (Incorporated by reference from
Exhibit 25 to Registration 33-57401, filed January 25, 1995.)
(2) Certificate of Authority of the Trustee to conduct business.
(Incorporated by reference from Exhibit 25 to Registration
33-57401, filed January 25, 1995.)
(3) Certificate of Authority of the Trustee to exercise corporate
trust powers. (Incorporated by reference from Exhibit 25 to
Registration 33-57401, filed January 25, 1995.)
(4) By-Laws. (Incorporated by reference from Exhibit 25 to
Registration 33-57401, filed January 25, 1995.)
(5) Inapplicable.
(6) Consent by the Trustee required by Section 321(b) of the Trust
Indenture Act of 1939. Included at Page 4 of this Form T-1
Statement.
(7) Report of condition of Trustee.
(8) Inapplicable.
(9) Inapplicable.
3
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the Trustee, FIRST UNION NATIONAL BANK OF VIRGINIA, a national
association organized and existing under the laws of the United States of
America, has duly caused this statement of eligibility and qualification to be
signed on its behalf by the undersigned, thereunto duly authorized, all in the
City of Richmond, and Commonwealth of Virginia on the 6th day of June, 1997.
FIRST UNION NATIONAL BANK OF VIRGINIA
(Trustee)
BY:
--------------------------------------
Dante M. Monakil, Vice President
EXHIBIT T-1 (6)
CONSENTS OF TRUSTEE
Under section 321(b) of the Trust Indenture Act of 1939 and in
connection with the proposed issuance by Tultex Corporation., of its 9 5/8%
Senior Notes Due 2007, First Union National Bank of Virginia, as the Trustee
herein named, hereby consents that reports of examinations of said Trustee by
Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon requests therefor.
FIRST UNION NATIONAL BANK OF VIRGINIA
BY:
--------------------------------------
John M. Turner, Vice President and
Managing Director
Dated: June 6, 1997
4
<PAGE>
EXHIBIT 99.1
------------
LETTER OF TRANSMITTAL
TULTEX CORPORATION
Offer To Exchange Its
9-58% Senior Notes due 2007
Which Have Been Registered Under The Securities Act Of 1933
For Any And All Of Its Outstanding
9-58% Senior Notes due 2007
Pursuant To The Prospectus
Dated [ ], 1997
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., RICHMOND
TIME, ON [ ], 1997 UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
First Union National Bank of Virginia
(the "Exchange Agent")
By Mail, Hand or Overnight Delivery:
First Union Customer Information Center
Reorganization Department, 3C3-NE1153
1525 West W.T. Harris Boulevard
Charlotte, N.C. 28262
By Facsimile Transmission
704/590-7268
Confirm by Telephone:
800/829-8432
Delivery of this Letter of Transmittal to an address other than as set
forth above or transmission of this Letter of Transmittal via a facsimile number
other than the ones listed above will not constitute a valid delivery. The
instructions accompanying this Letter of Transmittal should be read carefully
before this Letter of Transmittal is completed.
<PAGE>
The undersigned hereby acknowledges receipt of the Prospectus dated [ ],
1997 (the "Prospectus") of Tultex Corporation (the "Issuer") and this Letter of
Transmittal, which together constitute the Issuer's offer (the "Exchange Offer")
to exchange up to $75,000,000 aggregate principal amount of its 9-5/8% Senior
Notes due 2007 (the "Exchange Notes"), which have been registered under the
Securities Act of 1933, as amended (the "Securities Act"), pursuant to a
Registration Statement on Form S-4 of the Issuer (File No. 333-[ ]), of which
the Prospectus is a part, for a like amount of its outstanding 9-5/8% Senior
Notes due 2007 (the "Old Notes"), of which $75,000,000 aggregate liquidation
amount is outstanding. The term "Expiration Date" shall mean 5:00 p.m., Richmond
time, on [ ], 1997, unless the Exchange Offer is extended, in which case the
term "Expiration Date" means the latest date and time to which the Exchange
Offer is extended. Capitalized terms used but not defined herein have the
meaning given to them in the Prospectus.
YOUR BANK OR BROKER CAN ASSIST YOU IN COMPLETING THIS FORM. THE
INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED.
QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS
AND THIS LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE EXCHANGE AGENT.
Capitalized terms used but not defined herein shall have the same meaning
given them in the Prospectus.
This Letter of Transmittal is to be completed by holders of Old Notes
either if (i) Old Notes are to be forwarded herewith or (ii) tenders of Old
Notes are to be made by book-entry transfer to an account maintained by the
Exchange Agent at The Depository Trust Company ("DTC") pursuant to the
procedures set forth under "The Exchange Offer--Procedures for Tendering" in the
Prospectus and an Agent's Message (as defined herein) is not delivered.
Holders of Old Notes whose certificates (the "Certificates") for such Old
Notes are not immediately available or who cannot deliver their Certificates and
all other required documents to the Exchange Agent on or prior to the Expiration
Date (as defined in the Prospectus) or who cannot complete the procedures for
book-entry transfer on or prior to the Expiration Date, must tender their Old
Notes according to the guaranteed delivery procedures set forth in "The Exchange
Offer--Procedures for Tendering" in the Prospectus.
DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE
AGENT.
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
DESCRIPTION OF OLD NOTES TENDERED
- ---------------------------------------------------------------------------------------------------------
NAME(S) AND CERTIFICATE AGGREGATE
ADDRESS(ES) OF NUMBER(S)* AMOUNT OF
REGISTERED (ATTACH OLD NOTES AMOUNT NUMBER OF
HOLDER ADDITIONAL TENDERED (ATTACH OF OLD NOTES BENEFICIAL HOLDERS
(PLEASE FILL IN, IF LIST IF ADDITIONAL LIST IF TENDERED (IF LESS FOR WHOM OLD
BLANK) NECESSARY) NECESSARY) THAN ALL)** NOTES ARE HELD
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ $
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
TOTAL AMOUNT
TENDERED: $ $
- ---------------------------------------------------------------------------------------------------------
* Need not be completed by book-entry holders. Such holders should check the appropriate box below and
provide the requested information.
** Need not be completed if tendering for exchange all Old Notes held. Old Capital Securities may be
tendered in whole or in part in integral multiples of $1,000. Old Notes held shall be deemed
tendered unless a lesser number is specified in this column.
- ---------------------------------------------------------------------------------------------------------
</TABLE>
(BOXES BELOW TO BE CHECKED BY ELIGIBLE INSTITUTIONS (defined in Instruction 1)
ONLY)
[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH DTC AND COMPLETE THE
FOLLOWING:
Name of Tendering Institution:
------------------------------------------------
DTC Account Number:
-----------------------------------------------------------
Transaction Code Number:
------------------------------------------------------
By crediting the Old Notes to the Exchange Agent's Account at DTC in accordance
with DTC's Automated Tender Offer Program ("ATOP") and by complying with
applicable ATOP procedures with respect to the Exchange Offer, including
transmitting to the Exchange Agent a computer-generated message (an "Agent's
Message") in which the holder of the Old Notes acknowledges and agrees to be
bound by the terms of the Letter of Transmittal, the participant in DTC confirms
on behalf of itself and the beneficial owners of such Old Notes all provisions
of this Letter of Transmittal applicable to it and such beneficial owner as
fully as if it had completed the information required herein and executed and
transmitted this Letter of Transmittal to the Exchange Agent.
[ ] CHECK HERE AND ENCLOSE A PHOTOCOPY OF THE NOTICE OF GUARANTEED DELIVERY IF
TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE FOLLOWING:
Name of
Registered Holder:
-----------------------------------------------------------
Window Ticket Number (if any):
----------------------------------------------
Date of Execution of
<PAGE>
Notice of Guaranteed Delivery:
--------------------------------------------------
Name of Institution which Guaranteed Delivery:
- --------------------------------------------------------------------------------
If Guaranteed Delivery is to be made By Book-Entry Transfer:
Name of Tendering
Institution:
--------------------------------------------------------------------
DTC Account Number:
-------------------------------------------------------------
Transaction Code Number:
--------------------------------------------------------
[_] CHECK HERE IF TENDERED BY BOOK-ENTRY TRANSFER AND NON-EXCHANGED OLD NOTES
ARE TO BE RETURNED BY CREDITING THE DTC ACCOUNT NUMBER SET FORTH ABOVE.
[_] CHECK HERE IF YOU ARE A BROKER-DEALER WHO ACQUIRED THE OLD NOTES FOR YOUR
OWN ACCOUNT AS A RESULT OF MARKET MAKING OR OTHER TRADING ACTIVITIES (A
"PARTICIPATING BROKER-DEALER") AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE
PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.
Name:
--------------------------------------------------------------------------
Address:
----------------------------------------------------------------------
Area Code and Telephone Number:
-----------------------------------------------
Contact Person:
---------------------------------------------------------------
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Tultex Corporation, a Virginia
corporation (the "Issuer"), the above-described aggregate principal amount of
the Issuer's 9-5/8% Senior Notes due 2007 (the "Old Notes") in exchange for a
like aggregate principal amount of the Issuer's 9-5/8% Senior Notes due 2007
(the "Exchange Notes") which have been registered under the Securities Act of
1933 (the "Securities Act"), upon the terms and subject to the conditions set
forth in the Prospectus dated [ ], 1997 (as the same may be amended or
supplemented from time to time, the "Prospectus"), receipt of which is
acknowledged, and in this Letter of Transmittal (which, together with the
Prospectus, constitutes the "Exchange Offer").
Subject to and effective upon the acceptance for exchange of all or any
portion of the Old Notes tendered herewith in accordance with the terms and
conditions of the Exchange Offer (including, if the Exchange Offer is extended
or amended, the terms and conditions of any such extension or amendment), the
undersigned hereby sells, assigns and transfers to or upon the order of the
Issuer all right, title and interest in and to such Old Notes as are being
tendered herewith. The undersigned hereby irrevocably constitutes and appoints
the Exchange Agent as its agent and attorney-in-fact (with full knowledge that
the Exchange Agent is also acting as agent of the Issuer in connection with the
Exchange Offer) with respect to the tendered Old Notes, with full power of
substitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest), subject only to the right of withdrawal described in
the Prospectus to (i) deliver Certificates for Old Notes to the Issuer together
with all accompanying evidences of transfer and authenticity to, or upon the
order of, the Issuer, upon receipt by the Exchange Agent, as the undersigned's
agent, of the Exchange Notes to be issued in exchange for such Old Notes, (ii)
present Certificates for such Old Notes for transfer, and to transfer the Old
Notes on the books of the Issuer, and (iii) receive for the account of the
Issuer all benefits and otherwise exercise all rights of beneficial ownership of
such Old Notes, all in accordance with the terms and conditions of the Exchange
Offer.
THE UNDERSIGNED HEREBY REPRESENTS AND WARRANTS THAT THE UNDERSIGNED HAS
FULL POWER AND AUTHORITY TO TENDER, EXCHANGE, SELL, ASSIGN AND TRANSFER THE OLD
NOTES TENDERED HEREBY AND THAT, WHEN THE SAME ARE ACCEPTED FOR EXCHANGE, THE
ISSUER WILL ACQUIRE GOOD, MARKETABLE AND UNENCUMBERED TITLE THERETO, FREE AND
CLEAR OF ALL LIENS, RESTRICTIONS, CHARGES AND ENCUMBRANCES, AND THAT THE OLD
NOTES TENDERED HEREBY ARE NOT SUBJECT TO ANY ADVERSE CLAIMS OR PROXIES. THE
UNDERSIGNED WILL, UPON REQUEST, EXECUTE AND DELIVER ANY ADDITIONAL DOCUMENTS
DEEMED BY THE ISSUER OR THE EXCHANGE AGENT TO BE NECESSARY OR DESIRABLE TO
COMPLETE THE EXCHANGE, ASSIGNMENT AND TRANSFER OF THE OLD NOTES TENDERED HEREBY,
AND THE UNDERSIGNED WILL COMPLY WITH ITS OBLIGATIONS UNDER THE REGISTRATION
RIGHTS AGREEMENT. THE UNDERSIGNED HAS READ AND AGREES TO ALL OF THE TERMS OF THE
EXCHANGE OFFER.
The name and address of the registered holder of the Old Notes tendered
hereby should be printed above, if they are not already set forth above, as they
appear on the Certificates representing such Old Notes. The Certificate numbers
and the Old Notes that the undersigned wishes to tender should be indicated in
the appropriate boxes above.
If any tendered Old Notes are not exchanged pursuant to the Exchange Offer
for any reason, or if Certificates are submitted for more Old Notes than are
tendered or accepted for exchange, Certificates for such nonexchanged or
nontendered Old Notes will be returned (or, in the case of Old Notes tendered by
book-entry transfer, such Old Notes will be credited to an account maintained at
DTC), without expense to the tendering holder, promptly following the expiration
or termination of the Exchange Offer.
<PAGE>
The undersigned understands that tenders of Old Notes pursuant to any one
of the procedures described under "The Exchange Offer--Procedures for Tendering
Old Notes" in the Prospectus and in the instructions herein will, upon the
Issuer's acceptance for exchange of such tendered Old Notes, constitute a
binding agreement between the undersigned, the Issuer upon the terms and subject
to the conditions of the Exchange Offer. The undersigned recognizes that, under
certain circumstances set forth in the Prospectus, the Issuer may not be
required to accept for exchange any of the Old Notes tendered hereby.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, the undersigned hereby directs that the Exchange Notes be
issued in the name of the undersigned or, in the case of a book-entry transfer
of Old Notes, that such Exchange Notes be credited to the account indicated
above maintained at DTC. If applicable, substitute Certificates representing Old
Notes not exchanged or not accepted for exchange will be issued to the
undersigned or, in the case of a book-entry transfer of Old Notes, will be
credited to the account indicated above maintained at DTC. Similarly, unless
otherwise indicated under "Special Delivery Instructions" below, please deliver
Exchange Notes to the undersigned at the address shown below the undersigned's
signature.
BY TENDERING OLD NOTES AND EXECUTING THIS LETTER OF TRANSMITTAL, THE
UNDERSIGNED HEREBY REPRESENTS AND AGREES THAT (I) THE UNDERSIGNED IS NOT AN
"AFFILIATE" OF THE ISSUER WITHIN THE MEANING OF RULE 405 UNDER THE SECURITIES
ACT, (II) ANY EXCHANGE NOTES TO BE RECEIVED BY THE UNDERSIGNED ARE BEING
ACQUIRED IN THE ORDINARY COURSE OF ITS BUSINESS, (III) THE UNDERSIGNED HAS NO
ARRANGEMENT OR UNDERSTANDING WITH ANY PERSON TO PARTICIPATE IN A DISTRIBUTION
(WITHIN THE MEANING OF THE SECURITIES ACT) OF EXCHANGE NOTES TO BE RECEIVED IN
THE EXCHANGE OFFER, AND (IV) IF THE UNDERSIGNED IS NOT A BROKER-DEALER, THE
UNDERSIGNED IS NOT ENGAGED IN, AND DOES NOT INTEND TO ENGAGE IN, A DISTRIBUTION
(WITHIN THE MEANING OF THE SECURITIES ACT) OF SUCH EXCHANGE NOTES. BY TENDERING
OLD NOTES PURSUANT TO THE EXCHANGE OFFER AND EXECUTING THIS LETTER OF
TRANSMITTAL, A HOLDER OF OLD NOTES WHICH IS A BROKER-DEALER REPRESENTS AND
AGREES, CONSISTENT WITH CERTAIN NO-ACTION LETTERS ISSUED BY THE STAFF OF THE
DIVISION OF CORPORATION FINANCE OF THE SECURITIES AND EXCHANGE COMMISSION TO
THIRD PARTIES, THAT (A) SUCH OLD NOTES HELD BY THE BROKER-DEALER ARE HELD ONLY
AS A NOMINEE, OR (B) SUCH OLD NOTES WERE ACQUIRED BY SUCH BROKER-DEALER FOR ITS
OWN ACCOUNT AS A RESULT OF MARKET-MAKING ACTIVITIES OR OTHER TRADING ACTIVITIES
AND IT WILL DELIVER A PROSPECTUS (AS AMENDED OR SUPPLEMENTED FROM TIME TO TIME)
MEETING THE REQUIREMENTS OF THE SECURITIES ACT IN CONNECTION WITH ANY RESALE OF
SUCH EXCHANGE NOTES (PROVIDED THAT, BY SO ACKNOWLEDGING AND BY DELIVERING A
PROSPECTUS, SUCH BROKER-DEALER WILL NOT BE DEEMED TO ADMIT THAT IT IS AN
"UNDERWRITER" WITHIN THE MEANING OF THE SECURITIES ACT).
THE ISSUER HAS AGREED THAT, SUBJECT TO THE PROVISIONS OF THE REGISTRATION
RIGHTS AGREEMENT, THE PROSPECTUS, AS IT MAY BE AMENDED OR SUPPLEMENTED FROM TIME
TO TIME, MAY BE USED BY A PARTICIPATING BROKER-DEALER IN CONNECTION WITH RESALES
OF EXCHANGE NOTES RECEIVED IN EXCHANGE FOR OLD EXCHANGE NOTES, WHERE SUCH OLD
NOTES WERE ACQUIRED BY SUCH PARTICIPATING BROKER-DEALER FOR ITS OWN ACCOUNT AS A
RESULT OF MARKET-MAKING ACTIVITIES OR OTHER TRADING ACTIVITIES, FOR A PERIOD
ENDING 180 DAYS AFTER THE EXPIRATION DATE (SUBJECT TO EXTENSION UNDER CERTAIN
LIMITED CIRCUMSTANCES DESCRIBED IN THE PROSPECTUS) OR, IF EARLIER, WHEN ALL SUCH
EXCHANGE NOTES HAVE BEEN DISPOSED OF BY SUCH PARTICIPATING BROKER-DEALER. IN
THAT REGARD, EACH PARTICIPATING BROKER-DEALER WHO ACQUIRED OLD NOTES FOR ITS OWN
ACCOUNT AS A RESULT OF MARKET-MAKING OR OTHER TRADING ACTIVITIES, BY TENDERING
SUCH OLD NOTES AND EXECUTING THIS LETTER OF TRANSMITTAL, AGREES THAT, UPON
RECEIPT OF NOTICE FROM THE ISSUER OF THE OCCURRENCE OF ANY EVENT OR THE
DISCOVERY OF ANY FACT WHICH MAKES ANY STATEMENT CONTAINED OR INCORPORATED BY
REFERENCE IN THE PROSPECTUS UNTRUE IN ANY MATERIAL RESPECT OR WHICH CAUSES THE
PROSPECTUS TO OMIT TO STATE A MATERIAL FACT NECESSARY IN ORDER TO MAKE THE
STATEMENTS CONTAINED OR INCORPORATED BY REFERENCE THEREIN, IN LIGHT OF THE
CIRCUMSTANCES UNDER WHICH THEY WERE MADE, NOT MISLEADING, OR OF THE
<PAGE>
OCCURRENCE OF CERTAIN OTHER EVENTS SPECIFIED IN THE REGISTRATION RIGHTS
AGREEMENT, SUCH PARTICIPATING BROKER-DEALER WILL SUSPEND THE SALE OF EXCHANGE
NOTES PURSUANT TO THE PROSPECTUS UNTIL THE ISSUER HAS AMENDED OR SUPPLEMENTED
THE PROSPECTUS TO CORRECT SUCH MISSTATEMENT OR OMISSION AND HAS FURNISHED COPIES
OF THE AMENDED OR SUPPLEMENTED PROSPECTUS TO THE PARTICIPATING BROKER-DEALER, OR
THE ISSUER HAS GIVEN NOTICE THAT THE SALE OF THE EXCHANGE NOTES MAY BE RESUMED,
AS THE CASE MAY BE. IF THE ISSUER GIVES SUCH NOTICE TO SUSPEND THE SALE OF THE
EXCHANGE NOTES, IT SHALL EXTEND THE 180-DAY PERIOD REFERRED TO ABOVE DURING
WHICH PARTICIPATING BROKER-DEALERS ARE ENTITLED TO USE THE PROSPECTUS IN
CONNECTION WITH THE RESALE OF EXCHANGE NOTES BY THE NUMBER OF DAYS DURING THE
PERIOD FROM AND INCLUDING THE DATE OF THE GIVING OF SUCH NOTICE TO AND INCLUDING
THE DATE WHEN PARTICIPATING BROKER-DEALERS SHALL HAVE RECEIVED COPIES OF THE
SUPPLEMENTED OR AMENDED PROSPECTUS NECESSARY TO PERMIT RESALES OF THE EXCHANGE
NOTES OR TO AND INCLUDING THE DATE ON WHICH THE ISSUER HAS GIVEN NOTICE THAT THE
SALE OF EXCHANGE NOTES MAY BE RESUMED, AS THE CASE MAY BE.
Holders of Old Notes whose Old Notes are accepted for exchange will not
receive accumulated Distributions on such Old Notes for any period from and
after the last Distribution date to which Distributions have been paid or duly
provided for on such Old Notes prior to the original issue date of the Exchange
Notes or, if no such Distributions have been paid or duly provided for, will not
receive any accrued Distributions on such Old Notes, and the undersigned waives
the right to receive any interest on such Old Notes accrued from and after such
Distribution date or, if no such Distributions have been paid or duly provided
for, from and after April 17, 1996.
All authority herein conferred or agreed to be conferred in this Letter of
Transmittal shall survive the death or incapacity of the undersigned and any
obligation of the undersigned hereunder shall be binding upon the heirs,
executors, administrators, personal representatives, trustees in bankruptcy,
legal representatives, successors and assigns of the undersigned. Except as
stated in the Prospectus, this tender is irrevocable.
<PAGE>
HOLDERS SIGN HERE
(SEE INSTRUCTIONS 2, 5 AND 6)
(PLEASE COMPLETE SUBSTITUTE FORM W-9 CONTAINED HEREIN)
(NOTE: SIGNATURES MUST BE GUARANTEED IF REQUIRED BY INSTRUCTION 2)
Must be signed by registered holder exactly as name appears on Certificate
for the Old Notes hereby tendered or on a security position listing, or by any
person authorized to become the registered holder by endorsements and documents
transmitted herewith (including such opinions of counsel, certifications and
other information as may be required by the Issuer to comply with the
restrictions on transfer applicable to the Old Notes). If signature is by an
attorney-in-fact, executor, administrator, trustee, guardian, officer of a
corporation or another acting in a fiduciary capacity or representative
capacity, please set forth the signer's full title. See Instruction 5.
------------------------------------
(Signature of Holder(s)
or Authorized Signatory)
Date: , 1997
----------------------
Name(s):
-----------------------------------------------------------------------
(Please Print)
Capacity (full title):
----------------------------------------------------------
Address:
-----------------------------------------------------------------------
(Include Zip Code)
Area Code and Telephone
Number:
------------------------------------------------------------------------
Tax Identification or Social Security Number:
-----------------------------------
<PAGE>
- --------------------------------------------------------------------------------
SIGNATURE GUARANTEE
(If required-See Instructions 2 and 5)
----------------------
(Authorized Signature)
Date: , 1997
-----------------------
Name of Eligible Institution Guaranteeing Signatures:
---------------------------
Capacity (full title):
----------------------------------------------------------
(Please Print)
Address:
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Include Zip Code)
Area Code and Telephone Number:
------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS
(See Instructions 1, 5 and 6)
To be completed ONLY if the Exchange Notes or any Old Notes that are not
tendered are to be issued in the name of someone other than the registered
holder of the Old Notes whose name appears above.
Issue
[ ] Exchange Notes and/or
[ ] Old Notes not tendered
to:
- --------------------------------------------------------------------------------
Name
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
(Include Zip Code)
- --------------------------------------------------------------------------------
Area Code and Telephone Number
- --------------------------------------------------------------------------------
Tax Identification or Social Security Number
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 1, 5 and 6)
To be completed ONLY if the Exchange Notes or any Old Notes that are not
tendered are to be sent to someone other than the registered holder of the Old
Notes whose name appears above, or to such registered holder at an address other
than that shown above.
Mail
[ ] Exchange Notes and/or
[ ] Old Notes not tendered
to:
- --------------------------------------------------------------------------------
Name
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
(Include Zip Code)
- --------------------------------------------------------------------------------
Area Code and Telephone Number
- --------------------------------------------------------------------------------
Tax Identification or Social Security Number
- --------------------------------------------------------------------------------
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND
CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES; GUARANTEED
DELIVERY PROCEDURES. This Letter of Transmittal is to be completed either if (a)
Certificates are to be forwarded herewith or (b) tenders are to be made pursuant
to the procedures for tender by book-entry transfer set forth under "The
Exchange Offer--Procedures for Tendering" in the Prospectus and an Agent's
Message is not delivered. Certificates, or book-entry confirmation of a
book-entry transfer of such Old Notes into the Exchange Agent's account at DTC,
as well as this Letter of Transmittal (or facsimile thereof), properly completed
and duly executed, with any required signature guarantees, and any other
documents required by this Letter of Transmittal, must be received by the
Exchange Agent at its address set forth herein on or prior to the Expiration
Date. Tenders by book-entry transfer may also be made by delivering an Agent's
Message in lieu of this Letter of Transmittal. The term "book-entry
confirmation" means a timely confirmation of book-entry transfer of Old Notes
into the Exchange Agent's account at DTC. The term "Agent's Message" means a
message, transmitted by DTC to and received by the Exchange Agent and forming a
part of a book-entry confirmation, which states that DTC has received an express
acknowledgment from the tendering Participant, which acknowledgment states that
such participant has received and agrees to be bound by, and makes the
representations and warranties contained in, the Letter of Transmittal and that
the Issuer may enforce the Letter of Transmittal against such participant. Old
Notes may be tendered in whole or in part in integral multiples of $1,000.
Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available or (ii) who cannot deliver their Old Notes, this Letter of
Transmittal and all other required documents to the Exchange Agent on or prior
to the Expiration Date or (iii) who cannot complete the procedures for delivery
by book-entry transfer on or prior to the Expiration Date, may tender their Old
Notes by properly completing and duly executing a Notice of Guaranteed Delivery
pursuant to the guaranteed delivery procedures set forth under "The Exchange
Offer--Procedures for Tendering" in the Prospectus. Pursuant to such procedures:
(i) such tender must be made by or through an Eligible Institution (as defined
below); (ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form made available by the Issuer, must be
received by the Exchange Agent on or prior to the Expiration Date; and (iii) the
Certificates (or a book-entry confirmation) representing all tendered Old Notes,
in proper form for transfer, together with a Letter of Transmittal (or facsimile
thereof or Agent's Message in lieu thereof), properly completed and duly
executed, with any required signature guarantees and any other documents
required by this Letter of Transmittal, must be received by the Exchange Agent
within three New York Stock Exchange trading days after the date of execution of
such Notice of Guaranteed Delivery, all as provided in "The Exchange
Offer--Procedures for Tendering" in the Prospectus.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by facsimile or mail to the Exchange Agent, and must include a guarantee by an
Eligible Institution in the form set forth in such Notice. For Old Notes to be
properly tendered pursuant to the guaranteed delivery procedure, the Exchange
Agent must receive a Notice of Guaranteed Delivery on or prior to the Expiration
Date. As used herein and in the Prospectus, "Eligible Institution" means a firm
or other entity identified in Rule 17Ad-15 under the Exchange Act as "an
eligible guarantor institution," including (as such terms are defined therein)
(i) a bank; (ii) a broker, dealer, municipal securities broker or dealer or
government securities broker or dealer; (iii) a credit union; (iv) a national
securities exchange, registered securities association or clearing agency; or
(v) a savings association that is a participant in a Securities Transfer
Association.
<PAGE>
THE METHOD OF DELIVERY OF CERTIFICATES, THIS LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING HOLDER
AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE
AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
PROPERLY INSURED, OR OVERNIGHT DELIVERY SERVICE IS RECOMMENDED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY ON OR PRIOR TO THE
EXPIRATION DATE.
The Issuer will not accept any alternative, conditional or contingent
tenders. Each tendering holder, by execution of a Letter of Transmittal (or
facsimile thereof or Agent's Message in lieu thereof), waives any right to
receive any notice of the acceptance of such tender.
2. GUARANTEE OF SIGNATURES. No signature guarantee on this Letter of
Transmittal is required if:
(i) this Letter of Transmittal is signed by the registered holder
(which term, for purposes of this document, shall include any Participant
in DTC whose name appears on a security position listing as the owner of
the Old Notes) of Old Notes tendered herewith, unless such holder has
completed either the box entitled "Special Issuance Instructions" or the
box entitled "Special Delivery Instructions" above, or
(ii) such Old Notes are tendered for the account of a firm that is an
Eligible Institution.
In all other cases, an Eligible Institution must guarantee the signature on
this Letter of Transmittal. See Instruction 5.
3. INADEQUATE SPACE. If the space provided in the box captioned
"Description of Old Notes Tendered" is inadequate, the Certificate numbers
and/or the principal amount of Old Notes and any other required information
should be listed on a separate signed schedule which is attached to this Letter
of Transmittal.
4. PARTIAL TENDERS AND WITHDRAWAL RIGHTS. Tenders of Old Notes will be
accepted only in integral multiples of $1,000. If less than all of the Old Notes
evidenced by any Certificate submitted are to be tendered, fill in the principal
amount of Old Notes which are to be tendered in the box entitled "Principal
Amount of Old Notes Tendered (If Less than All)." In such case, a new
Certificate for the remainder of the Old Notes that were evidenced by your Old
Certificate will be sent to the holder of the Old Notes, promptly after the
Expiration Date unless the appropriate boxes on this Letter of Transmittal are
completed. All Old Notes represented by Certificates delivered to the Exchange
Agent will be deemed to have been tendered unless otherwise indicated.
Except as otherwise provided herein, tenders of Old Notes may be withdrawn
at any time on or prior to the Expiration Date. In order for a withdrawal to be
effective, a written, telegraphic or facsimile transmission of such notice of
withdrawal must be timely received by the Exchange Agent at one of its addresses
set forth above or in the Prospectus on or prior to the Expiration Date. Any
such notice of withdrawal must specify the name of the person who tendered the
Old Notes to be withdrawn, the aggregate Principal Amount of Old Notes to be
withdrawn, and (if Certificates for Old Notes have been tendered) the name of
the registered holder of the Old Notes as set forth on the Certificate for the
Old Notes, if different from that of the person who tendered such Old Notes. If
Certificates for the Old Notes have been delivered or otherwise identified to
the Exchange Agent, then prior to the physical release of such Certificates for
the Old Notes, the tendering holder must submit the serial numbers shown on the
particular Certificates for the Old Notes to be withdrawn and the signature on
the notice of withdrawal must be guaranteed by an Eligible Institution, except
in the case of Old Notes tendered for the account of an Eligible Institution. If
Old Notes have been tendered pursuant to the procedures for book-entry transfer
set forth under "The Exchange Offer--Procedures for Tendering," the notice of
withdrawal must specify the name and number of the account at DTC to be credited
with the withdrawal of Old Notes, in which case a notice of withdrawal will be
effective if delivered to the Exchange Agent by written, telegraphic or
facsimile transmission on or prior to the Expiration Date. Withdrawals of
tenders of Old Notes may not be rescinded. Old Notes properly withdrawn will not
be deemed validly tendered for purposes of the Exchange
<PAGE>
Offer, but may be retendered at any subsequent time on or prior to the
Expiration Date by following any of the procedures described in the Prospectus
under "The Exchange Offer--Procedures for Tendering."
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by the Issuer, in its
sole discretion, whose determination shall be final and binding on all parties.
Neither the Issuer, any affiliates or assigns of the Issuer, the Exchange Agent
nor any other person shall be under any duty to give any notification of any
irregularities in any notice of withdrawal or incur any liability for failure to
give any such notification. Any Old Notes which have been tendered but which are
withdrawn on or prior to the Expiration Date will be returned to the holder
thereof without cost to such holder promptly after withdrawal.
5. SIGNATURES ON LETTER OF TRANSMITTAL, ASSIGNMENTS AND ENDORSEMENTS.
If this Letter of Transmittal is signed by the registered holder of the Old
Notes tendered hereby, the signature must correspond exactly with the name as
written on the face of the Certificates or on a security position listing
without alteration, enlargement or any change whatsoever.
If any of the Old Notes tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Old Notes are registered in different names on several
Certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal (or facsimiles thereof or Agent's Messages in lieu
thereof) as there are different registrations of Certificates.
If this Letter of Transmittal or any Certificates or bond powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing and must submit proper evidence
satisfactory to the Issuer, in its sole discretion, of such persons' authority
to so act.
When this Letter of Transmittal is signed by the registered owner of the
Old Notes listed and transmitted hereby, no endorsement of Certificates or
separate bond powers are required unless Exchange Notes are to be issued in the
name of a person other than the registered holder. Signatures on such
Certificates or bond powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered owner of the Old Notes listed, the Certificates must be endorsed or
accompanied by appropriate bond powers, signed exactly as the name of the
registered owner appears on the Certificates, and also must be accompanied by
such opinions of counsel, certifications and other information as the Issuer or
the Property Trustee may require in accordance with the restrictions on transfer
applicable to the Old Notes. Signatures on such Certificates or bond powers must
be guaranteed by an Eligible Institution.
6. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. If Exchange Notes are to
be issued in the name of a person other than the signer of this Letter of
Transmittal, or if Exchange Notes are to be sent to someone other than the
signer of this Letter of Transmittal or to an address other than that shown
above, the appropriate boxes on this Letter of Transmittal should be completed.
Certificates for Old Notes not exchanged will be returned by mail or, if
tendered by book-entry transfer, by crediting the account indicated above
maintained at DTC unless the appropriate boxes on this Letter of Transmittal are
completed. See Instruction 4.
7. IRREGULARITIES. The Issuer will determine, in its sole discretion, all
questions as to the form of documents, validity, eligibility (including time of
receipt) and acceptance for exchange of any tender of Old Notes, which
determination shall be final and binding on all parties. The Issuer reserves the
absolute right to reject any and all tenders determined by either of them not to
be in proper form or the acceptance of which, or exchange for, may, in the view
of counsel to the Issuer, be unlawful. The Issuer also reserves the absolute
right, subject to applicable law, to waive any of the conditions of the Exchange
Offer set forth in the Prospectus under "The Exchange Offer," or any conditions
or irregularities in any tender of Old Notes of any particular holder whether or
not similar conditions or irregularities are waived in the case of other
holders. The Issuer's interpretation of the terms and conditions of the
<PAGE>
Exchange Offer (including this Letter of Transmittal and the instructions
hereto) will be final and binding. No tender of Old Notes will be deemed to have
been validly made until all irregularities with respect to such tender have been
cured or waived. The Issuer, any affiliates or assigns of the Issuer, the
Exchange Agent, or any other person shall not be under a duty to give
notification of any irregularities in tenders or incur any liability for failure
to give such notification.
8. QUESTIONS, REQUESTS FOR ASSISTANCE AND ADDITIONAL COPIES. Questions
and requests for assistance may be directed to the Exchange Agent at its address
and telephone number set forth on the front of this Letter of Transmittal.
Additional copies of the Prospectus, the Notice of Guaranteed Delivery and the
Letter of Transmittal may be obtained from the Exchange Agent or from your
broker, dealer, commercial bank, trust company or other nominee.
9. LOST, DESTROYED OR STOLEN CERTIFICATES. If any Certificates
representing Old Notes have been lost, destroyed or stolen, the holder should
promptly notify the Exchange Agent. The holder will then be instructed as to the
steps that must be taken in order to replace the Certificates. This Letter of
Transmittal and related documents cannot be processed until the procedures for
replacing lost, destroyed or stolen Certificates have been followed.
10. SECURITY TRANSFER TAXES. Holders who tender their Old Notes for
exchange will not be obligated to pay any transfer taxes in connection
therewith. If, however, Exchange Notes are to be delivered to, or are to be
issued in the name of, any person other than the registered holder of the Old
Notes tendered, or if a transfer tax is imposed for any reason other than the
exchange of Old Notes in connection with the Exchange Offer, then the amount of
any such transfer tax (whether imposed on the registered holder or any other
persons) will be payable by the tendering holder. If satisfactory evidence of
payment of such taxes or exemption therefrom is not submitted with the Letter of
Transmittal, the amount of such transfer taxes will be billed directly to such
tendering holder.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE THEREOF) AND ALL OTHER
REQUIRED DOCUMENTS MUST BE RECEIVED BY THE EXCHANGE AGENT AT OR PRIOR TO THE
EXPIRATION DATE.
<PAGE>
IMPORTANT TAX INFORMATION
Under federal income tax law, a holder whose tendered Old Notes are
accepted for exchange is required by law to provide the Exchange Agent with such
holder's correct taxpayer identification number ("TIN") on Substitute Form W-9
included herein or otherwise establish a basis for exemption from backup
withholding. If such holder is an individual, the TIN is his social security
number. If the Exchange Agent is not provided with the correct TIN, the Internal
Revenue Service may subject the holder or transferee to a $50 penalty. In
addition, delivery of such holder's Exchange Notes may be subject to backup
withholding. Failure to comply truthfully with the backup withholding
requirements also may result in the imposition of severe criminal and/or civil
fines and penalties.
Certain holders (including, among others, all corporations and certain
foreign persons) are not subject to these backup Withholding and reporting
requirements. Exempt holders should furnish their TIN, write "Exempt" on the
face of the Substitute Form W-9, and sign, date and return the Substitute Form
W-9 to the Exchange Agent. A foreign person, including entities, may qualify as
an exempt recipient by submitting to the Exchange Agent a properly completed
Internal Revenue Service Form W-8, signed under penalties of perjury, attesting
to that holder's foreign status. A Form W-8 can be obtained from the Exchange
Agent. See the enclosed "Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9" for additional instructions.
If backup withholding applies, the Exchange Agent is required to withhold
31% of any payments made to the holder or other transferee. Backup withholding
is not an additional federal income tax. Rather, the federal income tax
liability of persons subject to backup withholding will be reduced by the amount
of tax withheld. If withholding results in an overpayment of taxes, a refund may
be obtained from the Internal Revenue Service.
Purpose of Substitute Form W-9
To prevent backup withholding on payments made with respect to Old Notes
exchanged in the Exchange Offer, the holder is required to provide the Exchange
Agent with either: (i) the holder's correct TIN by completing the form included
herein, certifying that the TIN provided on Substitute Form W-9 is correct (or
that such holder is awaiting a TIN) and that (A) the holder has not been
notified by the Internal Revenue Service that the holder is subject to backup
withholding as, a result of failure to report all interest or dividends or (B)
the Internal Revenue Service has notified the holder that the holder is no
longer subject to backup withholding; or (ii) an adequate basis for exemption.
Number to Give the Depositary
The holder is required to give the Exchange Agent the TIN (e.g., social
security number or employer identification number) of the registered holder of
the Old Notes. If the Old Notes are held in more than one name or are held not
in the name of the actual owner, consult the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional guidance on which number to report.
<PAGE>
EXCHANGE AGENT'S NAME: FIRST UNION NATIONAL BANK OF VIRGINIA
<TABLE>
<S> <C>
SUBSTITUTE Part 1-PLEASE PROVIDE YOUR TIN IN Social Security Number OR
Form W-9 THE BOX AT RIGHT AND CERTIFY BY Employer Identification Number
SIGNING AND DATING BELOW
-------------------------------
-----------------------------------------------------------------------------------------
Department of the Treasury
Internal Revenue Service Part 2-Certification-Under penalties of perjury, I certify that:
Payer's Request for (1) The number shown on this form is my correct Taxpayer Identification Number
Taxpayer Identification (or I am waiting for a number to be issued to me) and
Number ("TIN")
(2) I am not subject to backup withholding either because I
have not been notified by the Internal Revenue Service
(the "IRS") that I am subject to backup withholding as
a result of a failure to report all interest or
dividends, or the IRS has notified me that I am no
longer subject to backup withholding.
Certification Instructions-You must cross out item (2) above if you have been
notified by the IRS that you are currently subject to backup withholding because
of underreporting interest or dividends on your tax return. However, if after
being notified by the IRS that you were subject to backup withholding you
received another notification from the IRS that you are no longer subject to
backup withholding, do not cross out such item (2).
-------------------
SIGNATURE DATE Part 3
------------------- ----------- Awaiting TIN [_]
-------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU. PLEASE REVIEW THE
ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON
SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX
IN PART 3 OF SUBSTITUTE FORM W-9.
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or (b)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number by the time of payment, 31%
of all reportable payments made to me will be withheld, but that such amounts
will be refunded to me if I then provide a Taxpayer Identification Number within
60 days.
, 1997
- -------------------------------------------- ---------------------
Signature Date
- --------------------------------------------------------------------------------
<PAGE>
EXHIBIT 99.2
------------
5/5/97
NOTICE OF GUARANTEED DELIVERY
FOR TENDER OF
9-5/8% SENIOR NOTES DUE 2007
OF
TULTEX CORPORATION
As set forth in the Exchange Offer, this Notice of Guaranteed Delivery, or
one substantially equivalent to this form, must be used to accept the Exchange
Offer (as defined below) if (i) certificates for the Issuer's (as defined below)
9-5.8% Senior Notes due 2007 (the "Old Notes") are not immediately available,
(ii) the Old Notes, the Letter of Transmittal and all other required documents
cannot be delivered to First Union National Bank of Virginia (the "Exchange
Agent") on or prior to the Expiration Date (as defined in the Prospectus
referred to below) or (iii) the procedures for delivery by book-entry transfer
cannot be completed on or prior to the Expiration Date. This Notice of
Guaranteed Delivery may be delivered by hand, overnight courier or mail, or
transmitted by facsimile transmission, to the Exchange Agent on or prior to the
Expiration Date. See "The Exchange Offer Procedures for Tendering" in the
Prospectus.
First Union National Bank of Virginia, Exchange Agent
By Mail, Hand or Overnight Delivery:
First Union Customer Information Center
Attn: Reorganization Department, 3C3-NC1153
1525 West W.T. Harris Boulevard
Charlotte, N.C. 28262
Facsimile Transmission
(For Eligible Institutions Only):
704/590-7628
Confirm By Telephone:
800/829-8432
<PAGE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE,
OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE,
WILL NOT CONSTITUTE A VALID DELIVERY.
THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE
SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE
GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH
SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE
SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Tultex Corporation, a Virginia
corporation, upon the terms and subject to the conditions set forth in the
Prospectus dated [ ], 1997 (as the same may be amended or supplemented from time
to time, the "Prospectus"), and the related Letter of Transmittal (which
together constitute the "Exchange Offer"), receipt of which is hereby
acknowledged, the aggregate liquidation amount of Old Notes set forth below
pursuant to the guaranteed delivery procedures set forth in the Prospectus under
the caption "The Exchange Offer-- Procedure for Tendering."
Aggregate Liquidation
Amount Tendered:
---------------------------
Name of Registered Holder:
----------------------------------------
Certificate Nos.
(if available):
----------------------------
Address:
----------------------------------------------------------
- ------------------------------------------------------------------
Area Code and Telephone Number:
-----------------------------------
If Old Notes will be tendered by book-entry transfer, provide the following
information:
Signature:
--------------------------------------------------------
DTC Account Number:
-----------------------------------------------
Date:
-------------------------------------------------------------
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED
3
<PAGE>
GUARANTEE
(NOT TO USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm or other entity identified in Rule 17Ad-15 under the
Securities Exchange Act of 1934, as amended, as an "eligible guarantor
institution," including (as such terms are defined therein); (i) a bank; (ii) a
broker, dealer, municipal securities broker, municipal securities dealer,
government securities broker, government securities dealer, (iii) a credit
union; (iv) a national securities exchange, registered securities association
clearing agency; or (v) a savings association that is a participant in a
Securities Transfer Association recognized program (each of the foregoing being
referred to as an "Eligible Institution"), hereby guarantees to deliver to the
Exchange Agent, at one of its addresses set forth above, either the Old Notes
tendered hereby in proper form for transfer, or confirmation of the book-entry
transfer of such Old Notes to the Exchange Agent's account at The Depository
Trust Company ("DTC"), pursuant to the procedures for book-entry transfer set
forth in the Prospectus, in either case together with one or more properly
completed and duly executed Letters of Transmittal (or facsimile thereof or
Agent's Message in lieu thereof) and any other required documents within three
business days after the date of execution of this Notice of Guaranteed Delivery.
The undersigned acknowledges that it must deliver the Letters of Transmittal (or
facsimile thereof or Agent's Message in lieu thereof) and the Old Notes tendered
hereby (or a book-entry confirmation) to the Exchange Agent within the time
period set forth above and that failure to do so could result a financial loss
to the undersigned.
Name of Firm:
-------------------------------------------------------------------
(Authorized Signature):
---------------------------------------------------------
Title:
Address:
-----------------------------------------------------------------------
-----------------------------------------------------------------------
(Include Zip Code)
Area Code and Telephone Number:
------------------------------------------------
Date:
-------------------
NOTE: DO NOT SEND OLD NOTES WITH THIS NOTICE OF GUARANTEED DELIVERY. ACTUAL
SURRENDER OF OLD NOTES MUST BE MADE PURSUANT TO, AND BE ACCOMPANIED BY, A
PROPERLY COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL AND ANY OTHER
REQUIRED DOCUMENTS.
4
<PAGE>
EXHIBIT 99.3
[6/12/97]
[_________], 1997
EXCHANGE AGENT AGREEMENT
------------------------
First Union National Bank of Virginia
One James Center
Richmond, Virginia 23219
Ladies and Gentlemen:
Tultex Corporation, a Virginia corporation (the "Issuer") proposes to make
an offer (the "Exchange Offer") to exchange up to $75,000,000 aggregate
principal amount of its 9 5/8% Senior Notes due 2007 (the "Exchange Notes"),
which have been registered under the Securities Act of 1933, as amended (the
"Securities Act"), for a like amount of its outstanding 9 5/8% Senior Notes due
2007 (the "Old Notes"), of which $75,000,000 aggregate amount is outstanding.
The terms and conditions of the Exchange Offer as currently contemplated are set
forth in a prospectus dated [_________ ], 1997 (the "Prospectus"), a copy of
which is attached to this Agreement as Attachment A, proposed to be distributed
------------
to all record holders of the Old Notes. Capitalized terms used herein and not
otherwise defined shall have the meanings assigned to them in the Prospectus.
The Issuer hereby appoints First Union National Bank of Virginia to act as
exchange agent (the "Exchange Agent") in connection with the Exchange Offer.
References hereinafter to "you" shall refer to First Union National Bank of
Virginia.
The Exchange Offer is expected to be commenced by the Issuer on or about
[___________], 1997. The Letter of Transmittal accompanying the Prospectus is to
be used by the holders of the Old Notes to accept the Exchange Offer, and
contains certain instructions with respect to the Exchange Offer.
The Exchange Offer shall expire at 5:00 p.m., Richmond time, on
[___________], 1997 or on such later date or time to which the Issuer may extend
the Exchange Offer (the "Expiration Date"). Subject to the terms and conditions
set forth in the Prospectus, the Issuer expressly reserves the right to extend
the Exchange Offer from time to time and may extend the Exchange Offer by giving
oral (promptly confirmed in writing) or written notice to you no later than 9:00
a.m., Richmond time, on the next business day after the previously scheduled
Expiration Date.
<PAGE>
The Issuer expressly reserves the right to amend or terminate the Exchange
Offer, and not to accept for exchange any Old Notes not theretofore accepted for
exchange, upon the occurrence of any of the conditions of the Exchange Offer
specified in the Prospectus under the caption "The Exchange Offer." The Issuer
will give oral (promptly confirmed in writing) or written notice of any
amendment, termination or nonacceptance to you as promptly as practicable.
In carrying out your duties as Exchange Agent, you are to act in accordance
with the following instructions:
1. You will perform such duties and only such duties as are
specifically described in the section of the Prospectus captioned "The Exchange
Offer" and as specifically set forth herein and such duties which are
necessarily incidental thereto; and shall generally act in good faith in the
performance of your undertakings hereunder. The Issuer acknowledges that you are
also acting as agent of the tendering security holders under terms of the Letter
of Transmittal.
2. You will establish an account with respect to the Old Notes at The
Depository Trust Company (the "Book-Entry Transfer Facility") for purposes of
the Exchange Offer within two business days after the date of the Prospectus or,
if you already have established an account with the Book-Entry Transfer Facility
suitable for the Exchange Offer, you will identify such preexisting account to
be used in the Exchange Offer, and any financial institution that is a
participant in the Book-Entry Transfer Facility's systems may make book-entry
delivery of the Old Notes by causing the Book-Entry Transfer Facility to
transfer such Old Notes into your account in accordance with the Book-Entry
Transfer Facility's procedure for such transfer.
3. You are to examine each of the Letters of Transmittal, certificates
for Old Notes and confirmations of book-entry transfers into your account at the
Book-Entry Transfer Facility and any Agent's Message or other documents
delivered or mailed to you by or for holders of the Old Notes to ascertain
whether: (i) the Letters of Transmittal and any such other documents are fully
executed and properly completed in accordance with instructions set forth
therein and (ii) the Old Notes have otherwise been properly tendered in
accordance with the Letters of Transmittal. In each case where the Letter of
Transmittal or any other document has been improperly completed or executed or
any of the certificates for Old Notes are not in proper form for transfer or
some other irregularity in connection with the acceptance of the Exchange Offer
exists, you will endeavor to inform the presenters of the need for fulfillment
of all requirements and to take any other action as may be necessary or
advisable to cause such irregularity to be corrected.
4. With the approval of the President and Chief Executive Officer, the
Executive Vice President and General Counsel or the Vice President and Chief
Financial Officer of the Issuer (such approval, if given orally, to be confirmed
in writing) or any other
2
<PAGE>
person designated by any such officer of the Issuer in writing, you are
authorized to waive any irregularities in connection with any tender of Old
Notes pursuant to the Exchange Offer.
5. Tenders of Old Notes may be made only as set forth in the section
of the Prospectus captioned "The Exchange Offer -- Procedures for Tendering" or
in the Letter of Transmittal, and Old Notes shall be considered properly
tendered to you only when tendered in accordance with the procedures set forth
therein.
Notwithstanding the provisions of this paragraph 5, Old Notes which
the Issuer or any person designated by the Issuer in writing shall approve as
having been properly tendered shall be considered to be properly tendered (such
approval, if given orally, shall be confirmed in writing).
6. You shall advise the Issuer with respect to any Old Notes
delivered subsequent to the Expiration Date and accept its instructions with
respect to disposition of such Old Notes.
7. You shall accept tenders:
(a) in cases where the Old Notes are registered in two or more names
only if signed by all named holders;
(b) in cases where the signing person (as indicated on the Letter of
Transmittal) is acting in a fiduciary or a representative capacity only when
proper evidence of his or her authority to so act is submitted; and
(c) from persons other than the registered holder of Old Notes
provided that customary transfer requirements, including any applicable transfer
taxes, are fulfilled.
You shall accept partial tenders of Old Notes where so indicated and
as permitted in the Letter of Transmittal and deliver certificates for Old Notes
to the transfer agent for split-up and return any untendered Old Notes to the
holder (or to such other person as may be designated in the Letter of
Transmittal) as promptly as practicable after expiration or termination of the
Exchange Offer.
8. Upon satisfaction or waiver of all of the conditions to the
Exchange Offer, the Issuer will notify you (such notice if given orally, to be
promptly confirmed in writing) of the Issuer's acceptance, promptly after the
Expiration Date, of all Old Notes properly tendered and you, on behalf of the
Issuer, will exchange such Old Notes for Exchange Notes pursuant to the
applicable provisions of the Indenture dated as of April 15, 1997 (the
"Indenture"), among the Issuer, First Union National Bank of Virginia, as
trustee, and subsidiaries of the Issuer as Guarantors, and cause such Old Notes
to be canceled. Delivery of Exchange Notes will be made on behalf of the Issuer
by you at the rate of $1,000 principal amount at maturity of Exchange Notes for
each $1,000 principal amount at
3
<PAGE>
maturity of the Old Notes tendered promptly after notice (such notice if given
orally, to be promptly confirmed in writing) of acceptance of said Old Notes by
the Issuer; provided, however, that in all cases, Old Notes tendered pursuant to
-------- -------
the Exchange Offer will be exchanged only after timely receipt by you of
certificates for such Old Notes (or confirmation of book-entry transfer into
your account at the Book-Entry Transfer Facility), a properly completed and duly
executed Letter of Transmittal (or facsimile thereof) with any required
signature guarantees (or in lieu thereof an Agent's Message), any other required
document and compliance with the applicable requirements of the Indenture. You
shall issue Exchange Capital Securities only in any integral multiples of
$1,000.
9. Tenders pursuant to the Exchange Offer are irrevocable, except
that, subject to the terms and upon the conditions set forth in the Prospectus
and the Letter of Transmittal, Old Notes tendered pursuant to the Exchange Offer
may be withdrawn at any time on or prior to the Expiration Date.
10. The Issuer shall not be required to exchange any Old Notes
tendered if any of the conditions set forth in the Exchange Offer are not met.
Notice of any decision by the Issuer not to exchange any Old Notes tendered
shall be given (such notice, if given orally, shall be promptly confirmed in
writing) by the Issuer to you.
11. If, pursuant to the Exchange Offer, the Issuer does not accept for
exchange all or part of the Old Notes tendered because of an invalid tender, the
occurrence of certain other events set forth in the Prospectus under the caption
"The Exchange Offer" or otherwise, you shall as soon as practicable after the
expiration or termination of the Exchange Offer return those certificates for
unaccepted Old Notes (or effect the appropriate book-entry transfer of the
unaccepted Old Notes), and return any related required documents and the Letters
of Transmittal relating thereto that are in your possession, to the persons who
deposited them.
12. All certificates for reissued Old Notes or for unaccepted Old
Notes shall be forwarded by (a) first-class mail, return receipt requested,
under a blanket surety bond protecting you, the Issuer from loss or liability
arising out of the non-receipt or non- delivery of such certificates or (b) by
registered mail insured separately for the replacement value of such
certificates.
13. You are not authorized to pay or offer to pay any concessions,
commissions or solicitation fees to any broker, dealer, bank or other persons or
to engage or utilize any person to solicit tenders.
14. As Exchange Agent hereunder you:
(a) will be regarded as making no representations and having no
responsibilities as to the validity, sufficiency, value or genuineness of Old
Notes, and will
4
<PAGE>
not be required to and will make no representation as to the validity, value or
genuineness of the Exchange Offer;
(b) shall not be obligated to take any legal action hereunder which
might in your reasonable judgment involve any expense or liability, unless you
shall have been furnished with reasonable indemnity;
(c) shall not be liable to the Issuer for any action taken or omitted
by you, or any action suffered by you to be taken or omitted, without
negligence, willful misconduct or bad faith on your part, by reason of or as a
result of the administration of your duties hereunder in accordance with the
terms and conditions of this Agreement or by reason of your compliance with the
instructions set forth herein or with any written or oral instructions delivered
to you pursuant hereto, and may reasonably rely on and shall be protected in
acting in good faith in reliance upon any certificate, instrument, opinion,
notice, letter, facsimile or other document or security delivered to you and
reasonably believed by you to be genuine and to have been signed by the proper
party or parties;
(d) may reasonably act upon any tender, statement, request, comment,
agreement or other instrument whatsoever not only as to its due execution and
validity and the effectiveness of its provisions, but also as to the truth and
accuracy of any information contained therein, which you shall in good faith
reasonably believe to be genuine or to have been signed or represented by a
proper person or persons;
(e) may rely on and shall be protected in acting upon written or oral
instructions from any designated officer of the Issuer or person designated by
any such officer with respect to the Exchange Offer;
(f) shall not advise any person tendering Old Notes pursuant to the
Exchange Offer as to the wisdom of making such tender or as to the market value
or decline or appreciation in market value of any Old Notes; and
(g) may consult with your counsel with respect to any questions
relating to your duties and responsibilities and the written opinion of such
counsel shall be full and complete authorization and protection in respect of
any action taken, suffered or omitted by you hereunder in good faith and in
accordance with such written opinion of such counsel.
15. You shall take such action as may from time to time be requested
by the Issuer or its counsel (and such other action as you may reasonably deem
appropriate) to furnish copies of the Prospectus, Letter of Transmittal and the
Notice of Guaranteed Delivery, or such other forms as may be approved from time
to time by the Company or the Issuer, to all persons requesting such documents
and to accept and comply with telephone requests for information relating to the
Exchange Offer, provided that such information shall relate only to the
procedures for accepting (or withdrawing from) the Exchange Offer. The Issuer
will furnish you with sufficient copies of such documents at your request. All
other
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requests for information relating to the Exchange Offer shall be directed to
Suzanne H. Wood, Vice President and Chief Financial Officer, Tultex Corporation,
101 Commonwealth Boulevard, Martinsville, Virginia 24401; (540) 632-2961.
16. You shall advise by facsimile transmission or telephone, and
promptly thereafter confirm in writing to the Issuer and Hunton & Williams,
counsel for the Issuer, and such other person or persons as they may request,
daily, and more frequently if reasonably requested, up to and including the
Expiration Date, as to the principal amount of the Old Notes which have been
tendered pursuant to the Exchange Offer and the items received by you pursuant
to this Agreement, separately reporting and giving cumulative totals as to items
properly received and items improperly received and items covered by Notices of
Guaranteed Delivery. In addition, you will also inform, and cooperate in making
available to, the Issuer or any such other person or persons as the Issuer
requests from time to time prior to the Expiration Date of such other
information as they, or he reasonably requests. Such cooperation shall include,
without limitation, the granting by you to the Issuer and such person as the
Issuer may request of access to those persons on your staff who are responsible
for receiving tenders, in order to ensure that immediately prior to the
Expiration Date, the Issuer shall have received information in sufficient detail
to enable them to decide whether to extend the Exchange Offer. You shall prepare
a list of persons from information available to you who failed to tender or
whose tenders were not accepted and the aggregate principal amount of Old Notes
not tendered or Old Notes not accepted and deliver said list to the Issuer at
least seven days prior to the Expiration Date. You shall also prepare a final
list of all persons whose tenders were accepted, the aggregate principal amount
of Old Notes accepted and deliver said list to the Issuer.
17. Letters of Transmittal and Notices of Guaranteed Delivery shall be
stamped by you as to the date and the time of receipt thereof and shall be
preserved by you for a period of time at least equal to the period of time you
preserve other records pertaining to the transfer of securities. You shall
dispose of unused Letters of Transmittal and other surplus materials by
returning them to the Company.
18. For services rendered as Exchange Agent hereunder you shall be
paid a fee of $[ ] and you shall be reimbursed for your expenses (including fees
and expenses of your counsel, which fees are expected under normal circumstances
to be not in excess of $[ ], incurred in connection with the Exchange Offer.
19. You hereby acknowledge receipt of the Prospectus and the Letter of
Transmittal attached hereto and further acknowledge that you have examined each
of them to the extent necessary to perform your duties hereunder. Any
inconsistency between this Agreement, on the one hand, and the Prospectus and
the Letter of Transmittal (as they may be amended from time to time), on the
other hand, shall be resolved in favor of the latter two documents, except with
respect to the duties, liabilities and indemnification of you as Exchange Agent,
which shall be controlled by this Agreement.
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20. The Issuer agrees to indemnify and hold you harmless in your
capacity as Exchange Agent hereunder against any liability, cost or expense,
including reasonable attorneys's fees, arising out of or in connection with the
acceptance or administration of your duties hereunder, including, without
limitation, in connection with any act, omission, delay or refusal made by you
in reasonable reliance upon any signature, endorsement, assignment, certificate,
order, request, notice, instruction or other instrument or document reasonably
believed by you to be valid, genuine and sufficient and in accepting any tender
or effecting any transfer of Old Notes reasonably believed by you in good faith
to be authorized, and in delaying or refusing in good faith to accept any
tenders or effect any transfer of Old Notes; provided, however, that the Issuer
-------- -------
shall not be liable for indemnification or otherwise for any loss, liability,
cost or expense to the extent arising out of your negligence, willful breach of
this Agreement, willful misconduct or bad faith. In no case shall the Issuer be
liable under this indemnity with respect to any claim against you unless the
Issuer shall be notified by you, by letter or cable or by facsimile confirmed by
letter, of the written assertion of a claim against you or of any other action
commenced against you, promptly after you shall have received any such written
assertion or commencement of action. The Issuer shall be entitled to participate
at its own expense in the defense of any such claim or other action, and, if the
Issuer so elects, the Issuer shall assume the defense of any suit brought to
enforce any such claim. In the event that the Issuer shall assume the defense of
any such suit, the Issuer shall not be liable for the fees and expenses of any
additional counsel thereafter retained by you so long as the Issuer shall retain
counsel reasonably satisfactory to you to defend such suit. You shall not
compromise or settle any such action or claim without the consent of the Issuer.
21. This Agreement and your appointment as Exchange Agent hereunder
shall be construed and enforced in accordance with the laws of the Commonwealth
of Virginia applicable to agreements made and to be performed entirely within
such state, and without regard to conflicts of law principles, and shall inure
to the benefit of, and the obligations created hereby shall be binding upon, the
successors and assigns of each of the parties hereto.
22. This Agreement may be executed in two or more counterparts, each
of which shall be deemed to be an original and all of which taken together
constitute one and the same agreement.
23. In case any provision of this Agreement shall be invalid, illegal
or unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
24. This Agreement shall not be deemed or construed to be modified,
amended, rescinded, canceled or waived, in whole or in part, except by a written
instrument signed by a duly authorized representative of the party to be
charged. This Agreement may not be modified orally.
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25. Unless otherwise provided herein, all notices, requests and other
communications to any party hereunder shall be in writing (including facsimile)
and shall be given to such party, addressed to it, at its address or telecopy
number set forth below:
If to the Issuer:
Tultex Corporation
101 Commonwealth Boulevard
Martinsville, Virginia 24401
Facsimile: 540/632-8000
Attention: Kathy H. Rogers, Corporate Secretary
With a copy to:
Hunton & Williams
951 East Byrd Street
Riverfront Plaza, East Tower
Richmond, Virginia 23219
Facsimile: 804/788-8218
Attention: Lathan M. Ewers, Jr.
If to the Exchange Agent:
First Union National Bank of Virginia
One James Center, 2nd Floor
Richmond, Virginia 23219
Facsimile: 804/788-9661
Attention: Dante M. Monakil, Vice President
26. Unless terminated earlier by the parties hereto, this Agreement
shall terminate 90 days following the Expiration Date. Notwithstanding the
foregoing, Paragraphs 18 and 20 shall survive the termination of this Agreement.
Except as provided in Section 17, upon any termination of this Agreement, you
shall promptly deliver to the Issuer any funds or property (including, without
limitation, Letters of Transmittal and any other documents relating to the
Exchange Offer) then held by you as Exchange Agent under this Agreement.
27. This Agreement shall be binding and effective as of the date
hereof.
Please acknowledge receipt of this Agreement and confirm the
arrangements herein provided by signing and returning the enclosed copy.
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TULTEX CORPORATION
By:
--------------------
Name: Suzanne H. Wood
Title: Vice President and
Chief Financial Officer
Accepted as the date
first above written:
FIRST UNION NATIONAL BANK OF VIRGINIA
By:
------------------------
Name: Dante M. Monakil
Title: Vice President
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