<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 13, 1997
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
ANVIL KNITWEAR, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 2253 13-3801709
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification Code Number) Identification
incorporation or organization) No.)
</TABLE>
--------------------------
ANVIL HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 2253 13-3801705
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification Code Number) Identification
incorporation or organization) No.)
</TABLE>
--------------------------
COTTONTOPS, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 2261 56-2005760
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification Code Number) Identification
incorporation or organization) No.)
</TABLE>
--------------------------
228 EAST 45TH STREET
NEW YORK, NEW YORK 10017
TELEPHONE: (212) 476-0300
(Address, including zip code, and telephone number, including
area code, of registrants' principal executive offices)
--------------------------
BERNARD GELLER, CHIEF EXECUTIVE COPY TO:
OFFICER DENNIS M. MYERS
Anvil Knitwear, Inc. Kirkland & Ellis
228 East 45th Street 200 East Randolph Drive
New York, New York 10017 Chicago, Illinois 60601
Telephone: (212) 476-0300 (312) 861-2000
(Name, address, including zip code,
and telephone number, including area
code, of agent for service)
--------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
--------------------------
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box. / /
--------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PER UNIT(1) OFFERING PRICE(1) REGISTRATION FEE
<S> <C> <C> <C> <C>
10 7/8% Series B Senior Notes due 2007..... $130,000,000 100% $130,000,000 $39,394
Guarantees of Series B Senior Notes due
2007..................................... $130,000,000 (2) (2) None
</TABLE>
(1) Estimated pursuant to Rule 457 solely for the purpose of calculating the
registration fee.
(2) No further fee is payable pursuant to Rule 457(n).
--------------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO THE REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH
STATE.
<PAGE>
SUBJECT TO COMPLETION, DATED MAY 13, 1997
PROSPECTUS
JUNE , 1997
ANVIL KNITWEAR, INC.
OFFER TO EXCHANGE ITS 10 7/8% SERIES B SENIOR NOTES DUE 2007 FOR ANY AND ALL OF
ITS
OUTSTANDING 10 7/8% SERIES A SENIOR NOTES DUE 2007
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
, 1997, UNLESS EXTENDED.
Anvil Knitwear, Inc., a Delaware corporation ("Anvil"), hereby offers (the
"Exchange Offer"), upon the terms and 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 Series B 10 7/8%
Senior Notes due 2007, (the "New Senior Notes"), registered under the Securities
Act of 1933, as amended (the "Securities Act"), pursuant to a Registration
Statement of which this Prospectus is a part, for each $1,000 principal amount
of its outstanding 10 7/8% Senior Notes due 2007 (the "Old Senior Notes"), of
which $130,000,000 principal amount is outstanding. The form and terms of the
New Senior Notes are the same as the form and term of the Old Senior Notes
(which they replace), except that the New Senior Notes will bear a Series B
designation and will have been registered under the Securities Act and,
therefore, will not bear legends restricting their transfer and will not contain
certain provisions relating to liquidated damages which were included in the
terms of the Old Senior Notes in certain circumstances relating to the timing of
the Exchange Offer. The New Senior Notes will evidence the same debt as the Old
Senior Notes (which they replace) and will be issued under and be entitled to
the benefits of an Indenture, dated as of March 14, 1997 (the "Senior
Indenture"), between Anvil, Anvil's parent, Anvil Holdings, Inc., a Delaware
corporation ("Holdings"), Cottontops, Inc., a Delaware corporation
("Cottontops"), the other Subsidiary Guarantors (as defined therein) and United
States Trust Company of New York, as trustee, governing the Old Senior Notes and
the New Senior Notes. The Old Senior Notes and the New Senior Notes are
sometimes referred to herein collectively as the "Senior Notes." See "The
Exchange Offer" and "Description of Securities--Senior Notes."
The Senior Notes bear interest at a rate of 10 7/8% per annum, payable
semi-annually on March 15 and September 15 of each year, commencing on September
15, 1997. The Senior Notes will mature on March 15, 2007 and will not be subject
to any sinking fund requirement. The Senior Notes will be redeemable by Anvil,
in whole or in part, at any time on or after March 15, 2002, at the redemption
prices set forth herein, plus accrued and unpaid interest and Liquidated Damages
(as defined herein), if any, to the redemption date. Notwithstanding the
foregoing, at any time on or before March 15, 2000, Anvil, at its option, may
redeem in the aggregate up to 40% of the original principal amount of the Senior
Notes at 110% of the aggregate principal amount so redeemed plus accrued and
unpaid interest and Liquidated Damages, if any, to the redemption date with the
net proceeds of one or more Public Equity Offerings (as defined herein),
PROVIDED that at least 60% of the principal amount of the Senior Notes
originally issued remain outstanding immediately after the occurrence of any
such redemption and that any such redemption occurs within 60 days following the
closing of any such Public Equity Offering. See "Description of
Securities--Senior Notes-- Optional Redemption."
The New Senior Notes will be, as the Old Senior Notes (which they replace)
are, senior unsecured obligations of Anvil, and will, as the Old Senior Notes
(which they replace), rank PARI PASSU in right of payment to all existing and
future senior indebtedness of Anvil and senior in right of payment to any
subordinated indebtedness of Anvil. The New Senior Notes will be, as the Old
Senior Notes (which they replace) are, fully and unconditionally guaranteed, on
an unsecured senior basis by Holdings, Cottontops and the other Subsidiary
Guarantors, if any, of Anvil (the "Guarantees"). The Senior Notes and the
Guarantees will be effectively subordinated to all existing and future
indebtedness of Anvil, Holdings and Cottontops, respectively, to the extent of
the value of the assets securing such indebtedness and will be structurally
subordinated to all existing and future indebtedness of their respective
subsidiaries. As of February 1, 1997, after giving pro forma effect to the
Recapitalization (as defined), the aggregate principal amount of senior
indebtedness of Anvil and Holdings, including the Senior Notes and the
Guarantees, respectively, would have been approximately $162.0 million
(including the discount on the Senior Notes) and approximately $32.0 million of
indebtedness of Anvil and Holdings would have been secured. In addition, Anvil
would have had $23.0 million of additional borrowing availability under the New
Credit Agreement (as defined). The Senior Indenture permits Anvil and its
restricted subsidiaries to incur additional indebtedness, subject to certain
limitations, and contains no limitation on the ability of Holdings to incur
additional indebtedness. See "Risk Factors--Subordination of Securities to
Current and Future Obligations," "Capitalization" and "Description of
Securities--Senior Notes."
(COVER PAGE CONTINUED ON FOLLOWING PAGE)
--------------------------
SEE "RISK FACTORS," BEGINNING ON PAGE 12, FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY HOLDERS WHO TENDER THEIR OLD SENIOR NOTES
IN THE EXCHANGE OFFER.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
(COVER PAGE CONTINUED)
In the event of a Change of Control (as defined), holders of the Senior
Notes will have the right to require Anvil to purchase its Senior Notes at 101%
of the aggregate principal amount thereof plus accrued and unpaid interest and
Liquidated Damages, if any, to the repurchase date. See "Risk Factors--Change of
Control Provisions; Limitations on Right of Repayment," "Description of
Securities--Senior Notes--Certain Covenants," "--Certain Definitions" and
"--Repurchase at the Option of Holders--Change of Control Offer." In addition,
Anvil is obligated in certain instances to make offers to repurchase the Senior
Notes at a purchase price in cash equal to 100% of the principal amount thereof
plus accrued and unpaid interest and Liquidated Damages, if any, to the date of
repurchase with the
proceeds of certain asset sales. See "Description of Securities--Senior
Notes--Certain Covenants."
Anvil will accept for exchange any and all Old Senior Notes validly tendered
and not withdrawn prior to 5:00 p.m., New York City time on , 1997,
unless extended by Anvil in its sole discretion (the "Expiration Date"). Tenders
of Old Senior Notes may be withdrawn at any time prior to 5:00 p.m. on the
Expiration Date. The Exchange Offer is subject to certain customary conditions.
The Old Senior Notes were sold by Anvil on March 14, 1997 to the Initial
Purchasers (as defined) in a transaction not registered under the Securities Act
in reliance upon an exemption under the Securities Act (the "Initial Offering").
The Initial Purchasers subsequently placed the Old Senior Notes with qualified
institutional buyers in reliance upon Rule 144A under the Securities Act and
with a limited number of institutional accredited investors in reliance upon
Rule 501(a) under the Securities Act. Accordingly, the Old Senior Notes may not
be reoffered, resold, or otherwise transferred in the United States unless
registered under the Securities Act or unless an applicable exemption from the
registration requirements of the Securities Act is available. The New Senior
Notes are being offered hereunder in order to satisfy the obligations of Anvil,
Holdings and Cottontops under the Registration Rights Agreement (as defined)
entered into by Anvil, Holdings, Cottontops and the Initial Purchasers in
connection with the Initial Offering. See "The Exchange Offer."
Based on no-action letters issued by the staff of the Securities and
Exchange Commission (the "Commission") to third parties, Anvil believes the New
Senior Notes issued pursuant to the Exchange Offer may be offered for resale,
resold and otherwise transferred by any holder thereof (other than any such
holder that is an "affiliate" of Anvil within the meaning of Rule 405 under the
Securities Act) without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that such New Senior Notes are
acquired in the ordinary course of such holder's business and such holder has no
arrangement or understanding with any person to participate in the distribution
of such New Senior Notes. See "The Exchange Offer--Resale of the New Senior
Notes." Each broker-dealer (a "Participating Broker-Dealer") that receives New
Senior 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 New
Senior Notes. The Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a Participating Broker-Dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act. This
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 New Senior Notes
received in exchange for Old Senior Notes where such Old Senior Notes were
acquired by such Participating Broker-Dealer as a result of marketmaking
activities or other trading activities. Anvil has agreed that, for a period of
180 days after the Expiration Date, it will make this Prospectus available to
any Participating Broker-Dealer for use in connection with any such resale. See
"Plan of Distribution."
Holders of Old Senior Notes not tendered and accepted in the Exchange Offer
will continue to hold such Old Senior Notes and will be entitled to all the
rights and benefits and will be subject to the limitations applicable thereto
under the Senior Indenture and with respect to transfer under the Securities
Act. Anvil will pay all the expenses incurred by it incident to the Exchange
Offer. See "The Exchange Offer."
There has not previously been any public market for the Old Senior Notes or
the New Senior Notes. Anvil does not intend to list the New Senior Notes on any
securities exchange or to seek approval for quotation through any automated
quotation system. The Old Senior Notes are currently eligible for trading in the
Private Offerings, Resales and Trading through Automated Linkages ("PORTAL")
market. However, there can be no assurance that an active market for the New
Senior Notes will develop. See "Risk Factors--Absence of a Public Market Could
Adversely Affect the Value of the Senior Notes." Moreover, to the extent that
Old Senior Notes are tendered and accepted in the Exchange Offer, the trading
market for untendered and tendered but unaccepted Old Senior Notes could be
adversely affected.
Concurrent with the Initial Offering, Holdings sold 30,000 Units (the
"Units"), each consisting of 40 shares of 13% Senior Exchangeable Preferred
Stock due 2009 (the "Old Senior Preferred Stock") of Holdings and 13 shares of
Class B Common Stock, $0.01 par value per share (the "Class B Common"), of
Holdings (the "Initial Units Offering" and, together with the Initial Offering,
the "Initial Offerings").
Concurrent with the Exchange Offer, Holdings is offering (the "Preferred
Exchange Offer") to exchange $1,000 liquidation preference of its Series B 13%
Senior Exchangeable Preferred Stock due 2009 (the "New Senior Preferred Stock")
for each $1,000 liquidation preference of its outstanding Old Senior Preferred
Stock. The New Senior Preferred Stock and the Old Senior Preferred Stock are
sometimes referred to herein collectively as the "Senior Preferred Stock." The
Senior Preferred Stock are exchangeable, at the option of Holdings, into
Holdings' 13% Subordinated Exchange Debentures due 2009 (the "Exchange
Debentures"). The Exchange Offer and the Preferred Exchange Offer are sometimes
referred to herein collectively as the "Exchange Offers." See
"Summary--Concurrent Preferred Exchange Offer." The Old Senior Notes, the New
Senior Notes, the New Senior Preferred Stock, the Old Senior Preferred Stock and
the Exchange Debentures are sometimes referred to herein collectively as the
"Securities."
ii
<PAGE>
(COVER PAGE CONTINUED)
The New Senior Notes will be available initially in book-entry form and
Anvil expects that the New Senior Notes issued pursuant to this Exchange Offer
will be issued in the form of a Global Note, which will be deposited with, or on
behalf of, The Depository Trust Company (the "Depositary") and registered in its
name or in the name of Cede & Co., its nominee, except with respect to
institutional "accredited investors" (within the meaning of Rule 501(a)(1), (2),
(3) or (7) under the Securities Act) who will receive New Senior Notes in
certificated form. Beneficial interests in the Global Note will be shown on, and
transfer thereof will be effected through, records maintained by the Depositary
and its participants. After the initial issuance of the Global Note, New Senior
Notes in certificated form will be issued in exchange for the Global Note on the
terms set forth in the Senior Indenture. See "Description of Securities--Senior
Notes--Book-Entry, Delivery and Form."
Market data used throughout this Prospectus were obtained from internal
surveys and industry publications. Industry publications generally indicate that
the information contained therein has been obtained from sources believed to be
reliable, but that the accuracy and completeness of such information is not
guaranteed. Neither Anvil nor Holdings have independently verified such market
data. Similarly, internal surveys, while believed to be reliable, have not been
verified by any independent source.
This Prospectus, including the documents incorporated by reference herein,
contains certain forward-looking statements. While Anvil and Holdings believe
these statements are reasonable, prospective investors should be aware that
actual results could differ materially from those projected by such forward-
looking statements as a result of the risk factors set forth in this Prospectus
or other factors. Prospective investors should consider carefully the risk
factors as well as the other information and data included in this Prospectus
before tendering the Old Senior Notes in exchange for the New Senior Notes.
Anvil and Holdings caution the reader, however, that the list of risk factors
set forth herein may not be exhaustive and that these or other factors could
have an adverse effect on the ability of Anvil to service its indebtedness,
including principal and interest payments on the Senior Notes or an adverse
effect on the ability of Holdings and Cottontops to perform their obligations
under the Guarantees. See "Risk Factors."
------------------------
ANVIL, COTTON DELUXE and the COTTON DELUXE design are registered trademarks
of Anvil.
iii
<PAGE>
AVAILABLE INFORMATION
Anvil, Holdings and Cottontops have filed with the Commission a Registration
Statement on Form S-4 (the "Exchange Offer Registration Statement," which term
shall encompass all amendments, exhibits, annexes and schedules thereto)
pursuant to the Securities Act, and the rules and regulations promulgated
thereunder, covering the New Senior Notes being offered hereby. This Prospectus
does not contain all the information set forth in the Exchange Offer
Registration Statement. For further information with respect to Anvil and the
Exchange Offer, reference is made to the Exchange Offer Registration Statement.
Statements made in this Prospectus as to the contents of any contract, agreement
or other document referred to are not necessarily complete. With respect to each
such contract, agreement or other document filed as an exhibit to the Exchange
Offer Registration Statement, reference is made to the exhibit for a more
complete description of the document or matter involved, and each such statement
shall be deemed qualified in its entirety by such reference. The Exchange Offer
Registration Statement, including the exhibits thereto, can be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549, at the Regional Offices of
the Commission at 7 World Trade Center, 13th Floor, New York, New York 10048 and
at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. Copies of such materials can be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. The Commission maintains a Web site that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the Commission. The address of such site is
http://www.sec.gov.
As the result of the filing of the Exchange Offer Registration Statement
with the Commission, Anvil, Holdings and Cottontops will become subject to the
information requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and in accordance therewith will be required to file periodic
reports and other information with the Commission. The obligation of Anvil,
Holdings and Cottontops to file periodic reports and other information with the
Commission will be suspended if the New Senior Notes are held of record by fewer
than 300 holders as of the beginning of any fiscal year of Anvil, Holdings or
Cottontops other than the fiscal year in which the Exchange Offer Registration
Statement is declared effective. Holdings has agreed pursuant to the Senior
Indenture that, whether or not it is required to do so by the rules and
regulations of the Commission, for so long as any of the Senior Notes remain
outstanding, it will furnish to the holders of the Senior Notes (within 15 days
after it is or would have been required to file with the Commission) and file
with the Commission (unless the Commission will not accept such a filing) (i)
all quarterly and annual financial information that would be required to be
contained in a filing with the Commission on Forms 10-Q and 10-K if Holdings was
required to file such forms, including a "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and, with respect to the
annual information only, a report thereon by Holdings' certified independent
accountants and (ii) all current reports that would be required to be filed with
the Commission on Form 8-K if Holdings was required to file such reports. In
addition, for so long as any of the Senior Notes remain outstanding, Anvil,
Holdings, Cottontops and any other Subsidiary Guarantor, if any, agree to
furnish to the holders of the Senior Notes or any prospective transferee of any
such holder, upon their request, the information required to be delivered by
Rule 144A(d)(4) under the Securities Act.
iv
<PAGE>
SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY, AND SHOULD BE READ IN
CONJUNCTION WITH, THE MORE DETAILED INFORMATION AND FINANCIAL STATEMENTS,
INCLUDING THE NOTES THERETO, APPEARING ELSEWHERE IN THIS PROSPECTUS. ANVIL
HOLDINGS, INC. ("HOLDINGS") WAS FORMED TO ACQUIRE SUBSTANTIALLY ALL OF THE
ASSETS OF THE ANVIL KNITWEAR DIVISION (THE "PREDECESSOR") OF MCGREGOR
CORPORATION ("MCGREGOR") AS OF JANUARY 28, 1995 (THE "ACQUISITION"). UNLESS THE
CONTEXT OTHERWISE REQUIRES, ALL REFERENCES TO THE "COMPANY" IN THIS PROSPECTUS
SHALL MEAN HOLDINGS AND ITS CONSOLIDATED SUBSIDIARIES, INCLUDING ANVIL KNITWEAR,
INC. ("ANVIL"). WHERE THE CONTEXT SO REQUIRES, REFERENCES TO THE "COMPANY" IN
RELATION TO PERIODS PRIOR TO THE ACQUISITION SHALL MEAN THE PREDECESSOR.
FINANCIAL STATEMENTS PRESENTED HEREIN REFLECT THE CONSOLIDATED FINANCIAL
STATEMENTS OF THE COMPANY OR THE COMBINED FINANCIAL STATEMENTS OF THE
PREDECESSOR. HOLDINGS' SOLE ASSET IS THE CAPITAL STOCK OF ANVIL. THE FISCAL YEAR
OF THE COMPANY ENDS ON THE SATURDAY CLOSEST TO JANUARY 31. FISCAL YEARS ARE
IDENTIFIED HEREIN ACCORDING TO THE CALENDAR YEAR IN WHICH THEY BEGIN. FOR
EXAMPLE, THE FISCAL YEAR ENDED FEBRUARY 1, 1997 IS REFERRED TO HEREIN AS "FISCAL
1996."
THE COMPANY
Anvil Knitwear, Inc. is a leading designer, manufacturer and marketer of
high quality activewear for sale principally into the "imprinted" or "decorated"
segment of the U.S. apparel industry. The Company offers an extensive line of
activewear products designed for men, women and children, including short and
long sleeve T-shirts, classic button and collar knit sport shirts (known as
"plackets"), collarless short and long sleeve knit shirts (known as "henleys"),
fleeced sweatshirts, athletic shorts and caps. The Company markets and sells its
products primarily to distributors and screen printers under the ANVIL and
COTTON DELUXE brand names as well as under private labels. Prior to their
ultimate resale to the consumer, the Company's products typically are printed or
embroidered with logos, designs or characters. The Company believes that its
strong operating performance is due to: (i) its broad range of high quality
products; (ii) its strong relationships with customers and suppliers; (iii) its
flexible, vertically integrated manufacturing operations; (iv) its commitment to
controlling costs and improving manufacturing processes; and (v) the strong
growth of the activewear market. For the fiscal year ended February 1, 1997, the
Company generated net sales and EBITDA of $204.2 million and $32.6 million,
respectively.
The Company has achieved significant increases in net sales and EBITDA in
recent years. From fiscal 1991 through fiscal 1996, the Company's net sales grew
from $124.6 million to $204.2 million, representing a compound annual growth
rate ("CAGR") of 10.4%, and EBITDA grew from $15.5 million to $32.6 million,
representing a CAGR of 16.0%. This improvement resulted primarily from the
Company's operating leverage, management's initiatives to reduce costs and
improve productivity and the Company's successful introduction of higher priced
products.
The Company offers high quality activewear in a variety of styles, colors,
fabric weights and blends, enabling it to serve effectively a number of market
niches as well as the traditional T-shirt market. The Company works closely with
its distributor and screen printer customers to meet their needs for style and
color innovation. The Company continues to compete successfully by: (i)
targeting niche products on which larger competitors have not traditionally
focused; (ii) responding quickly to market developments; and (iii) regularly
introducing new products. In addition, the Company has made significant
investments to modernize and expand its domestic manufacturing and distribution
facilities in order to improve quality, reduce costs, manage inventories and
shorten production cycles.
The Company operates primarily in the U.S. imprinted activewear market,
which accounted for approximately $13.8 billion of retail sales and $6.7 billion
of factory level sales in 1995. From 1990 through 1995, industry retail dollar
sales and unit sales of imprinted activewear (T-shirts, knit shirts, fleecewear
and athletic shorts) in the U.S. market grew at CAGRs of 8.0% and 5.7%,
respectively. From fiscal 1990 through fiscal 1995, the Company's net sales and
unit sales increased at CAGRs of 12.7% and 9.3%, respectively. The Company
believes sales of activewear products has been driven primarily by: (i) the
1
<PAGE>
increased consumer preference for comfortable apparel selections; (ii) more
flexible dress codes, including the greater acceptance of casual wear in the
workplace; and (iii) the heightened emphasis on physical fitness. In addition,
activewear products have registered a number of significant improvements in
product characteristics that have contributed to enhanced consumer appeal,
including improvements in fabric weight, blends and construction as well as
increased offerings of size, color and style.
The activewear market is characterized by low fashion risk relative to many
other apparel markets. While substantial opportunity exists for product
innovation and differentiation, basic garment styles are generally not driven by
trends or fads. The industry is also characterized by certain barriers to entry,
including: (i) significant capital expenditures required for vertically
integrated production; (ii) strong supplier relationships; and (iii) established
customer relationships. Furthermore, the Company believes that the relatively
low labor portion of the cost of manufacturing activewear and the short delivery
times required by distributors and screen printers have impeded the penetration
of imports.
BUSINESS STRATEGY
The Company's objective is to continue to increase net sales and EBITDA by
implementing the following key elements of its business strategy:
/ / OFFER A BROAD RANGE OF HIGH QUALITY PRODUCTS. The Company offers high
quality activewear in a wide variety of styles, colors, fabric weights
and blends, enabling it to serve effectively a number of market niches.
During the past five years, the Company has strengthened its position in
the activewear market by successfully introducing higher priced products
to supplement its traditional T-shirt offerings. From fiscal 1991
through fiscal 1996, the Company's gross sales of henleys and plackets,
both higher priced products, increased at a CAGR of 51.1%. In addition,
the Company expects to continue to expand its product offerings under
its ANVIL and COTTON DELUXE brands, capitalizing on the growth in the
higher priced branded products segment of the activewear market.
Furthermore, the Company is working closely with third parties to market
complementary imprintable products, such as caps, bags, carryalls and
jackets, through the Company's established distribution channels.
/ / ENHANCE AND EXPAND CUSTOMER RELATIONSHIPS. The Company continually seeks
to strengthen and expand its customer relationships by promoting the
Company's: (i) broad product offerings; (ii) ability to design
customized products; (iii) quick, reliable delivery; and (iv) ability to
accommodate modifications to customer orders. The Company's direct
salesforce focuses on developing strong relationships with distributors,
who have accounted for an increasing percentage of activewear sales in
recent years. In fiscal 1996, sales to distributors accounted for
approximately 64% of the Company's net sales. In the Company's
experience, distributors place larger purchase orders, purchase a
broader product mix, maintain higher inventory levels and develop more
predictable order and re-order patterns than certain of its other
customers. The Company estimates that distributors resell products to
approximately 20,000 smaller screen printers and embroiderers. The
Company's expanded product offerings have enabled it to more effectively
service distributors and satisfy the disparate preferences of consumers.
/ / FLEXIBLE, VERTICALLY INTEGRATED MANUFACTURING OPERATIONS. The Company is
a vertically integrated manufacturer which knits (exclusively from
purchased yarn), bleaches, dyes, finishes, cuts and sews its activewear
products at its efficient manufacturing facilities. The Company believes
that being vertically integrated allows it to maintain a competitive
cost structure, minimize delivery time and provide consistent, high
quality products. The Company's manufacturing flexibility enables it to
complete smaller volume production runs efficiently, respond quickly to
customer needs and accommodate last minute modifications to customer
orders. The Company reduces inventory risk by maintaining a supply of
goods in a "greige" (undyed and unbleached) state until relatively late
in the production process and by turning its finished goods inventory
(costs of sales divided by ending
2
<PAGE>
finished goods inventory) frequently (for example, approximately 7.6
times in fiscal 1996). In addition, the Company typically is able to
deliver specialized products to its customers within four to five weeks
of receiving an order and believes its turnaround time to be generally
shorter than that typically achieved by its competitors delivering
similar specialized products.
/ / CONTINUE TO CONTROL COSTS AND IMPROVE MANUFACTURING. From fiscal 1991
through fiscal 1996, the Company invested approximately $42 million to
modernize and expand its domestic manufacturing and distribution
facilities in order to improve quality, reduce costs, manage inventories
and shorten production cycles. The Company believes it can continue to
improve its operating efficiency by: (i) increasing the use of offshore
sewing operations; (ii) utilizing its 660,000 square foot centralized
distribution facility to deliver its products in a more cost efficient
manner; and (iii) opportunistically redesigning manufacturing processes
to shorten production cycles and improve inventory management. The
Company believes that it manages its working capital and inventory
better than any of its primary publicly-traded competitors.
/ / CAPITALIZE ON THE GROWTH OF THE ACTIVEWEAR MARKET. From 1990 through
1995, industry retail dollar sales and unit sales of imprinted
activewear (T-shirts, knit shirts, fleecewear and athletic shorts) in
the U.S. market grew at CAGRs of 8.0% and 5.7%, respectively. From
fiscal 1990 through fiscal 1995, the Company's net sales and unit sales
increased at CAGRs of 12.7% and 9.3%, respectively. The Company believes
the sale of activewear products has been driven primarily by: (i) the
increased consumer preference for comfortable apparel selections; (ii)
more flexible dress codes, including the greater acceptance of casual
wear in the workplace; and (iii) the heightened emphasis on physical
fitness. In addition, the Company believes that it has identified
significant growth opportunities in several international markets,
including certain markets in Europe, South America and Japan.
THE RECAPITALIZATION
On February 12, 1997, Holdings, Anvil VT, Inc., Vestar Equity Partners, L.P.
("Vestar"), 399 Venture Partners, Inc. and certain of its employees and
affiliates (collectively, "399 Venture"), the Management Investors and the other
existing stockholders of Holdings (collectively, the "Existing Stockholders")
and Bruckmann, Rosser, Sherrill & Co., L.P. and certain of its employees and
affiliates (collectively, "BRS") entered into a Recapitalization Agreement (as
amended, the "Recapitalization Agreement"). Pursuant to the Recapitalization
Agreement: (i) Holdings redeemed and repurchased a substantial portion of its
outstanding shares of capital stock; (ii) 399 Venture and the Management
Investors reinvested a portion of their old shares of common stock of Holdings
(the "Retained Shares"), which converted into shares of Class A Common Stock,
$0.01 par value per share ("Class A Common"), and Class B Common; (iii) 399
Venture exchanged a portion of its old preferred stock for 3,333 Units; and (iv)
BRS purchased shares of Class A Common and Class B Common. As of March 14, 1997,
399 Venture, BRS and the Management Investors owned 39.1%, 39.1% and 14.0%,
respectively, of the issued and outstanding capital stock of the Company. The
Class A Common and the Class B Common are sometimes collectively referred to
herein as the "Common Stock." See "The Recapitalization."
The Company used approximately $225.5 million to complete the
Recapitalization, including the payment of related fees and expenses. In order
to finance the Recapitalization: (i) Anvil issued $130.0 million in aggregate
principal amount of Old Senior Notes in the Initial Offering; (ii) Holdings
issued 30,000 Units, consisting of an aggregate of 1.2 million shares of Old
Senior Preferred Stock and 390,000 shares of Class B Common, in the Initial
Units Offering for gross proceeds of $26.7 million; (iii) Anvil borrowed
approximately $33.3 million under a $55.0 million amended and restated credit
agreement (the "New Credit Agreement"); and (iv) 399 Venture, the Management
Investors and BRS, collectively, contributed in the form of equity securities
and cash an aggregrate of approximately $35.5 million to Holdings (the "Equity
Contribution").
3
<PAGE>
THE INITIAL OFFERING
<TABLE>
<S> <C>
OLD SENIOR NOTES............. The Old Senior Notes were sold by Anvil on March 14, 1997 to
Donaldson, Lufkin and Jenrette Securities Corporation
("DLJ"), Wasserstein Perella Securities, Inc. and
NationsBanc Capital Markets, Inc. (collectively, the
"Initial Purchasers") pursuant to a Purchase Agreement,
dated as of March 11, 1997 (the "Purchase Agreement"). The
Initial Purchasers subsequently resold the Old Senior Notes
to qualified institutional buyers pursuant to Rule 144A
under the Securities Act and to a limited number of
institutional accredited investors pursuant to Rule 501(a)
of the Securities Act.
CONCURRENT INITIAL UNITS
OFFERING................... Concurrent with the Initial Offering, Holdings sold 26,667
Units on March 14, 1997 to DLJ (the "Initial Purchaser") and
3,333 Units, for which DLJ acted as agent in connection with
the sale by Holdings, pursuant to a Purchase Agreement,
dated as of March 11, 1997 (the "Units Purchase Agreement").
Each Unit consisted of 40 shares of Old Senior Preferred
Stock and 13 shares of Class B Common Stock.
REGISTRATION RIGHTS
AGREEMENT.................. Pursuant to the Purchase Agreement, Anvil, Holdings,
Cottontops and the Initial Purchasers entered into a
Registration Rights Agreement, dated as of March 14, 1997
(the "Registration Rights Agreement"), which grants the
holders of the Old Senior Notes certain exchange and
registration rights. The Exchange Offer is intended to
satisfy such exchange rights which terminate upon the
consummation of the Exchange Offer.
THE EXCHANGE OFFER
SECURITIES OFFERED........... $130,000,000 aggregate principal amount of 10 7/8% Series B
Senior Notes due 2007 of Anvil.
THE EXCHANGE OFFER........... $1,000 principal amount of New Senior Notes in exchange for
each $1,000 principal amount of Old Senior Notes. As of the
date hereof, $130,000,000 aggregate principal amount of Old
Senior Notes are outstanding. Anvil will issue the New
Senior Notes to holders on or promptly after the Expiration
Date.
Based on an interpretation by the staff of the Commission
set forth in no-action letters issued to third parties,
Anvil believes that New Senior Notes issued pursuant to the
Exchange Offer in exchange for Old Senior Notes may be
offered for resale, resold and otherwise transferred by any
holder thereof (other than any such holder which is an
"affiliate" of Anvil within the meaning of Rule 405 under
the Securities Act) without compliance with the registration
and prospectus delivery provisions of the Securities Act,
provided that such New Senior Notes are acquired in the
ordinary course of such holder's business and that such
holder does not intend to participate and has no arrangement
or understanding with any person to participate in the
distribution of such New Senior Notes. Each holder accepting
the Exchange Offer is required to represent to Anvil in the
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
Letter of Transmittal that, among other things, the New
Senior Notes will be acquired by the holder in the ordinary
course of business and the holder does not intend to
participate and has no arrangement or understanding with any
person to participate in the distribution of such New Senior
Notes.
Any Participating Broker that acquired Old Senior Notes for
its own account as a result of market-making activities or
other trading activities may be a statutory underwriter.
Each Participating Broker-Dealer that receives New Senior
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 New Senior Notes. The
Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a Participating Broker-Dealer will
not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act. This Prospectus, as it
may be amended or supplemented from time to time, may be
used by a Participating Broker-Dealer in connection with
resale of New Senior Notes received in exchange for Old
Senior Notes where such Old Senior Notes were acquired by
such Participating Broker-Dealer as a result of
market-making activities or other trading activities. Anvil
has agreed that, for a period of 180 days after the
Expiration Date, it will make this Prospectus available to
any Participating Broker-Dealer for use in connection with
any such resale. See "Plan of Distribution."
Any holder who tenders in the Exchange Offer with the
intention to participate, or for the purpose of
participating, in a distribution of the New Senior Notes
could not rely on the position of the staff of the
Commission enunciated in no-action letters and, in the
absence of an exemption therefrom, must comply with the
registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction.
Failure to comply with such requirements in such instance
may result in such holder incurring liability under the
Securities Act for which the holder is not indeminified by
Anvil.
EXPIRATION DATE.............. 5:00 p.m., New York City 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.
ACCRUED INTEREST ON THE
NEW SENIOR NOTES AND THE
OLD SENIOR NOTES........... Each New Senior Note will bear interest from its issuance
date. Holders of Old Senior Notes that are accepted for
exchange will receive, in cash, accrued interest thereon to,
but not including, the issuance date of the New Senior
Notes. Such interest will be paid with the first interest
payment on the New Senior Notes. Interest on the Old Senior
Notes accepted for exchange will cease to accrue upon
issuance of the New Senior Notes.
CONDITIONS TO THE
EXCHANGE OFFER............. The Exchange Offer is subject to certain customary
conditions, which may be waived by Anvil. See "The Exchange
Offer--Conditions."
</TABLE>
5
<PAGE>
<TABLE>
<S> <C>
PROCEDURES FOR TENDERING
OLD SENIOR NOTES........... Each holder of Old Senior Notes wishing to accept the
Exchange Offer must complete, sign and date the accompanying
Letter of Transmittal, or a facsimile thereof or transmit an
Agent's Message (as defined) in connection with a book-entry
transfer, in accordance with the instructions contained
herein and therein, and mail or otherwise deliver such
Letter of Transmittal, such facsimile or such Agent's
Message, together with the Old Senior Notes and any other
required documentation to the Exchange Agent (as defined) at
the address set forth herein. By executing the Letter of
Transmittal or Agent's Message, each holder will represent
to Anvil that, among other things, the New Senior Notes
acquired pursuant to the Exchange Offer are being obtained
in the ordinary course of business of the person receiving
such New Senior Notes, whether or not such person is the
holder, that neither the holder nor any such other person
(i) has any arrangement or understanding with any person to
participate in the distribution of such New Senior Notes,
(ii) is engaging or intends to engage in the distribution of
such New Notes, or (iii) is an "affiliate," as defined under
Rule 405 of the Securities Act, of Anvil. See "The Exchange
Offer--Purpose and Effect of the Exchange Offer" and "--
Procedures for Tendering."
UNTENDERED OLD SENIOR
NOTES...................... Following the consummation of the Exchange Offer, holders of
Old Senior Notes eligible to participate but who do not
tender their Old Senior Notes will not have any further
exchange rights and such Old Senior Notes will continue to
be subject to certain restrictions on transfer. Accordingly,
the liquidity of the market for such Old Senior Notes could
be adversely affected.
CONSEQUENCES OF FAILURE TO
EXCHANGE................... The Old Senior Notes that are not exchanged pursuant to the
Exchange Offer will remain restricted securities.
Accordingly, such Old Senior Notes may be resold only (i) to
Anvil, (ii) pursuant to Rule 144A or Rule 144 under the
Securities Act or pursuant to some other exemption under the
Securities Act, (iii) outside the United States to a foreign
person pursuant to the requirements of Rule 904 under the
Securities Act, or (iv) pursuant to an effective
registration statement under the Securities Act. See "The
Exchange Offer-- Consequences of Failure to Exchange."
SHELF REGISTRATION
STATEMENT.................. If any holder of the Old Senior Notes (other than any such
holder which is an "affiliate" of Anvil within the meaning
of Rule 405 under the Securities Act) is not eligible under
applicable securities laws to participate in the Exchange
Offer, and such holder has provided information regarding
such holder and the distribution of such holder's Old Senior
Notes to Anvil for use therein, Anvil has agreed to register
the Old Senior Notes on a shelf registration statement (the
"Shelf Registration Statement") and use its best efforts to
cause it to be declared effective by the Commission as
promptly as practical on or after the consummation of the
Exchange Offer. Anvil has agreed to maintain the
effectiveness of the Shelf Registration Statement for, under
certain circumstances, a maximum of three
</TABLE>
6
<PAGE>
<TABLE>
<S> <C>
years, to cover resales of the Old Senior Notes held by any
such holders.
SPECIAL PROCEDURES FOR
BENEFICIAL OWNERS.......... Any beneficial owner whose Old Senior 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. If such beneficial owner wishes to tender on such
owner's own behalf, such owner must, prior to completing and
executing the Letter of Transmittal and delivering its Old
Senior Notes, either make appropriate arrangements to
register ownership of the Old Senior Notes in such owner's
name or obtain a properly completed bond power from the
registered holder. The transfer of registered ownership may
take considerable time. Anvil will keep the Exchange Offer
open for not less than twenty business days in order to
provide for the transfer of registered ownership.
GUARANTEED DELIVERY
PROCEDURES................. Holders of Old Senior Notes who wish to tender their Old
Senior Notes and whose Old Senior Notes are not immediately
available or who cannot deliver their Old Senior Notes, the
Letter of Transmittal or any other documents required by the
Letter of Transmittal to the Exchange Agent (or comply with
the procedures for book-entry transfer) prior to the
Expiration Date must tender their Old Senior Notes according
to the guaranteed delivery procedures set forth in "The
Exchange Offer--Guaranteed Delivery Procedures."
WITHDRAWAL RIGHTS............ Tenders may be withdrawn at any time prior to 5:00 p.m., New
York City time, on the Expiration Date.
ACCEPTANCE OF OLD SENIOR
NOTES AND DELIVERY OF NEW
NOTES...................... Anvil will accept for exchange any and all Old Senior Notes
which are properly tendered in the Exchange Offer prior to
5:00 p.m., New York City time, on the Expiration Date. The
New Senior Notes issued pursuant to the Exchange Offer will
be delivered promptly following the Expiration Date. See
"The Exchange Offer--Terms of the Exchange Offer."
USE OF PROCEEDS.............. There will be no cash proceeds to Anvil from the exchange
pursuant to the Exchange Offer. See "Use of Proceeds."
EXCHANGE AGENT............... United States Trust Company of New York.
</TABLE>
7
<PAGE>
THE NEW SENIOR NOTES
<TABLE>
<S> <C>
GENERAL...................... The form and terms of the New Senior Notes are the same as
the form and terms of the Old Senior Notes (which they
replace) except that (i) the New Senior Notes bear a Series
B designation, (ii) the New Senior Notes have been
registered under the Securities Act and, therefore, will not
bear legends restricting the transfer thereof, and (iii) the
holders of New Senior Notes will not be entitled to certain
rights under the Registration Rights Agreement, including
the provisions providing for liquidated damages in certain
circumstances relating to the timing of the Exchange Offer,
which rights will terminate when the Exchange Offer is
consummated. See "The Exchange Offer--Purpose and Effect of
the Exchange Offer." The New Senior Notes will evidence the
same debt as the Old Senior Notes and will be entitled to
the benefits of the Senior Indenture. See "Description of
Securities--Senior Notes." The Old Senior Notes and the New
Senior Notes are sometimes referred to herein collectively
as the "Senior Notes."
MATURITY DATE................ March 15, 2007.
INTEREST PAYMENT DATES....... March 15 and September 15 of each year, commencing September
15, 1997.
OPTIONAL REDEMPTION.......... On or after March 15, 2002, Anvil may redeem the Senior
Notes, at the redemption prices set forth herein, plus
accrued and unpaid interest and Liquidated Damages, if any,
to the date of redemption. Notwithstanding the foregoing, at
any time on or before March 15, 2000, Anvil may redeem up to
40% of the original aggregate principal amount of the Senior
Notes with the net proceeds of one or more Public Equity
Offerings at a redemption price equal to 110% of the
principal amount thereof, plus accrued and unpaid interest
and Liquidated Damages, if any, to the date of redemption;
PROVIDED that at least 60% of the original aggregate
principal amount of the Senior Notes remains outstanding
after each such redemption. See "Description of
Securities--Senior Notes--Optional Redemption."
CHANGE OF CONTROL............ Upon a Change of Control, Anvil will be required to make an
offer to purchase all of the outstanding Senior Notes at a
price equal to 101% of the principal amount thereof, plus
accrued and unpaid interest and Liquidated Damages, if any,
to the date of repurchase. See "Description of
Securities--Senior Notes--Repurchase at the Option of
Holders."
RANKING...................... The New Senior Notes will be, as the Old Senior Notes (which
they replace) are, senior unsecured obligations of Anvil and
will rank PARI PASSU in right of payment to all existing and
future senior indebtedness of Anvil and senior in right of
payment to all subordinated indebtedness of Anvil. The New
Senior Notes will be, as the Old Senior Notes (which they
replace) are, effectively subordinated to all existing and
future secured indebtedness of Anvil, including indebtedness
pursuant to the New Credit Agreement, to the extent of the
value of the assets securing such indebtedness and will be
</TABLE>
8
<PAGE>
<TABLE>
<S> <C>
structurally subordinated to all existing and future
indebtedness of its subsidiaries. See "Description of
Securities--Senior Notes-- General."
GUARANTEES................... The New Senior Notes will be, as the Old Senior Notes (which
they replace) are, fully and unconditionally guaranteed by
Holdings and Cottontops. The Guarantees will be a senior
unsecured obligation of Holdings and Cottontops and will be
effectively subordinated to all secured indebtedness of
Holdings and Cottontops, respectively to the extent of the
value of the assets securing such indebtedness and will be
structurally subordinated to all existing and future
indebtedness of their subsidiaries.
CERTAIN COVENANTS............ The Senior Indenture contains certain covenants which, among
other things, limit the ability of Anvil and its Restricted
Subsidiaries to: (i) incur additional indebtedness and issue
preferred stock; (ii) repay certain other indebtedness;
(iii) pay dividends or make certain other distributions;
(iv) repurchase equity interests; (v) consummate certain
asset sales; (vi) enter into certain transactions with
affiliates; (vii) enter into sale and leaseback
transactions; (viii) incur liens; (ix) merge or consolidate
with any other person; or (x) sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of
the assets of Anvil. In addition, under certain
circumstances, Anvil will be required to make an offer to
purchase the Senior Notes at a price equal to the principal
amount thereof, plus accrued and unpaid interest and
Liquidated Damages, if any, to the date of purchase, with
the proceeds of certain Asset Sales. See "Description of
Securities-- Senior Notes--Certain Covenants."
</TABLE>
CONCURRENT PREFERRED EXCHANGE OFFER
Concurrent with the Exchange Offer, Holdings is offering to exchange $1,000
liquidation preference of its New Senior Preferred Stock for each $1,000
liquidation preference of its outstanding Old Senior Preferred Stock. The Senior
Preferred Stock is exchangeable, at the option of Holdings, into Holdings'
Exchange Debentures, subject to certain conditions.
RISK FACTORS
Prospective investors should carefully consider the factors set forth under
"Risk Factors," as well as the other information set forth in this Prospectus
before tendering the Old Senior Notes in exchange for the New Senior Notes.
------------------------
Anvil and Holdings were incorporated under the laws of the State of Delaware
on November 23, 1994 and December 16, 1994, respectively. The principal
executive offices of Anvil and Holdings are located at 228 East 45th Street, New
York, New York 10017, and their telephone number is (212) 476-0300.
9
<PAGE>
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA
(DOLLARS AND UNITS IN THOUSANDS)
The following summary historical financial data were derived from the
historical financial statements of the Predecessor and the Company and the
unaudited pro forma financial data were derived from the "Pro Forma Financial
Statements" of the Company. The historical combined financial statements of the
Predecessor for fiscal years 1992 and 1994 and the five and seven month periods
ended June 30, 1993 and January 29, 1994, respectively, were audited by KPMG
Peat Marwick LLP. The historical consolidated financial statements of the
Company for fiscal years 1995 and 1996 were audited by Deloitte & Touche LLP.
The Old Senior Notes surrendered in exchange for the New Senior Notes will be
retired and canceled and cannot be reissued. Likewise, the Old Senior Preferred
Stock surrendered in exchange for the New Senior Preferred Stock will be
returned and canceled and cannot be reissued. Accordingly, neither the issuance
of the New Senior Notes nor the New Senior Preferred Stock will result in any
increase or decrease in the indebtedness of the Company. As such, no effect has
been given to the Exchange Offers in the pro forma financial data included
herein. The information contained in this table should be read in conjunction
with "Selected Historical Financial Data," "Management's Discussion and Analysis
of Financial Condition and Results of Operations," "Unaudited Pro Forma
Financial Statements" and the combined and consolidated financial statements and
the notes thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
PREDECESSOR(1) THE COMPANY(1)
------------------------------------------------ ----------------------
<S> <C> <C> <C> <C> <C> <C>
<CAPTION>
FISCAL YEAR FIVE SEVEN
ENDED MONTHS MONTHS FISCAL YEAR ENDED
----------- ENDED ENDED ---------------------------------
JAN. 31, JUNE 30, JAN. 29, JAN. 28, JAN. 27, FEB. 1,
1993 1993 1994(2) 1995(2) 1996 1997
----------- ----------- ----------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales........................................... $ 140,839 $ 75,743 $ 74,691 $ 169,923 $ 193,389 $ 204,154
Gross profit........................................ 24,112 14,546 12,283 38,017 43,666 47,341
Selling, general and administrative expenses........ 11,103 5,788 6,632 14,704 17,778 21,678
Operating income (loss)............................. 13,009 8,703 (1,066) 9,878 25,152 24,705
Net income (loss)................................... 8,073 4,972 (3,338) 1,057 10,154 10,325
OTHER DATA:
EBITDA(3)........................................... $ 16,329 $ 10,617 $7,830 $ 28,639 $ 31,615 $ 32,592
Cash provided by (used in):
Operating activities.............................. (4,186 ) 21,919 (996 ) 13,654 7,163 23,811
Investing activities.............................. (9,242 ) (3,003 ) (4,764 ) (7,888) (7,703) (6,519 )
Financing activities.............................. 13,376 (18,813 ) 4,125 (5,313) 775 (16,997 )
Depreciation and amortization....................... 3,320 1,914 8,896 18,761 6,463 7,287
Capital expenditures................................ 9,372 3,003 4,764 7,888 7,703 4,815
Ratio of earnings to fixed charges(6)............... -- -- -- -- 2.9x 3.0x
Ratio of earnings to fixed charges and preferred
stock dividends(6)................................ -- -- -- -- 2.4x 2.5x
SELECTED OPERATING DATA:
Dozens of units sold................................ 4,187 2,198 2,224 4,711 4,973 5,319
Unit growth......................................... 11.1% * * 6.5% 5.6% 7.0%
Net sales growth.................................... 13.0% * * 13.0% 13.8% 5.6%
PRO FORMA DATA:
Cash interest expense(4)............................ $ 16,752
Ratio of EBITDA to cash interest expense(4)......... 1.9x
Ratio of net debt to EBITDA(5)...................... 4.9x
</TABLE>
<TABLE>
<CAPTION>
AS OF FEBRUARY 1, 1997
------------------------
<S> <C> <C>
ACTUAL PRO FORMA(7)
--------- -------------
BALANCE SHEET DATA:
Cash and cash equivalents............................................................. $ 1,863 $ 1,863
Total assets.......................................................................... 136,832 142,366
Total debt (including the discount on the Senior Notes)............................... 68,594 162,069
Preferred stock (liquidation value)................................................... 25,582 30,000
Total stockholders' equity (deficiency)............................................... 43,386 (66,497)
</TABLE>
*SEE FOOTNOTE 2. (FOOTNOTES APPEAR ON NEXT PAGE)
10
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- ------------------------------
(FOOTNOTES FROM PRIOR PAGE)
(1) The periods prior to and including January 28, 1995 reflect the combined
financial data of the Predecessor, which was acquired by the Company as of
January 28, 1995 from McGregor, a wholly owned subsidiary of Astrum
International Corp. ("Astrum"). The periods beginning January 29, 1995
reflect the consolidated financial data of the Company after the
Acquisition. Because of the revaluation of the assets and liabilities
acquired and the related impact to the consolidated statements of
operations, the financial statements of the Predecessor for the periods
prior to January 29, 1995 are not comparable to those of the Company
subsequent to that date although the information regarding net sales is
comparable with net sales reported for other periods.
(2) In connection with Astrum's emergence from its Chapter 11 bankruptcy
proceeding, the Predecessor adopted "fresh-start" accounting (the
Predecessor was not a party to Astrum's Chapter 11 bankrupty proceeding).
Accordingly, effective June 30, 1993, the assets of the Predecessor were
recorded at their fair market values with the excess of the reorganization
value over the fair value of the assets recorded as an intangible asset. As
a result of these adjustments, the financial statements for the seven months
ended January 29, 1994 and for the year ended January 28, 1995 are not
comparable to the prior periods. The Company has omitted unit growth and net
sales growth for the five and seven month periods ended June 30, 1993 and
January 29, 1994, respectively, because such periods may not be comparable
to the other periods presented.
(3) EBITDA is defined as operating income plus depreciation and amortization.
The fiscal 1996 EBITDA excludes a non-cash charge of $0.6 million for the
estimated loss on disposal of certain fixed assets. EBITDA is not a measure
of performance under generally accepted accounting principles ("GAAP").
While EBITDA should not be considered in isolation or as a substitute for
net income, cash flows from operating activities and other income or cash
flow statement data prepared in accordance with GAAP, or as a measure of
profitability or liquidity, management believes that EBITDA is commonly used
in evaluating a company's ability to service debt. EBITDA should not be
construed as an indication of the Company's operating performance or as a
measure of liquidity. EBITDA does not take into account the Company's debt
service requirements and other commitments and, accordingly, is not
necessarily indicative of amounts that may be available for discretionary
uses. The EBITDA measure presented in this Prospectus may not be comparable
to other similarly titled measures of other companies.
(4) Cash interest expense was calculated assuming an interest rate of 10.875% on
the Senior Notes and 8.0% on borrowings under the New Credit Agreement. See
"Unaudited Pro Forma Financial Statements."
(5) Net debt represents total debt less cash and cash equivalents and was
calculated based on pro forma debt balances as of February 1, 1997.
(6) Earnings used in computing the ratio of earnings to fixed charges consist of
income before provision for income taxes plus fixed charges. Fixed charges
consist of interest expense on all indebtedness (including amortization of
deferred debt issuance costs) and a portion of operating lease rental
expense that is representative of the interest factor (approximately 1/3).
The calculation of these ratios is not meaningful for the Predecessor as its
interest expense and rental expense were DE MINIMUS. Preferred stock
dividends consist of dividends paid and dividends accumulated in arrears.
(7) The pro forma balance sheet data give effect to the Recapitalization as if
the Recapitalization had occurred on February 1, 1997. The pro forma
financial data do not purport to be indicative of the Company's financial
position had the Recapitalization been completed as of the date presented,
nor do such data purport to project the Company's financial position or
results of operations at any future date or for any future period.
11
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RISK FACTORS
PROSPECTIVE INVESTORS OF THE SECURITIES SHOULD CAREFULLY CONSIDER THE
FOLLOWING RISK FACTORS, IN ADDITION TO THE OTHER INFORMATION SET FORTH IN THIS
PROSPECTUS BEFORE TENDERING THE OLD SENIOR NOTES IN EXCHANGE FOR THE NEW SENIOR
NOTES.
SUBSTANTIAL LEVERAGE AND DEBT SERVICE
Anvil and Holdings incurred substantial indebtedness and debt service
obligations in connection with the Recapitalization. As of February 1, 1997,
after giving pro forma effect to the Recapitalization, Holdings would have had
total consolidated indebtedness of approximately $162.0 million (including the
discount on the Senior Notes), Senior Preferred Stock with an aggregate
liquidation preference of $30.0 million and a stockholders' deficiency of
approximately $66.5 million. On the same pro forma basis, Holdings' ratios of
earnings to fixed charges and earnings to fixed charges and preferred stock
dividends for the fiscal year ended February 1, 1997 would have been 1.4 to 1.0
and 1.3 to 1.0, respectively. As of February 1, 1997, after giving pro forma
effect to the Recapitalization, Anvil would have had total consolidated
indebtedness of approximately $162.0 million (including the discount on the
Senior Notes) and a stockholder's deficiency of approximately $66.5 million. On
the same pro forma basis, Anvil's ratio of earnings to fixed charges for the
fiscal year ended February 1, 1997 would have been 1.4 to 1.0. In addition,
after giving pro forma effect to the Recapitalization, Anvil would have had
approximately $23.0 million, subject to an asset based formula, available under
the New Credit Agreement, and all borrowings under such facility are guaranteed
by Holdings and secured by substantially all of Anvil's assets and a pledge by
Holdings of all of the capital stock of Anvil. Subject to certain restrictions
under the New Credit Agreement, the Senior Indenture and, if the Exchange
Debentures are issued, the Exchange Debenture Indenture, Anvil and its
subsidiaries may incur additional indebtedness (including additional secured
indebtedness and senior indebtedness) from time to time. The New Credit
Agreement and the Senior Indenture do not contain limitations on the ability of
Holdings to incur additional indebtedness and, if the Exchange Debentures are
issued, the Exchange Debenture Indenture will permit Holdings and its
subsidiaries to incur additional indebtedness, subject to certain restrictions.
Holdings has outstanding Senior Preferred Stock with an aggregate liquidation
preference of $30.0 million which, subject to certain conditions, may be
exchanged for Exchange Debentures. On or before March 15, 2002, Holdings may pay
dividends on the Senior Preferred Stock in cash or in additional shares of
Senior Preferred Stock; thereafter, all dividends must be paid in cash.
Similarly, if the Exchange Debentures are issued, Holdings will be able to pay
interest thereon in cash or in additional Exchange Debentures on or before March
15, 2002; thereafter, all interest must be paid in cash. See "Use of Proceeds,"
"Capitalization," "Description of Securities--Senior Notes," "-- Senior
Preferred Stock" and "--Exchange Debentures."
The level of indebtedness and dividend obligations could have important
consequences to holders of the Securities, including, but not limited to, the
following: (i) a substantial portion of cash flow from operations must be
dedicated to debt service and dividend obligations and will not be available for
other purposes; (ii) additional debt financing in the future for working
capital, capital expenditures or acquisitions may be limited; and (iii) the
level of indebtedness could limit flexibility in reacting to changes in the
operating environment and economic conditions generally.
The ability of Anvil and Holdings (as the case may be) to pay principal and
interest on the Senior Notes and, if issued, the Exchange Debentures, to satisfy
their other debt obligations, and to pay cash dividends on the Senior Preferred
Stock will depend upon future operating performance, which will be affected by
prevailing economic conditions and financial, business and other factors,
certain of which are beyond their control, as well as the availability of
revolving credit borrowings under the New Credit Agreement. If operating cash
flow of Anvil and Holdings is insufficient to meet their operating expenses, to
service their debt requirements as they become due and to pay cash dividends on,
and the mandatory redemption price for, the Senior Preferred Stock to the extent
required by the Certificate of Designation related thereto, Anvil and Holdings
may be required to refinance a portion of the principal of the Senior
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Notes and, if issued, the Exchange Debentures prior to their maturity. If Anvil
and Holdings are unable to service their indebtedness, and, in the case of
Holdings, to pay dividends on the Senior Preferred Stock or the mandatory
redemption price therefor, they will be forced to take actions such as reducing
or delaying capital expenditures, selling assets, restructuring or refinancing
their indebtedness or seeking additional equity capital. There can be no
assurance that any of these remedies can be effected on satisfactory terms, if
at all. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations-- Liquidity and Capital Resources," "Description of
Securities--Senior Notes," "--Senior Preferred Stock" and "--Exchange
Debentures."
SUBORDINATION OF SECURITIES TO CURRENT AND FUTURE OBLIGATIONS
The New Senior Notes will be, as the Old Senior Notes (which they replace)
are, senior unsecured obligations of Anvil and will, as the Old Senior Notes
(which they replace), rank PARI PASSU in right of payment with all senior
Indebtedness of Anvil. The New Senior Notes will, as the Old Senior Notes (which
they replace), effectively rank junior to any secured Indebtedness of Anvil,
including Indebtedness incurred under the New Credit Agreement, to the extent of
the value of the assets securing such indebtedness and will be, as the Old
Senior Notes (which they replace) are, structurally subordinated to any
Indebtedness of Anvil's subsidiaries. The New Senior Notes will be, as the Old
Senior Notes (which they replace), fully and unconditionally guaranteed on a
senior unsecured basis by Holdings. The Guarantee effectively ranks junior to
any secured Indebtedness of Holdings, including Indebtedness incurred under the
New Credit Agreement, to the extent of the value of the assets securing such
indebtedness and is structurally subordinated to any Indebtedness of Holdings'
subsidiaries. The New Senior Preferred Stock will rank senior in right of
payment with respect to all Junior Securities and PARI PASSU in right of payment
with respect to all Parity Securities. The New Senior Preferred Stock will, as
the Old Senior Preferred Stock (which they replace), rank junior to all
Indebtedness and other obligations of Holdings and its subsidiaries, including
Anvil (the issuer of the Senior Notes). The Exchange Debentures, if issued, will
be unsecured obligations of Holdings and will be subordinated in right of
payment to all existing and future Senior Indebtedness of Holdings and to any
Indebtedness of Holdings' subsidiaries. As of February 1, 1997, after giving pro
forma effect to the Recapitalization, the aggregate principal amount of
outstanding Indebtedness of Anvil and its subsidiaries to which the Senior Notes
would have been effectively junior would have been approximately $32.0 million,
the aggregate principal amount of outstanding Indebtedness of Holdings and its
subsidiaries to which the Senior Preferred Stock or the Exchange Debentures, if
issued, would have been junior would have been approximately $162.0 million
(including the discount on the Senior Notes). In addition, after giving pro
forma effect to the Recapitalization, Anvil would have had approximately $23.0
million available, subject to an asset based formula, under the New Credit
Agreement and all borrowings under such facility are guaranteed by Holdings and
secured by substantially all of Anvil's assets and a pledge by Holdings of all
the capital stock of Anvil. Subject to certain restrictions under the New Credit
Agreement and the Senior Indenture, Anvil and its subsidiaries may incur
additional indebtedness (including additional secured indebtedness and senior
indebtedness) from time to time. The New Credit Agreement and the Senior
Indenture do not contain limitations on the ability of Holdings to incur
additional indebtedness and, if the Exchange Debentures are issued, the Exchange
Debenture Indenture will permit Holdings and its subsidiaries to incur
additional indebtedness, subject to certain restrictions. See "Description of
Securities--Senior Notes," "--Senior Preferred Stock," "--Exchange Debentures"
and "Description of Certain Indebtedness."
Upon any dividend, liquidation or any other distribution by Holdings,
holders of Class A Common will be entitled to be paid out of the assets of
Holdings then available for distribution, a preference equal to $100 per share
(the "Class A Preference") before any distribution is paid on any other class of
Common Stock, including the Class B Common offered in the Initial Units
Offering. The Class A Preference accretes at a rate of 12.5% per annum. Only
after satisfaction of all liabilities, the payment of the liquidation preference
of any outstanding shares of preferred stock and the payment of the Class A
Preference, will the holders of shares of Class B Common be entitled to share
ratably with all other classes
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of Common Stock in the distribution of all of Holdings' assets remaining
available for distribution. See "Description of Capital Stock--Common Stock."
RISKS ASSOCIATED WITH HOLDING COMPANY STRUCTURE
Holdings is a holding company that conducts substantially all of its
business through its direct and indirect subsidiaries, including Anvil. As a
holding company, Holdings is dependent on dividends or other intercompany
transfers of funds from its subsidiaries to meet its debt service and other
obligations, including its obligations under the Guarantee, the Senior Preferred
Stock and, if issued, the Exchange Debentures. The New Credit Agreement and the
Senior Indenture contain certain restrictions on the ability of Anvil and its
subsidiaries to make dividends and other distributions to Holdings. In addition,
under the terms of the Senior Indenture and the Exchange Debenture Indenture
(collectively, the "Indentures"), Anvil and its subsidiaries may incur certain
indebtedness pursuant to agreements that may restrict the ability to make such
dividends or other intercompany transfers necessary to service Holdings' debt
and/or dividend obligations. Any failure by Holdings to satisfy its obligations
with respect to the Exchange Debentures, if issued, at maturity (with respect to
payments of principal) or prior thereto (with respect to payments of interest or
required repurchases) would constitute a default under the Exchange Debenture
Indenture and the New Credit Agreement and could cause a default under
agreements governing other indebtedness of Holdings and its subsidiaries,
including the Senior Indenture. Any failure by Holdings to satisfy its
obligations under the Senior Preferred Stock would permit the holders thereof
only to elect certain Directors to Holdings' Board of Directors. The Exchange
Debentures, if issued, will be obligations exclusively of Holdings and will not
be guaranteed by any of Holdings' subsidiaries. In addition, because Holdings
conducts its business through its subsidiaries, all existing and future
indebtedness and other obligations of Holdings and its subsidiaries (including
the Senior Notes and borrowings under the New Credit Agreement) will be
effectively senior to the Senior Preferred Stock and, if issued, the Exchange
Debentures. Consequently, Holdings' cash flow and ability to service its debt,
including the Exchange Debentures and the Guarantee, and to pay cash dividends
on the Senior Preferred Stock are dependent upon the earnings of its
subsidiaries and the distribution of those earnings to Holdings, or upon loans,
advances or other payments made by its subsidiaries to Holdings. See
"Description of Securities-- Senior Notes," "--Senior Preferred Stock" and
"--Exchange Debentures."
RESTRICTIONS IMPOSED BY CERTAIN COVENANTS
The Senior Indenture restricts, among other things, Anvil's and its
Restricted Subsidiaries' (as defined in the Senior Indenture) ability to pay
dividends or make certain other restricted payments, including the payment of
cash dividends on or the redemption of its capital stock, to incur additional
indebtedness, to encumber or sell assets, to enter into transactions with
affiliates, to enter into certain guarantees of indebtedness, to make restricted
investments, to merge or consolidate with any other entity and to transfer or
lease all or substantially all of their assets. The Exchange Debenture Indenture
contains similar restrictions applicable to Holdings and its Restricted
Subsidiaries (as defined in the Exchange Debenture Indenture) and the
Certificate of Designation contains certain restrictions on Holdings' ability,
directly or indirectly, to make certain junior payments and Restricted
Investments (as defined in the Certificate of Designation), to enter into
transactions with affiliates or to merge or consolidate with any other entity or
to transfer or lease all or substantially all of its assets. In addition, the
New Credit Agreement contains certain other and more restrictive covenants and
prohibits Anvil and its subsidiaries from prepaying other indebtedness,
including the Senior Notes and the Exchange Debentures, and from redeeming the
Senior Preferred Stock. The New Credit Agreement also requires Anvil to maintain
specified financial ratios and satisfy certain financial condition tests.
Anvil's ability to meet those financial ratios and tests can be affected by
events beyond its control, and there can be no assurance that Anvil will meet
those tests. See "Description of Securities--Senior Notes," "--Senior Preferred
Stock," "--Exchange Debentures" and "Description of Certain Indebtedness--New
Credit Agreement."
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The ability of Anvil and Holdings to comply with the covenants contained in
the New Credit Agreement, the Indentures and the Certificate of Designation (as
the case may be) may be affected by events beyond their control, including
prevailing economic, financial and industry conditions. The breach of any
covenant or restriction could result in a default which would permit the secured
lenders or the holders of the Senior Notes (as the case may be) to declare all
amounts borrowed thereunder to be due and payable, together with accrued and
unpaid interest, and the commitments of the secured lenders to make further
extensions of credit under the New Credit Agreement could be terminated. If
Anvil or Holdings was unable to repay their indebtedness to their secured
lenders, the secured lenders could proceed against any or all of the collateral
securing such indebtedness, which collateral consists of the capital stock and
substantially all of the assets of Anvil.
CHANGE OF CONTROL PROVISIONS; LIMITATIONS ON RIGHTS OF REPAYMENT
Upon the occurrence of a Change of Control, each holder of Senior Notes,
Senior Preferred Stock and, if issued, Exchange Debentures, will have the right
to require Anvil or Holdings (as the case may be) to purchase all or part of
such holder's Senior Notes, Senior Preferred Stock or Exchange Debentures (as
the case may be) at a repurchase price equal to 101% of the aggregate principal
amount or the liquidation preference (as the case may be) plus accrued and
unpaid interest or dividends (as the case may be). The repurchase of the Senior
Notes, Senior Preferred Stock or, if issued, the Exchange Debentures, in
relation to a Change of Control will constitute a default under the New Credit
Agreement. In addition, the Change of Control purchase feature of the Senior
Notes, the Senior Preferred Stock and, if issued, the Exchange Debentures may in
certain circumstances discourage or make more difficult a sale or takeover of
Anvil or Holdings and, thus, the removal of incumbent management. See
"Description of Securities--Senior Notes," "--Senior Preferred Stock,"
"--Exchange Debentures" and "Description of Certain Indebtedness."
The holders of the Senior Notes, the Senior Preferred Stock and, if issued,
the Exchange Debentures have limited rights to require the repurchase or
redemption of the Senior Notes, the Senior Preferred Stock and the Exchange
Debentures in the event of a takeover, recapitalization or similar
restructuring, including a recapitalization or similar transaction with
management. Consequently, the Change of Control provisions will not afford any
protection in a highly leveraged transaction, including such a transaction
initiated by Anvil or Holdings, management of Anvil or Holdings or an affiliate
of Anvil or Holdings, if such transaction does not result in a Change of
Control. In addition, the New Credit Agreement provides that certain change of
control events with respect to Holdings and/or Anvil constitutes a default
thereunder permitting the lending parties thereto to accelerate the Indebtedness
thereunder. In addition, certain events that may obligate Anvil or Holdings to
offer to repay all outstanding obligations under the New Credit Agreement may
not constitute a Change of Control under the Senior Indenture, the Certificate
of Designation or the Exchange Debenture Indenture. Furthermore, neither Anvil
nor Holdings may have sufficient resources to repay Indebtedness under the New
Credit Agreement and may have insufficient resources to repurchase tendered
Securities. Furthermore, any future credit agreements or other agreements
relating to senior Indebtedness to which Anvil or Holdings become a party may
contain similar restrictions and provisions.
In the event a Change of Control occurs at a time when Anvil and/or Holdings
is directly or indirectly prohibited from purchasing Securities, Anvil and/or
Holdings could seek the consent of its creditors to the purchase of Securities
or could attempt to refinance the indebtedness that contains such prohibition.
If Anvil and/or Holdings do not obtain such a consent or refinance such
indebtedness, the purchase of Securities would remain prohibited. The failure by
Anvil or Holdings (as the case may be) to purchase tendered Securities would
constitute a breach of the Senior Indenture, the Certificate of Designation and/
or the Exchange Debenture Indenture which would, in turn, constitute a default
under the New Credit Agreement and could lead to the acceleration of the
indebtedness thereunder. In any such event, the security granted in respect of
the New Credit Agreement, the legal and structural subordination of the
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Senior Preferred Stock and the structural and contractual subordination of the
Exchange Debentures would likely result in the holders of the Securities
receiving less ratably than other creditors.
In addition, the terms of the Senior Notes include provisions similar to
those contained in the Exchange Debentures enabling holders thereof to require
Anvil to repurchase all or any part of such securities under circumstances
constituting a Change of Control. However, Anvil and Holdings may not have
sufficient resources to repurchase tendered Exchange Debentures and/or Senior
Notes and any such failure may constitute a default under the terms of the New
Credit Agreement, the Senior Notes, the Senior Indenture, the Exchange
Debentures and the Exchange Debenture Indenture. Again, in any such event, the
structural and contractual subordination of the Exchange Debentures and the
security granted in respect of the New Credit Agreement would likely result in
the holders of the Exchange Debentures receiving less ratably than other
creditors of Holdings. See "Description of Securities--Senior Notes-- Mandatory
Offers to Purchase Senior Notes--Change of Control," and "--Exchange
Debentures-- Mandatory Offers to Purchase Exchange Debentures--Change of
Control."
SUBSTANTIAL BENEFITS OF RECAPITALIZATION TO EXECUTIVE OFFICERS, DIRECTORS AND
EXISTING STOCKHOLDERS
In connection with the Recapitalization, Holdings redeemed and repurchased
substantially all of its outstanding shares of capital stock. Vestar, Culligan
International Company ("Culligan") and 399 Venture, the principal stockholders
of Holding immediately prior the Recapitalization, received proceeds in
aggregate amounts of approximately $47.9 million, $41.1 million and $7.2
million, respectively, in connection with such repurchases. Members of
management (including certain then-existing Directors) who held shares of
capital stock of Holdings received proceeds in an aggregate amount of
approximately $17.7 million in connection with such repurchases. Furthermore,
the Company's four senior executives received an aggregate of approximately $5.3
million pursuant to the terms of the Company's Phantom Equity Plan, an aggregate
of approximately $470,000 representing transaction fees in connection with the
Recapitalization and an aggregate of $500,000 representing a transaction bonus
awarded in connection with the Recapitalization (the "Management Bonus"). See
"Management," "Security Ownership of Certain Beneficial Owners and Management"
and "Certain Relationships and Related Transactions."
DOMESTIC AND INTERNATIONAL COMPETITION
The domestic activewear industry is highly competitive. The Company faces
competition principally from large vertically integrated U.S.-based
manufacturers of activewear, which are generally larger than the Company and
have greater financial and other resources. There can be no assurances that the
Company can continue to compete successfully with such competitors. In addition,
certain competitors have greater vertical integration than the Company insofar
as certain of such competitors spin their own yarn, which under certain market
conditions may give them a competitive advantage. Prices for the Company's
products are typically determined by market conditions. To remain competitive,
the Company reviews and adjusts its pricing structure from time to time in
response to industry-wide price changes. To the extent that the Company may be
obligated to adjust its pricing policies to meet competition, the Company's
financial performance may be adversely affected by price reductions implemented
by significant competitors or by the failure of such competitors to increase
prices in line with increases in the Company's costs and expenses.
The Company also faces competition from foreign manufacturers of activewear
who generally have substantially lower labor costs than domestic manufacturers.
Historically, the Company has benefited from quotas and tariffs imposed by the
United States on the importation of apparel. The General Agreement on Tariffs
and Trade ("GATT"), which became effective on January 1, 1995, requires a
complete phase-out of all existing quotas over a ten-year period. The phase-out
of such quotas is scheduled to take place in four stages as follows (expressed
in a percentage of total imports): 16% in 1995; 17% in 1999; 18% in 2003; and
49% in 2005. To date, no products manufactured by the Company have been subject
to quota reductions under GATT. The products that will be subject to quota
eliminations in 1999 and 2003 have not yet been
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selected. In addition to the phasing-out of the use of quotas, GATT also
requires that the United States reduce tariffs on textile and apparel imports
over the same ten-year period. To date, the United States has not lowered such
tariffs. Although the Company believes that it is less susceptible to import
competition than many other textile and apparel manufacturers due to the capital
intensive nature of its vertically integrated business, its focus on
high-quality, relatively low labor content of its products and its rapid
delivery capabilities, no assurance can be given that the elimination or
substantial reduction of quotas and tariffs as contemplated by GATT will not
have a material adverse effect on the Company's results of operations or that
the Company can continue to compete successfully with such competitors. See
"Business--Competition."
SUPPLY AND PRICE OF YARN
The principal raw material used by the Company in the production of its
products is cotton yarn. Unlike certain of its competitors, the Company does not
spin its own yarn. Instead, the Company obtains substantially all of its yarn
from five yarn suppliers pursuant to purchase orders for quantities ranging from
30 days' to one year's supply, based upon the Company's expectations as to yarn
prices and levels of supply. The Company does not have and does not typically
enter into long-term supply contracts (more than one year) relating to cotton
yarn. In fiscal 1996, one yarn supplier accounted for approximately 35% of the
Company's total yarn purchases. Although to date the Company has always been
able to obtain sufficient quantities of yarn for its manufacturing processes, a
significant disruption in the ability or willingness of the Company's yarn
suppliers to deliver a sufficient quantity of quality yarn or any other
interruption in the Company's ability to obtain yarn could have a material
adverse effect on the Company's results of operations.
The price of cotton yarn used by the Company in its manufacturing operations
is subject to volatility. The Company is sensitive to fluctuations in cotton
yarn prices as cotton yarn is the largest component of the manufacturing cost of
its products. Although the Company generally attempts to pass on any increase in
raw materials prices to its customers, no assurance can be given that the
Company will be successful in passing on such price increases in the future.
DEPENDENCE UPON SENIOR MANAGEMENT
The Company is dependent on the personal efforts, relationships and
abilities of its senior management team, who on average have more than 20 years
of experience in the apparel industry. At the time of the Acquisition, the
Company entered into four-year employment agreements with certain of its
executive officers, including its Chief Executive Officer. The loss of services
of any of the members of the Company's senior management team could have a
material adverse effect on the future performance of the Company. The Company
does not maintain "key man" insurance on any of the members of its senior
management team. In addition, the Company believes that its success is dependent
on its ability to attract and retain additional qualified employees, and the
failure to recruit such other skilled personnel could have a material adverse
effect on the Company's financial condition and results of operations. See
"Management--Employment Agreements."
ENVIRONMENTAL CONSIDERATIONS
Apparel manufacturers such as the Company have become subject to
increasingly stringent environmental standards imposed by federal, state and
local environmental laws and regulations. The Company has made, and will
continue to make, expenditures to comply with such environmental standards. The
Company regularly reviews its procedures and policies for compliance with
environmental laws. Based upon the Company's experience to date, the cost of
compliance with environmental laws has not had, and is not expected to have a
material adverse effect on the Company's financial condition, liquidity or
results of operations. However, future events, such as changes in existing laws
and regulations, may give rise to
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additional compliance costs that could have a material adverse effect on the
Company's financial condition or results of operations. See
"Business--Environmental Matters."
CONTROL BY PRINCIPAL STOCKHOLDERS
399 Venture and BRS together own shares of Common Stock that represent
approximately 78.2% of voting power of the outstanding Common Stock. In
addition, pursuant to the Stockholders Agreement (as defined), 399 Venture, BRS
and the Management Investors have agreed to vote all of their shares of Common
Stock for the election of directors designated by certain stockholders,
including 399 Venture and BRS. As a result, 399 Venture and BRS together have
the effective voting power to elect a majority of the Directors of the Company
and generally exercise control over the business, policies and affairs of the
Company. Furthermore, the Stockholders Agreement contains certain restrictions
on the transfer by the holders of Common Stock (other than holders of Class B
Common issued in the Initial Units Offering), including certain participation
rights and rights of first refusal for the Company and certain holders to
purchase the shares of Common Stock prior to transfer by any other current
holder, which could prevent or cause a change of control of the Company. See
"Security Ownership of Certain Beneficial Owners and Management--Stockholders
Agreement."
ABSENCE OF A PUBLIC MARKET COULD ADVERSELY AFFECT THE VALUE OF THE SENIOR NOTES
The Old Senior Notes were issued to, and Anvil believes are currently owned
by, a relatively small number of beneficial owners. Prior to the Exchange Offer,
there has not been any public market for the Old Senior Notes. The Old Senior
Notes have not been registered under the Securities Act and will be subject to
restrictions on transferability to the extent that they are not exchanged for
New Senior Notes by holders who are entitled to participate in this Exchange
Offer. The holders of Old Senior Notes (other than any such holder that is an
"affiliate" of Anvil within the meaning of Rule 405 under the Securities Act)
who are not eligible to participate in the Exchange Offer are entitled to
certain registration rights, and Anvil is required to file a Shelf Registration
Statement with respect to such Old Senior Notes. The New Senior Notes will
constitute a new issue of securities with no established trading market. Anvil
does not intend to list the New Senior Notes on any national securities exchange
or seek the admission thereof to trading in the National Association of
Securities Dealers Automated Quotation System. The Initial Purchasers have
advised Anvil that they currently intend to make a market in the New Senior
Notes, but they are not obligated to do so and may discontinue such market
making at any time. In addition, such market making activity will be subject to
the limits imposed by the Securities Act and the Exchange Act and may be limited
during the Exchange Offer and the pendency of the Shelf Registration Statement.
Accordingly, no assurance can be given that an active public or other market
will develop for the New Senior Notes or as to the liquidity of the trading
market for the New Senior Notes. If a trading market does not develop or is not
maintained, holders of the New Senior Notes may experience difficulty in
reselling the New Senior Notes or may be unable to sell them at all. If a market
for the New Senior Notes develops, any such market may be discontinued at any
time.
If a public trading market develops for the New Senior Notes, future trading
prices of such securities will depend on many factors including, among other
things, prevailing interest rates, Anvil's results of operations and the market
for similar securities. Depending on prevailing interest rates, the market for
similar securities and other factors, including the financial condition of
Anvil, the New Senior Notes may trade at a discount from their principal amount.
FAILURE TO FOLLOW EXCHANGE OFFER PROCEDURES COULD ADVERSELY AFFECT HOLDERS
Issuance of the New Senior Notes in exchange for the Old Senior Notes
pursuant to the Exchange Offer will be made only after a timely receipt by Anvil
of such Old Senior Notes, a properly completed and duly executed Letter of
Transmittal or Agent's Message (as defined) and all other required documents.
Therefore, holders of the Old Senior Notes desiring to tender such Old Senior
Notes in exchange for New
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Senior Notes should allow sufficient time to ensure timely delivery. Anvil is
under no duty to give notification of defects or irregularities with respect to
the tenders of Old Senior Notes for exchange. Old Senior Notes that are not
tendered or are tendered but not accepted will, following the consummation of
the Exchange Offer, continue to be subject to the existing restrictions upon
transfer thereof, and, upon consummation of the Exchange Offer, certain
registration rights under the Registration Rights Agreement will terminate. In
addition, any holder of Old Senior Notes who tenders in the Exchange Offer for
the purpose of participating in a distribution of the New Senior Notes may be
deemed to have received restricted securities, and if so, will be required to
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction. Each broker-dealer
that receives New Senior Notes for its own account in exchange for Old Senior
Notes, where such Old Senior Notes were acquired by such broker-dealer as a
result of market-making activities or other trading activities, must acknowledge
that it will deliver a prospectus in connection with any resale of such New
Senior Notes. See "Plan of Distribution." To the extent that Old Senior Notes
are tendered and accepted in the Exchange Offer, the trading market for
untendered and tendered but unaccepted Old Senior Notes could be adversely
affected. See "The Exchange Offer."
FRAUDULENT TRANSFER CONSIDERATIONS
Under fraudulent transfer law, if a court were to find in a lawsuit by an
unpaid creditor or representative of creditors of Anvil or Holdings, that Anvil
or Holdings received less than fair consideration or reasonable equivalent value
for incurring the indebtedness represented by the Senior Notes or the Guarantees
and, if issued, the Exchange Debentures, and, at the time of such incurrence,
Anvil or Holdings (as the case may be) (i) was insolvent or was rendered
insolvent by reason of such incurrence, (ii) was engaged or about to engage in a
business or transaction for which its remaining property constituted
unreasonably small capital or (iii) intended to incur, or believed it would
incur, debts beyond it ability to pay as such debts mature, such court could,
among other things, (a) void all or a portion of Anvil's obligations to the
holders of Senior Notes and the Guarantees and, if issued, Holdings' obligations
to the holders of the Exchange Debentures and/or (b) subordinate Anvil's
obligations to the holders of the Senior Notes or Holdings' obligations under
the Guarantees and, if issued, Holdings' obligations to the holders of the
Exchange Debentures to other existing and future indebtedness of Anvil or
Holdings (as the case may be) the effect of which would be to entitle such other
creditors to be paid in full before any payment could be made on the Senior
Notes or the Guarantees and, if issued, the Exchange Debentures. The measure of
insolvency for purposes of determining whether a transfer is avoidable as a
fraudulent transfer varies depending upon the law of the jurisdiction which is
being applied. Generally, however, a debtor would be considered insolvent if the
sum of all of its liabilities were greater than the value of all of its property
at a fair valuation, or if the present fair saleable value of the debtor's
assets were less than the amount required to repay its probable liability on its
debts as they become absolute and mature. There can be no assurance as to what
standard a court would apply in order to determine solvency.
Management believes the Senior Notes and the Guarantees were issued without
the intent to hinder, defraud or delay creditors, for proper purposes and in
good faith. Management believes that Anvil and Holdings received equivalent
value at the time the indebtedness under the Senior Notes and the Guarantee
incurred. As of February 1, 1997, after giving pro forma effect to the
Recapitalization, the Company would have had a stockholders' deficiency of
approximately $66.5 million. See "Capitalization," "Pro Forma Financial Data"
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations." Management believes that, for purposes of the Federal Bankruptcy
Code and state fraudulent transfer or conveyance laws, Anvil and Holdings are
and will be, solvent, will have sufficient capital for carrying on their
business and will be able to pay their debts as they mature. These beliefs are
based upon the Company's operating history, management's analysis of cash flows,
the estimated fair value of the Company's assets and the Company's estimated
liabilities. In determining the estimated fair value of the Company's assets,
the Board of Directors utilized a written report of an expert in appraisals as
to the equity value of Holdings and as to certain other valuation and solvency
matters. The various factors
19
<PAGE>
considered by the Board as enumerated above, supported the Board's conclusions
regarding the sufficiency of the Company's capital and no one factor was given
more significance than others by the Board in reaching its conclusions. As a
result of the uncertainty of the application of fraudulent transfer or
conveyance law in transactions similar to the Recapitalization, including the
distribution to stockholders, there can be no assurance that a court passing on
any of the foregoing issues would agree with management's views.
TAX CONSEQUENCES OF DISTRIBUTIONS WITH RESPECT TO THE SENIOR PREFERRED STOCK AND
EXCHANGE DEBENTURES; POTENTIAL FOR UNPLANNED DEEMED DIVIDEND INCOME
If the redemption price of the Senior Preferred Stock exceeds its issue
price by more than a DE MINIMIS amount, such excess may be treated as a
constructive distribution with respect to the Senior Preferred Stock of
additional stock over the term of the Senior Preferred Stock using a constant
interest rate method similar to that used for accruing original issue discount.
As a result of the allocation of a portion of the purchase price of the Units to
the Class B Common, the Senior Preferred Stock initially purchased by holders
may have a redemption price that exceeds its issue price by more than a DE
MINIMIS amount, resulting in such constructive distributions. In addition,
because the issue price of the Senior Preferred Stock distributed in lieu of
payments of cash dividends will be equal to the fair market value of the Senior
Preferred Stock at the time of distribution, it is possible, depending on its
fair market value at that time, that such Senior Preferred Stock will be issued
with a redemption premium large enough to be considered a dividend as described
above. In such event holders would be required to include such premium in income
as a distribution over some period in advance of receiving the cash attributable
to such income, and such Senior Preferred Stock might trade separately, which
might adversely affect the liquidity of the Senior Preferred Stock.
Holdings may, at its option and under certain circumstances, issue Exchange
Debentures in exchange for the Senior Preferred Stock. Any such exchange will be
a taxable event to holders of the Senior Preferred Stock. Furthermore, the
Exchange Debentures may in certain circumstances be treated as having been
issued with original issue discount ("OID") for federal income tax purposes. In
such event, holders of Exchange Debentures will be required to include such OID
(as ordinary income) in income over the life of the Exchange Debentures, in
advance of the receipt of the cash attributable to such income.
20
<PAGE>
THE RECAPITALIZATION
On February 12, 1997, Holdings, Anvil VT, Inc., Vestar, 399 Venture, the
Management Investors, the other Existing Stockholders and BRS entered into the
Recapitalization Agreement. Pursuant to the Recapitalization Agreement: (i)
Holdings redeemed substantially all of its outstanding preferred stock (the "Old
Preferred Stock") and repurchased a substantial portion of its old common stock
(the "Old Common Stock"); (ii) 399 Venture and the Management Investors
reinvested a portion of their shares of Old Common Stock, which converted into
shares of Class A Common and Class B Common; (iii) 399 Venture exchanged a
portion of its Old Preferred Stock for 3,333 Units; and (iv) BRS purchased
shares of Class A Common and Class B Common. As part of the Recapitalization,
the Company also: (i) repaid all of Anvil's outstanding borrowings under its
existing credit agreement (the "Old Credit Agreement"); (ii) repaid a
subordinated promissory note issued to Culligan in connection with Acquisition
(the "Subordinated Note"); (iii) made payments to the Management Investors
pursuant to the Phantom Equity Plan; (iv) paid the Management Bonus; and (v)
paid fees and expenses related to the Recapitalization. The foregoing
transactions together with the related financing transactions discussed below
are collectively referred to herein as the "Recapitalization." See "Use of
Proceeds."
The Company used approximately $225.5 million to complete the
Recapitalization, including the payment of related fees and expenses. In order
to finance the Recapitalization: (i) Anvil issued $130.0 million in aggregate
principal amount of Old Senior Notes in the Offering; (ii) Holdings issued
30,000 Units, consisting of an aggregate of 1,200,000 shares of Old Senior
Preferred Stock and 390,000 shares of Class B Common, in the Initial Units
Offering for gross proceeds of $26.7 million; (iii) Anvil borrowed approximately
$33.3 million under the New Credit Agreement; and (iv) 399 Venture, BRS and the
Management Investors made the Equity Contribution of $35.5 million to Holdings.
The Equity Contribution was comprised of: (i) a cash investment of $13.1 million
and reinvestment of $0.5 million of equity securities by BRS; (ii) the
reinvestment of $16.9 million of equity securities by 399 Venture; and (iii) the
reinvestment of $5.0 million of equity securities by the Management Investors.
The capital structure of Holdings as reflected in its historical
consolidated financial statements consists of three classes of Old Common Stock
(Classes A, B and C) and three classes of Old Preferred Stock (Classes A, B and
C). The various classes of Old Common Stock and Old Preferred Stock were
substantially identical except with respect to voting and conversion rights. In
connection with the Recapitalization, Holdings filed with the Secretary of State
of Delaware a Restated Certificate of Incorporation, which among other things,
sets forth the terms of the Common Stock and the Senior Preferred Stock.
Holdings has outstanding 290,000 shares of Class A Common and 3,590,000 shares
of Class B Common. The Class A Common is nonvoting and is entitled to the Class
A Preference upon any distribution by Holdings to holders of its capital stock
(whether by dividend, liquidation distribution or otherwise). The Class B Common
entitles the holder thereof to one vote per share. See "Security Ownership of
Certain Beneficial Owners and Management," "Description of Securities--Senior
Preferred Stock" and "Description of Capital Stock."
399 Venture, BRS and the Management Investors own the following shares of
capital stock of Holdings:
<TABLE>
<CAPTION>
SHARES BENEFICALLY OWNED
---------------------------------- PERCENTAGE OF
NAME CLASS A COMMON CLASS B COMMON VOTING POWER
- ----------------------------------------------------- ---------------- ---------------- ---------------
<S> <C> <C> <C>
399 Venture.......................................... 122,484 1,394,882 39.1%
BRS.................................................. 122,484 1,394,882 39.1
Management Investors................................. 45,032 496,894 14.0
------- ---------------- -----
Total.......................................... 290,000 3,286,658 92.2%
</TABLE>
21
<PAGE>
USE OF PROCEEDS
(IN MILLIONS, EXCEPT SHARE DATA)
The Exchange Offer is intended to satisfy certain of Anvil's obligations
under the Registration Rights Agreement. Anvil will not receive any cash
proceeds from the issuance of the New Senior Notes offered hereby. In
consideration for issuing the New Senior Notes contemplated in this Prospectus,
Anvil will receive Old Senior Notes in like principal amount, the form and terms
of which are the same as the form and terms of the New Senior Notes (which
replace the Old Senior Notes), except as described herein.
The proceeds from the Initial Offerings were approximately $156.7 million
before deducting commissions and estimated expenses thereof. The proceeds from
the Initial Offerings, together with borrowings of approximately $33.3 million
under the New Credit Agreement and proceeds from the Equity Contribution of
$35.5 million, were used to: (i) repay all outstanding borrowings under the Old
Credit Agreement; (ii) repay the Subordinated Note; (iii) redeem or exchange all
of the outstanding shares of the Old Preferred Stock (including all accrued
dividends thereon); (iv) repurchase all of Holdings' Old Common Stock (other
than the Retained Shares); (v) make payments to the Company's senior management
team pursuant to the Company's Phantom Equity Plan; (vi) pay the Management
Bonus; and (vii) pay the fees and expenses of the Recapitalization. The New
Credit Agreement permits borrowings of up to $55.0 million for working capital
and for general corporate purposes, including future acquisitions. Certain
former stockholders of Holdings received a significant portion of the net
proceeds of the Initial Offerings. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital Resources,"
"Description of Certain Indebtedness" and "Certain Relationships and Related
Transactions."
The following table sets forth the sources and uses of funds relating to the
Recapitalization:
<TABLE>
<S> <C>
SOURCES OF FUNDS:
Borrowings under the New Credit Agreement......................... $ 33.3
Old Senior Notes due 2007 (including original issue discount)..... 130.0
Units(1).......................................................... 26.7
Equity Contribution............................................... 35.5
---------
Total sources................................................. $ 225.5
---------
---------
USES OF FUNDS:
Repay borrowings under the Old Credit Agreement(2)................ $ 61.3
Repay the Subordinated Note(3).................................... 9.6
Redeem or exchange the Old Preferred Stock(4)..................... 26.1
Repurchase shares of Old Common Stock(5).......................... 91.6
Payment under the Phantom Equity Plan(6).......................... 5.3
Payment of Management Bonus(7).................................... 0.5
Retained Shares(8)................................................ 19.1
Fees and expenses(9).............................................. 12.0
---------
Total uses.................................................... $ 225.5
---------
---------
</TABLE>
- --------------------------
(1) In connection with the Initial Units Offering, Holdings offered 30,000
Units, each consisting of 40 shares of Old Senior Preferred Stock with a
liquidation preference of $25.00 per share and 13 shares of Class B Common.
Accordingly, an aggregate of 1,200,000 shares of Old Senior Preferred Stock
and 390,000 shares of Class B Common were issued in the Initial Units
Offering.
(2) Borrowings under the Old Credit Agreement as of March 14, 1997 consisted of:
(i) $30.5 million principal amount of a tranche A term loan that matures
quarterly in varying amounts from April 29, 1995 through February 3, 2001
(the "Tranche A Term Loan"), and $14.8 million principal amount of a tranche
B term loan that matures quarterly
22
<PAGE>
in varying amounts from April 29, 1995 through February 2, 2002 (the
"Tranche B Term Loan," together with the Tranche A Term Loan, the "Term
Loans"), and (ii) $15.8 million principal amount of revolving credit loans
that mature on January 30, 2001, subject to certain required temporary
interim reductions and $0.2 million of accrued interest. As of February 1,
1997, the weighted average interest rate with respect to all borrowings
under the Old Credit Agreement was approximately 8%.
(3) The Subordinated Note was issued by Holdings to Culligan in the principal
amount of $7.5 million in connection with the Acquisition. The Subordinated
Note would have matured on January 30, 2005 or earlier upon a change in
ownership of Holdings (as defined therein) and bore interest, payable
semiannually, at 10% per annum if paid in cash, or at 12% per annum if such
interest payments are deferred by Holdings. See "Certain Relationships and
Related Transactions."
(4) The Old Preferred Stock was issued by Holdings to finance a portion of the
Acquisition. Dividends on the Old Preferred Stock accrued at a rate of 12.5%
per annum on the sum of the liquidation value of the Old Preferred Stock
($100 per share) plus all accumulated and unpaid dividends thereon,
compounded quarterly. Pursuant to the Recapitalization Agreement, 399
Venture exchanged a portion of its Old Preferred Stock for 3,333 Units
included in the Initial Units Offering.
(5) Pursuant to the Recapitalization Agreement, Holdings agreed to repurchase
Old Common Stock at a purchase price equal to approximately $10.50 per
share. All Old Common Stock held by the Existing Stockholders was redeemed,
except for the Retained Shares. The aggregate repurchase amount for the Old
Common Stock was net of the payment of: (i) the price to be paid by the
Management Investors in connection with the exercise of the currently
outstanding options and (ii) the repayment of certain loans made to certain
Management Investors in connection with their original purchase of the Old
Common Stock.
(6) In connection with the Acquisition, the Company and the Management Investors
entered into a Phantom Equity Plan. The Phantom Equity Plan provided that
the Management Investors were entitled to a cash payment upon certain
events, including the Recapitalization. See "Management--Phantom Equity
Plan."
(7) As part of the Recapitalization, the Company agreed to pay the Company's
senior management team a transaction bonus of $500,000 in the aggregate.
(8) Pursuant to the Recapitalization Agreement, 399 Venture, BRS and the
Management Investors reinvested a portion of their shares of Old Common
Stock, having a value of $13.6 million, $0.5 million and $5.0 million,
respectively, which converted into shares of Class A Common, Class B Common
and Old Senior Preferred Stock.
(9) Includes discounts, commissions and fees and expenses incurred in connection
with the Recapitalization and the New Credit Agreement. A portion of such
fees was paid in the form of dividends to holders of Class C Common.
23
<PAGE>
CAPITALIZATION
(IN THOUSANDS)
The following table sets forth the unaudited consolidated capitalization of
the Company as of February 1, 1997 and the pro forma consolidated capitalization
of the Company after giving effect to the Recapitalization as if the
Recapitalization had occurred on February 1, 1997. The Old Senior Notes
surrendered in exchange for the New Senior Notes will be retired and canceled
and cannot be reissued. Likewise, the Old Senior Preferred Stock surrendered in
exchange for the New Senior Preferred Stock will be retired and canceled and
cannot be reissued. Accordingly, neither the issuance of the New Senior Notes
nor the New Senior Preferred Stock will result in any increase or decrease in
the indebtedness of the Company. As such, no effect has been given to the
Exchange Offers in this capitalization table. This table should be read in
conjunction with "Use of Proceeds," "Selected Historical Financial Data" and
"Unaudited Pro Forma Financial Statements" and the financial statements and
notes thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
AS OF
FEBRUARY 1, 1997
------------------------
ACTUAL PRO FORMA
----------- -----------
<S> <C> <C>
Cash and cash equivalents........................................... $ 1,863 $ 1,863
----------- -----------
----------- -----------
Total debt:
Revolving credit facility borrowings under the Old Credit
Agreement....................................................... $ 14,400 $ --
Term Loans under the Old Credit Agreement......................... 46,325 --
Subordinated Note................................................. 7,869 --
Borrowings under the New Credit Agreement......................... -- 32,069
10 7/8% Senior Notes due 2007 (including the original issue
discount)....................................................... -- 130,000
----------- -----------
Total debt.................................................... 68,594 162,069
13% Senior Exchangeable Preferred Stock due 2009.................... -- 27,656
Total stockholders' equity (deficiency)............................. 43,386 (66,497)
----------- -----------
Total capitalization.......................................... $ 111,980 $ 123,228
----------- -----------
----------- -----------
</TABLE>
DIVIDEND POLICY
Holdings is not required to pay cash dividends on the Senior Preferred Stock
until after March 15, 2002. Holdings intends to retain future earnings, if any,
for use in its business and does not anticipate paying any cash dividends on the
Senior Preferred Stock for any period ending on or prior to March 15, 2002 or on
the Common Stock. In addition, the terms of the Senior Indenture and the New
Credit Agreement limit the amount of cash dividends Anvil may distribute to
Holdings to pay dividends with respect to the Senior Preferred Stock, the Common
Stock and other equity securities both before and after that date. Further,
holders of Class A Common are entitled to the Class A Preference upon a
distribution by Holdings to holders of its capital stock (whether by dividend,
liquidation or other distribution). See "Description of Securities--Senior
Notes--Certain Covenants," "--Senior Preferred Stock--Dividends" and
"Description of Certain Indebtedness."
24
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA
(DOLLARS AND UNITS IN THOUSANDS)
Set forth below are the selected historical financial data of the
Predecessor and the Company as of the dates and for the periods shown. The
selected historical financial data of the Predecessor for fiscal years 1992 and
1994 and the five and seven month periods ended June 30, 1993 and January 29,
1994, respectively, were derived from the combined financial statements of the
Predecessor for such periods, which were audited by KPMG Peat Marwick LLP. The
selected historical financial data of the Company for fiscal years 1995 and 1996
were derived from the consolidated financial statements for such periods, which
were audited by Deloitte & Touche LLP. The information presented below should be
read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the combined and consolidated financial
statements and notes thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
PREDECESSOR (1) THE COMPANY (1)
-------------------------------------------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
<CAPTION>
SEVEN
FISCAL YEAR FIVE MONTHS MONTHS FISCAL YEAR ENDED
ENDED ENDED ENDED ---------------------------------
JAN. 31, JUNE 30, JAN. 29, JAN. 28, JAN. 27, FEB. 1,
1993 1993 1994 (2) 1995 (2) 1996 1997
----------- ----------- ----------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales.................................... $ 140,839 $ 75,743 $ 74,691 $ 169,923 $ 193,389 $ 204,154
Cost of goods sold........................... 116,727 61,197 62,408 131,906 149,723 156,813
----------- ----------- ----------- ----------- --------- ---------
Gross profit................................. 24,112 14,546 12,283 38,017 43,666 47,341
Selling, general and administrative
expenses................................... 11,103 5,788 6,632 14,704 17,778 21,678
Amortization of intangible assets............ -- 55 6,717 13,435 736 958
----------- ----------- ----------- ----------- --------- ---------
Operating income (loss)...................... 13,009 8,703 (1,066) 9,878 25,152 24,705
Other income (expense):
Interest income and other--net............. 244 6 88 2,451 616 415
Interest expense........................... (188) (74) (107) (227) (8,844) (7,912)
----------- ----------- ----------- ----------- --------- ---------
Income (loss) before provision for income
taxes and cumulative effect of change in
accounting principle..................... 13,065 8,635 (1,085) 12,102 16,924 17,208
Provision for income taxes................. 5,845 3,663 2,253 11,045 6,770 6,883
----------- ----------- ----------- ----------- --------- ---------
Income (loss) before cumulative effect of
change in accounting principle............. 7,220 4,972 (3,338) 1,057 10,154 10,325
Cumulative effect of change in accounting
principle (3).............................. (853) -- -- -- -- --
----------- ----------- ----------- ----------- --------- ---------
Net income (loss)............................ $ 8,073 $ 4,972 $ (3,338) $ 1,057 $ 10,154 $ 10,325
----------- ----------- ----------- ----------- --------- ---------
----------- ----------- ----------- ----------- --------- ---------
OTHER DATA:
EBITDA (4)................................... $ 16,329 $ 10,617 $ 7,830 $ 28,639 $ 31,615 $ 32,592
Cash provided by (used in)...................
Operating activities....................... (4,186) 21,919 (996) 13,654 7,163 23,811
Investing activities....................... (9,242) (3,003) (4,764) (7,888) (7,703) (6,519)
Financing activities....................... 13,376 (18,813) 4,125 (5,313) 775 (16,997)
Depreciation and amortization................ 3,320 1,914 8,896 18,761 6,463 7,287
Capital expenditures......................... 9,372 3,003 4,764 7,888 7,703 4,815
Ratio of earnings to fixed charges (5)....... -- -- -- -- 2.9x 3.0x
Ratio of earnings to fixed charges and
preferred stock dividends (5).............. -- -- -- -- 2.4x 2.5x
SELECTED OPERATING DATA:
Dozens of units sold......................... 4,187 2,198 2,224 4,711 4,973 5,319
Unit growth.................................. 11.1% * * 6.5% 5.6% 7.0%
Net sales growth............................. 13.0% * * 13.0% 13.8% 5.6%
</TABLE>
*SEE FOOTNOTE 2.
25
<PAGE>
<TABLE>
<CAPTION>
PREDECESSOR (1) THE COMPANY (1)
--------------------------------- --------------------
JAN. 31, JAN. 29, JAN. 28, JAN. 27 FEB. 1,
1993 1994(2) 1995(2) 1996 1997
----------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA (AT END OF PERIOD):
Cash and cash equivalents.................................. $ 2,078 $ 546 $ 999 $ 1,568 $ 1,863
Total assets............................................... 82,315 110,956 109,141 136,527 136,832
Total debt................................................. -- -- -- 84,457 68,594
Preferred stock (liquidation value)........................ -- -- -- 22,620 25,582
Total stockholders' equity (6)............................. 67,230 91,759 87,503 33,008 43,386
</TABLE>
- ------------------------------
(1) The periods prior to and including January 28, 1995 reflect the combined
financial data of the Predecessor, which was acquired by the Company as of
January 28, 1995 from McGregor. The periods beginning January 29, 1995
reflect the consolidated financial data of the Company after the
Acquisition. Because of the revaluation of the assets and liabilities
acquired and the related impact to the consolidated statements of
operations, the financial statements of the Predecessor (other than net
sales) for the periods prior to January 29, 1995 are not comparable to those
of the Company subsequent to that date.
(2) In connection with Astrum's emergence from Chapter 11 bankruptcy
proceedings, the Predecessor adopted "fresh-start" accounting (the
Predecessor was not a party to Astrum's Chapter 11 bankruptcy proceeding).
Accordingly, effective June 30, 1993, the assets by the Predecessor were
recorded at their fair market values with the excess of the reorganization
value over the fair value of the assets recorded as an intangible asset. As
a result of the adjustments, the financial statements as of and for the year
ended January 28, 1995 and the seven months ended January 29, 1994 are not
comparable to prior periods. The Company has omitted unit growth and net
sales growth for the five and seven month periods ended June 30, 1993 and
January 29, 1994, respectively, because such periods may not be comparable
to the other periods presented.
(3) Cumulative effect of change in accounting principle relates to the
Predecessor's adoption of Statement of Financial Accounting Standards No.
109, effective February 2, 1992.
(4) EBITDA is defined as operating income plus depreciation and amortization.
The fiscal 1996 EBITDA excludes a non-cash charge of $0.6 million for the
estimated loss on disposal of certain fixed assets. EBITDA is not a measure
of performance under GAAP. While EBITDA should not be considered in
isolation or as a substitute for net income, cash flows from operating
activities and other income or cash flow statement data prepared in
accordance with GAAP, or as a measure of profitability or liquidity,
management understands that EBITDA is commonly used in evaluating a
company's ability to service debt. EBITDA should not construed as an
indication of the Company's operating performance or as a measure of
liquidity. EBITDA does not take into account the Company's debt service
requirements and other commitments and, accordingly, is not necessarily
indicative of amounts that may be available for discretionary uses. The
EBITDA measure presented in this Prospectus may not be comparable to other
similarly titled measures of other companies.
(5) Earnings used in computing the ratio of earnings to fixed charges consist of
income before provision for income taxes plus fixed charges. Fixed charges
consist of interest expense on all indebtedness (including amortization of
deferred debt issuance costs) and a portion of operating lease rental
expense that is representative of the interest factor (approximately 1/3).
The calculation of these ratios is not meaningful for the Predecessor as its
interest expense and rental expense were DE MINIMUS. Preferred stock
dividends consist of dividends paid and dividends accumulated in arrears.
(6) Stockholder's equity for the Predecessor represents McGregor's investment in
the Predecessor.
26
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The following discussion provides information with respect to the results of
operations of the Company for the fiscal years ended February 1, 1997 and
January 27, 1996 and of the Predecessor for the year ended January 28, 1995. As
of January 28, 1995, the Company acquired the assets and assumed certain
liabilities of the Anvil Knitwear division of McGregor in the Acquisition.
Because of the revaluation of the assets and liabilities of the Predecessor and
the related impact on cost of sales and expenses, the financial statements of
the Predecessor for the periods prior to January 29, 1995 are not comparable to
those of the Company for subsequent periods. In addition, as a result of
adjustments made when the Predecessor adopted "fresh-start" accounting in
connection with Astrum's emergence from its Chapter 11 bankruptcy proceeding,
the financial statements of the Predecessor for the years ended January 28, 1995
and January 29, 1994 are not comparable to the Predecessor's financial
statements for other years. The following information should be read in
conjunction with "Selected Historical Financial Data" and the combined and
consolidated financial statements and the notes thereto included elsewhere in
this Prospectus.
The aggregate purchase price of the Acquisition of $105.0 million (plus fees
and expenses of $6.9 million) was funded with $6.4 million of common equity,
$20.0 million of preferred equity, $52.5 million of long-term bank debt, $7.5
million of a subordinated note and $25.5 million of revolving credit facility
borrowings. The Acquisition was led by: (i) Vestar; (ii) an affiliate of 399
Venture; and (iii) the Management Investors. In addition, Culligan retained a
30.6% ownership interest in Holdings. As a result, in allocating the purchase
price of the net assets acquired in the Acquisition, the net assets were valued
at the sum of (i) their carryover cost basis to the extent of 30.6% plus (ii)
their estimated fair market value to the extent of the new ownership interest of
69.4%.
RESULTS OF OPERATIONS
The Company's results of operations are affected by numerous factors,
including competition, general economic conditions, raw material costs, mix of
products sold and plant utilization. Certain activewear products of the type
manufactured by the Company are generally available from multiple sources and
the Company's customers often purchase products from more than one source. To
remain competitive, the Company reviews and adjusts its pricing structure from
time to time in response to industry-wide price changes. In the basic T-shirt
market, for example, the Company does not lead its competitors in setting the
current pricing structure and modifies its prices to the extent necessary to
remain competitive with prices set by its larger competitors in this segment.
The Company has been able to mitigate pricing pressures by: (i) increasing
its average product margin by continuing to introduce new higher priced
products; (ii) continuing to improve and modernize its manufacturing processes
in order to reduce production costs; and (iii) moving a portion of its sewing
operations offshore to take advantage of lower wage rates. The gross profit
margins of the Company's products vary significantly. Accordingly, the Company's
overall gross profit margin is affected by its product mix. In addition, plant
utilization levels are important to profitability due to the capital intensive
nature of the Company's textile operations.
The largest component of the Company's cost of goods sold is the cost of
cotton yarn. Unlike certain of its competitors, the Company does not spin its
own yarn. Instead, the Company obtains substantially all of its yarn from five
yarn suppliers, generally placing orders for quantities ranging from 30 days' to
one year's supply depending upon management's expectations regarding future yarn
prices and levels of supply. Yarn prices fluctuate from time to time principally
as a result of competitive conditions in the yarn market and supply and demand
for raw cotton. The Company adjusts the timing and size of its purchase orders
for cotton yarn in an effort to minimize fluctuations in its raw material costs
resulting from changes in yarn
27
<PAGE>
prices. Historically, the Company has been successful in mitigating the impact
of fluctuating yarn prices. See "Risk Factors--Supply and Price of Yarn" and
"Business--Raw Materials."
The Company seeks to minimize inventory risk by maintaining a supply of
goods in a "greige" (undyed and unbleached) state until relatively late in the
production process and by turning its finished goods inventory frequently (for
example, approximately 7.8 times in fiscal 1996). The Company believes these
efforts have been a major contributing factor to Anvil's ability to compete
successfully in the imprinted activewear market.
The following table sets forth, for each of the periods indicated, certain
statement of operations data, expressed as a percentage of net sales, for the
Predecessor for the year ended January 28, 1995 and the Company for the years
ended January 27, 1996 and February 1, 1997:
<TABLE>
<CAPTION>
PREDECESSOR THE COMPANY
------------- ------------------------
FISCAL YEAR ENDED
---------------------------------------
JAN. 28, JAN. 27, FEB. 1,
1995 1996 1997
------------- ----------- -----------
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales........................................................................ 100.0% 100.0% 100.0%
Cost of goods sold............................................................... 77.6 77.4 76.8
----- ----- -----
Gross profit..................................................................... 22.4 22.6 23.2
Selling, general and administrative expenses..................................... 8.7 9.2 10.6
Amortization of intangible assets................................................ 7.9 0.4 0.5
----- ----- -----
Operating income................................................................. 5.8 13.0 12.1
Interest and other income, net................................................... 1.4 0.3 0.2
Interest expense................................................................. (0.1) (4.6) (3.9)
----- ----- -----
Income before provision for income taxes......................................... 7.1 8.8 8.4
Provision for income taxes....................................................... 6.5 3.5 3.4
----- ----- -----
Net income....................................................................... 0.6% 5.3% 5.0%
----- ----- -----
----- ----- -----
OTHER DATA:
EBITDA (1)....................................................................... 16.9% 16.3% 16.0%
</TABLE>
- ------------------------
(1) EBITDA is defined as operating income plus depreciation and amortization.
The fiscal 1996 EBITDA excludes a non-cash charge of $0.6 million for the
disposal of certain fixed assets. EBITDA is not a measure of performance
under GAAP. While EBITDA should not be considered in isolation or as a
substitute for net income, cash flows from operating activities and other
income or cash flow statement data prepared in accordance with GAAP, or as a
measure of profitability or liquidity, management understands that EBITDA is
commonly used in evaluating a company's ability to service debt. EBITDA
should not be construed as an indication of the Company's operating
performance or as a measure of liquidity. EBITDA does not take into account
the Company's debt service requirements and other commitments and,
accordingly, is not necessarily indicative of amounts that may be available
for discretionary uses. The EBITDA measure presented in this Prospectus may
not be comparable to other similarly titled measures of other companies.
COMPANY YEAR ENDED FEBRUARY 1, 1997 COMPARED TO COMPANY YEAR ENDED JANUARY 27,
1996
NET SALES for the year ended February 1, 1997 increased $10.8 million, or
5.6%, to $204.2 million from $193.4 million for the year ended January 27, 1996.
This increase in net sales was primarily the result of a 7.0% increase in sales
volume, partially offset by a 1.3% decline in average selling price. The decline
in average selling price was primarily the result of lower T-shirt prices due to
competitive market conditions partially offset by a favorable change in product
mix to higher priced products such as plackets and henleys.
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<PAGE>
GROSS PROFIT for the year ended February 1, 1997 increased by $3.7 million,
or 8.4%, to $47.3 million from $43.7 million for the year ended January 27,
1996. Gross profit margin increased to 23.2% for the year ended February 1, 1997
from 22.6% in the comparable period of the prior year. Gross profit for the year
ended January 27, 1996 was reduced by approximately $1.7 million (or 0.9% of net
sales) as a result of the increase in cost of goods sold due to the inventory
revaluation in connection with the Acquisition. The change in gross profit
margin (0.3% decrease after considering the inventory revaluation in fiscal
1995) was primarily the result of increased markdowns, increased sales promotion
expenses, and selling price reductions (principally on white T-shirts) offset by
the result of a favorable shift in product mix, lower yarn costs, manufacturing
costs reductions and volume improvements.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES for the year ended February 1,
1997 increased by $3.9 million, or 21.9%, to $21.7 million from $17.8 million
for the year ended January 27, 1996. As a percentage of net sales, selling,
general and administrative expenses increased to 10.6% in fiscal 1996 from 9.2%
in fiscal 1995. This 1.4% increase, as a percentage of net sales, in selling,
general and administrative expenses was primarily the result of start-up costs
relating to the opening of the Company's 660,000 square foot distribution
facility in Dillon, South Carolina. This facility was acquired in November 1995
and became fully operational by the end of the first quarter of 1996. The
remainder of the increase was principally attributable to increases in
advertising and selling expenses related to increased efforts in the retail and
export markets, salaries related to administrative personnel and a charge for
the estimated loss on the disposal of certain fixed assets.
AMORTIZATION OF INTANGIBLE ASSETS for the year ended February 1, 1997
increased by $0.2 million to $1.0 million from $0.7 million for the year ended
January 27, 1996.
OPERATING INCOME for the year ended February 1, 1997 decreased by $0.5
million, or 1.8% to $24.7 million from $25.2 million for the year ended January
27, 1996 as a result of the factors described above.
INTEREST AND OTHER INCOME for the year ended February 1, 1997 decreased by
$0.2 million to $0.4 million from $0.6 million for the year ended January 27,
1996.
INTEREST EXPENSE for the year ended February 1, 1997 decreased by $0.9
million, or 10.5%, to $7.9 million from $8.8 million for the year ended January
27, 1996. This decrease in interest expense was the result of reduced borrowings
under the Old Credit Agreement and lower average interest rates.
PROVISION FOR INCOME TAXES for the year ended February 1, 1997 increased by
$0.1 million to $6.9 million from $6.8 million for the year ended January 27,
1996 due to an increase in pre-tax earnings. As a percentage of income before
provision for income taxes, income tax expense was approximately 40.0% in each
period.
NET INCOME for the year ended February 1, 1997 increased by $0.2 million,
or 1.7%, to $10.3 million from $10.2 million for the year ended January 27,
1996, as a result of the factors described above.
COMPANY YEAR ENDED JANUARY 27, 1996 COMPARED TO PREDECESSOR YEAR ENDED JANUARY
28, 1995
NET SALES for the year ended January 27, 1996 increased by $23.5 million,
or 13.8%, to $193.4 million from $169.9 million in the year ended January 28,
1995. This increase in net sales was the result of a 5.6% increase in sales
volume, principally due to increased sales of plackets, and an 8.0% increase in
average selling price, principally due to a favorable change in product mix
(including the introduction of a higher priced placket style) and higher selling
prices for plackets and henleys.
GROSS PROFIT for the year ended January 27, 1996 increased by $5.6 million,
or 14.9%, to $43.7 million from $38.0 million in the year ended January 28,
1995. Gross profit margin increased to 22.6% in fiscal
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<PAGE>
1995 from 22.4% in the prior year. This increase in gross profit margin was
primarily the result of a higher utilization of plant capacity due to the
Company's increased sales volume and an increase in average selling price, the
combination of which more than offset the $1.7 million (or 0.9% of net sales)
increase in cost of goods sold as a result of the inventory revaluation in
connection with the Acquisition.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES in fiscal 1995 increased by
$3.1 million, or 20.9%, to $17.8 million from $14.7 million in fiscal 1994. As a
percentage of net sales, selling, general and administrative expenses increased
to 9.2% in fiscal 1995 from 8.7% in fiscal 1994. Approximately one-half of this
increase was the result of an increase in compensation expense primarily due to
the Company's increased sales efforts. The remainder of this increase is
attributable to a combination of advertising expenses, start-up costs associated
with the Company's new distribution facility and management fees.
AMORTIZATION OF INTANGIBLE ASSETS for the year ended January 27, 1996
decreased $12.7 million to $0.7 million from $13.4 million in the year ended
January 28, 1995. Fiscal 1995 amortization of intangible assets for the Company
is not comparable to the Predecessor due to the revaluation of assets in
connection with the Acquisition of the Predecessor in January 1995. Fiscal 1994
amortization expense resulted from the reorganization value in excess of fair
value of assets related to the adoption of "fresh-start" accounting in
connection with Astrum's emergence from its Chapter 11 bankruptcy proceeding.
OPERATING INCOME for the year ended January 27, 1996 increased by $15.3
million to $25.2 million from $9.9 million for the year ended January 28, 1995
as a result of the factors described above.
INTEREST AND OTHER INCOME for the year ended January 27, 1996 decreased by
$1.8 million to $0.6 million from $2.5 million for the year ended January 28,
1995. This decrease is attributable to the reversal into income in fiscal 1994
of approximately $2.5 million of expenses accrued in prior years that were no
longer required.
INTEREST EXPENSE for the year ended January 27, 1996 increased by $8.6
million to $8.8 million from $0.2 million for the year ended January 28, 1995.
The increase was the result of increased borrowings at the beginning of fiscal
1995 to finance the Acquisition in January 1995.
PROVISION FOR INCOME TAXES for the year ended January 27, 1996 decreased by
$4.3 million to $6.8 million from $11.0 million for the year ended January 28,
1995. As a percentage of income before provision for income taxes, income tax
expense was 40.0% and 91.3%, respectively. The percentage for the year ended
January 28, 1995 reflects non-deductible amortization of the reorganization
value described above.
NET INCOME for the year ended January 27, 1996 increased by $9.1 million to
$10.2 million from $1.1 million for the year ended January 28, 1995, as a result
of the factors described above.
LIQUIDITY AND CAPITAL RESOURCES
Since the Acquisition, the Company has utilized funds generated from
operations and borrowings under the Old Credit Agreement to meet working capital
and capital expenditure requirements. During fiscal 1994, the Predecessor
generated approximately $13.7 million in cash from operations. Net cash
generated by operating activities for fiscal 1995 and fiscal 1996 totaled
approximately $7.2 million and $23.8 million, respectively.
During fiscal 1994, the Predecessor made capital expenditures of
approximately $7.9 million. During fiscal 1995 and fiscal 1996, the Company made
capital expenditures of approximately $7.7 million and $4.8 million,
respectively. Since the Acquisition, the Company's major capital expenditures
have related to: (i) the acquisition of the 660,000 square foot distribution
center in Dillon, South Carolina; (ii) the acquisition and maintenance of
machinery and equipment; and (iii) the acquisition of management information
systems hardware and software. The Company anticipates spending approximately
$5.0
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<PAGE>
million for capital expenditures in fiscal 1997 primarily to fund the
acquisition of manufacturing equipment. The Company currently has no capital
commitments outside the ordinary course of business.
The Company's principal working capital requirements are financing accounts
receivable and inventories. As of February 1, 1997, the Company had net working
capital of approximately $29.5 million, including approximately $28.5 million of
accounts receivable, approximately $32.5 million of inventories and
approximately $33.9 million in accounts payable, accrued expenses and revolving
credit loans.
At the time of the Acquisition, Anvil entered into the Old Credit Agreement.
The Old Credit Agreement provided for Term Loans of $52.5 million, of which
approximately $46.3 million was outstanding as of February 1, 1997, and a
revolving credit facility, which, as amended, permits borrowings of up to $47.5
million (subject to borrowing base eligibility) to finance working capital,
letters of credit and other general corporate needs. As of February 1, 1997, the
Company had borrowing availability of approximately $33.1 million under the
revolving credit facility portion of the Old Credit Agreement. Indebtedness
under the Old Credit Agreement bore interest at a floating rate and was secured
by a pledge of all of the Company's assets. As of February 1, 1997, the
effective weighted average interest rates for the Term Loans and the revolving
credit facility were each approximately 8.0% and 8.25%, respecitvely. The Term
Loan portions of the Old Credit Agreement were required to be amortized in
quarterly payments from April 29, 1995 through February 2, 2002 and the
revolving credit facility portion of the Old Credit Agreement would have matured
on January 30, 2001 subject to certain required temporary interim reductions.
See "Description of Certain Indebtedness--Old Credit Agreement."
In connection with the Recapitalization, Anvil refinanced its existing
indebtedness under the Old Credit Agreement. The New Credit Agreement provides
for borrowings of up to $55.0 million for working capital and other general
corporate purposes, and bears interest, at Anvil's option, at LIBOR or prime
rate plus a margin. The indebtedness under the New Credit Agreement is
guaranteed by Holdings and Cottontops and is secured by substantially all of
Anvil's assets and a pledge by Holdings of all of the capital stock of Anvil.
The New Credit Agreement requires Anvil to meet certain financial tests,
including minimum levels of consolidated net worth, minimum levels of
consolidated EBITDA (as defined therein), minimum interest coverage and maximum
leverage ratio. The New Credit Agreement also contains covenants which, among
other things, limit: (i) the incurrence of additional indebtedness; (ii) the
payment of dividends; (iii) transactions with affiliates; (iv) asset sales,
acquisitions and mergers; (v) prepayments of other indebtedness; (vi) creation
of liens and encumbrances; and (vii) other matters customarily restricted in
such agreements. See "Description of Certain Indebtedness--New Credit
Agreement."
The Company's ability to satisfy its debt obligations, including, in the
case of Anvil, to pay principal and interest on the Senior Notes and, in the
case of Holdings, to pay principal and interest on the Exchange Debentures, if
issued, to perform its obligations under the Guarantee and to pay cash dividends
on the Senior Preferred Stock, will depend upon the Company's future operating
performance, which will be affected by prevailing economic conditions and
financial, business and other factors, certain of which are beyond its control,
as well as the availability of revolving credit borrowings under the New Credit
Agreement. However, the Company may be required to refinance a portion of the
principal of the Senior Notes and, if issued, the Exchange Debentures prior to
their maturity and, if the Company is unable to service its indebtedness, it
will be forced to take actions such as reducing or delaying capital
expenditures, selling assets, restructuring or refinancing its indebtedness, or
seeking additional equity capital. There can be no assurance that any of these
remedies can be effected on satisfactory terms, if at all. See "Risk Factors."
Holdings has no independent operations with its sole asset being the capital
stock of Anvil, which stock is pledged to secure the obligations under the New
Credit Agreement. As a holding company, Holdings' ability to pay cash dividends
on the Senior Preferred Stock or, if issued, principal and interest on the
Exchange Debentures is dependent upon the earnings of Anvil and its subsidiaries
and their ability to
31
<PAGE>
declare dividends or make other intercompany transfers to Holdings. Under the
terms of the Senior Indenture, Anvil may incur certain indebtedness pursuant to
agreements that may restrict its ability to make such dividends or other
intercompany transfers necessary to service Holdings' obligations, including its
obligations under the terms of the Senior Preferred Stock and, if issued, the
Exchange Debentures. The Senior Indenture restricts, among other things, Anvil's
and its Restricted Subsidiaries' ability to pay dividends or make certain other
restricted payments, to incur additional indebtedness, to encumber or sell
assets, to enter into transactions with affiliates, to enter into certain
guarantees of indebtedness, to make restricted investments, to merge or
consolidate with any other entity and to transfer or lease all or substantially
all of their assets. In addition, the New Credit Agreement contains other and
more restrictive covenants and prohibits Anvil's subsidiaries from declaring
dividends or making other intercompany transfers to Anvil in certain
circumstances.
The Company believes that based upon current levels of operations and
anticipated growth, funds generated from operations, together with other
available sources of liquidity, including borrowings under the New Credit
Agreement, will be sufficient over the next twelve months for the Company to
make anticipated capital expenditures, fund working capital requirements and
satisfy its debt service requirements.
SEASONALITY
The Company's business is not significantly seasonal as it manufactures and
sells a wide variety of activewear products that may be worn throughout the
year.
EFFECT OF INFLATION
Inflation generally affects the Company by increasing the interest expense
of floating rate indebtedness and by increasing the cost of labor, equipment and
raw materials. The Company does not believe that inflation has had any material
effect on the Company's business during the periods discussed herein.
NEW ACCOUNTING STANDARDS
Statement of Financial Accounting Standards ("SFAS") No. 128, EARNINGS PER
SHARE, effective for interim and annual periods ending after December 15, 1997,
establishes standards for computing and presenting earnings per share ("EPS")
and simplifies the standards for computing EPS currently found in Accounting
Principles Board Opinion No. 15, EARNINGS PER SHARE. Common stock equivalents
under APB No. 15, with the exception of contingently issuable shares (shares
issuable for little or no cash consideration), are no longer included in the
calculation of primary, or basic EPS. Under SFAS No. 128, contingently issuable
shares are included in the calculation of basic EPS. For the year ended February
1, 1997, the adoption of SFAS No. 128 would not have had a material effect on
the calculation of EPS.
SFAS No. 129, DISCLOSURE OF INFORMATION ABOUT CAPITAL STRUCTURE, effective
for periods ending after December 15, 1997, establishes standards for disclosing
information about an entity's capital structure. This statement requires
disclosure of the pertinent rights and privileges of various securities
outstanding (stock, options, warrants, preferred stock, debt and participation
rights) including dividend and liquidation preferences, participant rights, call
prices and dates, conversion or exercise prices and redemption requirements.
Adoption of this statement will have no effect on the Company as it currently
discloses the information required.
32
<PAGE>
BUSINESS
GENERAL
Anvil Knitwear, Inc. is a leading designer, manufacturer and marketer of
high quality activewear for sale principally into the "imprinted" or "decorated"
segment of the U.S. apparel industry. The Company offers an extensive line of
activewear products designed for men, women and children, including short and
long sleeve T-shirts, classic button and collar knit sport shirts (known as
"plackets"), collarless short and long sleeve knit shirts (known as "henleys"),
fleeced sweatshirts, athletic shorts and caps. The Company markets and sells its
products primarily to distributors and screen printers under the ANVIL and
COTTON DELUXE brand names as well as under private labels. Prior to their
ultimate resale to the consumer, the Company's products typically are printed or
embroidered with logos, designs or characters. The Company believes that its
strong operating performance is due to: (i) its broad range of high quality
products; (ii) its strong relationships with customers and suppliers; (iii) its
flexible, vertically integrated manufacturing operations; (iv) its commitment to
controlling costs and improving manufacturing processes; and (v) the strong
growth of the activewear market. For the fiscal year ended February 1, 1997, the
Company generated net sales and EBITDA of $204.2 million and $32.6 million,
respectively.
The Company has achieved significant increases in net sales and EBITDA in
recent years. From fiscal 1991 through fiscal 1996, the Company's net sales grew
from $124.6 million to $204.2 million, representing a CAGR of 10.4%, and EBITDA
grew from $15.5 million to $32.6 million, representing a CAGR of 16.0%. This
improvement resulted primarily from the Company's operating leverage,
management's initiatives to reduce costs and improve productivity and the
Company's successful introduction of higher priced products.
The Company offers high quality activewear in a variety of styles, colors,
fabric weights and blends, enabling it to serve a number of market niches
effectively as well as to serve the traditional T-shirt market segment. The
Company works closely with its distributor and screen printer customers to meet
their needs for style and color innovation. The Company continues to compete
successfully by: (i) targeting niche products on which larger competitors have
not traditionally focused; (ii) responding quickly to market developments; and
(iii) regularly introducing new products. In addition, the Company has made
significant investments to modernize and expand its domestic manufacturing and
distribution facilities in order to improve quality, reduce costs, manage
inventories and shorten production cycles.
BUSINESS STRATEGY
The Company's objective is to continue to increase net sales and EBITDA by
implementing the following key elements of its business strategy:
/ / OFFER A BROAD RANGE OF HIGH QUALITY PRODUCTS. The Company offers high
quality activewear in a wide variety of styles, colors, fabric weights
and blends, enabling it to serve a number of market niches effectively.
During the past five years, the Company has strengthened its position in
the activewear market by successfully introducing higher priced products
to supplement its traditional T-shirt segment. From fiscal 1991 through
fiscal 1996, the Company's gross sales of henleys and plackets, both
higher priced products, increased at a CAGR of 51.1%. In addition, the
Company expects to continue to expand its product offerings under its
ANVIL and COTTON DELUXE brands, capitalizing on the growth in the higher
priced branded products segment of the activewear market. Furthermore,
the Company is working closely with third parties to market
complementary imprintable products, such as caps, bags, carryalls and
jackets, through the Company's established distribution channels.
/ / ENHANCE AND EXPAND CUSTOMER RELATIONSHIPS. The Company continually seeks
to strengthen and expand its customer relationships by promoting the
Company's: (i) broad product offerings; (ii) ability to design
customized products; (iii) quick, reliable delivery; and (iv) ability to
accommodate modifications to customer orders. The Company's direct
salesforce focuses on developing strong relationships with distributors,
who have accounted for an increasing percentage of activewear sales in
recent years. In fiscal 1996, sales to distributors accounted for
approximately 64% of the Company's net sales. In the Company's
experience, distributors typically place larger
33
<PAGE>
purchase orders, purchase a broader product mix, maintain higher
inventory levels and develop more predictable order and re-order
patterns than certain of its other customers. The Company estimates that
distributors resell products to approximately 20,000 smaller screen
printers and embroiderers. The Company's expanded product offerings have
enabled it to more effectively service distributors and satisfy the
disparate preferences of consumers.
/ / FLEXIBLE, VERTICALLY INTEGRATED MANUFACTURING OPERATIONS. The Company is
a vertically integrated manufacturer which knits (exclusively from
purchased yarn), bleaches, dyes, finishes, cuts and sews its activewear
products at its efficient manufacturing facilities. The Company believes
that being vertically integrated allows it to maintain a competitive
cost structure, minimize delivery time and provide consistent, high
quality products. The Company's manufacturing flexibility enables it to
efficiently complete smaller volume production runs, respond quickly to
customer needs and accommodate last minute modifications to customer
orders. The Company reduces inventory risk by maintaining a supply of
goods in a "greige" (undyed and unbleached) state until relatively late
in the production process and by turning its finished goods inventory
(costs of sales divided by ending finished goods inventory) frequently
(for example, approximately 7.6 times in fiscal 1996). In addition, the
Company typically is able to deliver specialized products to its
customers within four to five weeks of receiving an order and believes
its turnaround time to be generally shorter than that normally achieved
by its competitors delivering similar specialized products.
/ / CONTINUE TO CONTROL COSTS AND IMPROVE MANUFACTURING. From fiscal 1991
through fiscal 1996, the Company invested approximately $42 million to
modernize and expand its domestic manufacturing and distribution
facilities in order to improve quality, reduce costs, manage inventories
and shorten production cycles. The Company believes it can continue to
improve its operating efficiency by: (i) increasing the use of offshore
sewing operations; (ii) utilizing its 660,000 square foot centralized
distribution facility to deliver its products in a more cost efficient
manner; and (iii) opportunistically redesigning manufacturing processes
to shorten production cycles and improve inventory management. The
Company believes that it manages its working capital and inventory
better than any of its primary publicly-traded competitors.
/ / CAPITALIZE ON THE GROWTH OF THE ACTIVEWEAR MARKET. From 1990 through
1995, industry retail dollar sales and unit sales of imprinted
activewear (T-shirts, knit shirts, fleecewear and athletic shorts) in
the U.S. market grew at CAGRs of 8.0% and 5.7%, respectively. From
fiscal 1990 through fiscal 1995, the Company's net sales and unit sales
increased at CAGRs of 12.7% and 9.3%, respectively. The Company believes
sales of activewear products has been driven primarily by: (i) the
increased consumer preference for comfortable apparel selections; (ii)
more flexible dress codes, including the greater acceptance of casual
wear in the workplace; and (iii) the heightened emphasis on physical
fitness. In addition, the Company believes that it has identified
significant growth opportunities in several international markets,
including certain markets in Europe, South America and Japan.
INDUSTRY
The Company is a participant in the domestic activewear market. In 1995 (the
latest period for which data is available), this market accounted for
approximately $16.5 billion in factory level sales. The Company focuses
primarily on the imprinted activewear segment of the activewear market, which
accounted for approximately $13.8 billion of retail sales and $6.7 billion of
activewear factory level sales in 1995. Imprinted activewear, which is either
branded or private label, typically is imprinted or embroidered with a logo,
design or character before it reaches the end-user. Branded products reach
end-users carrying the manufacturer's label, whereas products sold under a
private label reach the end-user carrying a customer's label. From 1990 through
1995, retail dollar sales and unit sales of imprinted activewear (T-shirts, knit
shirts, fleecewear and athletic shorts) grew at CAGRs of 8.0% and 5.7%,
respectively. From fiscal 1990 through fiscal 1995, the Company's net sales and
unit sales increased at CAGRs of 12.7% and 9.3%, respectively.
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<PAGE>
The following tables set forth retail level dollar sales and industry unit
sales, respectively, for each of the Company's major product categories:
DOMESTIC IMPRINTED ACTIVEWEAR MARKET RETAIL SALES
(IN BILLIONS OF DOLLARS)
<TABLE>
<CAPTION>
1990-1995
1990 1991 1992 1993 1994 1995 $ CAGR
--------- --------- --------- --------- --------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
T-shirts.................................. $ 5.0 $ 5.4 $ 5.8 $ 6.3 $ 6.9 $ 7.3 7.9%
Knit shirts............................... 1.5 1.6 1.8 1.9 2.1 2.4 10.3
Fleecewear................................ 2.2 2.4 2.7 3.0 2.9 3.1 7.2
Athletic shorts........................... 0.7 0.9 1.1 1.1 1.1 1.0 6.4
--------- --------- --------- --------- --------- --------- ---
Total................................. $ 9.4 $ 10.2 $ 11.4 $ 12.4 $ 13.1 $ 13.8 8.0%
--------- --------- --------- --------- --------- --------- ---
--------- --------- --------- --------- --------- --------- ---
</TABLE>
(IN MILLIONS OF DOZENS OF UNITS)
<TABLE>
<CAPTION>
1990-1995
1990 1991 1992 1993 1994 1995 UNITS CAGR
--------- --------- --------- --------- --------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
T-shirts.................................... 58.8 62.6 65.7 70.3 76.1 77.1 5.6%
Knit shirts................................. 8.2 9.1 9.6 10.2 10.4 12.4 8.6
Fleecewear.................................. 13.7 14.4 15.8 16.9 16.7 16.5 3.8
Athletic shorts............................. 6.8 7.5 9.4 10.1 10.2 9.4 6.7
--------- --------- --------- --------- --------- --------- ---
Total................................... 87.5 93.5 100.5 107.5 113.4 115.4 5.7%
--------- --------- --------- --------- --------- --------- ---
--------- --------- --------- --------- --------- --------- ---
</TABLE>
- ------------------------
SOURCE: THE CONTEXT GROUP
The Company believes that the long-term growth of the domestic activewear
market has been driven by: (i) the increased consumer preference for comfortable
apparel selections; (ii) more flexible dress codes, including the greater
acceptance of casual wear in the workplace; and (iii) the heightened emphasis on
physical fitness. Casual wear has become acceptable in a wider array of
settings. For example, many employers have adopted more flexible dress codes,
resulting in greater acceptance of knit shirts, sweatshirts and T-shirts.
Concurrent with this shift in consumer preferences, consumers' increased
participation in sports and their heightened focus on regular physical activity
have contributed to growth in the activewear market. For example, a study of
sports participation conducted by the National Sporting Goods Association
suggests that from 1987 to 1995 the number of people in the United States
participating in the 10 most popular sports increased by approximately 31
million people. In addition, activewear products have registered a number of
significant improvements in product characteristics that have contributed to
enhanced consumer appeal, including improvements in fabric weight, blends and
construction as well as increased offerings of size, color and style. The
Company believes that these trends should continue to generate demand for
activewear products for the foreseeable future.
The activewear market is characterized by low fashion risk compared to many
other apparel markets. While substantial opportunity exists for product
innovation and differentiation, basic garment styles are not generally driven by
trends or fads. The activewear industry is also characterized by certain
barriers to entry, including: (i) significant capital expenditures required for
vertically integrated production; (ii) strong supplier relationships; and (iii)
established customer relationships.
The primary distribution channel for activewear sales to the imprinted
segment of the activewear market is through distributors who, in turn, sell
their products primarily to, in the Company's estimation, approximately 20,000
smaller screen printers and embroiderers. Manufacturers of activewear for the
imprinted market, such as the Company, also sell directly to the major screen
printers and to retailers. In
35
<PAGE>
recent years, the Company has sold products primarily through distributors and
major screen printers, which represent approximately 80% of total industry
imprinted activewear sales.
The Company's net sales and profitability depend primarily on sales of
T-shirts and knit shirts (which includes plackets and henleys). Industry data
for 1995 suggest that the five largest domestic manufacturers of T-shirts for
sale into the imprinted activewear market through distributors and screen
printers (of which the Company was one) accounted for approximately 68% of 1995
T-shirt sales through these distribution channels. In addition, in 1995, the
five largest domestic manufacturers of knit shirts for sale into the imprinted
market through distributors and screen printers (of which the Company was one)
accounted for approximately 61% of 1995 knit shirt sales through these
distribution channels. Competition among these manufacturers and smaller
industry participants is intense and is primarily based on price, quality,
service and breadth of product offerings. The Company's management believes that
the Company competes favorably in these and its other imprinted activewear
product offerings.
Each of the Company's major categories of activewear products experiences
import competition. Industry data for 1995 suggest that imports accounted for
approximately 31% of all imprinted activewear unit sales. The Company believes
the threat of significant import competition in the domestic activewear market
segment to be lower than certain other market segments in the apparel industry
due in part to the relatively low labor content in activewear products. In
addition, domestic manufacturers serving the imprinted activewear market have
been able to differentiate themselves from foreign competitors by their ability
to meet the short delivery time requirements of distributors and screen
printers, especially with respect to niche products which have more styling
elements than basic black and white T-shirts. Furthermore, in an effort to
reduce the labor costs associated with the production of activewear items and to
compete more effectively with import competition, domestic manufacturers,
including the Company, have begun to move sewing operations offshore primarily
to countries located in Central and South America. See "Competition."
PRODUCTS
The Company's activewear products, which are designed for men, women and
children, include short and long sleeve T-shirts, tank tops, classic button and
collar knit sport shirts (known as "plackets") and collarless short and long
sleeve knit shirts (known as "henleys") as well as a variety of other niche
activewear products, such as fleeced sweatshirts, athletic shorts and caps. This
broad array of casual knitwear and athletic wear is marketed and sold by the
Company under its ANVIL and COTTON DELUXE brand names as well as under private
labels. The Company manufactures its products in a variety of fabrics and fabric
blends, principally in 100% pre-shrunk heavyweight and mediumweight jerseys and
also in combed cotton and polyester blend jerseys. The Company also offers its
activewear products in a broad array of colors ranging from black and white to a
variety of alternative shades such as bark, sand, slate blue, ivy and maroon.
Prior to their ultimate resale to the consumer, the Company's products typically
are printed or embroidered with logos, designs or characters.
36
<PAGE>
The following table sets forth certain information regarding sales of the
Company's activewear products:
SALES BY PRODUCT LINE
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
PREDECESSOR THE COMPANY
-------------------- ------------------------------------------
FISCAL YEAR ENDED
----------------------------------------------------------------
JAN. 28, 1995 JAN. 27, 1996 FEB. 1, 1997
-------------------- -------------------- --------------------
CATEGORY AMOUNT % AMOUNT % AMOUNT %
- ----------------------------------------------------------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Basic and Specialty T-shirts............................... $ 111.0 63.9% $ 116.8 58.0% $ 115.3 54.6%
Tank Tops, Plackets and Henleys............................ 53.8 31.0 67.1 33.3 80.0 37.9
Other Products............................................. 9.0 5.1 17.5 8.7 16.0 7.5
--------- --------- --------- --------- --------- ---------
Gross sales............................................ $ 173.8 100% $ 201.4 100% 211.3 100%
--------- --------- ---------
--------- --------- ---------
Returns, discounts and allowances.......................... (3.9) (8.0) (7.1)
--------- --------- ---------
Net sales.............................................. $ 169.9 $ 193.4 $ 204.2
--------- --------- ---------
--------- --------- ---------
</TABLE>
BASIC AND SPECIALTY T-SHIRTS. Basic and speciality T-shirts are the
Company's principal products. The basic T-shirt was the first product introduced
by the Company in the early 1970s. In addition to basic T-shirts, the Company
also manufactures a variety of specialty T-shirts, which have additional
features such as double needle stitching and color blocking. From fiscal 1991
through fiscal 1996, the Company's gross sales of basic and specialty T-shirts
increased at a CAGR of approximately 3%.
TANK TOPS, PLACKETS AND HENLEYS. The Company began manufacturing and
selling tank tops in the late 1970s. The Company introduced its first line of
plackets in the early 1980s and its first line of henleys in the early 1990s.
Plackets include classic button and collar knit sport shirts which are produced
in both short and long sleeve versions. The Company's newest item in its placket
line is its pique knit golf shirt, which it introduced in the first quarter of
fiscal 1996. Henleys are three button collarless knit shirts, which are produced
in both short and long sleeve versions. The Company produces tank tops, plackets
and henleys in a broad range of colors, fabrics and weights. From fiscal 1991
through fiscal 1996, the Company's gross sales of tank tops, plackets and
henleys increased at a CAGR of approximately 38%.
OTHER PRODUCTS. The Company's other products include fleeced sweatshirts,
knit shorts and caps, most of which are produced in a variety of colors and
designs. In addition to products which it manufactures in-house, this category
includes those products which the Company purchases from other activewear
manufacturers to complement its activewear product line. From fiscal 1991
through fiscal 1996, the Company's gross sales of other products increased at a
CAGR of approximately 8%.
SALES AND MARKETING
The Company markets its activewear products primarily to a wide range of
distributors, screen printers and private label customers through a direct
salesforce comprised of approximately 16 salespersons, two regional sales
managers and a director of sales. The Company has one sales representative in
Europe. Each member of the salesforce receives a base salary and is eligible to
receive an incentive bonus payment.
The Company seeks to differentiate itself from other larger activewear
manufacturers by marketing niche products to its customers and encouraging its
customers to purchase a broader product mix. The Company believes that by
encouraging its customers to expand their product mix towards higher priced
products with more style elements, it has been able to compete effectively
against other companies that
37
<PAGE>
concentrate primarily on basic, lower priced T-shirts. The Company believes that
this strategy has enabled it to penetrate the large and middle-tier wholesale
imprinted T-shirt distributor market.
Although the Company's sales and marketing efforts historically have focused
on the domestic activewear market, the Company anticipates expanding its sales
efforts in international markets. In fiscal 1996, the Company's net sales
directly into international markets were a relatively insignificant portion of
the Company's aggregate net sales. The Company believes that it has identified
several international markets, including certain markets in Europe, South
America and Japan, which offer significant opportunities for increased sales.
CUSTOMERS
The Company sells its products primarily to distributors and screen
printers. The Company also sells a small percentage of its products to retail
buyers. The Company currently services over 500 customers, of which the top
twenty account for approximately 60% of the Company's net sales. No individual
customer accounts for more than 10% of the Company's net sales.
The Company has significantly increased its sales to distributors in recent
years. In fiscal 1996, sales to distributors accounted for approximately 64% of
the Company's net sales. The Company targets distributors in its sales efforts
because distributors typically place larger orders, purchase a broader product
mix, maintain higher inventory levels and establish more predictable order and
re-order patterns than the Company's other customers. The Company estimates that
distributors resell products to approximately 20,000 smaller screen printers and
embroiderers throughout the United States. Screen printers and private label
customers accounted for the remaining 36% of the Company's net sales in fiscal
1996.
RAW MATERIALS
The Company's primary raw material is cotton yarn. Unlike certain of its
competitors, the Company does not spin its own yarn. Instead, the Company
purchases substantially all of its yarn from five domestic spinners. No
individual spinner accounted for more than 35% of the Company's purchased yarn
in fiscal 1996. Other raw materials purchased by the Company include dyes and
other chemicals used in the dyeing and bleaching of fabrics.
The Company believes that it is one of the largest purchasers of yarn in its
industry segment and has a sound relationship with each of its suppliers. The
Company believes these relationships allow the Company to order precise
quantities of yarn at highly competitive prices, thereby permitting the Company
to minimize working capital requirements. The Company's relationships with its
suppliers help the Company's continued access to supplies of raw materials
during periods when yarn is in peak demand. As a result, the Company has never
experienced any significant shortages of raw materials.
The Company determines the size of its purchase orders for yarn based on its
estimate of future yarn prices and levels of supply and periodically places
large purchase orders as a means of fixing its raw materials costs. This
practice helps to insulate the Company from fluctuations in yarn prices. The
Company's purchase orders typically are for quantities of yarn ranging from 30
days' to one-year's supply.
Certain of the Company's primary competitors spin their own yarn. The
Company estimates that in-house yarn production could reduce overall yarn costs,
but believes that such reductions would not be realized consistently.
Furthermore, the Company has concluded that the benefits achieved by acquiring
in-house spinning capacity would not justify the investment required to achieve
that capacity. In addition, the Company believes that the quality of its
purchased yarn is at least equal to the quality of yarn produced by fully
integrated manufacturers in its industry market segment.
38
<PAGE>
MANUFACTURING OPERATIONS AND FACILITIES
The Company conducts its operations principally through seven manufacturing
facilities and a centralized distribution center. The Company utilizes a
vertically integrated manufacturing process, with fabric being knit, bleached
and dyed from purchased yarn at its two textile facilities and the cutting and
sewing of such fabric occurring at its five sewing facilities. The Company
utilizes offshore and domestic contractors as it deems necessary.
TEXTILE FACILITY OPERATIONS. The Company conducts textile operations at two
facilities owned by the Company located in Kings Mountain and Asheville, North
Carolina. The Company operates over 150 knitting machines at its textile
facilities where cotton yarn is knitted into tubes of basic fabric constructions
such as jersey and fleece. These tubes of fabric correspond in weight and
diameter to the various styles and sizes required to make the Company's
activewear products. The knitted fabric is then batched for bleaching and
dyeing. Substantially all of the Company's products are either bleached to
remove the ecru color of natural cotton or dyed for colored products. Each of
the Company's textile facilities contains computerized controls, dye simulators
and spectrometers and modern jet vessels to assist the Company in maintaining an
efficient and quality controlled environment for the dyeing and bleaching
process. The Company's in-house dyeing capabilities allow the Company to control
the stage in the production process at which the fabric will be dyed thereby
allowing it to maintain excess unfinished inventory available to respond quickly
to customized orders. The Company's textile facilities each operated at
approximately 80% of capacity for the year ending February 1, 1997. The Company
believes it has the capability to increase the operating capacity of its textile
facilities with only relatively modest capital expenditures.
SEWING FACILITY OPERATIONS. The Company conducts its sewing operations at
three facilities owned by the Company located in Whiteville, Red Springs, and
Gibson, North Carolina and in two leased facilities located in Mullins, South
Carolina and in Honduras. Fabric produced at the Company's textile operations is
shipped to the Company's sewing facilities where it is marked by hand from
design patterns, cut and then sewn. Sewn garments are first sorted by style,
color and size and then packaged. The Company's quality control personnel check
the sewn garments at varying stages of the manufacturing process and immediately
prior to such garments being placed into cartons.
During the year ending February 1, 1997, the Company's sewing facilities on
average operated at 95% capacity. The Company began its offshore sewing
operations in January 1996 at its leased facility in Honduras in order to take
advantage of lower wage rates. During the year ended February 1, 1997, 21% of
the Company's production (sewing hours) was sewn offshore (including in-house
production and outside sources), and the Company expects its percentage of
offshore sewing labor hours to continue to increase.
DISTRIBUTION OPERATIONS. The Company performs all of its distribution
functions at its centralized distribution facility located in Dillon, South
Carolina. The Company acquired this 660,000 square foot facility in fiscal 1995
for an aggregate purchase price of $4.0 million and thereafter spent
approximately $2.0 million on subsequent improvements through February 1, 1997.
In the first quarter of fiscal 1996, the Company's centralized distribution
facility became fully operational, enabling the Company to consolidate its
formerly fragmented distribution operations and minimize distribution
inefficiencies. The Company's centralized distribution system also has enhanced
the Company's ability to provide efficient and responsive customer service and
to more efficiently manage inventory.
39
<PAGE>
The following table sets forth certain information regarding the Company's
facilities:
<TABLE>
<CAPTION>
APPROX. SQ.
LOCATION PRINCIPAL USE FT. OWNED/LEASED
- ----------------------------------- ----------------------------------- -------------- -------------
<S> <C> <C> <C>
New York, NY....................... Executive Offices 22,100 Leased(1)
Kings Mountain, NC................. Textile Facility 225,000 Owned
Asheville, NC...................... Textile Facility 175,000 Owned
Mullins, SC........................ Cut and Sew 149,000 Leased(2)
Whiteville, NC..................... Cut and Sew 104,000 Owned
Red Springs, NC.................... Sew 54,000 Owned
Gibson, NC......................... Sew 21,000 Owned
Dillon, SC......................... Distribution 660,000 Owned
Honduras........................... Sew 33,000 Leased(3)
</TABLE>
- ------------------------
(1) The lease for the Company's executive office space expires in 2002.
(2) The lease for this facility (including option periods) can be extended to
2012.
(3) The lease for this facility (including option periods) can be extended to
2003.
The Company also owns a 142,000 square foot manufacturing facility located
in Aynor, South Carolina, that is currently being held for sale. This facility
became excess space after the consolidation of certain operations in connection
with the Company's acquisition of its centralized distribution center.
From fiscal 1991 through fiscal 1996, the Company made aggregate capital
expenditures of approximately $42 million to maintain, modernize and update its
manufacturing facilities. The Company anticipates the level of capital
expenditures to continue at an annual rate of approximately $5.0 million. Recent
capital expenditures have improved the Company's ability to match colors, reduce
energy costs and control product shrinkage at its textile facilities. They also
have enabled the Company to improve its productivity and ability to develop new
products and styles through increased automation at its manufacturing
facilities.
The Company considers its owned and leased facilities and equipment to be in
good condition and suitable and adequate for the Company's current operations.
The Company's ongoing maintenance and improvement of its manufacturing
facilities enable it to accommodate anticipated sales growth.
MANAGEMENT INFORMATION SYSTEMS. The Company has a sophisticated, computer
based data collection and information processing system at each of its domestic
manufacturing facilities. This system is designed to improve piece-work
productivity, automate payroll, control work-in-process and improve supervisor
and management effectiveness by providing immediately accessible feedback
concerning sewing machine operator performance, current production and inventory
information and the location of lagging inventory bundles. In addition, among
other improvements made in connection with its new centralized distribution
facility, the Company installed an in-house radio frequency warehousing system.
The Company currently has plans to implement an advanced order processing,
allocation and customer service system which will provide the Company with
extensive inquiry and reporting capabilities for customer service personnel and
management and user defined allocation and shipping rules and immediate updates
concerning the status of customer orders. The Company believes that the proposed
system will allow it to service its customers more efficiently.
RECENT ACQUISITION
On January 31, 1997, the Company completed the acquisition of Cottontops, a
small marketer and distributor of activewear products which, prior to the
acquisition, supplied finished activewear products to the Company for
redistribution by the Company as well as directly into the retail market. The
aggregate amount of consideration payable in connection with this acquisition
(including the Company's assumption of certain liabilities) totaled $3.5
million, subject to adjustments in certain circumstances.
40
<PAGE>
COMPETITION
The imprinted activewear segment of the apparel market includes a number of
significant competitors and the activewear segment of the industry overall is
extremely competitive. Competition in this activewear segment of the apparel
industry is generally based upon price, quality, service and breadth of product
offerings. In response to market conditions and industry-wide adjustments in
price, the Company reviews and adjusts its product offerings and pricing
structure from time to time. The Company believes that its overall turnaround
time provides a competitive advantage and enables it to seek to continue to
capitalize on its timely responsiveness to its customers' requests. In addition,
the Company focuses on providing its customers with a broad array of branded and
private label niche products at competitive prices on a timely basis. By seeking
to promote and encourage a broader, higher priced product mix to its customers,
the Company believes it can continue to compete effectively in its market
segments.
The Company's principal domestic competitors include three large domestic
manufacturers of activewear, all of which are larger and have greater financial
and other resources than the Company. The Company also faces competition from
foreign manufacturers of activewear who generally have substantially lower labor
costs than domestic manufacturers. Historically, the Company has benefited from
quotas and tariffs imposed by the United States on the importation of apparel.
The Uruguay Round of GATT, which became effective on January 1, 1995, requires a
complete phase-out of all existing quotas over a ten-year period. The phase-out
of such quotas is scheduled to take place in four stages as follows (expressed
in a percentage of total imports): 16% in 1995; 17% in 1999; 18% in 2003; and
49% in 2005. To date, no products manufactured by the Company have been subject
to quota reductions under GATT. The products that will be subject to quota
eliminations in 1999 and 2003 have not yet been selected. In addition to the
phasing-out of the use of quotas, GATT also requires that the United States
reduce tariffs on textile/ apparel imports over the same ten-year period. To
date, the United States has not lowered such tariffs.
Increased foreign competition has caused many domestic apparel manufacturers
to move a portion of their sewing operations offshore to lower costs. The
Company performs a portion of its sewing activities offshore, principally for
basic products which are less time sensitive to take advantage of lower offshore
wage rates. The Company's activewear products do not require a significant
amount of manual labor as compared with certain other items in the apparel
industry. For example, the Company estimates the sewing time required to produce
a dozen T-shirts is approximately 30 minutes, accounting for no more than one-
quarter of such product's overall production costs. For this reason, the Company
believes that its segment is less vulnerable to foreign competition than other
segments of the apparel industry, which tend to be more labor intensive. In
addition, the Company believes that its domestic knitting, bleaching and dyeing
operations will continue to provide it with a competitive advantage which should
help protect the Company from the negative effects of GATT. The Company believes
that imports pose a larger threat to the operations of manufacturers of lower
priced, lower quality, high volume products. The Company believes that its
current strategy of emphasizing higher quality, niche products and promoting a
broader product mix should enable it to compete with imported activewear
products.
EMPLOYEES
As of December 31, 1996, the Company employed a total of 173 full-time
salaried employees and 2,301 full-time and part-time hourly employees. Of the
Company's employees, 2,377 are involved in manufacturing, 48 in marketing and
sales and 49 in finance and administration. Of the Company's 2,377 employees
involved in manufacturing, approximately 611 of such employees are employed at
the Company's textile facilities and 1,766 are employed at the Company's sewing
facilities.
None of the Company's employees are covered by a collective bargaining
agreement. The Company has not experienced any work stoppages and considers its
relations with its employees to be good.
41
<PAGE>
INTELLECTUAL PROPERTY
The Company attempts to register its material trademarks and trade names.
The Company believes that it has developed strong brand awareness among its
targeted customer base and as a result regards its brand names as valuable
assets. The Company has registered or applied for trademark registrations for
ANVIL and COTTON DELUXE (and the COTTON DELUXE design) in the United States and
certain foreign countries.
ENVIRONMENTAL MATTERS
The Company, like other apparel manufacturers, is subject to federal, state
and local environmental and occupational health and safety laws and regulations.
While there can be no assurance that the Company is at all times in complete
compliance with all such requirements, the Company believes that any
noncompliance is unlikely to have a material adverse effect on the Company. The
Company has made, and will continue to make, expenditures to comply with
environmental and occupational health and safety requirements. The Company
currently does not anticipate material capital expenditures for environmental
control equipment in fiscal 1997 or fiscal 1998. As is the case with
manufacturers in general, if a release of hazardous substances occurs on or from
the Company's properties or any associated offsite disposal location, or if
contamination from prior activities is discovered at any of the Company's
properties, the Company may be held liable. While the amount of such liability
could be material, the Company endeavors to conduct its operations in a manner
that reduces such risks.
Prior to the Acquisition, groundwater contamination was discovered at the
Asheville, North Carolina facility. In 1990, Winston Mills, Inc., a subsidiary
of McGregor, entered into an Administrative Order on Consent ("AOC") with the
North Carolina Department of Environment, Health and Natural Resources ("DEHNR")
concerning such contamination. Since that time, McGregor has been conducting
investigation and corrective action under DEHNR oversight and has remained
responsible to the DEHNR with respect to the contamination that is subject to
the AOC. While the total cost of the cleanup at the facility will depend upon
the extent of contamination and the corrective action approved by the DEHNR,
preliminary cleanup cost estimates range from $1.0 to $4.0 million. McGregor
continues to be a party to the Asheville, North Carolina facility's hazardous
waste permit and Culligan, an affiliate of McGregor, has guaranteed McGregor's
obligations under the AOC. McGregor also contractually agreed to fully indemnify
the Company with respect to the contamination as part of the terms of the
Acquisition. This indemnity is guaranteed by Culligan and by Astrum (now known
as Samsonite Corporation) in the event Culligan is unable to perform its
guarantor obligations. The Company could be held responsible for the cleanup of
this contamination if McGregor and Culligan were to become unable to fulfill
their obligations to DEHNR and the Company was not successful in obtaining
indemnification for the clean-up from either McGregor, Culligan or Astrum.
McGregor also agreed to fully indemnify the Company for any costs associated
with certain other environmental matters identified at the time of the
Acquisition. The Company believes that, even if McGregor were unable to fulfill
its indemnification obligations, these other matters would not have a material
adverse effect on the Company. McGregor also agreed to indemnify the Company,
subject to certain limitations, with respect to environmental liabilities that
arise from events that occurred or conditions in existence prior to the
Acquisition. Culligan and Astrum have also guaranteed McGregor's obligations
under these indemnities.
LEGAL PROCEEDINGS
The Company is a party to various litigation matters incidental to the
conduct of it business. The Company does not believe that the outcome of any of
the matters in which it is currently involved will have a material adverse
effect on the financial condition or results of operations of the Company. See
"Environmental Matters."
42
<PAGE>
MANAGEMENT
DIRECTORS, EXECUTIVE OFFICERS AND CERTAIN KEY EMPLOYEES OF ANVIL
The following sets forth certain information with respect to the Directors,
executive officers and certain key employees of Anvil. The Board of Directors of
Holdings is identical to that of Anvil.
<TABLE>
<CAPTION>
NAME AGE (1) POSITION
- ------------------------------------------ ----------- ------------------------------------------------------------
<S> <C> <C>
Bernard Geller............................ 63 Chief Executive Officer, Chairman of the Board and Director
Jacob Hollander........................... 55 Executive Vice President, Chief Administrative Officer,
Secretary, General Counsel and Director
Anthony Corsano........................... 37 Executive Vice President of Sales and Marketing
William H. Turner......................... 49 Executive Vice President of Manufacturing
Pasquale Branchizio....................... 58 Vice President of Finance
Bruce C. Bruckmann........................ 43 Director
Stephen F. Edwards........................ 33 Director
David F. Thomas........................... 47 Director
John D. Weber............................. 33 Director
</TABLE>
- ------------------------
(1) All ages are as of December 31, 1996.
BERNARD GELLER has served as the Chief Executive Officer of Anvil,
President of Holdings and has been a Director of Anvil and Holdings since the
Acquisition. Since the Recapitalization, Mr. Geller has served as Chairman of
the Board of Anvil and Holdings. From 1989 to 1995, Mr. Geller served as
Chairman of the Predecessor. From 1986 to 1989, Mr. Geller served as President
of McGregor's Anvil division, and from 1975 to 1986, as Controller and then
President of the Predecessor. Before joining the Predecessor, Mr. Geller was
with Union Underwear Co., Inc., a subsidiary of Fruit of the Loom, Inc., where
he worked for 14 years, principally as the company's controller.
JACOB HOLLANDER has served as Executive Vice President, Chief
Administrative Officer, Secretary and General Counsel of Anvil and Vice
President, Secretary and General Counsel of Holdings since the Acquisition.
Since the Recapitalization, Mr. Hollander has served as a Director of Anvil and
Holdings. From 1991 to 1995, Mr. Hollander served as Vice President and General
Counsel of Astrum. From 1985 to 1990, Mr. Hollander served as Vice President and
General Counsel of McGregor and Faberge, Incorporated, and from 1987 to 1989,
Mr. Hollander also served as Vice President and General Counsel of Elizabeth
Arden, Inc. During 1990, Mr. Hollander provided legal consulting services to the
Unilever group of companies and to McGregor. Prior to its acquisition by
McGregor, Mr. Hollander was Vice President of Faberge, Incorporated.
ANTHONY CORSANO has served as Executive Vice President of Sales and
Marketing of Anvil since the Acquisition. From 1993 to 1995, Mr. Corsano served
as Vice President of Sales and Marketing of the Predecessor. From 1988 to 1993,
Mr. Corsano served as Vice President--Sales of the Predecessor and from 1985 to
1988 Mr. Corsano served as National Sales Manager of the Predecessor.
WILLIAM H. TURNER has served as Executive Vice President of Manufacturing
of Anvil since the Acquisition. From 1992 to 1995, Mr. Turner served as
Executive Vice President of Manufacturing of the Predecessor. From 1985 to 1992,
Mr. Turner held the position of Vice President of Manufacturing (Cut and Sew) of
the Predecessor and from 1982 to 1985 he was the Predecessor's Plant Manager.
PASQUALE BRANCHIZIO has served as Vice President of Finance of Anvil and
Holdings since the Acquisition. From 1986 until 1995, Mr. Branchizio served as
Vice President of Finance of the Predecessor.
43
<PAGE>
From 1981 to 1986, Mr. Branchizio served as the Controller of the Predecessor.
Prior to that, Mr. Branchizio served as the Predecessor's Senior Accountant.
BRUCE C. BRUCKMANN has served as a Director of Anvil and Holdings since the
Recapitalization. Since 1994, Mr. Bruckmann has served as a principal of BRS.
From 1983 until 1994, Mr. Bruckmann served as an officer and subsequently a
Managing Director of Citicorp Venture Capital, Ltd. ("CVC"). CVC is an affiliate
of 399 Venture. Prior to joining CVC, Mr. Bruckmann was an associate at the New
York law firm of Patterson, Belknap, Webb & Tyler. Mr. Bruckmann is currently a
director of Jitney Jungles Stores of America, Inc., Mohawk Industries, Inc.,
AmeriSource Distribution Corporation, Chromcraft Revington Corporation and CORT
Business Services Corporation and a director of several private companies.
STEPHEN F. EDWARDS has served as a Director of Anvil and Holdings since the
Recapitalization. Since 1994, Mr. Edwards has served as a principal of BRS. From
1993 until 1994, Mr. Edwards served as an officer of CVC. From 1988 through
1991, he was an associate of CVC. Prior to joining CVC, Mr. Edwards worked with
Citicorp/Citibank in various corporate finance positions. Mr. Edwards is
currently a director of several private companies.
DAVID F. THOMAS has served as a Director of Anvil and Holdings since the
Recapitalization. Mr. Thomas has been President of 399 Venture since December
1994. In addition, Mr. Thomas has been a Managing Director of CVC for over five
years. Mr. Thomas is currently a director of Furnishings International, Inc.,
Galey & Lord, Inc. and a number of private companies.
JOHN D. WEBER has served as a Director of Anvil and Holdings since the
Recapitalization. Since 1994, Mr. Weber has been a Vice President at CVC and a
Vice President at 399 Venture. From 1992 until 1994, Mr. Weber worked at Putnam
Investments. Mr. Weber is currently a director of a number of private companies.
Directors are elected at the annual meeting of stockholders and each
director so elected holds office until the next annual meeting of stockholders
and until a successor is duly elected and qualified. There are no family
relations between any of the Directors or executive officers of Anvil and
Holdings.
Prior to the Recapitalization, the Boards of Holdings and Anvil were
controlled by Vestar. Following the Recapitalization, pursuant to the
Stockholders Agreement (as defined), 399 Venture, BRS and the Management
Investors have agreed to vote their shares of Common Stock so that each of the
Boards of Holdings and Anvil have up to eight members, comprised of up to three
members of each Board designated by 399 Venture, three members of each Board
designated by BRS and two members of each Board designated by the Management
Investors. The Directors that are designated by BRS are Messrs. Bruckmann and
Edwards, the Directors that are designated by 399 Venture are Messrs. Thomas and
Weber, and the Directors that are designated by the Management Investors are
Messrs. Geller and Hollander. See "Security Ownership of Certain Beneficial
Owners and Management--Stockholders Agreement."
COMPENSATION OF DIRECTORS
Directors of Anvil and Holdings will not receive compensation for services
rendered in that capacity, but will be reimbursed for any out-of-pocket expenses
incurred by them in connection with their travel to and attendance of board
meetings and committees thereof.
COMPENSATION OF EXECUTIVE OFFICERS
Compensation of all executive officers of the Company is fixed by the Board
and no executive officer is prevented from receiving compensation by virtue of
the fact that he is also a Director. The following table sets forth information
for the periods presented concerning the compensation for the Company's
44
<PAGE>
Chief Executive Officer and each of the three other most highly compensated
executive officers of the Company who were serving as executive officers of the
Company at the end of fiscal 1996 (collectively, the "Named Executive Officers")
for services rendered in all capacities to the Company during such period.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-----------------------------------------------------
NAME AND FISCAL OTHER ANNUAL ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS(1) COMPENSATION(2) COMPENSATION(3)
- -------------------------------------------------- ----------- ---------- ---------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
Bernard Geller.................................... 1996 $ 396,000 $ 373,535(4) $ 15,924 $ 14,004
Chief Executive Officer
Jacob Hollander................................... 1996 275,000 135,000 9,651 7,897
Executive Vice President, Chief Administrative
Officer, Secretary and General Counsel
Anthony Corsano................................... 1996 270,096 115,000 12,301 7,868
Executive Vice President of Sales and Marketing
William H. Turner................................. 1996 179,519 170,000 4,353 7,491
Executive Vice President of Manufacturing
</TABLE>
- ------------------------
(1) The Company provides bonus compensation based on the Company's operating
performance. See "--Bonus Plan."
(2) None of the Named Executive Officers received any Other Annual Compensation
in an amount in excess of either $50,000 or 10% of such Named Executive
Officer's salary and bonus.
(3) All Other Compensation includes: (i) matching contributions under the
Company's Savings Plan relating to before-tax contributions made by each of
the Named Executive Officers in the following amounts: Mr. Geller--$6,750,
Mr. Hollander--$6,750, Mr. Corsano--$6,750, and Mr. Turner-- $6,750; (ii)
insurance premiums paid by the Company with respect to term life insurance
for the benefit of the Named Executive Officers in the following amounts:
Mr. Geller--$1,651, Mr. Hollander--$1,147, Mr. Corsano--$1,118, and Mr.
Turner--$741; and (iii) the amount of premiums paid by the Company under a
life insurance policy designed to fund certain retirement benefits for Mr.
Geller--$5,603.
(4) Includes a bonus payment of $100,535 received by Mr. Geller pursuant to an
agreement entered into at the time of the Acquisition.
45
<PAGE>
OPTIONS EXERCISED IN LAST FISCAL YEAR/FISCAL YEAR-END OPTION VALUES
The following table sets forth information concerning options exercised
during the Company's last fiscal year and outstanding options for the Old Common
Stock as of the end of fiscal 1996 held by the Named Executive Officers. There
were no stock options granted by Holdings in fiscal 1996. All of the outstanding
options became fully vested pursuant to the Recapitalization Agreement. (See
"Old Stock Option Plan").
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE- MONEY OPTIONS AT
OPTIONS AT FISCAL FISCAL YEAR-END
YEAR-END --------------------------
SHARES ACQUIRED ----------------------- UNEXERCISABLE/EXERCISABLE
NAME ON EXERCISE VALUE REALIZED (1) UNEXERCISABLE/EXERCISABLE (2)
- ------------------------ --------------- ----------------------- ----------------------- --------------------------
<S> <C> <C> <C> <C>
Bernard Geller.......... 37,500 0 225,000/37,500 $ 2,218,500/369,750
Jacob Hollander......... 12,500 0 75,000/12,500 739,500/123,250
Anthony Corsano......... 12,500 0 75,000/12,500 739,500/123,250
William H. Turner....... 12,500 0 75,000/12,500 739,500/123,250
</TABLE>
- ------------------------
(1) Share of Old Common Stock acquired upon the exercise of such options were
not disposed of by such Named Executive Officers.
(2) Assumes a fair market value of the Old Common Stock at February 1, 1997
equal to $10.50 per share.
EMPLOYMENT AGREEMENTS
As of January 31, 1995, the Company entered into employment agreements with
Messrs. Geller, Hollander, Corsano and Turner (collectively, the "Employment
Agreements"). The Employment Agreements are for an initial term of four years
with automatic one year extensions unless terminated as set forth in the
Employment Agreements. The Employment Agreements provide for Messrs. Geller,
Hollander, Corsano and Turner (collectively, the "Executives") to serve in the
same or similar capacity with the Company as they did with the Predecessor. The
Employment Agreements provide for an initial annual base salary of $330,000,
$250,000, $235,000 and $150,000 for Messrs. Geller, Hollander, Corsano and
Turner, respectively. The Employment Agreements also provide each Executive with
customary fringe benefits and vacation periods as well as entitle the Executive
to participate in all of the Company's employee pension plans, welfare benefit
plans, tax deferred savings plans, or other welfare or retirement benefits, the
Bonus Plan and the Stock Option Plan. Each Executive's employment may be
terminated by the Company at any time with or without Cause (as defined below).
If such Executive is terminated by the Company without Cause or such Executive
resigns for Good Reason (as defined below), other than in connection with a
Strategic Sale (as defined below), the Executive will be entitled to receive his
base salary through the end of the term then in effect (the "Severance Period"),
plus any bonus that would have been payable to the Executive for the bonus year
in which the termination takes place. In addition, the Executive is entitled to
continue to participate in the Company's benefit plans through the end of the
fiscal year in which such termination occurs. Moreover, subject to certain
restrictions and at the discretion of the Company's Chief Executive Officer, if
the Executive is not engaged in regular employment at the end of the Severance
Period, the Company may make additional monthly payments to the Executive for up
to two years. If the Executive's employment terminates for any other reason,
such Executive will be entitled to only his base salary and benefits through the
end of the calendar month in which termination occurs, excluding bonuses.
Each of the Executives is subject to confidentiality, non-competition and
non-solicitation provisions. The non-competition provision provides that the
Executive is not to own, manage, control, participate in, consult with, render
services for, or in any manner engage in, any business that competes anywhere in
the world with the businesses of the Company and is enforceable for the term of
the Employment Agreement
46
<PAGE>
or during any period of time the Executive is receiving payments thereunder
unless the Company terminates the Executive without Cause or the Executive
resigns for Good Reason, in which case the provision expires upon such
termination.
"Cause" is defined in the Employment Agreements to mean: (i) a material
breach of the Employment Agreement by the Executive which is not cured within
thirty days of receipt of written notice from the Board; (ii) the Executive's
willful and repeated failure to comply with the lawful directives of the Board
or his superior officers(s) consistent with the terms of the Employment
Agreement; (iii) gross negligence or willful misconduct in the performance of
the Executive's duties under the Employment Agreement which results in material
injury to Holdings, Anvil or their subsidiaries; (iv) fraud committed by the
Executive with respect to Holdings, Anvil or their subsidiaries or (v)
indictment for a felony or a crime involving moral turpitude conviction of which
would materially injure relationships with customers, suppliers or employees or
otherwise cause material injury to the Company or its subsidiaries. "Good
Reason" is defined in the Employment Agreements to mean: (i) a material breach
of the Employment Agreement which is not cured within thirty days after the
Board's receipt of written notice from the Executive of non-compliance; (ii) the
assignment to the Executive of duties inconsistent with the Executive's
position, duties or responsibilities as in effect after the date of execution of
the Employment Agreements; (iii) the relocation by the Company of its executive
officers to a location outside a thirty mile radius around its current location
or (iv) upon a sale of the Company to a corporation or other legal entity that
is, or is part of a group of such entities, engaged in operating a material
business in competition with, or similar or related to the business of the
Company at the time of such a sale (a "Strategic Sale"). The Executive must give
a written notice of termination of his election to terminate employment for Good
Reason.
BONUS PLAN
The Company maintains an Executive Bonus Plan (the "Bonus Plan") which
provides annual incentive bonuses to certain management employees of the
Company. The Bonus Plan provides for an aggregate annual bonus pool equal to
4.0% of the Company's income before provision for income taxes (subject to
adjustment by the Board to exclude certain non-recurring items). The Chief
Executive Officer of the Company determines the allocation of the bonus pool
among the participants of the Bonus Plan.
In addition, the Management Investors received the Management Bonus
aggregating $500,000 pursuant to the Recapitalization Agreement.
OLD STOCK OPTION PLAN
At the time of the Acquisition, the Company adopted its 1995 Stock Option
Plan (the "Old Stock Option Plan"), which authorized the granting of options
relating to up to 600,000 shares of Old Common Stock. Pursuant to the Old Stock
Option Plan, the Management Investors were granted options in the following
aggregate amounts: Mr. Geller - 300,000; and Messrs. Hollander, Corsano and
Turner - 100,000 each. The exercise price of the options granted under the Old
Stock Option Plan was $0.64 per share. The Old Stock Option Plan provided that,
so long as a Management Investor is an employee of the Company, certain of such
options shall be subject to time vesting and certain of such options shall be
subject to time and performance vesting. In general, the options granted under
the Old Stock Option Plan would vest and become exercisable upon the sale of the
Company or other event where Vestar received a 35% internal rate of return on
its investment in Holdings. All of the outstanding options became fully vested
pursuant to the Recapitalization Agreement.
NEW STOCK OPTION PLAN
Holdings has a stock option plan which authorizes the granting of options
for approximately 5.0% of the Common Stock on a fully diluted basis (the "New
Stock Option Plan"). The options under the New Stock Option Plan are granted to
certain members of management, which include the Named Executive
47
<PAGE>
Officers, and are subject to time and performance vesting provisions. The
exercise price of such options is the fair market price for the Common Stock as
of March 14, 1997.
PHANTOM EQUITY PLAN
At the time of the Acquisition, Holdings and certain members of the
Company's management entered into the Phantom Equity Plan (the "Phantom Equity
Plan"). Pursuant to the Phantom Equity Plan, such management members were
entitled to receive a cash payment equal to 5.0% of any excess of the aggregate
sale price over $100.0 million in the event of a sale of the Company. Pursuant
to the Recapitalization Agreement such management members received $5.3 million
as final payment under the Phantom Equity Plan and the Phantom Equity Plan was
terminated.
SAVINGS PLAN
At the time of the Acquisition, the Company adopted its Predecessor's
savings plan (the "Savings Plan"), which is qualified under Sections 401(a) and
401(k) of the Internal Revenue Code. Under the Savings Plan, eligible employees
may contribute up to 16% of their annual compensation, subject to certain
limitations. The Company matches 100% of the first 3.0% contributed by an
eligible employee and 50% of the next 3.0% contributed.
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<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
All of Anvil's issued and outstanding capital stock is owned by Holdings.
The following table sets forth certain information with respect to the
beneficial ownership of the Common Stock as of May 1, 1997 by (i) any person or
group who beneficially owns more than five percent of any class of Holdings'
voting securities, (ii) each Named Executive Officer and Director and (iii) all
Directors and executive officers of Holdings as a group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED (1)
---------------------------------- PERCENTAGE
CLASS A COMMON CLASS B COMMON OF VOTING POWER (1)
---------------- ---------------- ---------------------
<S> <C> <C> <C>
Bruckmann, Rosser, Sherrill & Co., L.P. (2)............... %
126 East 56th Street 117,645 1,339,769 37.3
New York, New York 10022
399 Venture Partners, Inc. (3)............................ 97,751 1,113,214 31.0
399 Park Avenue, 14th Floor
New York, New York 10043
CCT Partners II, L.P. (4)................................. 17,250 196,449 5.5
399 Park Avenue, 14th Floor
New York, New York 10043
EXECUTIVE OFFICERS AND DIRECTORS:
Bernard Geller............................................ 22,516 248,447 6.9
Jacob Hollander........................................... 7,505 82,816 2.3
Anthony Corsano........................................... 7,505 82,816 2.3
William H. Turner......................................... 7,505 82,816 2.3
Bruce C. Bruckmann (5).................................... 120,065 1,367,325 38.1
Stephen F. Edwards (5).................................... 117,645 1,339,769 37.3
David F. Thomas (6)....................................... 100,946 1,149,594 32.0
John D. Weber (6)......................................... 98,171 1,118,000 31.1
Directors and executive officers
as a group (8 persons) (7).............................. 266,462 3,018,599 84.1
</TABLE>
- ------------------------
(1) Calculated pursuant to Rule 13d-3(d) under the Exchange Act. The Class B
Common is the only voting security of Holdings and entitles the holder
thereof to one vote per share. The Class A Common is nonvoting and is
entitled to the Class A Preference upon any distribution by Holdings.
(2) Excludes shares held individually by Mr. Bruckmann and another individual,
each of whom are principals of Bruckmann, Rosser, Sherrill & Co., L.P. ("BRS
& Co.").
(3) Excludes shares held individually by Messrs. Thomas and Weber and by certain
individuals (and affiliates thereof), each of whom are employed by 399
Venture Partners, Inc. ("399 Venture Partners").
(4) CCT Partners II, L.P. is a Delaware limited partnership, the limited
partners of which are certain employees of 399 Venture Partners.
(5) Includes shares held by BRS & Co. Messrs. Bruckmann and Edwards each
disclaim beneficial ownership of such shares. The address for such persons
is c/o BRS & Co., 126 East 56th Street, New York, New York 10022.
(6) Includes shares held by 399 Venture Partners. Messrs. Thomas and Weber each
disclaim beneficial ownership of such shares. The address for such persons
is c/o 399 Venture Partners, 399 Park Avenue, 14th floor, New York, New York
10043.
(7) Includes: (i) shares held by BRS & Co., which may be deemed to be owned
beneficially by Messrs. Bruckmann and Edwards, and (ii) shares held by 399
Venture Partners, which may be deemed to be owned beneficially by Messrs.
Thomas and Weber. Excluding the shares beneficially owned by BRS & Co. and
399 Venture Partners, the Directors and executive officers as a group
beneficially own
49
<PAGE>
51,065 shares of Class A Common and 565,616 shares of Class B Common, which
represents approximately 15.8% of the voting power of the Common Stock.
STOCKHOLDERS AGREEMENT
Pursuant to the Recapitalization, Holdings, 399 Venture, BRS and the
Management Investors entered into a Stockholders Agreement (the "Stockholders
Agreement"). The Stockholders Agreement provides: (i) that all parties thereto
will vote their shares of Common Stock so as to cause the Boards of Directors of
Anvil and Holdings each to consist of eight members, three of whom shall be
selected by 399 Venture, three of whom shall be selected by BRS and two of whom
shall be selected by the Management Investors; (ii) for certain restrictions on
transfer of the Common Stock including, but not limited to, provisions providing
that Holdings and certain holders of Common Stock will have limited rights of
first offer and certain limited participation rights in any proposed third party
sale of Common Stock by 399 Venture or BRS; (iii) that if Holdings authorizes
the issuance or sale of any Common Stock (other than as a dividend on the
outstanding Common Stock) to 399 Venture or BRS, Holdings will first offer to
sell to each of the other parties thereto a percentage of the shares of such
issuance, equal to the percentage of Common Stock held, respectively, by each of
them at the time of such issuance and (iv) that upon approval by the Board of
Directors of Holdings (or, under certain circumstances, 399 Venture or BRS) of a
sale of all or substantially all of the consolidated assets of Holdings or
substantially all the outstanding capital stock of Holdings (whether by merger,
consolidation or otherwise), each party thereto will consent to and raise no
objections against such sale and sell its Common Stock in such sale.
REGISTRATION RIGHTS AGREEMENT
Pursuant to the Recapitalization, 399 Venture, BRS, the Management Investors
and the Initial Purchaser entered into a Registration Rights Agreement (the
"Equity Registration Rights Agreement") which inures to the benefit of the
transferees of the Class B Common initially issued in connection with the
Initial Units Offering, subject to the limitations set forth therein. The Equity
Registration Rights Agreement provides that, subject to certain conditions, 399
Venture and BRS each have the right to exercise a limited number of long-form
and shelf demand registrations, and an unlimited number of short-form demand
registrations under the Securities Act of their respective shares of Common
Stock. The Equity Registration Rights Agreement also provides for piggyback
registration rights, allowing the parties thereto to include their Common Stock
in any registration filed by Holdings other than pursuant to a registration
statement on Form S-8 or S-4 or any similar form or in connection with a
registration the primary purpose of which is to register debt securities (i.e.,
in connection with a so-called "equity kicker"). However, if the piggyback
registration is an underwritten primary registration on behalf of Holdings, and
the managing underwriters advise Holdings that in their opinion the aggregate
number of shares of Common Stock which the participants elect to include in such
offering exceeds the number which can be sold in such offering without adversely
affecting the marketability of such offering, the number of such shares sold in
such offering shall be allocated according to the following priority: (i) first,
the securities Holdings proposes to sell; (ii) second, the Common Stock
requested to be included in such registration, pro rata among the holders of
such Common Stock on the basis of the number of shares of Common Stock owned by
each such holder; and (iii) third, other securities requested to be included in
such registration.
In addition, the parties thereto (other than certain individual investors
and the Unit holders and successors) are, subject to certain conditions,
prohibited from selling their shares of Common Stock within 180 days after the
effectiveness of any demand registration or piggyback registration (except as
part of such underwritten registration) unless the underwriters managing the
registered offering otherwise agree.
50
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
MANAGEMENT AGREEMENT
In connection with the Acquisition, Anvil, Holdings, Anvil (Czech), Inc., a
wholly owned subsidiary of Anvil ("ACI"), affiliates of Vestar and 399 Venture
and Culligan entered into a Management Agreement (the "Old Management
Agreement"), whereby the affiliates of Vestar and 399 Venture and Culligan
agreed to provide certain advisory and consulting services to Holdings, Anvil
and ACI. In exchange for these services, affiliates of Vestar and 399 Venture
and Culligan were to receive an annual fee of $200,000, $120,000 and $180,000,
respectively. In fiscal 1996, the Company made payments in the aggregate amount
of $292,000, and $180,000 under the Old Management Agreement to the affiliate of
Vestar and Culligan, respectively. The Old Management Agreement was terminated
pursuant to the Recapitalization Agreement.
PROMISSORY NOTES
In connection with their purchase of Holdings' securities under the Stock
Purchase Agreement, Messrs. Geller and Corsano each borrowed $125,000 from
Holdings under promissory notes, each dated as of January 30, 1995 (the
"Promissory Notes"). The Promissory Notes accrued interest at a rate of 7.19%
per annum and would have matured on January 30, 2002. The largest aggregate
amount of indebtedness outstanding to any individual during the last fiscal year
was $133,988. The Promissory Notes were repaid pursuant to the Recapitalization
Agreement.
SUBORDINATED PROMISSORY NOTE
In connection with the Acquisition, Holdings issued the Subordinated Note in
the principal amount of $7.5 million to Culligan. Interest on the Subordinated
Note was paid by Holdings semi-annually at a rate of 10% per year if paid in
cash, or 12% if deferred by Holdings. Holdings has deferred the payment of
interest on the Subordinated Note since the date of its issuance. The principal
amount would have been due January 30, 2005 unless, (i) Holdings or any holders
of Common Stock sells or issues the Common Stock and such sale or issuance
results in (x) a person owning more than 50% of Holdings' Common Stock
outstanding or (y) a person possessing the power to elect a majority of the
board of directors of Holdings or (ii) there is sale of at least substantially
all of Holdings' or its subsidiaries' assets. The Subordinated Note and all
unaccrued and unpaid interest thereon was repaid by Holdings using a portion of
the net proceeds from the Initial Offerings.
TRANSACTION FEES
In connection with the Acquisition, affiliates of Vestar and 399 Venture
received transaction fees of $1.6 million and $.9 million, respectively, for
investment banking services rendered to the Company. In connection with the
Recapitalization, affiliates of BRS, 399 Venture and the Management Investors
received transaction fees of approximately $1.27 million, $1.27 million and
$0.47 million, respectively, in the form of cash and dividends.
BENEFITS OF RECAPITALIZATION TO CERTAIN EXISTING STOCKHOLDERS AND NAMED
EXECUTIVE OFFICERS
In connection with the Recapitalization, Holdings redeemed all of its Old
Preferred Stock and repurchased all of its Old Common Stock (other than the
Retained Shares). Set forth below for those stockholders who, immediately prior
to the Recapitalization, owned more than five percent of Holdings'
51
<PAGE>
capital stock and the Named Executive Officers of the Company is the aggregate
amount paid to such stockholder or Named Executive Officer in connection with
such redemption and repurchase:
<TABLE>
<CAPTION>
NAME
- ----------------------------------------------------------------- AGGREGATE AMOUNT
RECEIVED
-------------------
(IN MILLIONS)
<S> <C>
Vestar........................................................... $ 47.9
Culligan......................................................... 41.1
399 Venture...................................................... 7.2
Bernard Geller................................................... 8.8
Jacob Hollander.................................................. 2.9
Anthony Corsano.................................................. 2.9
William H. Turner................................................ 2.9
</TABLE>
The Named Executive Officers received an aggregate of approximately $5.8
million pursuant to the Phantom Equity Plan and the Management Bonus. In
addition, Mr. Geller's options to purchase 262,500 shares of Old Common Stock
and each of Messrs. Hollander's, Corsano's and Turner's options to purchase
87,500 shares of Old Common Stock issued pursuant to the Old Stock Option Plan
vested and became exercisable at $0.64 per share pursuant to the terms of the
Recapitalization Agreement.
52
<PAGE>
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
The Old Senior Notes were originally sold by Anvil on March 14, 1997 to the
Initial Purchasers pursuant to the Purchase Agreement. The Initial Purchasers
subsequently resold the Old Senior Notes to qualified institutional buyers in
reliance on Rule 144A under the Securities Act and to a limited number of
institutional accredited investors in reliance on Rule 501(a) under the
Securities Act. As a condition to the Purchase Agreement, Anvil, Holdings and
Cottontops entered into the Registration Rights Agreement with the Initial
Purchasers pursuant to which each has agreed, for the benefits of the holders of
the Old Senior Notes, at Anvil's, Holdings' and Cottontops' cost, to use their
best efforts to (i) file the Exchange Offer Registration Statement within 60
days after the date of the original issue of the Old Senior Notes with the
Commission with respect to the Exchange Offer for the New Senior Notes; (ii) use
their best efforts to cause the Exchange Offer Registration Statement to be
declared effective under the Securities Act within 120 days after the date of
the original issuance of the Old Senior Notes and (iii) unless the Exchange
Offer would not be permitted by applicable law or Commission policy, commence
the Exchange Offer and use their best efforts to issue the New Senior Notes in
exchange for the Old Senior Notes on or prior to 150 days after the date of the
original issuance of the Old Senior Notes. Upon the Exchange Offer Registration
Statement being declared effective, Anvil will offer the New Senior Notes in
exchange for surrender of the Old Senior Notes. Anvil will keep the Exchange
Offer open for not less than 20 business days (or longer if required by
applicable law) after the date on which notice of the Exchange Offer is mailed
to the holders of the Old Senior Notes. For each Old Senior Note surrendered to
Anvil pursuant to the Exchange Offer, the holder of such Old Senior Note will
receive a New Senior Note having a principal amount equal to that of the
surrendered Old Senior Note. Interest on each Old Senior Note will accrue from
the last interest payment date on which interest was paid on the Old Senior Note
surrendered in exchange therefor or, if no interest has been paid on such Old
Senior Note, from the date of its original issue. Interest on each New Senior
Note will accrue from the date of its original issue.
Under existing interpretations of the staff of the Commission contained in
several no-action letters to third parties, the New Senior Notes will, in
general, be freely tradeable after the Exchange Offer without further
registration under the Securities Act. However, any purchaser of Old Senior
Notes who is an "affiliate" of Anvil or who intends to participate in the
Exchange Offer for the purpose of distributing the New Senior Notes (i) will not
be able to rely on the interpretation of the staff of the Commission, (ii) will
not be able to tender its Old Senior Notes in the Exchange Offer and (iii) must
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any sale or transfer of the Old Senior Notes,
unless such sale or transfer is made pursuant to an exemption from such
requirements.
As contemplated by these no-action letters and the Registration Rights
Agreement, each holder accepting the Exchange Offer is required to represent to
Anvil in the Letter of Transmittal that (i) the New Senior Notes are to be
acquired by the holder or the person receiving such New Senior Notes, whether or
not such person is the holder, in the ordinary course of business, (ii) the
holder or any such other person (other than a broker-dealer referred to in the
next sentence) is not engaging and does not intend to engage, in distribution of
the New Senior Notes, (iii) the holder or any such other person has no
arrangement or understanding with any person to participate in the distribution
of the New Senior Notes (iv) neither the holder nor any such other person is an
"affiliate" of Anvil within the meaning of Rule 405 under the Securities Act,
and (v) the holder or any such other person acknowledges that if such holder or
any other person participates in the Exchange Offer for the purpose of
distributing the New Senior Notes it must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale of the New Senior Notes and cannot rely on those no-action letters. As
indicated above, each Participating Broker-Dealer that receives a New Senior
Note for its own account in exchange for Old Senior Notes must acknowledge that
it (i) acquired the Old Senior Notes for its own account as a result of
market-making activities or other trading activities, (ii) has not entered into
any
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<PAGE>
arrangement or understanding with Anvil or any "affiliate" of Anvil (within the
meaning of Rule 405 under the Securities Act) to distribute the New Senior Notes
to be received in the Exchange Offer and (iii) will deliver a prospectus meeting
the requirements of the Securities Act in connection with any resale of such New
Senior Notes. For a description of the procedures for resales by Participating
Broker-Dealers, see "Plan of Distribution."
In the event that (i) changes in the law or the applicable interpretations
of the staff of the Commission do not permit or require Anvil to effect such an
Exchange Offer, or (ii) if any holder of Transfer Restricted Securities (as
defined therein) notifies Anvil within 10 business days following the
consummation of the Exchange Offer that such holder (a) is prohibit from law or
Commission policy from participating in the Exchange Offer, (b) may not resell
the New Senior Notes to the public without delivering a prospectus and the
Prospectus contained in the Exchange Offer Registration Statement is not
appropriate or available for such resales or (c) is a broker-dealer and holds
Old Senior Notes acquired directly from Anvil or one of its affiliates, then
Anvil will (x) file the Shelf Registration Statement covering resales of the Old
Senior Notes, (1) if pursuant to clause (i) above, within the earlier of 45 days
after Anvil determines it is not required to file the Exchange Offer
Registration Statement or 75 days after the original issue of the Old Senior
Notes or, (2) if pursuant to clause (ii) above, within 45 days after Anvil
receives notice, (y) use its reasonable best efforts to cause the Shelf
Registration Statement to be declared effective under the Securities Act, (1) if
pursuant to clause (i) above, within 120 days after Anvil becomes obligated to
file the Shelf Registration Statement or, (2) if pursuant to clause (ii) above,
within 120 days after Anvil receives notice and (z) use its reasonable best
efforts to keep effective the Shelf Registration Statement until the earlier of
three years after its effective date. Anvil will, in the event of the filing of
the Shelf Registration Statement, provide to each applicable holder of the Old
Senior Notes copies of the prospectus which is a part of the Shelf Registration
Statement, notify each such holder when the Shelf Registration Statement has
become effective and take certain other actions as are required to permit
unrestricted resale of the Old Senior Notes. A holder of the Old Senior Notes
that sells such Old Senior Notes pursuant to the Shelf Registration Statement
generally will be required to be named as a selling security holder in the
related prospectus and to deliver a prospectus to purchasers, will be subject to
certain of the civil liability provisions under the Securities Act in connection
with such sales and will be bound by the provisions of the Registration Rights
Agreement which are applicable to such a holder (including certain
indemnification obligations). In addition, each holder of the Old Senior Notes
will be required to deliver information to be used in connection with the Shelf
Registration Statement and to provide comments on the Shelf Registration
Statement within the time periods set forth in the Registration Rights Agreement
in order to have their Old Senior Notes included in the Shelf Registration
Statement and to benefit from the provisions set forth in the following
paragraph.
If (a) Anvil fails to file any of the Registration Statements required by
the Registration Rights Agreement on or before the date specified for such
filing, (b) any of such Registration Statements is not declared effective by the
Commission on or prior to the date specified for such effectiveness, or (c)
Anvil fails to consummate the Exchange Offer within 30 days of the date
specified for such effectiveness with respect to the Exchange Offer Registration
Statement, or (d) the Shelf Registration statement or the Exchange Offer
Registration Statement is declared effective but thereafter ceases to be
effective or usable in connection with resales of Transfer Restricted Securities
during the period specified in the Registration Rights Agreement (each such
event referred to in clauses (a) through (d) above a "Registration Default"),
the sole remedy available to holders of the Old Senior Notes will be the
immediate assessment of liquidated damages as follows: during the first 90-day
period immediately following the occurrence of such Registration Default, in a
amount equal to $.05 per week per $1,000 principal amount of the Transfer
Restricted Securities (as defined therein) held by any holder of Transfer
Restricted Securities (a "Holder") for so long as the Registration Default
continues. The amount of liquidated damages payable to each Holder shall
increase by an additional $.05 per week per $1,000 principal amount of Transfer
Restricted Securities held by such Holder for each subsequent 90-day period, up
to a maximum amount of liquidated damages of $.30 per week per $1,000 principal
amount of Transfer Restricted Securities held by such
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<PAGE>
Holder. All accrued liquidated damages shall be paid by Anvil and Holdings on
each Interest Payment Date (as defined) (i) to the Global Note Holder by wire
transfer or immediately available funds and (ii) to Holders of Certificated
Securities by wire transfer to the accounts specified, by them or by mailing
checks to their registered addresses if no such accounts have been specified as
provided in the Senior Indenture. Following the cure of all Registration
Defaults relating to any particular Transfer Restricted Securities, the accrual
of liquidated damages with respect to such Transfer Restricted Securities will
cease.
Holders of Old Senior Notes will be required to make certain representations
to Anvil (as described in the Registration Rights Agreement) in order to
participate in the Exchange Offer and will be required to deliver information to
be used in connection with the Shelf Registration Statement and to provide
comments on the Shelf Registration Statement within the time periods set forth
in the Registration Rights Agreement in order to have their Old Senior Notes
included in the Shelf Registration Statement and benefit from the provisions
regarding Additional Investors set forth above.
The summary herein of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified in
its entirety by, all the provisions of the Registration Rights Agreement, a copy
of which is filed as an exhibit to the Exchange Offer Registration Statement of
which this Prospectus is a part.
Following the consummation of the Exchange Offer, holders of the Old Senior
Notes who were eligible to participate in the Exchange Offer but who did not
tender their Old Senior Notes will not have any further registration rights and
such Old Senior Notes will continue to be subject to certain restrictions on
transfer. Accordingly, the liquidity of the market for such Old Senior 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, Anvil will accept any and all Old Senior Notes
validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on
the Expiration Date. Anvil will issue $1,000 principal amount of New Senior
Notes in exchange for each $1,000 principal amount of outstanding Old Senior
Notes accepted in the Exchange Offer. Holders may tender some or all of their
Old Senior Notes pursuant to the Exchange Offer. However, Old Senior Notes may
be tendered only in integral multiples of $1,000.
The form and terms of the New Senior Notes are the same as the form and
terms of the Old Senior Notes except that (i) the New Senior Notes bear a Series
B designation and a different CUSIP Number from the Old Senior Notes, (ii) the
New Senior Notes have been registered under the Securities Act and hence will
not bear legends restricting the transfer thereof and (iii) the holders of the
New Senior Notes will not be entitled to certain rights under the Registration
Rights Agreement, including the provisions providing for liquidated damages in
certain circumstances relating to the timing of the Exchange Offer, all of which
rights will terminate when the Exchange Offer is terminated. The New Senior
Notes will evidence the same debt as the Old Senior Notes and will be entitled
to the benefits of the Senior Indenture.
As of the date of this Prospectus, $130,000,000 aggregate principal amount
of Old Senior Notes were outstanding. Anvil has fixed the close of business on
, 1997 as the record date for the Exchange Offer for purposes of
determining the person to whom this Prospectus and the Letter of Transmittal
will be mailed initially.
Holders of Old Senior Notes do not have any appraisal or dissenters' rights
under the General Corporation Law of Delaware or the Senior Indenture in
connection with the Exchange Offer. Anvil intends to conduct the Exchange Offer
in accordance with the applicable requirements of the Exchange Act and the rules
and regulations of the Commission thereunder.
Anvil shall be deemed to have accepted validly tendered Old Senior Notes
when, as and if Anvil has given oral or written notice thereof to the Exchange
Agent. The Exchange Agent will act as agent for the tendering holders for the
purpose of receiving the New Senior Notes from Anvil.
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If any tendered Old Senior Notes are not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth herein or
otherwise, the certificates for any such unaccepted Old Senior Notes will be
returned, without expense, to the tendering holder thereof as promptly as
practicable after the Expiration Date.
Holders who tender Old Senior Notes in the Exchange Offer will not be
required to pay brokerage commissions or fees or, subject to the instructions in
the letter of Transmittal, transfer taxes with respect to the exchange of Old
Senior Notes pursuant to the Exchange Offer. Anvil will pay all charges and
expenses, other than transfer taxes in certain circumstances, in connection with
the exchange fees and expenses.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
, 1997, unless Anvil, 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, Anvil will notify the Exchange Agent
of any extension by oral or written notice and will mail to the registered
holders an announcement thereof, each prior to 9:00 a.m., New York City time, on
the next business day after the previously scheduled expiration date.
Anvil reserves the right, in its sole discretion, (i) to delay accepting any
Old Senior Notes, to extend the Exchange Offer or to terminate the Exchange
Offer if any of the conditions set forth below under "Conditions" shall not have
been satisfied, by giving oral or written notice of such delay, extension or
termination to the Exchange Agent or (ii) 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 oral or written notice
thereof to the registered holders.
INTEREST ON THE NEW SENIOR NOTES
The New Senior Notes will bear interest from their date of issuance. Holders
of Old Senior Notes that are accepted for exchange will receive, in cash,
accrued interest thereon to, but not including, the date of issuance of the New
Senior Notes. Such interest will be paid with the first interest payment on the
new Senior Notes on September 15, 1997. Interest on the Old Senior Notes
accepted for exchange will cease to accrue upon issuance of the New Senior
Notes.
Interest on the New Senior Notes is payable semi-annually on each March 15
and September 15, commencing on September 15, 1997.
PROCEDURES FOR TENDERING
Only a holder of Old Senior Notes may tender such Old Senior 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 or transmit an
Agent's Message in connection with a book-entry transfer, and mail or otherwise
deliver such Letter of Transmittal or such facsimile, or Agent's Message,
together with the Old Senior Notes and any other required documents, to the
Exchange Agent prior to 5:00 p.m., New York City time, on the Expiration Date.
To be tendered effectively, the Old Senior Notes, Letter of Transmittal or an
Agent's Message and other required documents must be completed and received by
the Exchange Agent at the address set forth below under "Exchange Agent" prior
to 5:00 p.m., New York City time, on the Expiration Date. Delivery of the Old
Senior Notes may be made by book-entry transfer in accordance with the
procedures described below. Confirmation of such book-entry transfer must be
received by the Exchange agent prior to the Expiration Date.
The term "Agent's Message" means a message, transmitted by a book-entry
transfer facility to, and received by, the Exchange Agent forming a part of a
confirmation of a book-entry, which states that such
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book-entry transfer facility has received an express acknowledgment from the
participant in such book-entry transfer facility tendering the Old Senior Notes
that such participant has received and agrees: (i) to participate in the
Automated Tender Option Program ("ATOP"); (ii) to be bound by the terms of the
Letter of Transmittal; and (iii) that Anvil may enforce such agreement against
such participant.
By executing the Letter of Transmittal or Agent's Message each holder will
make to Anvil the representations set forth above in the third paragraph under
the heading "--Purpose and Effect of the Exchange Offer."
The tender by a holder and the acceptance thereof by Anvil will constitute
agreement between such holder and Anvil in accordance with the terms and subject
to the conditions set forth herein and in the Letter of Transmittal or Agent's
Message.
THE METHOD OF DELIVERY OF OLD SENIOR NOTES AND THE LETTER OF TRANSMITTAL OR
AGENT'S MESSAGE AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE
ELECTION AND SOLE RISK OF THE HOLDER. AS AN ALTERNATIVE TO DELIVERY BY MAIL,
HOLDERS MAY WISH TO CONSIDER OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT
BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR OLD SENIOR NOTES SHOULD
BE SENT TO ANVIL. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS,
COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS
FOR SUCH HOLDERS.
Any beneficial owner whose Old Senior 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 and/or Book-Entry Transfer Facility Participant 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 Senior Notes tendered pursuant thereto are tendered (i) by a registered
holder who has not completed the box entitled (Special Registration
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 firm of the
Medallion System (an "Eligible Institution").
If the Letter of Transmittal is signed by a person other than the registered
holder of any Old Senior Notes listed therein, such Old Senior 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 Senior
Notes with the signature thereon guaranteed by an Eligible Institution.
If the Letter of Transmittal or any Old Senior Notes or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
offices of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and evidence
satisfactory to Anvil of their authority to so act must be submitted with the
Letter of Transmittal.
Anvil understands that the Exchange Agent will make a request promptly after
the date of this Prospectus to establish accounts with respect to the Old Senior
Notes at the Book-Entry Transfer Facility (as defined in the Letter of
Transmittal) for the purpose of facilitating the Exchange Offer, and subject to
the establishment thereof, any financial institution that is a participant in
the Book-Entry Transfer Facility's system may make book-entry delivery of Old
Senior Notes by causing such Book-Entry Transfer Facility to transfer such Old
Senior Notes into the Exchange Agent's account with respect to the old Senior
Notes in accordance with the Book-Entry Transfer Facility's procedures for such
transfer. Although delivery of the Old Senior Notes may be effected through
book-entry transfer into the Exchange Agent's
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account at the Book-Entry Transfer Facility, unless an Agent's Message is
received by the Exchange Agent, in compliance with ATOP, an appropriate Letter
of Transmittal properly completed and duly executed with any required signature
guarantee and all other required documents must in each case be transmitted to
and received or confirmed by the Exchange Agent at its address set forth below
on or prior to the Expiration Date, or, if the guaranteed delivery procedures
described below are complied with, within the time period provided under such
procedures. Delivery of documents to the Book-Entry Transfer Facility does not
constitute delivery to the Exchange Agent.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Old Senior Notes and withdrawal of tendered Old
Senior Notes will be determined by Anvil in its sole discretion, which
determination will be final and binding. Anvil reserves the absolute right to
reject any and all Old Senior Notes not properly tendered or any Old Senior
Notes Anvil's acceptance of which would, in the opinion of counsel for Anvil, be
unlawful. Anvil also reserves the right in its sole discretion to waive any
defects, irregularities or conditions of tender as to particular Old Senior
Notes. Anvil'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 Senior Notes must be cured within such time as
Anvil shall determine. Although Anvil intends to notify holders of defects or
irregularities with respect to tenders of Old Senior Notes, neither Anvil, the
Exchange Agent nor any other person shall incur any liability for failure to
give such notification. Tenders of Old Senior Notes will not be deemed to have
been made until such defects or irregularities have been cured or waived. Any
Old Senior Notes received by the Exchange Agent that are not properly 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 holders, unless otherwise
provided in the Letter of Transmittal, as soon as practicable following the
Expiration Date.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Old Senior Notes and (i) whose Old Senior
Notes are not immediately available, (ii) who cannot deliver their Old Senior
Notes, the Letter of Transmittal or any other required documents to the Exchange
Agent or (iii) who cannot complete the procedures for book-entry transfer, prior
to the Expiration Date, may effect a tender if:
(a) the tender is made through an Eligible Institution,
(b) 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 Senior Notes and the principal amount of Old Senior
Notes tendered, stating that the tender is being made thereby and
guaranteeing that, within five New York Stock Exchange trading days after
the Expiration Date, the Letter of Transmittal (or facsimile thereof)
together with the certificate(s) representing the Old Senior Notes (or a
confirmation of book-entry transfer of such Notes into the Exchange
Agent's account at the Book-Entry Transfer Facility), 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 (of facsimile
thereof), as well as the certificate(s) representing all tendered Old
Senior Notes in proper form for transfer (or a confirmation of book-entry
transfer of such Old Senior Notes into the Exchange Agent's account at
the Book-Entry Transfer Facility), and all other documents required by
the Letter of Transmittal are received by the Exchange Agent upon five
New York Stock Exchange trading days after the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to holders who wish to tender their Old Senior Notes according to the
guaranteed delivery procedures set forth above.
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WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Old Senior Notes may be
withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration
Date.
To withdraw a tender of Old Senior Notes in the Exchange Offer, a telegram,
telex, letter or facsimile transmission notice of withdrawal must be received by
the Exchange Agent at its address set forth herein prior to 5:00 p.m., New York
City time, on the Expiration Date. Any such notice of withdrawal must (i)
specify the name of the person having deposited the Old Senior Notes to be
withdrawn (the "Depositor"); (ii) identify the Old Senior Notes to be withdrawn
(including the certificate number(s) and principal amount of such Old Senior
Notes, or, in the case of Old Senior Notes transferred by book-entry transfer,
the name and number of the account at the Book-Entry Transfer Facility to be
credited); (iii) be signed by the holder in the same manner as the original
signature on the Letter of Transmittal by which such Old Senior 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
Senior Notes register the transfer of such Old Senior Notes into the name of the
person withdrawing the tender and (iv) specify the name in which any such Old
Senior Notes are to be registered, if different from that of the Depositor. All
questions as to the validity, form and eligibility (including time of receipt)
of such notices will be determined by Anvil, whose determination shall be final
and binding on all parties. Any Old Senior Notes so withdrawn will be deemed not
to have been validly tendered for purposes of the Exchange Offer and no New
Senior Notes will be issued with respect thereto unless the Old Senior Notes so
withdrawn are validly retendered. Any Old Senior Notes which have been tendered
but which are not accepted for exchange will be returned to the holder thereof
without cost to such holder as soon as practicable after withdrawal, rejection
of tender or termination of the Exchange Offer. Properly withdrawn Old Senior
Notes may be retendered by following one of the procedures described above under
"--Procedures for Tendering" at any time prior to the Expiration Date.
CONDITIONS
Notwithstanding any other term of the Exchange Offer, Anvil shall not be
required to accept for exchange, or exchange New Senior Notes for, any Old
Senior Notes, and may terminate or amend the Exchange Offer as provided herein
before the acceptance of such Old Senior Notes if:
(a) any action or proceeding is instituted or threatened in any court or by
or before any governmental agency with respect to the Exchange Offer
which, in the reasonable judgment of Anvil, might materially impair the
ability of Anvil to proceed with the Exchange Offer or any material
adverse development has occurred in any existing action or proceeding
with respect to Anvil, Holdings or any of their subsidiaries; or
(b) any law, statute, rule, regulation or interpretation by the staff of the
Commission is proposed, adopted or enacted, which, in the reasonable
judgment of Anvil, might materially impair the ability of Anvil to
proceed with the Exchange Offer or materially impair the contemplated
benefits of the Exchange Offer to Anvil; or
(c) any governmental approval has not been obtained, which approval Anvil
shall, in its reasonable discretion, deem necessary for the consummation
of the Exchange Offer as contemplated hereby.
If Anvil determines in its reasonable discretion that any of the conditions
are not satisfied, Anvil may (i) refuse to accept any Old Senior Notes and
return all tendered Old Senior Notes to the tendering holder, (iii) extend the
Exchange Offer and retain all Old Senior Notes tendered prior to the expiration
of the Exchange Offer, subject, however, to the rights of holders to withdraw
such Old Senior Notes (see "-- Withdrawal of Tenders") or (iii) waive such
unsatisfied conditions with respect to the Exchange Offer and accept all
properly tendered Old Senior Notes which have not been withdrawn.
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EXCHANGE AGENT
United States Trust Company of New York has been appointed as Exchange Agent
for the Exchange Offer. Questions and requests for assistance, requests for
additional copies of this Prospectus or of the Letter of Transmittal and
requests for Notice of Guaranteed Delivery should be directed to the Exchange
Agent addressed as follows:
<TABLE>
<S> <C>
BY MAIL: BY OVERNIGHT COURIER AND BY HAND AFTER 4:30
United States Trust Company of New York P.M.:
P.O. Box 843 Cooper Station United States Trust Company of New York
New York, New York 10276 770 Broadway - 13th Floor
Attention: Corporate Trust Operations New York, New York 10003
(registered or certified mail recommended) Attention: Corporate Trust Operations
BY HAND BEFORE 4:30 P.M.: FACSIMILE TRANSMISSION: (212) 420-6152
United States Trust Company of New York CONFIRM BY TELEPHONE: (800) 548-6565
111 Broadway
New York, New York 10006
Attention: Lower Level Corporate Trust Window
</TABLE>
DELIVERY TO AN ADDRESS OTHER THAN SET FORTH ABOVE WILL NOT CONSTITUTE A
VALID DELIVERY.
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by Anvil. The principal
solicitation is being made by mail; however, additional solicitation may be made
by telegraph, telecopy, telephone or in person by officers and regular employees
of Anvil and its affiliates.
Anvil has not retained any dealer-manager in connection with the Exchange
Offer and will not make any payments to brokers, dealers, or others soliciting
acceptances of the Exchange Offer. Anvil, 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 to be incurred in connection with the Exchange Offer will
be paid by Anvil. Such expenses include fees and expenses of the Exchange Agent
and Trustee, accounting and legal fees and printing costs, among others.
ACCOUNTING TREATMENT
The New Senior Notes will be recorded at the same carrying value as the Old
Senior Notes, which is face value, as reflected in Anvil's accounting records on
the date of exchange. Accordingly, no gain or loss for accounting purposes will
be recognized by Anvil. The expenses of the Exchange Offer will be expensed over
the term of the New Senior Notes.
CONSEQUENCES OF FAILURE TO EXCHANGE
The Old Senior Notes that are not exchanged for New Senior Notes pursuant to
the Exchange Offer will remain restricted securities. Accordingly, such Old
Senior Notes may be resold only (i) to Anvil (upon redemption thereof or
otherwise), (ii) so long as the Old Senior Notes are eligible for resale
pursuant to Rule 144A, to a person inside the United States whom the seller
reasonably believes is a qualified institutional buyer within the meaning of
Rule 144A under the Securities Act in a transaction meeting the requirements of
Rule 144A, in accordance with Rule 144 under the Securities Act, or pursuant to
another exemption from the registration requirements of the Securities Act (and
based upon an opinion of counsel reasonably acceptable to Anvil), (iii) outside
the United States to a foreign person in a transaction meeting the requirements
of Rule 904 under the Securities Act, or (iv) pursuant to an effective
registration
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statement under the Securities Act, in each case in accordance with any
applicable securities laws of any state of the United States.
RESALE OF THE NEW SENIOR NOTES
With respect to resales of New Senior Notes, based on interpretations by the
staff of the Commission set forth in no-action letters issued to third parties,
Anvil believes that a holder or other person who receives New Senior Notes,
whether or not such person is the holder (other than a person that is an
"affiliate" of Anvil within the meaning of Rule 405 under the Securities Act)
who receives New Senior Notes in exchange for Old Senior 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 New Senior Notes, will be allowed to resell the New Senior
Notes to the public without further registration under the Securities Act and
without delivering to the purchasers of the New Senior Notes a prospectus that
satisfies the requirements of Section 10 of the Securities Act. However, if any
holder acquires New Senior Notes in the Exchange Offer for the purpose of
distributing or participating in a distribution of the New Senior Notes, such
holder cannot rely on the position of the staff of the Commission enunciated in
such 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 any resale transaction, unless an exemption from registration is
otherwise available. Further, each Participating Broker-Dealer that receives New
Senior Notes for its own account in exchange for Old Senior Notes, where such
Old Senior Notes were acquired by such Participating Broker-Dealer as a result
of market-making activities or other trading activities, must acknowledge that
it will deliver a Prospectus in connection with any resale of such New Senior
Notes.
As contemplated by these no-action letters and the Registration Rights
Agreement, each holder accepting the Exchange Offer is required to represent to
Anvil in the Letter of Transmittal that (i) the New Senior Notes are to be
acquired by the holder or the person receiving such New Senior Notes, whether or
not such person is the holder, in the ordinary course of business, (ii) the
holder or any such other person (other than a broker-dealer referred to in the
next sentence) is not engaging and does not intend to engage, in the
distribution of the New Senior Notes, (iii) the holder or any such other person
has no arrangement or understanding with any person to participate in the
distribution of the New Senior Notes, (iv) neither the holder nor any such other
person is an "affiliate" of Anvil within the meaning of Rule 405 under the
Securities act, and (v) the holder or any such other person acknowledges that if
such holder or other person participates in the Exchange Offer for the purpose
of distributing the New Senior Notes it must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale of the New Senior Notes and cannot rely on those no-action letters. As
indicated above, each Participating Broker-Dealer that receives a New Senior
Note for its own account in exchange for Old Senior Notes must acknowledge that
it will deliver a Prospectus in connection with any resale of such New Senior
Notes. For a description of the procedures for such resales by Participating
Broker-Dealers, see "Plan of Distribution."
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DESCRIPTION OF SECURITIES
SENIOR NOTES
GENERAL
The New Senior Notes will be issued under the Senior Indenture. The terms of
the New Senior Notes include those stated in the Senior Indenture and those made
part of the Senior Indenture by reference to the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act") as in effect on the date of the Senior
Indenture. The form and terms of the New Senior Notes are the same as the form
and terms of the Old Senior Notes (which they replace) except that (i) the New
Senior Notes bear a Series B designation, (ii) the New Senior Notes have been
registered under the Securities Act and, therefore, will not bear legends
restricting the transfer thereof, and (iii) the holders of New Senior Notes will
not be entitled to certain rights under the Registration Rights Agreement,
including the provisions providing for liquidated damages in certain
circumstances relating to the timing of the Exchange Offer, which rights will
terminate when the Exchange offer is consummated. The New Senior Notes are
subject to all such terms, and holders of the New Senior Notes are referred to
the Senior Indenture and the Trust Indenture Act for a statement of them. The
following is a summary of the material terms and provisions of the New Senior
Notes. This summary does not purport to be a complete description of the New
Senior Notes and is subject to the detailed provisions of, and qualified in its
entirety by reference to, the New Senior Notes and the Senior Indenture
(including the definitions contained therein). A copy of the form of Senior
Indenture may be obtained from Anvil by any holder or prospective investor upon
request. Definitions relating to certain capitalized terms are set forth under
"--Certain Definitions" and throughout this description. Capitalized terms that
are used but not otherwise defined herein have the meanings assigned to them in
the Senior Indenture and such definitions are incorporated herein by reference.
The Old Senior Notes and the New Senior Notes are sometimes referred to herein
collectively as the "Senior Notes." Any descriptions of the Senior Notes
presented in the future tense shall refer to the New Senior Notes, where
appropriate.
The Senior Notes will be senior unsecured obligations of Anvil and will rank
senior in right of payment to all subordinated Indebtedness of Anvil and PARI
PASSU in right of payment with all existing and future senior Indebtedness
(including borrowings under the New Credit Agreement). The Senior Notes will be
effectively subordinated to all existing and future secured Indebtedness of
Anvil, including Indebtedness pursuant to the New Credit Agreement, to the
extent of the value of the assets securing such Indebtedness and the Senior
Notes will be structurally subordinated to Indebtedness of Anvil's Subsidiaries.
As of February 1, 1997, on a pro forma basis after giving effect to the
Recapitalization, Anvil would have had approximately $162.0 million (including
the discount on the Senior Notes) of senior Indebtedness (including the Senior
Notes), approximately $32.0 million of which would have been secured
indebtedness. In addition, on a pro forma basis after giving effect to the
Recapitalization, Anvil would have had approximately $23.0 million of
availability, subject to an asset based formula, under the New Credit Agreement
and all borrowings thereunder are secured.
Restrictions in the Senior Indenture on the ability of Anvil and its
Restricted Subsidiaries to incur additional Indebtedness, to make Asset Sales,
to enter into transactions with Affiliates and to enter into mergers,
consolidations or sales of all or substantially all of its assets, may make more
difficult or discourage a takeover of Anvil or Holdings, whether favored or
opposed by the management of Anvil and Holdings. While such restrictions cover a
variety of arrangements which have traditionally been used to effect highly
leveraged transactions, the Senior Indenture may not afford holders of Senior
Notes protection in all circumstances from the adverse aspects of a highly
leveraged transaction, reorganization, restructuring, merger or similar
transaction.
As of the date hereof, Anvil has four Subsidiaries, all of which constitute
Restricted Subsidiaries for the purposes of the Senior Indenture. Under certain
circumstances, Anvil will be able to designate future Subsidiaries as
Unrestricted Subsidiaries. Unrestricted Subsidiaries will not be subject to many
of the restrictive covenants set forth in the Senior Indenture.
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PRINCIPAL, MATURITY AND INTEREST
The Senior Notes will be limited in aggregate principal amount to $130.0
million and will mature on March 15, 2007. Interest on the Senior Notes will
accrue at the rate of 10 7/8% per annum and will be payable semi-annually in
arrears on March 15 and September 15, commencing on September 15, 1997, to
Holders of record on the immediately preceding March 1 and September 1. Interest
on the Senior Notes will accrue from the most recent date to which interest has
been paid or, if no interest has been paid, from the date of original issuance.
Interest will be computed on the basis of a 360-day year comprised of twelve
30-day months. Principal, premium, if any, interest and Liquidated Damages on
the Senior Notes will be payable at the office or agency of Anvil maintained for
such purpose within the City and State of New York or, at the option of Anvil,
payment of interest and Liquidated Damages may be made by check mailed to the
Holders of the Senior Notes at their respective addresses set forth in the
register of Holders of Senior Notes; PROVIDED that all payments with respect to
Global Senior Notes and Certificated Securities the Holders of whom have given
wire transfer instructions to Anvil will be required to be made by wire transfer
of immediately available funds to the accounts specified by the Holders thereof.
Until otherwise designated by Anvil, Anvil's office or agency will be the office
of the Trustee maintained for such purpose. Anvil may change such office or
agency without prior notice to Holders of the Senior Notes, and Holdings or any
of its Subsidiaries may act as Paying Agent or Registrar. The Senior Notes will
be issued in denominations of $1,000 and integral multiples thereof.
HOLDINGS' GUARANTEE
Holdings has irrevocably and unconditionally guarantee on a senior unsecured
basis the performance and punctual payment when due, whether at stated maturity,
by acceleration or otherwise, of all obligations of Anvil under the Senior
Indenture and the Senior Notes, whether for principal of or interest on or
Liquidated Damages, if any, on the Senior Notes, expenses, indemnification or
otherwise (all such obligations guaranteed by Holdings being herein called the
"Guaranteed Obligations") with respect to Holdings. Holdings has no material
assets other than the common stock of Anvil, and, accordingly, its ability to
perform under its Guarantee will be dependent on the financial condition and net
worth of Anvil. Holdings covenants in the Senior Indenture to engage in no
businesses other than holding the capital stock of Anvil and other Persons
engaged in the same, similar, ancillary, complementary or related business to
the business in which Anvil is engaged and other activities incidental thereto,
including financing activities for the benefit of Anvil and such Persons.
The Guarantee is a continuing guarantee and shall (a) remain in full force
and effect until payment in full of all the Guaranteed Obligations, (b) be
binding upon Holdings and its successors, transferees and assigns and (c) inure
to the benefit of and be enforceable by the Trustee, the Holders and their
successors, transferees and assigns.
SUBSIDIARY GUARANTEES
Anvil's payment obligations under the Senior Notes will be guaranteed
pursuant to future guarantees (collectively, the "Subsidiary Guarantees") on a
senior basis by any Subsidiaries that become guarantors (collectively, the
"Subsidiary Guarantors") under the covenant entitled "--Additional Subsidiary
Guarantees." The obligations of each Subsidiary Guarantor under its Subsidiary
Guarantee will be limited so as not to constitute a fraudulent conveyance under
applicable law. Cottontops is the sole Subsidiary Guarantor.
The Senior Indenture provides that no Subsidiary Guarantor may consolidate
with or merge with or into (whether or not such Subsidiary Guarantor is the
surviving Person), another Person or entity whether or not affiliated with such
Subsidiary Guarantor unless (i) subject to the provisions of the following
paragraph, the Person formed by or surviving any such consolidation or merger
(if other than such Subsidiary Guarantor) assumes all the obligations of such
Subsidiary Guarantor pursuant to a supplemental indenture in form and substance
reasonably satisfactory to the Trustee under the Senior Indenture;
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(ii) immediately after giving effect to such transaction, no Default or Event of
Default exists; (iii) such Subsidiary Guarantor, or any Person formed by or
surviving any such consolidation or merger, (A) would have Consolidated Net
Worth (immediately after giving effect to such transaction) equal to or greater
than the Consolidated Net Worth of such Subsidiary Guarantor immediately
preceding the transaction and (B) would be permitted by virtue of Anvil's pro
forma Fixed Charge Coverage Ratio to incur, immediately after giving effect to
such transaction, at least $1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test set forth in the covenant described in
"--Incurrence of Indebtedness and Issuance of Preferred Stock"; and (iv) such
Subsidiary Guarantor delivers to the Trustee an Officers' Certificate and an
Opinion of Counsel addressed to the Trustee with respect to the foregoing
matters; PROVIDED, HOWEVER, that the foregoing will not apply to the merger of
two or more Subsidiary Guarantors with and into each other or the merger of any
Subsidiary Guarantor into Anvil.
The Senior Indenture provides that in the event of a sale or other
disposition of all of the assets of any Subsidiary Guarantor, by way of merger,
consolidation or otherwise, or a sale or other disposition of all of the capital
stock of any Subsidiary Guarantor, by way of merger, consolidation or otherwise,
then such Subsidiary Guarantor (in the event of a sale or other disposition of
all of the capital stock of such Subsidiary Guarantor) or the corporation
acquiring the property (in the event of a sale or other disposition of all of
the assets of such Subsidiary Guarantor) will be released and relieved of any
obligations under its Subsidiary Guarantee; provided that the Net Proceeds of
such sale or other disposition are applied in accordance with the applicable
provisions of the Senior Indenture. See "--Repurchase at the Option of
Holders--Asset Sales."
OPTIONAL REDEMPTION
Except as set forth below, the Senior Notes will not be redeemable at
Anvil's option prior to March 15, 2002. Thereafter, the Senior Notes will be
subject to redemption for cash at the option of Anvil, in whole or in part, upon
not less than 30 nor more than 60 days' notice to each holder of Senior Notes to
be redeemed, at the following redemption prices (expressed as percentages of
principal amount thereof) if redeemed during the 12-month period beginning on
March 15 of each of the years indicated below, in each case together with any
accrued and unpaid interest and Liquidated Damages thereon to the applicable
redemption date:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---------------------------------------------------------------------------------- -----------
<S> <C>
2002.............................................................................. 105.438%
2003.............................................................................. 103.625%
2004.............................................................................. 101.813%
2005 and thereafter............................................................... 100.000%
</TABLE>
Notwithstanding the foregoing, at any time on or before March 15, 2000,
Anvil may (but will not have the obligation to) redeem for cash up to 40% of the
original aggregate principal amount of the Senior Notes at a redemption price of
110% of the principal amount thereof, in each case plus any accrued and unpaid
interest and Liquidated Damages thereon to the redemption date, with the net
proceeds of a Public Equity Offering; PROVIDED that at least 60% of the original
aggregate principal amount of the Senior Notes remains outstanding immediately
after the occurrence of such redemption; and PROVIDED, FURTHER, that such
redemption will occur within 60 days of the date of the closing of such Public
Equity Offering.
If less than all of the Senior Notes are to be redeemed at any time,
selection of Senior Notes for redemption will be made by the Trustee in
compliance with the requirements of the principal national securities exchange,
if any, on which the Senior Notes are listed, or, if the Senior Notes are not so
listed, on a pro rata basis, by lot or by such method as the Trustee will deem
fair and appropriate; PROVIDED that no Senior Notes of $1,000 or less will be
redeemed in part. Notices of redemption will be mailed by first class mail at
least 30 but not more than 60 days before the redemption date to each Holder of
Senior Notes to be redeemed at its registered address. If any Senior Note is to
be redeemed in part only, the notice of
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redemption that relates to such Senior Note will state the portion of the
principal amount thereof to be redeemed. A new Senior Note in principal amount
equal to the unredeemed portion thereof will be issued in the name of the Holder
thereof upon cancellation of the original Note. On and after the redemption
date, interest will cease to accrue on Senior Notes or portions of them called
for redemption unless Anvil defaults in the payment thereof.
MANDATORY REDEMPTION
Except as set forth below under "--Repurchase at the Option of Holders,"
Anvil is not required to make any mandatory redemption, purchase or sinking fund
payments with respect to the Senior Notes prior to the maturity date.
REPURCHASE AT THE OPTION OF HOLDERS
CHANGE OF CONTROL
The Senior Indenture provides that upon the occurrence of a Change of
Control, each Holder of Senior Notes will have the right to require Anvil to
repurchase all or any part (equal to $1,000 or an integral multiple thereof) of
such Holder's Senior Notes pursuant to the offer described below (the "Change of
Control Offer") at an offer price in cash equal to 101% of the aggregate
principal amount thereof plus accrued and unpaid interest and Liquidated Damages
thereon to the date of purchase (the "Change of Control Payment"). Within 30
days following any Change of Control, Anvil will mail a notice to each Holder
describing the transaction or transactions that constitute the Change of Control
and offering to repurchase Senior Notes pursuant to the procedures required by
the Senior Indenture and described in such notice. Anvil will comply with the
requirements of Rule 14e-1 under the Exchange Act and any other securities laws
and regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of the Senior Notes as a result of
a Change of Control.
The Change of Control Offer will remain open for a period of 20 Business
Days following its commencement and no longer, except to the extent that a
longer period is required by applicable law (the "Change of Control Offer
Period"). No later than five Business Days after the termination of the Offer
Period (the "Change of Control Purchase Date"), Anvil will purchase all Senior
Notes validly tendered and not properly withdrawn pursuant to the Change of
Control Offer. Payment for any Senior Notes so purchased will be made in the
same manner as interest payments are made on the Senior Notes.
If the Change of Control Purchase Date is on or after an interest record
date and on or before the related interest payment date, any accrued and unpaid
interest and Liquidated Damages will be paid to the Person in whose name a
Senior Note is registered at the close of business on such record date, and no
additional interest will be payable to Holders who tender Senior Notes pursuant
to the Change of Control Offer.
On the Change of Control Purchase Date, Anvil will, to the extent lawful,
(1) accept for payment all Senior Notes or portions thereof properly tendered
pursuant to the Change of Control Offer, (2) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all Senior Notes or
portions thereof so tendered and (3) deliver or cause to be delivered to the
Trustee the Senior Notes so accepted together with an Officers' Certificate
stating the aggregate principal amount of Senior Notes or portions thereof being
purchased by Anvil. The Paying Agent will promptly mail to each Holder of Senior
Notes so tendered the Change of Control Payment for such Senior Notes and the
Trustee will promptly authenticate and mail (or cause to be transferred by book
entry) to each Holder a new Senior Note equal in principal amount to any
unpurchased portion of the Senior Notes surrendered, if any; provided that each
such new Senior Note will be in a principal amount of $1,000 or an integral
multiple thereof. Anvil will publicly announce the results of the Change of
Control Offer on the Change of Control Purchase Date.
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Except as described above, the Senior Indenture does not contain provisions
that permit the Holders of Senior Notes to require Anvil to redeem the Senior
Notes in the event of a takeover, recapitalization or similar restructuring,
including an issuer recapitalization or similar transaction with management.
Consequently, the Change of Control provisions will not afford any protection in
a highly leveraged transaction, including such a transaction initiated by Anvil,
management of Anvil or an Affiliate of Anvil, if such transaction does not
result in a Change of Control. In addition, the existence of the Holder's right
to require Anvil to repurchase such Holder's Senior Notes upon the occurrence of
a Change of Control may or may not deter a third party from seeking to acquire
Anvil or Holdings in a transaction that would constitute a Change of Control.
Anvil's ability to repurchase Senior Notes pursuant to a Change of Control
Offer may be limited by a number of factors. The New Credit Agreement provides
that certain change of control events with respect to Holdings and/or Anvil
would constitute a default thereunder permitting the lending parties thereto to
accelerate the Indebtedness thereunder. In addition, certain events that may
obligate Anvil to offer to repay all outstanding obligations under the New
Credit Agreement may not constitute a Change of Control under the Senior
Indenture. However, Anvil may not have sufficient resources to repay
Indebtedness under the New Credit Agreement and Anvil may not have sufficient
resources to repurchase tendered Senior Notes. Furthermore, any future credit
agreements or other agreements relating to senior Indebtedness to which Anvil
becomes a party may contain similar restrictions and provisions. In the event a
Change of Control occurs at a time when Anvil is directly or indirectly
prohibited from purchasing Senior Notes, Anvil could seek the consent of its
lenders to the purchase of Senior Notes or could attempt to refinance the
borrowings that contain such prohibition. If Anvil does not obtain such a
consent or repay such borrowings, the purchase of Senior Notes will remain
prohibited. The failure by Anvil to purchase tendered Senior Notes would
constitute a breach of the Senior Indenture which would, in turn, constitute a
default under the New Credit Agreement and could lead to the acceleration of the
indebtedness thereunder. In any such event, the security granted in respect of
the New Credit Agreement could result in the Holders of the Senior Notes
receiving less ratably than other creditors of Anvil.
In addition, the terms of the Senior Preferred Stock and Exchange Debentures
of Holdings include provisions similar to those contained in the Senior Notes
enabling holders thereof to require Holdings to repurchase all or any part of
such securities under circumstances constituting a Change of Control. However,
Holdings and Anvil may not have sufficient resources to repurchase tendered
shares of Senior Preferred Stock and/or Exchange Debentures and any such failure
may constitute a default under the terms of the New Credit Agreement, the Senior
Notes, the Senior Indenture and the Certificate of Designation or the Exchange
Debenture Indenture. Again, in any such event, the security granted in respect
of the New Credit Agreement could result in the Holders of the Senior Notes
receiving less ratably than other creditors of Anvil.
The definition of Change of Control includes a phrase relating to the sale,
lease or transfer of "all or substantially all" of the assets of Anvil and its
Restricted Subsidiaries, taken as a whole. Although there is a developing body
of case law interpreting the phrase "substantially all," there is no precise
definition of the phrase under applicable law. Accordingly, the ability of a
Holder of Senior Notes to require Anvil to repurchase such Senior Notes as a
result of a sale, lease or transfer of less than all of the assets of Anvil and
its Restricted Subsidiaries taken as a whole to another Person or group may be
uncertain.
ASSET SALES
The Senior Indenture provides that Anvil will not, and will not permit any
of its Restricted Subsidiaries to, engage in an Asset Sale in excess of $1.0
million unless (i) Anvil (or the Restricted Subsidiary, as the case may be)
receives consideration at the time of such Asset Sale at least equal to the fair
market value, and in the case of a lease of assets, a lease providing for rent
and other conditions which are no less favorable to Anvil (or the Restricted
Subsidiary, as the case may be) in any material respect than the then prevailing
market conditions (evidenced in each case by a resolution of the Board of
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Directors of such entity set forth in an Officers' Certificate delivered to the
Trustee) of the assets or Equity Interests sold or otherwise disposed of, and
(ii) at least 75% (100% in the case of lease payments) of the consideration
therefor received by Anvil or such Restricted Subsidiary is in the form of cash
or Cash Equivalents; provided that the amount of (x) any liabilities (as shown
on Anvil's or such Restricted Subsidiary's most recent balance sheet or in the
notes thereto, excluding contingent liabilities and trade payables), of Anvil or
any Restricted Subsidiary (other than liabilities that are by their terms
subordinated to the Senior Notes, or any guarantee thereof) that are assumed by
the transferee of any such assets and (y) any notes or other obligations
received by Anvil or any such Restricted Subsidiary from such transferee that
are promptly, but in no event more than 30 days after receipt, converted by
Anvil or such Subsidiary into cash (to the extent of the cash received), will be
deemed to be cash for purposes of this provision.
Within 365 days after the receipt of any Net Proceeds from an Asset Sale,
Anvil may apply such Net Proceeds (a) to reduce permanently long-term
Indebtedness of a Restricted Subsidiary, (b) to reduce permanently Indebtedness
(and, in the case of revolving Indebtedness, to reduce permanently the
commitments) under the New Credit Agreement, or (c) to an investment in another
business, the making of a capital expenditure or the acquisition of other
tangible assets, in each case, in the same or a similar line of business as
Anvil was engaged in on the date of the Senior Indenture. Any Net Proceeds from
Asset Sales that are not applied or invested as provided in the preceding
sentence of this paragraph will be deemed to constitute "Excess Proceeds." On
the earlier of (i) the 366th day after an Asset Sale or (ii) such date as the
Board of Anvil or the Restricted Subsidiary determines not to apply the Net
Proceeds relating to such Asset Sale in the manner set forth in (a), (b) or (c),
if the aggregate amount of Excess Proceeds exceeds $5.0 million, Anvil will be
required to make an offer to all Holders of Senior Notes (an "Asset Sale Offer")
to purchase the maximum principal amount of Senior Notes that may be purchased
out of the Excess Proceeds, at an offer price in cash in an amount equal to 100%
of the principal amount thereof plus accrued and unpaid interest and Liquidated
Damages thereon to the date of purchase, in accordance with the procedures set
forth in the Senior Indenture. To the extent that the aggregate amount of Senior
Notes tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds,
Anvil may use any remaining Excess Proceeds for general corporate purposes. If
the aggregate principal amount of Senior Notes surrendered by Holders thereof
exceeds the amount of Excess Proceeds, the Trustee shall select the Senior Notes
to be purchased on a pro rata basis. Upon completion of such Asset Sale Offer,
the amount of Excess Proceeds shall be reset at zero.
The Asset Sale Offer will remain open for a period of 20 Business Days
following its commencement and no longer, except to the extent that a longer
period is required by applicable law (the "Asset Sale Offer Period"). No later
than five Business Days after the termination of the Asset Sale Offer Period
(the "Asset Sale Purchase Date"), Anvil will purchase the principal amount of
Senior Notes required to be purchased pursuant to this covenant (the "Asset Sale
Offer Amount") or, if less than the Asset Sale Offer Amount has been tendered,
all Senior Notes tendered in response to the Asset Sale Offer. Payment for any
Senior Notes so purchased will be made in the same manner as interest payments
are made on the Senior Notes.
If the Asset Sale Purchase Date is on or after an interest record date and
on or before the related interest payment date, any accrued and unpaid interest
and Liquidated Damages will be paid to the Person in whose name a Note is
registered at the close of business on such record date, and no additional
interest will be payable to Holders who tender Senior Notes pursuant to the
Asset Sale Offer.
On or before the Asset Sale Purchase Date, Anvil will, to the extent lawful,
accept for payment, on a pro rata basis to the extent necessary, the Asset Sale
Offer Amount of Senior Notes or portions thereof tendered pursuant to the Asset
Sale Offer, or if less than the Asset Sale Offer Amount has been tendered, all
Senior Notes tendered, and will deliver to the Trustee an Officers' Certificate
stating that such Senior Notes or portions thereof were accepted for payment by
Anvil in accordance with the terms of this covenant. Anvil, the Depositary or
the Paying Agent, as the case may be, will promptly (but in any case not later
than five days after the Asset Sale Purchase Date) mail or deliver to each
tendering Holder an amount equal to the purchase price of the Senior Notes
tendered by such Holder and accepted by Anvil for
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purchase, and Anvil will promptly issue a new Senior Note, and the Trustee, upon
delivery of an Officers' Certificate from Anvil will authenticate and mail or
deliver such new Senior Note to such Holder, in a principal amount equal to any
unpurchased portion of the Senior Note surrendered. Any Senior Note not so
accepted will be promptly mailed or delivered by Anvil to the Holder thereof.
Anvil will publicly announce the results of the Asset Sale Offer on the Asset
Sale Purchase Date.
Anvil will comply with the requirements of Rule 14e-1 under the Exchange Act
and any other securities laws and regulations thereunder to the extent such laws
and regulations are applicable in connection with the repurchase of the Senior
Notes pursuant to any Asset Sale Offer.
If Anvil is required to make an Asset Sale Offer and Holdings has exchanged
its Senior Preferred Stock for Exchange Debentures, the Exchange Debenture
Indenture under which the Exchange Debentures are issued may require Holdings to
make a similar offer to purchase Exchange Debentures. If either Anvil or
Holdings was unable to purchase all of the Senior Notes or Exchange Debentures
it would then be required to repurchase, an Event of Default may result under
the Senior Indenture and/or the Exchange Debenture Indenture and any such Event
of Default may also constitute an event of default under the New Credit
Agreement. In any such event, the security granted in respect of the New Credit
Agreement could result in the Holders of the Senior Notes receiving less ratably
than other creditors of Anvil.
CERTAIN COVENANTS
RESTRICTED PAYMENTS
The Senior Indenture provides that Anvil will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly: (i) declare or pay
any dividend or make any distribution on account of Anvil's or any of its
Restricted Subsidiaries' Equity Interests (including, without limitation, any
payment in connection with any merger or consolidation involving Anvil) (other
than dividends or distributions payable in Equity Interests (other than
Disqualified Stock) of Anvil or dividends or distributions payable to Anvil or
any Wholly Owned Subsidiary of Anvil); (ii) purchase, redeem or otherwise
acquire or retire for value any Equity Interests of Anvil or any direct or
indirect parent of Anvil or other Affiliate or Restricted Subsidiary of Anvil;
(iii) make any principal payment on, or purchase, redeem, defease or otherwise
acquire or retire for value any Indebtedness that is subordinated to the Senior
Notes, except in accordance with the scheduled mandatory redemption or repayment
provisions set forth in the original documentation governing such Indebtedness
(but not pursuant to any mandatory offer to repurchase upon the occurrence of
any event); or (iv) make any Restricted Investment (all such payments and other
actions set forth in clauses (i) through (iv) above being collectively referred
to as "Restricted Payments"), unless, at the time of and after giving effect to
such Restricted Payment:
(a) no Default or Event of Default will have occurred and be continuing
or would occur as a consequence thereof;
(b) Anvil would, at the time of such Restricted Payment and after giving
pro forma effect thereto as if such Restricted Payment had been made at the
beginning of the applicable four quarter period, have been permitted to
incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test set forth in the first paragraph of the covenant
described under "--Incurrence of Indebtedness and Issuance of Preferred
Stock"; and
(c) such Restricted Payment, together with the aggregate of all other
Restricted Payments made by Anvil and its Restricted Subsidiaries after the
date of the Senior Indenture, is less than the sum of, without duplication,
(i) 50% of the Consolidated Net Income of Anvil for the period (taken as one
accounting period) from the beginning of the first fiscal quarter commencing
after the date of the Senior Indenture to the end of Anvil's most recently
ended fiscal quarter for which internal financial statements are available
at the time of such Restricted Payment (or, if such Consolidated Net Income
for such period is a deficit, less 100% of such deficit), plus (ii) to the
extent not included in the amount described in clause (i) above, 100% of the
aggregate net cash proceeds received after the date
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of the Senior Indenture by Anvil from the issue or sale of, or from
additional capital contributions in respect of, Equity Interests of Anvil or
of debt securities of Anvil or any Subsidiary Guarantor that have been
converted into, or cancelled in exchange for, Equity Interests of Anvil
(other than Equity Interests (or convertible debt securities) sold to a
Restricted Subsidiary or an Unrestricted Subsidiary of Anvil and other than
Disqualified Stock or debt securities that have been converted into
Disqualified Stock and less the amount of any loans made pursuant to clause
(vi) of the next succeeding paragraph), plus (iii) 100% of any cash
dividends received by Anvil or a Wholly Owned Subsidiary that is a
Subsidiary Guarantor after the date of the Senior Indenture from an
Unrestricted Subsidiary of Anvil, plus (iv) 100% of the cash proceeds
realized upon the sale of any Unrestricted Subsidiary (less the amount of
any reserve established for purchase price adjustments and less the maximum
amount of any indemnification or similar contingent obligation for the
benefit of the purchaser, any of its Affiliates or any other third party in
such sale, in each case as adjusted for any permanent reduction in any such
amount on or after the date of such sale, other than by virtue of a payment
made to such Person) following the date of the Senior Indenture, plus (v) to
the extent that any Restricted Investment that was made after the date of
the Senior Indenture is sold to an unaffiliated purchaser for cash or
otherwise liquidated or repaid for cash, the cash proceeds realized with
respect to such Restricted Investment (less the cost of disposition, if
any).
The foregoing provisions will not prohibit (i) the payment of any dividend
within 60 days after the date of declaration thereof, if at said date of
declaration such payment would have complied with the provisions of the Senior
Indenture; (ii) the making of any Restricted Investment in exchange for, or out
of the proceeds of, the substantially concurrent sale (other than to a
Subsidiary of Anvil) of, or from substantially concurrent additional capital
contributions in respect of, Equity Interests of Anvil (other than Disqualified
Stock); (iii) the redemption, repurchase, retirement or other acquisition of any
Equity Interests of Anvil or any direct or indirect parent of Anvil in exchange
for, or out of the proceeds of, the substantially concurrent sale (other than to
a Subsidiary of Anvil) of, or from substantially concurrent additional capital
contributions in respect of, other Equity Interests of Anvil (other than any
Disqualified Stock); (iv) the defeasance, redemption or repurchase of
subordinated Indebtedness with the net cash proceeds from (X) an incurrence of
Permitted Refinancing Indebtedness or (Y) the substantially concurrent sale
(other than to a Subsidiary of Anvil) of, or from substantially concurrent
additional capital contributions in respect of, Equity Interests of Anvil (other
than Disqualified Stock); (v) the declaration or payment of any dividend to
Holdings for, or the direct repurchase, redemption or other acquisition or
retirement for value of any Equity Interests of Anvil or any Restricted
Subsidiary of Anvil or Holdings held by any member of Anvil's (or any of its
Restricted Subsidiaries' or Holdings') management pursuant to any management
agreement, stock option agreement or plan or stockholders agreement; PROVIDED
that (X) the aggregate price paid for all such repurchased, redeemed, acquired
or retired Equity Interests will not exceed $1.0 million in any fiscal year
(plus any amount available for such payments hereunder since the date of the
Senior Indenture which have not been used for such purpose) or (Y) $5.0 million
in the aggregate (in each case, net of the cash proceeds received by Anvil from
subsequent reissuances of such Equity Interests to new members of management);
(vi) loans to members of management of Anvil or any Restricted Subsidiary the
proceeds of which are used for a concurrent purchase of Equity Interests of
Holdings and a capital contribution in an amount equal to such proceeds to
Anvil; (vii) payments in connection with the application of the net proceeds of
the Recapitalization as set forth under "Use of Proceeds"; (viii) payments to
Holdings in respect of accounting, legal or other administrative expenses
incurred by Holdings relating to the operations of Anvil in the ordinary course
of business and in respect of fees and related expenses associated with
registration statements filed with the Commission and subsequent ongoing public
reporting requirements arising from the issuance of the Guarantee, the Senior
Preferred Stock and the Exchange Debentures; PROVIDED that the aggregate amount
of such payments does not exceed $500,000 in any fiscal year; (ix) so long as
Holdings files consolidated income tax returns which include Anvil, payments to
Holdings in an amount equal to the amount of income tax that Anvil would have
paid if it had filed consolidated tax returns on a separate-company basis; (x)
payments to Holdings in an amount sufficient to pay director's fees and the
reasonable expenses of its directors in an aggregate
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amount not to exceed $125,000 per year (including indemnification obligations
and professional fees and expenses) and to pay salaries and other compensation
of employees who perform services for both Anvil and Holdings; (xi) payments to
Holdings in an amount not to exceed $200,000 in aggregate to enable Holdings to
make payments to holders of its Capital Stock in lieu of issuing fractional
shares thereof; (xii) in the event Holdings elects to issue the Exchange
Debentures in exchange for the Senior Preferred Stock, cash payments to Holdings
in an amount necessary to enable Holdings to make payments to the holders of the
Senior Preferred Stock (A) in lieu of issuing an Exchange Debenture in a
principal amount less than $1,000 and (B) any accrued and unpaid dividends in
respect of the period from the dividend payment date immediately preceding the
exchange date to the exchange date; (xiii) the making of any principal payment
on, or purchase, redeem, defease or otherwise acquire or retire for value any
Indebtedness that is subordinated to the Senior Notes out of Excess Proceeds
available for general corporate purposes after consummation of purchases of
Senior Notes pursuant to an Asset Sale Offer; and (xiv) the repurchase of the
Senior Preferred Stock or the Exchange Debentures in connection with an offer
required to be made therefor in connection with a Change of Control provided
that Anvil has previously paid all amounts required to be paid in connection
with any Change of Control Offer for the Senior Notes; PROVIDED HOWEVER that in
the case of any transaction described in clauses (i), (ii), (iii), (iv) and (v)
no Default or Event of Default will have occurred and be continuing immediately
after such transaction. In determining the aggregate amount of Restricted
Payments made after the date of the Senior Indenture, 100% of the amounts
expended pursuant to the foregoing clauses (ii), (iii), (iv)(Y), (v) and (vi)
shall be included in such calculation and none of the amounts expended pursuant
to the foregoing clauses (i), (iv)(X), (vii), (viii), (ix), (x), (xi), (xii),
(xiii) and (xiv) shall be included in such calculation.
As of the date hereof and as of the issue date of the Senior Notes, all of
Anvil's Subsidiaries were Restricted Subsidiaries. The Board of Directors may
designate any Subsidiary to be an Unrestricted Subsidiary if such designation
would not cause a Default. For purposes of making such determination, all
outstanding Investments by Anvil and its Restricted Subsidiaries (except to the
extent repaid in cash) in the Subsidiary so designated will be deemed to be
Restricted Payments at the time of such designation and will reduce the amount
available for Restricted Payments under the first paragraph of this covenant.
Such designation will only be permitted if such Restricted Payment would be
permitted at such time and if such Subsidiary otherwise meets the definition of
an Unrestricted Subsidiary.
The amount of all Restricted Payments (other than cash) will be the greater
of (i) book value or (ii) fair market value (evidenced by a resolution of the
Board of Directors set forth in an Officers' Certificate delivered to the
Trustee) on the date of the Restricted Payment of the asset(s) proposed to be
transferred by Anvil or such Restricted Subsidiary, as the case may be, pursuant
to the Restricted Payment. Not later than the date of making any Restricted
Payment, Anvil will deliver to the Trustee an Officers' Certificate stating that
such Restricted Payment is permitted and setting forth the basis upon which the
calculation required by this covenant were computed, which calculations may be
based upon Anvil's latest available financial statements.
INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK
The Senior Indenture provides that Anvil will not, and will not permit any
of its Restricted Subsidiaries and Unrestricted Subsidiaries to, directly or
indirectly, create, incur, issue, assume, guarantee or otherwise become directly
or indirectly liable, contingently or otherwise, with respect to (collectively,
"incur") any Indebtedness (including Acquired Indebtedness) and that Anvil will
not issue any Disqualified Stock and will not permit any of its Restricted
Subsidiaries to issue any shares of preferred stock; PROVIDED, HOWEVER, that
Anvil and its Restricted Subsidiaries may incur Indebtedness (including Acquired
Indebtedness) or issue shares of Disqualified Stock if: (i) the Fixed Charge
Coverage Ratio for Anvil's most recently ended four full fiscal quarters for
which internal financial statements are available immediately preceding the date
on which such additional Indebtedness is incurred or such Disqualified Stock is
issued would have been (A) any time prior to March 15, 1999, at least 2.00 to 1
and (B) thereafter, at least 2.25 to 1, in each case determined on a pro forma
basis (including a pro forma application of the net
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proceeds therefrom), as if the additional Indebtedness had been incurred, or the
Disqualified Stock had been issued, as the case may be, at the beginning of such
four-quarter period; and (ii) no Default or Event of Default will have occurred
and be continuing or would occur as a consequence thereof; PROVIDED, that no
guarantee may be incurred pursuant to this paragraph unless the guaranteed
Indebtedness is incurred by Anvil or a Restricted Subsidiary pursuant to this
paragraph.
The foregoing provisions will not apply to:
(i) the incurrence by Anvil and its Restricted Subsidiaries of
Indebtedness and letters of credit pursuant to the New Credit Agreement
(with letters of credit being deemed to have a principal amount equal to the
maximum potential liability of Anvil or the relevant Restricted Subsidiary
thereunder) in a maximum principal amount outstanding at any one time not to
exceed $55.0 million (or in the event of any refinancing of the Indebtedness
under the New Credit Agreement, the greater of $55.0 million or the
Borrowing Base) (1) less the amount of all mandatory principal payments
actually made by Anvil in respect of term loans thereunder (excluding any
such payments to the extent refinanced at the time of payment under a
replaced credit agreement) and (2) in the case of the revolving credit
facility, reduced by any required permanent repayments (which are
accompanied by a corresponding permanent commitment reduction) thereunder;
(ii) the incurrence by Anvil and its Restricted Subsidiaries of the
Existing Indebtedness;
(iii) the incurrence by Anvil of Indebtedness represented by the Senior
Notes and by the Restricted Subsidiaries of Indebtedness represented by the
Subsidiary Guarantees;
(iv) the incurrence by Anvil or any of its Restricted Subsidiaries of
Indebtedness represented by Capital Lease Obligations, mortgage financings
or Purchase Money Obligations, in each case incurred for the purpose of
financing all or any part of the purchase price or cost of construction or
improvement of property used in the business of Anvil or such Restricted
Subsidiary, in an aggregate principal amount not to exceed $5.0 million at
any time outstanding;
(v) the incurrence by Anvil or any of its Restricted Subsidiaries of
Permitted Refinancing Indebtedness in exchange for, or the net proceeds of
which are used to extend, refinance, renew, replace, defease or refund,
Indebtedness that was permitted by the Senior Indenture to be incurred;
(vi) the incurrence by Anvil or any of its Restricted Subsidiaries of
intercompany Indebtedness between or among Anvil and any of its Wholly Owned
Subsidiaries or between or among any Wholly Owned Subsidiaries; PROVIDED,
HOWEVER, that (i) any subsequent issuance or transfer of Equity Interests
that results in any such Indebtedness being held by a Person other than a
Wholly Owned Subsidiary and (ii) any sale or other transfer of any such
Indebtedness to a Person that is not either Anvil or a Wholly Owned
Subsidiary will be deemed, in each case, to constitute an incurrence of such
Indebtedness by Anvil or such Subsidiary, as the case may be;
(vii) the incurrence by Anvil or any of its Restricted Subsidiaries that
are Subsidiary Guarantors of Hedging Obligations that are incurred for the
purpose of fixing or hedging interest rate risk with respect to any floating
rate Indebtedness that is permitted by the Senior Indenture to be incurred;
(viii) the incurrence by Anvil and its Restricted Subsidiaries that are
Subsidiary Guarantors and its foreign subsidiaries that are Restricted
Subsidiaries of Indebtedness (in addition to Indebtedness permitted by any
other clause of this paragraph) in an aggregate principal amount at any time
outstanding not to exceed $15.0 million; provided that such Indebtedness
incurred by foreign subsidiaries that are Restricted Subsidiaries shall not
exceed an aggregate principal amount at any time outstanding of $5.0
million;
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(ix) the incurrence by Anvil's Unrestricted Subsidiaries of Non-Recourse
Debt, PROVIDED, HOWEVER, that if any such Indebtedness ceases to be
Non-Recourse Debt of an Unrestricted Subsidiary, such event will be deemed
to constitute an incurrence of Indebtedness by a Restricted Subsidiary of
Anvil;
(x) Indebtedness incurred by Anvil or any of its Restricted Subsidiaries
that are Subsidiary Guarantors arising from agreements providing for
indemnification, adjustment of purchase price or similar obligations, or
from guarantees or letters of credit, surety bonds or performance bonds
securing the performance of Anvil or any of its Restricted Subsidiaries
pursuant to such agreements, in connection with the disposition of any
business, assets or Restricted Subsidiary of Anvil (other than guarantees or
similar credit support by Anvil or any of its Restricted Subsidiaries of
Indebtedness incurred by any Person acquiring all or any portion of such
business, assets or Restricted Subsidiary for the purpose of financing such
acquisition), in a principal amount not to exceed 25% of the gross proceeds
(with proceeds other than cash or Cash Equivalents being valued at the fair
market value thereof as determined by the Board of Directors of Anvil in
good faith) actually received by Anvil or any of its Restricted Subsidiaries
in connection with such disposition; and
(xi) the incurrence by a Securitization Entity of Indebtedness in a
Qualified Securitization Transaction that is non-recourse to Anvil or any
Subsidiary of Anvil (except Standard Securitization Undertakings); PROVIDED,
HOWEVER, that the amount of Indebtedness outstanding under clause (i) above
and this clause (xi) shall not in the aggregate exceed $55.0 million at any
time outstanding (or in the event of a refinancing of the Indebtedness under
the New Credit Agreement, the greater of $55.0 million or the Borrowing
Base).
Notwithstanding any other provision of this covenant, a guarantee of
Indebtedness permitted by the terms of the Senior Indenture at the time such
Indebtedness was incurred will not constitute a separate incurrence of
Indebtedness.
SALE AND LEASEBACK TRANSACTIONS
The Senior Indenture provides that Anvil will not, and will not permit any
of its Restricted Subsidiaries to, enter into any sale and leaseback
transaction; PROVIDED that Anvil or any Subsidiary Guarantor may enter into a
sale and leaseback transaction if (i) Anvil or such Subsidiary Guarantor could
have (a) incurred Indebtedness in an amount equal to the Attributable Debt
relating to such sale and leaseback transaction pursuant to the Fixed Charge
Coverage Ratio test set forth in the first paragraph of the covenant
"--Incurrence of Additional Indebtedness and Issuance of Preferred Stock" and
(b) incurred a Lien to secure such Indebtedness pursuant to the covenant
"Liens," (ii) the net cash proceeds of such sale and leaseback transaction are
at least equal to the fair market value (as determined in good faith by the
Board of Directors and set forth in an Officers' Certificate delivered to the
Trustee) of the property that is the subject of such sale and leaseback
transaction and (iii) the transfer of assets in such sale and leaseback
transaction is permitted by, and the proceeds of such transaction are applied in
compliance with, the covenant under "Repurchase at the Option of Holders--Asset
Sales."
LIENS
The Senior Indenture provides that Anvil will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume
or suffer to exist any Lien on any asset now owned or hereafter acquired, or any
income or profits therefrom or assign or convey any right to receive income
therefrom, except Permitted Liens.
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DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED SUBSIDIARIES
The Senior Indenture provides that Anvil will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly, create or otherwise
cause or suffer to exist or become effective any encumbrance or restriction on
the ability of any Restricted Subsidiary to (i) (a) pay dividends or make any
other distributions to Anvil or any of its Restricted Subsidiaries (1) on its
Capital Stock or (2) with respect to any other interest or participation in, or
measured by, its profits, or (b) pay any Indebtedness owed to Anvil or any of
its Restricted Subsidiaries, (ii) make loans or advances to Anvil or any of its
Restricted Subsidiaries or (iii) transfer any of its properties or assets to
Anvil or any of its Restricted Subsidiaries, except for such encumbrances or
restrictions existing under or by reason of (a) Existing Indebtedness as in
effect on the date of the Senior Indenture, (b) the New Credit Agreement as in
effect as of the date of the Senior Indenture, and any amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings thereof; PROVIDED, that such amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings are no more restrictive with respect to such
dividend and other payment restrictions than those contained in the New Credit
Agreement as in effect on the date of the Senior Indenture, (c) the Senior
Indenture and the Senior Notes, (d) the Senior Preferred Stock, the Certificate
of Designation, the Exchange Debentures and the Exchange Debenture Indenture,
(e) applicable law, (f) any instrument governing Acquired Indebtedness or
Capital Stock of a Person acquired by Anvil or any of its Restricted
Subsidiaries as in effect at the time of such acquisition (except to the extent
such Acquired Indebtedness was incurred in connection with or in contemplation
of such acquisition), which encumbrance or restriction is not applicable to any
Person, or the properties or assets of any Person, other than the Person, or the
property or assets of the Person, so acquired; PROVIDED that the Consolidated
EBITDA of such Person is not taken into account in determining whether such
acquisition was permitted by the terms of the Senior Indenture, (g) by reason of
customary non-assignment provisions in leases and licenses entered into in the
ordinary course of business and consistent with past practices, (h) purchase
money obligations for property acquired in the ordinary course of business that
impose restrictions of the nature described in clause (iii) above on the
property so acquired, (i) agreements relating to the financing of the
acquisition of real or tangible personal property acquired after the date of the
Senior Indenture; PROVIDED, that such encumbrance or restriction relates only to
the property which is acquired and in the case of any encumbrance or restriction
that constitutes a Lien, such Lien constitutes a Purchase Money Lien, (j) any
restriction or encumbrance contained in contracts for sale of assets permitted
by the Senior Indenture in respect of the assets being sold pursuant to such
contract, or (k) Indebtedness or other contractual requirements of a
Securitization Entity in connection with a Qualified Securitization Transaction;
PROVIDED that such restrictions apply only to such Securitization Entity.
TRANSACTIONS WITH AFFILIATES
The Senior Indenture provides that Anvil will not, and will not permit any
of its Restricted Subsidiaries to, sell, lease, transfer or otherwise dispose of
any of its properties or assets to, or purchase any property or assets from, or
enter into or make any contract, agreement, understanding, loan, advance or
guarantee with, or for the benefit of, any Affiliate (each of the foregoing, an
"Affiliate Transaction"), unless (i) such Affiliate Transaction is on terms that
are no less favorable to Anvil or the relevant Restricted Subsidiary than those
that would have been obtained in a comparable transaction by Anvil or such
Restricted Subsidiary with an unrelated Person and (ii) Anvil delivers to the
Trustee (a) with respect to any Affiliate Transaction entered into after the
date of the Senior Indenture involving aggregate consideration in excess of $1.0
million, a resolution of the Board of Directors set forth in an Officers'
Certificate certifying that such Affiliate Transaction complies with clause (i)
above and that such Affiliate Transaction has been approved by a majority of the
disinterested members of the Board of Directors and (b) with respect to any
Affiliate Transaction involving aggregate consideration in excess of $5.0
million, an opinion as to the fairness to Anvil or such Restricted Subsidiary of
such Affiliate Transaction from a financial point of view issued by an
investment banking firm of national standing; PROVIDED that the
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following will not be deemed to be Affiliate Transactions: (p) reasonable fees
and compensation paid to, and indemnity provided on behalf of, officers and
directors of Holdings, Anvil or any Restricted Subsidiary as determined in good
faith by the appropriate Board of Directors or senior management; (q) the
provision of administrative or management services by Anvil or any of its
officers to Holdings or any of its Restricted Subsidiaries in the ordinary
course of business consistent with past practice; (r) transactions between Anvil
or one or more of its Restricted Subsidiaries and the relevant Securitization
Entity effected as part of a Qualified Securitization Transaction; (s) any
agreement as in effect as of the date of the Senior Indenture (including,
without limitation, the New Credit Agreement) or any amendment thereto or any
transactions contemplated thereby (including pursuant to any amendment thereto)
and any replacement agreement thereto so long as any such amendment or
replacement agreement is not more disadvantageous to the Holders of Senior Notes
in any material respect than the original agreement as in effect on the date of
the Senior Indenture; (t) payments or loans to employees or consultants which
are approved by the Board of Directors of Anvil in good faith; (u) the existence
of, or the performance by Anvil or any of its Restricted Subsidiaries of its
obligations under the terms of, any stockholders agreement (including any
registration rights agreement or purchase agreement related thereto) to which it
is a party as of the date of the Senior Indenture and any similar agreement
which it may enter into thereafter; PROVIDED, HOWEVER, that the existence of, or
the performance by Anvil or any of its Restricted Subsidiaries of obligations
under any similar agreement entered into after the date of the Senior Indenture
shall only be permitted by this clause (u) to the extent that the terms of any
such new agreement are not otherwise disadvantageous to the Holders of the
Senior Notes in any material respect; (v) transactions with customers, clients,
suppliers, joint venture partners or purchasers or sellers of goods or services,
in each case in the ordinary course of business (including, without limitation,
pursuant to joint venture agreements) and otherwise in compliance with the terms
of the Senior Indenture which are at least as favorable as might reasonably have
been obtained at such time from an unaffiliated party; (w) any employment
agreement entered into by Anvil or any of its Restricted Subsidiaries in the
ordinary course of business and consistent with the past practice of Anvil or
such Restricted Subsidiary (including, without limitation, any such employment
agreements entered into prior to the date of the Senior Indenture), (x)
transactions between or among Anvil and/or its Wholly Owned Subsidiaries, (y)
(i) the payment of customary management, consulting and advisory fees and
related expenses to 399 Venture and BRS and their Affiliates not to exceed an
aggregate of $750,000 per year and (ii) payments by Anvil or any of its
Restricted Subsidiaries to 399 Venture and BRS and their Affiliates made
pursuant to any financial advisory, financing, underwriting or placement
agreement or in respect of other investment banking activities, including,
without limitation, in connection with acquisitions or divestitures which are
approved by the Board of Directors of Anvil, Holdings or such Restricted
Subsidiary in good faith not to exceed an aggregate of $750,000 per year; and
(z) transactions permitted by the covenant described in "-- Restricted
Payments."
LINE OF BUSINESS
Anvil will not, and will not permit any Restricted Subsidiary to, engage in
any line of business which is not the same, similar, ancillary, complementary or
related to the businesses in which Anvil is engaged on the date of the Senior
Indenture.
ADDITIONAL SUBSIDIARY GUARANTEES
The Senior Indenture provides that all Restricted Subsidiaries of Anvil
substantially all of whose assets are located in the United States or that
conduct substantially all of their business in the United States will be
Subsidiary Guarantors. In addition, the Senior Indenture provides that Anvil
will not, and will not permit any of the Subsidiary Guarantors to, make any
Investment in any Subsidiary that is not a Subsidiary Guarantor unless either
(i) such Investment is permitted by the covenant described under "-- Restricted
Payments," or (ii) such Restricted Subsidiary executes a Subsidiary Guarantee
and delivers an opinion of counsel in accordance with the provisions of the
Senior Indenture.
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REPORTS
The Senior Indenture provides that, whether or not required by the rules and
regulations of the Commission, so long as any Senior Notes are outstanding,
Holdings will furnish to the Holders of Senior Notes, within 15 days after it is
or would have been required to file such with the Commission, (i) all quarterly
and annual financial information that would be required to be contained in a
filing with the Commission on Forms 10-Q and 10-K if Holdings was required to
file such Forms, including a "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and, with respect to the annual information
only, reports thereon by the certified independent accountants of Holdings and
(ii) all current reports that would be required to be filed with the Commission
on Form 8-K if Holdings was required to file such reports. In addition, whether
or not required by the rules and regulations of the Commission, Holdings will
file copies of all such information and reports with the Commission for public
availability (unless the Commission will not accept such a filing) and make such
information available to securities analysts and prospective investors upon
request. In addition, Holdings and Anvil have agreed, and the Subsidiary
Guarantors, if any, will agree, that, for so long as any Senior Notes remain
outstanding, they will furnish to the Holders and to securities analysts and
prospective investors, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act.
MERGER, CONSOLIDATION OR SALE OF ASSETS
The Senior Indenture provides that Anvil shall not, in a single transaction
or series of related transactions, consolidate or merge with or into (whether or
not Anvil is the surviving corporation), or directly and/or indirectly through
its Restricted Subsidiaries sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of its properties or assets determined on a
consolidated basis for Anvil and its Restricted Subsidiaries taken as a whole in
one or more related transactions, to another corporation, Person or entity
unless (i) Anvil is the surviving corporation or the entity or the Person formed
by or surviving any such consolidation or merger (if other than Anvil) or to
which such sale, assignment, transfer, lease, conveyance or other disposition
will have been made is a corporation organized or existing under the laws of the
United States, any state thereof or the District of Columbia; (ii) the entity or
Person formed by or surviving any such consolidation or merger (if other than
Anvil) or the entity or Person to which such sale, assignment, transfer, lease,
conveyance or other disposition will have been made assumes all the obligations
of Anvil, under the Senior Notes and the Senior Indenture pursuant to a
supplemental indenture in a form reasonably satisfactory to the Trustee; (iii)
immediately after such transaction no Default or Event of Default exists; (iv)
Anvil or the entity or Person formed by or surviving any such consolidation or
merger (if other than Anvil), or to which such sale, assignment, transfer,
lease, conveyance or other disposition will have been made (A) will have
Consolidated Net Worth immediately after the transaction equal to or greater
than the Consolidated Net Worth of Anvil immediately preceding the transaction
and (B) will, at the time of such transaction and after giving pro forma effect
thereto as if such transaction had occurred at the beginning of the applicable
four-quarter period, be permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the
first paragraph of the covenant described above under the caption "--Incurrence
of Indebtedness and Issuance of Preferred Stock"; and (v) Anvil delivers to the
Trustee an Officers' Certificate and an Opinion of Counsel addressed to the
Trustee with respect to the foregoing matters; PROVIDED, HOWEVER, that the
requirement set forth in clause (iv) above shall not apply to a merger between
Anvil and any Wholly Owned Subsidiary or to any merger between Wholly Owned
Subsidiaries.
EVENTS OF DEFAULT AND REMEDIES
The Senior Indenture provides that each of the following constitutes an
Event of Default: (i) default for 30 days in the payment when due of interest
on, or Liquidated Damages with respect to, the Senior Notes; (ii) default in
payment when due of the principal of or premium, if any, on the Senior Notes;
(iii) failure by Anvil to comply with the provisions described under the
captions "--Change of Control," "--
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Asset Sales," "--Restricted Payments," "--Incurrence of Indebtedness and
Issuance of Preferred Stock," "--Sale and Leaseback Transactions" or "--Merger,
Consolidation or Sale of Assets"; (iv) failure by Anvil for 60 days after notice
to comply with any of its other agreements in the Senior Indenture or the Senior
Notes; (v) default under any mortgage, indenture or instrument under which there
may be issued or by which there may be secured or evidenced any Indebtedness for
money borrowed by Anvil or any of its Restricted Subsidiaries or Holdings (or
the payment of which is guaranteed by Anvil or any of its Restricted
Subsidiaries or Holdings) whether such Indebtedness or guarantee now exists, or
is created after the date of the Senior Indenture, which default (a) is caused
by a failure to pay principal of or premium, if any, or interest on such
Indebtedness prior to the expiration of the grace period provided in such
Indebtedness on the date of such default (a "Payment Default") or (b) results in
the acceleration of such Indebtedness prior to its express maturity and, in each
case, the principal amount of any such Indebtedness, together with the principal
amount of any other such Indebtedness under which there has been a Payment
Default or the maturity of which has been so accelerated, aggregates $5.0
million or more; (vi) failure by Anvil or any of its Restricted Subsidiaries or
Holdings to pay final judgments aggregating in excess of $3.0 million, which
judgments are not paid, discharged or stayed for a period of 60 days; (vii)
except as permitted by the Senior Indenture, any Subsidiary Guarantee will be
held in any judicial proceeding to be unenforceable or invalid or will cease for
any reason to be in full force and effect or any Subsidiary Guarantor, or any
Person acting on behalf of any Subsidiary Guarantor, will deny or disaffirm its
obligations under its Subsidiary Guarantee; (viii) the Guarantee will be held in
any judicial proceeding to be unenforceable or invalid or will cease for any
reason to be in full force and effect or Holdings, or any Person acting on
behalf of Holdings, will deny or disaffirm its obligations under the Guarantee;
and (ix) certain events of bankruptcy or insolvency with respect to Holdings,
Anvil or any of its Significant Subsidiaries or group of Restricted Subsidiaries
that, together, would constitute a Significant Subsidiary.
If any Event of Default occurs and is continuing, the Trustee or the Holders
of at least 25% in principal amount of the then outstanding Senior Notes may
declare all the Senior Notes to be due and payable immediately. Notwithstanding
the foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency with respect to Holdings, Anvil, any Significant
Subsidiary or any group of Subsidiaries that, taken together, would constitute a
Significant Subsidiary, all outstanding Senior Notes will become due and payable
without further action or notice. Holders of the Senior Notes may not enforce
the Senior Indenture or the Senior Notes except as provided in the Senior
Indenture. Subject to certain limitations, Holders of a majority in principal
amount of the then outstanding Senior Notes may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Holders of the
Senior Notes notice of any continuing Default or Event of Default (except a
Default or Event of Default relating to the payment of principal or interest) if
it determines that withholding notice is in their interest.
The Holders of a majority in aggregate principal amount of the Senior Notes
then outstanding by notice to the Trustee may on behalf of the Holders of all of
the Senior Notes waive any existing Default or Event of Default and its
consequences under the Senior Indenture except a continuing Default or Event of
Default in the payment of interest on, or the principal of, premium and
Liquidated Damages, if any, on the Senior Notes.
Anvil is required to deliver to the Trustee annually a statement regarding
compliance with the Senior Indenture, and Anvil is required upon becoming aware
of any Default or Event of Default, to deliver to the Trustee a statement
specifying such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of Anvil, as
such, will have any liability for any obligations of Anvil under the Senior
Notes, the Senior Indenture or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder of Senior Notes by
accepting a Note
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waives and releases all such liability. The waiver and release are part of the
consideration for issuance of the Senior Notes. Such waiver may not be effective
to waive liabilities under the federal securities laws and it is the view of the
Commission that such a waiver is against public policy.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Anvil may, at its option and at any time, elect to have all of its
obligations discharged with respect to the outstanding Senior Notes ("Legal
Defeasance") except for (i) the rights of Holders of outstanding Senior Notes to
receive payments in respect of the principal of, premium, if any, and interest
and Liquidated Damages on such Senior Notes when such payments are due from the
trust referred to below, (ii) Anvil's obligations with respect to the Senior
Notes concerning issuing temporary Senior Notes, registration of Senior Notes,
mutilated, destroyed, lost or stolen Senior 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
Anvil's obligations in connection therewith and (iv) the Legal Defeasance
provisions of the Senior Indenture. In addition, Anvil may, at its option and at
any time, elect to have the obligations of Anvil released with respect to
certain covenants that are described in the Senior Indenture ("Covenant
Defeasance") and thereafter any omission to comply with such obligations will
not constitute a Default or Event of Default with respect to the Senior Notes.
In the event Covenant Defeasance occurs, certain events (not including
nonpayment, bankruptcy, receivership, rehabilitation and insolvency events)
described under "Events of Default" will no longer constitute an Event of
Default with respect to the Senior Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i)
Anvil must irrevocably deposit with the Trustee, in trust, for the benefit of
the Holders of the Senior Notes, cash in U.S. dollars, non-callable Government
Securities, or a combination thereof, in such amounts as will be sufficient, in
the opinion of a nationally recognized firm of independent public accountants,
to pay the principal of, premium, if any, and interest and Liquidated Damages on
the outstanding Senior Notes on the stated maturity or on the applicable
redemption date, as the case may be, and Anvil must specify whether the Senior
Notes are being defeased to maturity or to a particular redemption date; (ii) in
the case of Legal Defeasance, Anvil will have delivered to the Trustee an
opinion of counsel in the United States reasonably acceptable to the Trustee
confirming that (A) Anvil has received from, or there has been published by, the
Internal Revenue Service a ruling or (B) since the date of the Senior Indenture,
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 will confirm that,
the Holders of the outstanding Senior Notes will not recognize income, gain or
loss for federal income tax purposes as a result of such Legal 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 Legal Defeasance had
not occurred; (iii) in the case of Covenant Defeasance, Anvil will have
delivered to the Trustee an opinion of counsel in the United States reasonably
acceptable to the Trustee confirming that the Holders of the outstanding Senior
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 will have occurred and be continuing on the date of such deposit
(other than a Default or Event of Default resulting from the borrowing of funds
to be applied to such deposit) or insofar as Events of Default from bankruptcy
or insolvency events are concerned, at any time in the period ending on the 91st
day after the date of deposit; (v) such Legal Defeasance or Covenant Defeasance
will not result in a breach or violation of, or constitute a default under any
material agreement or instrument (other than the Senior Indenture) to which
Anvil or any of its Subsidiaries is a party or by which Anvil or any of its
Subsidiaries is bound (including, without limitation, the New Credit Agreement);
(vi) Anvil must have delivered to the Trustee an opinion of counsel to the
effect that on the 91st day following the deposit, the trust funds will not be
subject to the effect of any applicable bankruptcy, insolvency, reorganization
or similar laws affecting creditors' rights generally; (vii) Anvil must deliver
to the Trustee an Officers' Certificate stating that the deposit was not made by
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Anvil with the intent of preferring the Holders of Senior Notes over the other
creditors of Anvil with the intent of defeating, hindering, delaying or
defrauding creditors of Anvil or others; and (viii) Anvil must deliver to the
Trustee an Officers' Certificate and an opinion of counsel, each stating that
all conditions precedent provided for relating to the Legal Defeasance or the
Covenant Defeasance have been complied with.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange Senior Notes in accordance with the Senior
Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and Anvil may
require a Holder to pay any taxes and fees required by law or permitted by the
Senior Indenture. Anvil is not required to transfer or exchange any Note
selected for redemption. Also, Anvil is not required to transfer or exchange any
Note for a period of 15 days before a selection of Senior Notes to be redeemed.
The registered Holder of a Note will be treated as the owner of it for all
purposes.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next two succeeding paragraphs, the Senior
Indenture or the Senior Notes may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount of the Senior Notes then
outstanding (including consents obtained in connection with a tender offer or
exchange offer for Senior Notes), and any existing default or compliance with
any provision of the Senior Indenture or the Senior Notes may be waived with the
consent of the Holders of a majority in principal amount of the then outstanding
Senior Notes (including consents obtained in connection with a tender offer or
exchange offer for Senior Notes).
Without the consent of each Holder affected, an amendment or waiver may not
(with respect to any Senior Notes held by a non-consenting Holder): (i) reduce
the principal amount of Senior Notes whose Holders must consent to an amendment,
supplement or waiver, (ii) reduce the principal of or change the fixed maturity
of any Note or alter the provisions with respect to the redemption of the Senior
Notes (other than provisions relating to the covenants described above under the
caption "-- Repurchase at the Option of Holders"), (iii) reduce the rate of or
change the time for payment of interest on any Note, (iv) waive a Default or
Event of Default in the payment of principal of or premium, if any, or interest
on the Senior Notes (except a rescission of acceleration of the Senior Notes by
the Holders of at least a majority in aggregate principal amount of the Senior
Notes and a waiver of the payment default that resulted from such acceleration),
(v) make any Note payable in money other than that stated in the Senior Notes,
(vi) make any change in the provisions of the Senior Indenture relating to
waivers of past Defaults or the rights of Holders of Senior Notes to receive
payments of principal of or premium, if any, or interest on the Senior Notes,
(vii) waive a redemption payment with respect to any Note or (viii) make any
change in the foregoing amendment and waiver provisions.
Notwithstanding the foregoing, without the consent of any Holder of Senior
Notes, Anvil and the Trustee may amend or supplement the Senior Indenture or the
Senior Notes to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Senior Notes in addition to or in place of certificated Senior
Notes, to provide for the assumption of Anvil's obligations to Holders of Senior
Notes in the case of a merger or consolidation, to make any change that would
provide any additional rights or benefits to the Holders of Senior Notes or that
does not adversely affect the legal rights under the Senior Indenture of any
such Holder, or to comply with requirements of the Commission in order to effect
or maintain the qualification of the Senior Indenture under the Trust Indenture
Act.
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CONCERNING THE TRUSTEE
The Senior Indenture contains certain limitations on the rights of the
Trustee, should it become a creditor of Anvil, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any such
claim as security or otherwise. The Trustee will be permitted to engage in other
transactions; however, if it acquires any conflicting interest it must eliminate
such conflict within 90 days, apply to the Commission for permission to continue
or resign.
The Holders of a majority in principal amount of the then outstanding Senior
Notes will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The Senior Indenture provides that in case an Event of
Default will occur (which will not be cured), the Trustee will be required, in
the exercise of its power, to use the degree of care of a prudent man in the
conduct of his own affairs. Subject to such provisions, the Trustee will be
under no obligation to exercise any of its rights or powers under the Senior
Indenture at the request of any Holder of Senior Notes, unless such Holder will
have offered to the Trustee security and indemnity satisfactory to it against
any loss, liability or expense.
BOOK-ENTRY, DELIVERY AND FORM
GLOBAL NOTES
Except as set forth in the next paragraph, the New Senior Notes will
initially be issued in the form of one or more Global Notes (collectively, the
"Global Note"). The Global Note will be deposited upon issuance (the "Closing
Date") with, or on behalf of the Depositary and registered in the name of Cede &
Co., as nominee of the Depositary (such nominee being referred to herein as the
"Global Note Holder").
Senior Notes that were issued as described below under "--Certificated
Securities" will be issued in the form of registered definitive certificates
(the "Certificated Securities"). Such Certificated Securities may, unless the
Global Note has previously been exchanged for Certificated Securities, be
exchanged by a QIB for an interest in the Global Note representing the principal
amount of Senior Notes being transferred.
The Depositary is a limited-purpose trust company that was created to hold
securities for its participating organizations (collectively, the "Participants"
or the "Depositary's Participants") and to facilitate the clearance and
settlement of transactions in such securities between Participants through
electronic book-entry changes in accounts of its Participants. The Depositary's
Participants include securities brokers and dealers, banks and trust companies,
clearing corporations and certain other organizations. Access to the
Depositary's system is also available to other entities such as banks, brokers,
dealers and trust companies (collectively, the "Indirect Participants" or the
"Depositary's Indirect Participants") that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly. Persons who are
not Participants may beneficially own securities held by or on behalf of the
Depositary only through the Depositary's Participants or the Depositary's
Indirect Participants.
Anvil expects that pursuant to procedures established by the Depositary (i)
upon deposit of the Global Note, the Depositary will credit the accounts of
Participants designated by the Exchange Agent with portions of the principal
amount of the Global Note and (ii) ownership of the Senior Notes evidenced by
the Global Note will be shown on, and the transfer of ownership thereof will be
effected only through, records maintained by the Depositary (with respect to the
interests of the Depositary's Participants), the Depositary's Participants and
the Depositary's Indirect Participants. Prospective investors are advised that
the laws of some states require that certain persons take physical delivery in
definitive form of securities that they own. Consequently, the ability to
transfer Senior Notes evidenced by the Global Note will be limited to such
extent.
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So long as the Global Note Holder is the registered owner of any Senior
Notes, the Global Note Holder will be considered the sole Holder under the
Senior Indenture of any Senior Notes evidenced by the Global Note. Beneficial
owners of Senior Notes evidenced by the Global Note will not be considered the
owners or Holders thereof under the Senior Indenture for any purpose, including
with respect to the giving of any directions, instructions or approvals to the
Trustee thereunder. Neither Anvil nor the Trustee will have any responsibility
or liability for any aspect of the records of the Depositary or for maintaining,
supervising or reviewing any records of the Depositary relating to the Senior
Notes.
Payments in respect of the principal of, premium, if any, interest and
Liquidated Damages, if any, on any Senior Notes registered in the name of the
Global Note Holder on the applicable record date will be payable by the Trustee
to or at the direction of the Global Note Holder in its capacity as the
registered Holder under the Senior Indenture. Under the terms of the Senior
Indenture, Anvil and the Trustee may treat the persons in whose names Senior
Notes, including the Global Note, are registered as the owners thereof for the
purpose of receiving such payments. Consequently, neither Anvil nor the Trustee
has or will have any responsibility or liability for the payment of such amounts
to beneficial owners of Senior Notes. Anvil believes, however, that it is
currently the policy of the Depositary to immediately credit the accounts of the
relevant Participants with such payments, in amounts proportionate to their
respective holdings of beneficial interests in the relevant security as shown on
the records of the Depositary. Payments by the Depositary's Participants and the
Depositary's Indirect Participants to the beneficial owners of Senior Notes will
be governed by standing instructions and customary practice and will be the
responsibility of the Depositary's Participants or the Depositary's Indirect
Participants.
CERTIFICATED SECURITIES
Subject to certain conditions, investors may receive Certificated
Securities. In addition, if (i) Anvil notifies the Trustee in writing that the
Depositary is no longer willing or able to act as a depositary and Anvil is
unable to locate a qualified successor within 90 days or (ii) Anvil, at its
option, notifies the Trustee in writing that it elects to cause the issuance of
Certificated Securities, then, upon surrender by the Global Note Holder of its
Global Note, Certificated Securities will be issued to each person that the
Global Note Holder and the Depositary identify as being the beneficial owner of
the related Senior Notes.
Neither Anvil nor the Trustee will be liable for any delay by the Global
Note Holder or the Depositary in identifying the beneficial owners of Senior
Notes and Anvil and the Trustee may conclusively rely on, and will be protected
in relying on, instructions from the Global Note Holder or the Depositary for
all purposes.
SAME-DAY SETTLEMENT AND PAYMENT
The Senior Indenture requires that payments in respect of the Senior Notes
represented by the Global Note (including principal, premium, if any, interest
and Liquidated Damages, if any) be made by wire transfer of immediately
available funds to the accounts specified by the Global Note Holder. With
respect to Certificated Securities, Anvil will make all payments of principal,
premium, if any, interest and Liquidated Damages, if any, by wire transfer of
immediately available funds to the accounts specified by the Holders thereof or,
if no such account is specified, by mailing a check to each such Holder's
registered address. Secondary trading in long-term notes and debentures of
corporate issuers is generally settled in clearing-house or next-day funds. In
contrast, the New Senior Notes represented by the Global Note are expected to
trade in the Depositary's Same-Day Funds Settlement System, and any permitted
secondary market trading activity in such Senior Notes will, therefore, be
required by the Depositary to be settled in immediately available funds. Anvil
expects that secondary trading in the Certificated Securities will also be
settled in immediately available funds.
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CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Senior Indenture and
the foregoing summary of the terms of the Senior Notes. Reference is made to the
Senior Indenture for a full disclosure of all such terms, as well as any other
capitalized terms used herein for which no definition is provided.
"ACQUIRED INDEBTEDNESS" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary or is designated a Restricted
Subsidiary of such specified Person, including, without limitation, Indebtedness
incurred in connection with, or in contemplation of, such other Person merging
with or into or becoming a Subsidiary or Restricted Subsidiary of such specified
Person, and (ii) Indebtedness secured by a Lien encumbering any asset acquired
by such specified Person.
"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 purposes of this definition, "control"
(including, which correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control.
"ASSET SALE" means (i) the sale, lease, conveyance or other disposition of
any assets (including, without limitation, by way of a sale and leaseback,
including any disposition by means of a merger, consolidation or similar
transaction and including the issuance, sale or other transfer of any of the
capital stock of any Restricted Subsidiary of such person) other than to Anvil
or to any of its Wholly Owned Subsidiaries (including the receipt of proceeds of
insurance paid on account of the loss of or damage to any asset and awards of
compensation for any asset taken by condemnation, eminent domain or similar
proceeding, and including the receipt of proceeds of business interruption
insurance); and (ii) the issuance of Equity Interests in any Restricted
Subsidiaries or the sale of any Equity Interests in any Restricted Subsidiaries,
in each case, in one or a series of related transactions, PROVIDED, that
notwithstanding the foregoing, the term "Asset Sale" shall not include: (a) the
sale, lease, conveyance, disposition or other transfer of all or substantially
all of the assets of Anvil, as permitted pursuant to the covenant described
under "Merger, Consolidation or Sale of Assets," (b) the sale or lease of
equipment, inventory, accounts receivable or other assets in the ordinary course
of business consistent with past practice, (c) a transfer of assets by Anvil to
a Wholly Owned Subsidiary that is a Subsidiary Guarantor or by a Wholly Owned
Subsidiary that is a Subsidiary Guarantor to Anvil or to another Wholly Owned
Subsidiary that is a Subsidiary Guarantor, or by a Wholly Owned Subsidiary that
is not a Subsidiary Guarantor to another Wholly Owned Subsidiary that is not a
Subsidiary Guarantor, (d) an issuance of Equity Interests by a Wholly Owned
Subsidiary to Anvil or to another Wholly Owned Subsidiary that is a Subsidiary
Guarantor, or by a Wholly Owned Subsidiary that is not a Subsidiary Guarantor to
another Wholly Owned Subsidiary that is not a Subsidiary Guarantor, (e) the
surrender or waiver of contract rights or the settlement, release or surrender
of contract, tort or other claims of any kind, (f) the grant in the ordinary
course of business of any non-exclusive license of patents, trademarks,
registrations therefor and other similar intellectual property, (g) Permitted
Investments or (h) any cash dividend, distribution, Investment or payment made
pursuant to the first or second paragraph of the "Restricted Payments" covenant.
"ATTRIBUTABLE DEBT" in respect of a sale and leaseback transaction means, at
the time of determination, the present value (discounted at the rate of interest
implicit in such transaction, determined in accordance with GAAP) of the
obligation of the lessee for net rental payments during the remaining term of
the lease included in such sale and leaseback transaction (including any period
for which such lease has been extended or may, at the option of the lessor, be
extended).
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"BOARD OF DIRECTORS" means the Board of Directors of Anvil, or any
authorized committee of the Board of Directors.
"BORROWING BASE" means, as of any date, an amount equal to the sum of (i)
85% of all Eligible Receivables, (ii) 60% of all Eligible Raw Materials
Inventory, (iii) 50% of Eligible Finished Goods Inventory and (iv) 50% of the
fair market value or, if acquired after the date of the Senior Indenture, the
acquisition cost, of appraised equipment and real property owned by Anvil and
its Restricted Subsidiaries, or such lesser amount as may then constitute the
"Borrowing Base" under the New Credit Agreement.
"BRS" means Bruckmann, Rosser, Sherrill & Co., L.P.
"BUSINESS DAY" means any day other than a Legal Holiday.
"CAPITAL LEASE OBLIGATION" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized on a balance sheet in accordance with
GAAP.
"CAPITAL STOCK" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership, partnership interests
(whether general or limited) and (iv) any other interest or participation that
confers on a Person the right to receive a share of the profits and losses of,
or distributions of assets of, the issuing Person.
"CASH EQUIVALENTS" means (a) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States is pledged in support thereof) having maturities no more than twelve
months from the date of acquisition, (b) U.S. dollar denominated (or foreign
currency fully hedged) time deposits, certificates of deposit, Eurodollar time
deposits or Eurodollar certificates of deposit of (i) any domestic commercial
bank of recognized standing having capital and surplus in excess of $100.0
million or (ii) any bank whose short-term commercial paper rating from S&P is at
least A-1 or the equivalent thereof or from Moody's is at least P-1 or the
equivalent thereof (any such bank being an "Approved Lender"), in each case with
maturities of not more than twelve months from the date of acquisition, (c)
commercial paper and variable or fixed rate notes issued by any Approved Lender
(or by the parent company thereof) or any variable rate notes issued by, or
guaranteed by, any domestic corporation rated A-2 (or the equivalent thereof) or
better by S&P or P-2 (or the equivalent thereof) or better by Moody's and
maturing within twelve months of the date of acquisition, (d) repurchase
agreements with a bank or trust company or recognized securities dealer having
capital and surplus in excess of $100.0 million for direct obligations issued by
or fully guaranteed by the United States of America in which Anvil shall have a
perfected first priority security interest (subject to no other Liens) and
having, on the date of purchase thereof, a fair market value of at least 100% of
the amount of repurchase obligations, and (e) interests in money market mutual
funds which invest solely in assets or securities of the type described in
subparagraphs (a), (b), (c) or (d) hereof.
"CHANGE OF CONTROL" means such time as (i) prior to the initial public
offering by Anvil or any direct or indirect parent of Anvil of its common stock
(other than a public offering pursuant to a registration statement on Form S-8),
Permitted Holders cease to have, directly or indirectly, in the aggregate at
least 51% of the voting power of the voting stock of Anvil or Holdings or any
other direct or indirect parent of Holdings ceases to own, directly or
indirectly, 100% of the voting power of the voting stock of Anvil (other than by
reason of a merger of Holdings and Anvil) or (ii) after the initial public
offering by Anvil or any direct or indirect parent of Anvil of its common stock
(other than a public offering pursuant to a registration statement on Form S-8),
(A) any Schedule 13D, Form 13F or Schedule 13G under the Exchange Act, or any
amendment to such Schedule or Form, is received by Anvil or Holdings which
indicates that, or Anvil or Holdings otherwise becomes aware that, a "person" or
"group" (within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act)
has become, directly or indirectly, the
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"beneficial owner," by way of merger, consolidation or otherwise, of 40% or more
of the voting power of the voting stock of Anvil or Holdings on a fully-diluted
basis after giving effect to the conversion and exercise of all outstanding
warrants, options and other securities of Anvil or Holdings, as the case may be
(whether or not such securities are then currently convertible or exercisable)
and (B) such person or group has become, directly or indirectly, the beneficial
owner of a greater percentage of the voting capital stock of Anvil, calculated
on such fully-diluted basis, than beneficially owned by the Permitted Holders,
or (iii) the sale, lease or transfer of all or substantially all of the assets
of Anvil to any person or group (other than the Permitted Holders or a
Subsidiary Guarantor), or (iv) during any period of two consecutive calendar
years, individuals who at the beginning of such period constituted the Board of
Directors of Anvil or Holdings (together with any new directors whose election
by the Board of Directors of Anvil or Holdings or whose nomination for election
by the shareholders of Anvil or Holdings, as the case may be, was approved by a
vote of a majority of the directors then still in office who either were
directors at the beginning of such period or whose election or nomination for
election was previously so approved or was approved by the Permitted Holders)
cease for any reason to constitute a majority of the directors of Anvil or
Holdings, as the case may be, then in office.
"COMMISSION" means the Securities and Exchange Commission.
"CONSOLIDATED EBITDA" means, with respect to Anvil and its Restricted
Subsidiaries for any period, the sum of, without duplication, (i) the
Consolidated Net Income for such period, plus (ii) to the extent deducted from
Consolidated Net Income for such period, (x) the Fixed Charges for such period,
plus (y) non-cash dividends on Anvil's preferred stock, plus (iii) provision for
taxes based on income or profits for such period (to the extent such income or
profits were included in computing Consolidated Net Income for such period),
plus (iv) consolidated depreciation, amortization and other non-cash charges of
Anvil and its Restricted Subsidiaries required to be reflected as expenses on
the books and records of Anvil, minus (v) cash payments with respect to any
nonrecurring, non-cash charges previously added back pursuant to clause (iv),
and (vi) excluding the impact of foreign currency translations. Notwithstanding
the foregoing, the provision for taxes based on the income or profits of, and
the depreciation and amortization and other non-cash charges of, a Restricted
Subsidiary of a Person shall be added to Consolidated Net Income to compute
Consolidated EBITDA only to the extent that the Net Income of such Restricted
Subsidiary was included in calculating the Consolidated Net Income of such
Person and only if a corresponding amount would be permitted at the date of
determination to be dividended to Anvil by such Restricted Subsidiary without
prior approval (that has not been obtained), pursuant to the terms of its
charter and all agreements, instruments, judgments, decrees, orders, statutes,
rules and governmental regulations applicable to that Restricted Subsidiary or
its stockholders.
"CONSOLIDATED NET INCOME" means, with respect to any Person for any period,
the aggregate of the Net Income of such Person and its Restricted Subsidiaries
for such period, on a consolidated basis, determined in accordance with GAAP;
PROVIDED that (i) the Net Income (but not loss) of any Person that is not a
Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid in cash to the referent Person or a Wholly Owned Subsidiary
thereof that is a Subsidiary Guarantor, (ii) the Net Income of, or any dividends
or other distributions from, any Unrestricted Subsidiary, to the extent
otherwise included, shall be excluded, whether or not distributed to Anvil or
one of its Restricted Subsidiaries, (iii) the Net Income of any Restricted
Subsidiary shall be excluded to the extent that the declaration or payment of
dividends or similar distributions by that Restricted Subsidiary of that Net
Income is not at the date of determination permitted without any prior
governmental approval (which has not been obtained) or, directly or indirectly,
by operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to that
Restricted Subsidiary or its stockholders, (iv) the Net Income of any Person
acquired in a pooling of interests transaction for any period prior to the date
of such acquisition shall be excluded, (v) the cumulative effect of a change in
accounting principles shall be excluded, (vi) income or loss attributable to
discontinued operations shall be excluded; (vii) any
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increase in cost of sales or other write-offs resulting from the purchase
accounting treatment of any acquisitions shall be excluded; and (viii) all other
extraordinary, unusual or nonrecurring gains or losses shall be excluded.
"CONSOLIDATED NET WORTH" of a Person at any date means the amount by which
the assets of such Person and its consolidated Restricted Subsidiaries (less any
revaluation or other write-up subsequent to the date of the Senior Indenture in
any such assets (other than write-ups resulting from foreign currency
translations and write-ups of tangible assets of a going concern business made
within twelve months after the acquisition of such business)) exceed the sum of
(a) the total liabilities of such Person and its consolidated Restricted
Subsidiaries, plus (b) any Disqualified Stock of such Person or any consolidated
Restricted Subsidiaries of such Person issued to any Person other than such
Person or a Wholly Owned Subsidiary of such Person, in each case determined in
accordance with GAAP.
"DEFAULT" means any event that is or with the passage of time or the giving
of notice or both would be an Event of Default.
"DEPOSITARY" means, with respect to the Senior Notes issuable or issued in
whole or in part in global form, the Person specified in the Senior Indenture as
the Depositary with respect to the Senior Notes, until a successor shall have
been appointed and become such Depositary pursuant to the applicable provision
of the Senior Indenture, and, thereafter, "Depositary" shall mean or include
such successor.
"DISQUALIFIED STOCK" means any Capital Stock that, 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 redeemable at
the option of the Holder thereof, in whole or in part, on or prior to the date
on which is 91 days after the date that the Senior Notes mature.
"ELIGIBLE FINISHED GOODS INVENTORY" means, as of any date of determination,
the gross dollar value (valued at the lower of cost or fair market value (on a
first-in, first-out basis)) of all finished goods inventory (including for
purposes hereof, finished goods inventory which is in transit back to Anvil or
any Subsidiary Guarantor) of Anvil or any Subsidiary Guarantor less appropriate
reserves determined in accordance with GAAP applied on a consistent basis but
excluding in any event and without duplication, to the extent not treated
accordingly by GAAP, (i) inventory subject to any Lien (other than a Permitted
Lien), (ii) inventory which fails to meet standards for sale or use imposed by
governmental agencies, departments or divisions having regulatory authority over
such goods, (iii) inventory which is not useable or saleable at prices
approximating their cost (after taking into account, without duplication, the
amount of any reserves for obsolescence, unsaleability or decline in value),
(iv) inventory located outside of the United States (unless in transit back to
Anvil or any Subsidiary Guarantor), (v) inventory in the possession of domestic
contractors (other than Anvil or any Subsidiary Guarantor) or other third
parties, and (vi) all work in process.
"ELIGIBLE RAW MATERIALS INVENTORY" means, as of any date of determination,
the gross dollar value (valued at the lower of cost or fair market value (on a
first-in, first-out basis)) of all raw materials (including for purposes hereof,
uncut dyed or greige cloth) of Anvil or any Subsidiary Guarantor less
appropriate reserves determined in accordance with GAAP applied on a consistent
basis but excluding in any event, to the extent not treated accordingly by GAAP
and without duplication, (i) inventory subject to any Lien (other than a
Permitted Lien), (ii) inventory which fails to meet standards for sale or use
imposed by governmental agencies, departments or divisions having regulatory
authority over such goods, (iii) inventory which is not useable or saleable at
prices approximating their cost (after taking into account, without duplication,
the amount of any reserves for obsolescence, unsaleability or decline in value),
(iv) inventory located outside of the United States (unless in transit back to
Anvil or any Subsidiary Guarantor), (v) inventory in the possession of domestic
contractors (other than Anvil or any Subsidiary Guarantor) or other third
parties, and (vi) all work in process (except uncut dyed or greige cloth).
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"ELIGIBLE RECEIVABLES" means, as of any date of determination, the aggregate
gross amount of all accounts receivable, receivables and obligations for payment
created or arising from the sale of inventory or the rendering of services in
the ordinary course of business, owned by or owing to Anvil or any Subsidiary
Guarantor, net of allowances and reserves for doubtful or uncollectible accounts
and sales adjustments consistent with Anvil's internal policies and in any event
in accordance with GAAP applied on a consistent basis, (hereinafter sometimes
referred to collectively as "Receivables"), but excluding, without duplications
in any event (i) Receivables subject to a Lien (other than a Permitted Lien),
(ii) Receivables which are outstanding more than 90 days from the due date of
the original invoice or more than 180 days from the date of shipment, (iii)
Receivables evidenced by notes, chattel paper or other instruments, unless such
notes, chattel paper or instruments have been delivered to and are in the
possession of such parties as may be specified in the New Credit Agreement, (iv)
Receivables with respect to which the account debtor is not solvent or is the
subject of a bankruptcy or insolvency proceedings of any kind, (v) Receivables
owing by an account debtor located outside of the United States (unless payment
for the goods shipped is secured by an irrevocable letter of credit in a form
and from an institution acceptable to such parties as may be specified in the
New Credit Agreement), (vi) Receivables which are contingent or subject to
offset, deduction, counterclaim, dispute or other defense to payment, in each
case to the extent of such offset, deduction, counterclaim dispute or other
defense, and (vii) Receivables arising out of transactions with Subsidiaries or
Affiliates of Anvil.
"EQUITY INTERESTS" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXCHANGE OFFER" means the offer that may be made by Anvil pursuant to the
Registration Rights Agreement to exchange New Senior Notes for Senior Notes.
"EXISTING INDEBTEDNESS" means the Indebtedness of Anvil and its Restricted
Subsidiaries (other than Indebtedness under the New Credit Agreement) in
existence on the date of the Senior Indenture, until such amounts are repaid.
"FIXED CHARGES" means, with respect to any Person for any period, the sum,
without duplication, of (i) the consolidated interest expense of such Person and
its Restricted Subsidiaries for such period, whether paid or accrued (including,
without limitation, amortization of original issue discount, non-cash interest
payments, the interest component of any deferred payment obligations, the
interest component of all payments associated with Capital Lease Obligations,
commissions, discounts and other fees and charges incurred in respect of letter
of credit or bankers' acceptance financings, and net payments (if any) pursuant
to Hedging Obligations), and (ii) the consolidated interest expense of such
Person and its Restricted Subsidiaries that was capitalized during such period,
and (iii) any interest expense on Indebtedness of another Person that is
guaranteed by such Person or one of its Restricted Subsidiaries or secured by a
Lien on assets of such Person or one of its Restricted Subsidiaries (whether or
not such guarantee or Lien is called upon), and (iv) the product of (a) all cash
dividend payments (and non-cash dividend payments in the case of a Person that
is a Restricted Subsidiary) on any series of preferred stock of such Person
payable to a party other than Anvil or a Wholly Owned Subsidiary, times (b) a
fraction, the numerator of which is one and the denominator of which is one
minus the then current combined federal, state and local statutory tax rate of
such Person, expressed as a decimal, on a consolidated basis and in accordance
with GAAP, but excluding from the calculation of fixed charges amortization of
financing costs (except to the extent referred to in the parenthetical in clause
(i) of this definition).
"FIXED CHARGE COVERAGE RATIO" means with respect to any Person for any
period, the ratio of the Consolidated EBITDA of such Person and its Restricted
Subsidiaries for such period to the Fixed Charges of such Person and its
Restricted Subsidiaries for such period. In the event that Anvil or any of its
Restricted Subsidiaries incurs, assumes, guarantees or repays any Indebtedness
(other than the incurrence
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or repayment of revolving credit borrowings used for working capital, except to
the extent that a repayment is accompanied by a permanent reduction in revolving
credit commitments) or issues preferred stock subsequent to the commencement of
the four-quarter reference period for which the Fixed Charge Coverage Ratio is
being calculated but prior to the date on which the event for which the
calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"),
then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect
to such incurrence, assumption, guarantee or redemption of Indebtedness, or such
issuance or redemption of preferred stock, as if the same had occurred at the
beginning of the applicable four-quarter reference period. For purposes of
making the computation referred to above, (i) acquisitions that have been made
by Anvil or any of its Restricted Subsidiaries, including through mergers or
consolidations and including any related financing transactions, during the
four-quarter reference period or subsequent to such reference period and on or
prior to the Calculation Date shall be deemed to have occurred on the first day
of the four-quarter reference period and shall give pro forma effect to the
Consolidated EBITDA and Indebtedness of the Person which is the subject of any
such acquisition, and (ii) the Consolidated EBITDA attributable to discontinued
operations, as determined in accordance with GAAP, and operations or businesses
disposed of prior to the Calculation Date, shall be excluded, and (iii) the
Fixed Charges attributable to discontinued operations, as determined in
accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded, but only to the extent that the obligations
giving rise to such Fixed Charges will not be obligations of the referent Person
or any of its Restricted Subsidiaries following the Calculation Date.
"GAAP" means generally accepted accounting principles 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 have been approved by a significant segment of the accounting
profession, which are in effect on the date of the Senior Indenture.
"GOVERNMENT SECURITIES" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States is pledged.
"GUARANTEE" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"HEDGING OBLIGATIONS" means, with respect to any Person, the obligations of
such Person under (i) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements and (ii) other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates.
"HOLDER" means a Person in whose name a Senior Note is registered on the
Registrar's books.
"INDEBTEDNESS" means, with respect to any Person, any indebtedness of such
Person, whether or not contingent, in respect of borrowed money or evidenced by
bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or banker's acceptances or
representing Capital Lease Obligations or the balance deferred and unpaid of the
purchase price of any property or representing any Hedging Obligations, except
any such balance that constitutes an accrued expense or trade payable, if and to
the extent any of the foregoing indebtedness (other than letters of credit and
Hedging Obligations) would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP, as well as all indebtedness of others
secured by a Lien on any asset of such Person (whether or not such indebtedness
is assumed by such Person), the maximum fixed repurchase price of Disqualified
Stock issued by such Person in each case, if held by any Person other than Anvil
or a Wholly Owned Subsidiary of Anvil, and, to the extent not otherwise
included, the guarantee by such Person of any indebtedness of any other Person.
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"INVESTMENTS" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances (other than advances to customers in the ordinary course of business
that are recorded as accounts receivable on the books of such Person) or capital
contributions (excluding commission, travel, relocation and similar advances to
officers and employees made in the ordinary course of business), purchases or
other acquisitions for consideration of Indebtedness, Equity Interests or other
securities and all other items that are or would be classified as investments on
a balance sheet prepared in accordance with GAAP; provided that an acquisition
of assets, Equity Interests or other securities by Anvil for consideration
consisting of common equity securities of Anvil or of any direct or indirect
parent of Anvil shall not be deemed to be an Investment.
"LEGAL HOLIDAY" means a Saturday, a Sunday or a day on which federal offices
or banking institutions in the City of New York, in the city of the Corporate
Trust Office of the Trustee, or at a place of payment are authorized by law,
regulation or executive order to remain closed. If a payment date is a Legal
Holiday, payment may be made on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset, whether
or not filed, recorded or otherwise perfected under applicable law (including
any conditional sale or other title retention agreement, any lease in the nature
thereof, any option or other agreement to sell or give a security interest in
and any filing of or agreement to give any financing statement under the Uniform
Commercial Code (or equivalent statutes) of any jurisdiction).
"LIQUIDATED DAMAGES" means all liquidated damages owing pursuant to the
Registration Rights Agreement.
"NET INCOME" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP, and before reduction for
non-cash preferred stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (b) the
disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries, (ii) any extraordinary or nonrecurring gain (but
not loss), together with any related provision for taxes on such extraordinary
or nonrecurring gain (but not loss).
"NET PROCEEDS" means the aggregate cash proceeds received by Anvil or any of
its Restricted Subsidiaries in respect of any Asset Sale (including, without
limitation, any cash received upon the sale or other disposition of any non-cash
consideration received in any Asset Sale), net of the direct costs relating to
such Asset Sale (including, without limitation, legal, accounting and investment
banking fees, and sales commissions) and any relocation expenses incurred as a
result thereof, taxes paid or payable as a result thereof (after taking into
account any available tax credits or deductions and any tax sharing
arrangements), and any reserve for adjustment in respect of the sale price of
such asset or assets established in accordance with GAAP and net of any Purchase
Money Obligations relating to the assets comprising such Asset Sale.
"NEW CREDIT AGREEMENT" means, collectively, (i) that certain Amended and
Restated Credit Agreement, as in effect on the date of the Senior Indenture, by
and among Anvil, Holdings, the lenders that may be from time to time parties
thereto and NationsBank, N.A., as administrative agent, as the foregoing may
from time to time be amended, renewed, supplemented or otherwise modified at the
option of the parties thereto, including increases in the principal amount
thereof (subject to such increases otherwise being in conformity with the terms
of the Senior Indenture) and (ii) after NationsBank, N.A., as administrative
agent, has acknowledged in writing that the Credit Agreement described in clause
(i) above has been
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terminated and all then outstanding Indebtedness thereunder or with respect
thereto have been repaid in full in cash and discharged, any successors to or
replacements of (as designated by the Board of Directors of Anvil in its sole
judgment, and evidenced by a resolution) such Credit Agreement, as such
successors or replacements may from time to time be amended, renewed,
supplemented, modified or replaced, including increases in the principal amount
thereof (subject to such increases otherwise being in conformity with the terms
of the Senior Indenture).
"NON-RECOURSE DEBT" means Indebtedness (i) as to which neither Anvil nor any
of its Restricted Subsidiaries (a) provides credit support of any kind
(including any undertaking, agreement or instrument that would constitute
Indebtedness), (b) is directly or indirectly liable (as a guarantor or
otherwise), or (c) constitutes the lender; and (ii) no default with respect to
which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of Anvil or
any of its Restricted Subsidiaries to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its stated maturity; and (iii) as to which the lenders have been notified in
writing that they will not have any recourse to the stock or assets of Anvil or
any of its Restricted Subsidiaries.
"NOTE CUSTODIAN" means the Trustee, as custodian with respect to the Global
Notes, or any successor entity thereto.
"OBLIGATIONS" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"OFFICER" means, with respect to any Person, the Chairman of the Board, the
Chief Executive Officer, the President, the Chief Operating Officer, the Chief
Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the
Secretary or any Vice President of such Person.
"PERMITTED HOLDERS" means, collectively, (i) BRS and its Affiliates, and
their respective employees and directors, (ii) 399 Venture and its Affiliates,
and their respective employees and directors, (iii) all full-time executive
officers of Holdings and its Subsidiaries who acquire Capital Stock of Holdings,
and (iv) with respect to any natural persons described in the foregoing clauses
(i) through (iii), (A) any spouse, lineal descendant (including by adoption and
stepchildren), or sibling of such natural persons and (B) any trust,
corporation, limited liability company or partnership, the beneficiaries,
members, stockholders or partners of which consist entirely of such natural
persons or the individuals described in clause (A) above.
"PERMITTED INVESTMENTS" means (a) any Investments in Anvil or in a Wholly
Owned Subsidiary of Anvil that is a Subsidiary Guarantor and that is engaged in
the same or a similar line of business as Anvil and its Restricted Subsidiaries
were engaged in on the date of the Senior Indenture and reasonable extensions or
expansions thereof; (b) any Investments in Cash Equivalents; (c) Investments by
Anvil or any Restricted Subsidiary of Anvil in a Person if as a result of such
Investment (i) such Person becomes a Wholly Owned Subsidiary of Anvil that is a
Subsidiary Guarantor that is engaged in the same or a similar line of business
as Anvil and its Restricted Subsidiaries were engaged in on the date of the
Senior Indenture and reasonable extensions or expansions thereof or (ii) such
Person is merged, consolidated or amalgamated with or into, or transfers or
conveys substantially all of its assets to, or is liquidated into, Anvil or a
Wholly Owned Subsidiary of Anvil that is a Subsidiary Guarantor and that is
engaged in the same or a similar line of business as Anvil and its Restricted
Subsidiaries were engaged in on the date of the Senior Indenture and reasonable
extensions or expansions thereof; (d) Investments made as a result of the
receipt of non-cash consideration from an Asset Sale that was made pursuant to
and in compliance with the covenant described under "--Asset Sales"; (e)
Investments by Anvil or any Restricted Subsidiary in cash in an aggregate amount
not to exceed $5.0 million outstanding at any one time; (f) stock, obligations
or securities received in settlement of debts created in the ordinary course of
business and owing to Anvil or any Subsidiary or in satisfaction of judgments or
pursuant to any plan of reorganization or similar
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arrangement upon the bankruptcy or insolvency of Anvil's trade creditors or
customers; (g) the contribution of shares of stock or other equity securities of
an Unrestricted Subsidiary to another Subsidiary; (h) loans and advances to
employees and officers of Anvil and its Restricted Subsidiaries in the ordinary
course of business not to exceed an aggregate of $1.0 million at any one time
outstanding; (i) accounts receivable created or acquired in the ordinary course
of business; (j) currency agreements and interest swap obligations entered into
in the ordinary course of Anvil's or its Restricted Subsidiaries' businesses and
otherwise in compliance with the Senior Indenture; and (k) any Investment by
Anvil or a Wholly Owned Subsidiary of Anvil in a Securitization Entity or any
Investment by a Securitization Entity in any other Person in connection with a
Qualified Securitization Transaction; provided that any Investment in a
Securitization Entity is in the form of a Purchase Money Note or an Equity
Interest.
"PERMITTED LIENS" means (i) Liens securing (a) Indebtedness permitted by
clauses (i), (ii), (iv) or (viii) under the covenant entitled "Incurrence of
Indebtedness and Issuance of Preferred Stock" and (b) related Hedging
Obligations; (ii) Liens in favor of Anvil or any Wholly Owned Subsidiary that is
a Subsidiary Guarantor; (iii) Liens on property of a Person existing at the time
such Person is merged into or consolidated with Anvil or any Restricted
Subsidiary of Anvil; PROVIDED that such Liens were in existence prior to the
contemplation of such merger or consolidation and do not extend to any assets
other than those of the Person merged into or consolidated with Anvil; (iv)
Liens on property of a Person existing at the time such Person becomes a
Restricted Subsidiary of Anvil; (v) Liens on property existing at the time of
acquisition thereof by Anvil or any Restricted Subsidiary of Anvil, PROVIDED
that such Liens were in existence prior to the contemplation of such
acquisition; (vi) Liens to secure the performance of statutory obligations,
surety or appeal bonds, performance bonds or other obligations of a like nature
incurred in the ordinary course of business; (vii) Liens existing on the date of
the Senior Indenture; (viii) Liens for taxes, assessments or governmental
charges or claims that are not yet delinquent or that are being contested in
good faith by appropriate proceedings promptly instituted and diligently
concluded, PROVIDED that any reserve or other appropriate provision as shall be
required in conformity with GAAP shall have been made therefor; (ix) carriers',
warehousemen's, mechanics', materialmen's, repairmen's, or other similar Liens
arising in the ordinary course of business which are not overdue for a period of
more than 60 days or which are being contested in good faith by appropriate
proceedings diligently conducted; (x) statutory Liens of landlords or of
mortgagees of landlords arising by operation of law, provided that the rental
payments secured thereby are not yet due and payable; (xi) Liens incurred in the
ordinary course of business of Anvil or any Restricted Subsidiary of Anvil with
respect to obligations that do not exceed $1.5 million at any one time
outstanding and that (a) are not incurred in connection with the borrowing of
money or the obtaining of advances or credit (other than trade credit in the
ordinary course of business) and (b) do not in the aggregate materially detract
from the value of the property or materially impair the use thereof in the
operation of business by Anvil or such Restricted Subsidiary; (xii)
nonconsensual Liens incurred in the ordinary course of business of any foreign
subsidiary that is a Restricted Subsidiary that (a) are not incurred in
connection with the borrowing of money or the obtaining of advances of credit
(other than trade credit in the ordinary course of business) and (b) do not in
the aggregate materially detract from the value of the property or materially
impair the use thereof in the operation of business by such Restricted
Subsidiary; (xiii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance and
other types of social security; (xiv) easements, rights-of-way, restrictions,
minor defects or irregularities in title and other similar charges or
encumbrances not interfering in any material respect with the business of Anvil
or any of its Restricted Subsidiaries; (xv) Purchase Money Liens (including
extensions and renewals thereof); (xvi) judgment and attachment Liens not giving
rise to an Event of Default; (xvii) Liens arising out of consignment or similar
arrangements for the sale of goods; (xviii) any interest or title of a lessor in
property subject to any capital lease obligation or operating lease; (xix) Liens
arising from filing Uniform Commercial Code financing statements regarding
leases; (xx) Liens encumbering deposits made to secure obligations arising from
statutory or regulatory requirements of Anvil or any of its Restricted
Subsidiaries, including rights of offset and set-off, arising in the ordinary
course of business; (xxi) Liens on assets transferred to a Securitization
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Entity or on assets of a Securitization Entity, in either case incurred in
connection with a Qualified Securitization Transaction; and (xxii) Liens in
favor of customs and revenue authorities arising as a matter of law to secure
payment of custom duties in connection with the importation of goods.
"PERMITTED REFINANCING INDEBTEDNESS" means any Indebtedness of Anvil or any
of its Restricted Subsidiaries issued in exchange for, or the net proceeds of
which are used to extend, refinance, renew, replace, defease or refund other
Indebtedness of Anvil or any of its Restricted Subsidiaries; provided that: (i)
the principal amount of such Permitted Refinancing Indebtedness does not exceed
the principal amount of the Indebtedness so extended, refinanced, renewed,
replaced, defeased or refunded (plus the amount of reasonable expenses incurred
in connection therewith); (ii) such Permitted Refinancing Indebtedness has a
final maturity date at least as late as the final maturity date of, and has a
Weighted Average Life to Maturity equal to or greater than the Weighted Average
Life to Maturity of, the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; (iii) if the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded is subordinated in right of
payment to the Senior Notes, such Permitted Refinancing Indebtedness has a final
maturity date later than the final maturity date of, and is subordinated in
right of payment to, the Senior Notes on terms at least as favorable to the
Holders of Senior Notes as those contained in the documentation governing the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; and (iv) such Indebtedness is incurred either by Anvil or by the
Restricted Subsidiary who is the obligor on the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded.
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, limited
liability company, or other business entity or government or agency or political
subdivision thereof (including any subdivision or ongoing business of any such
entity or substantially all of the assets of any such entity, subdivision or
business).
"PUBLIC EQUITY OFFERING" means an underwritten public offering pursuant to a
registration statement filed with the Commission in accordance with the
Securities Act of (i) Equity Interests other than Disqualified Stock of Anvil or
any successor by merger to Anvil or (ii) of Equity Interests other than
Disqualified Stock of Anvil's parent or indirect parent corporation to the
extent that the cash proceeds therefrom are contributed to the equity capital of
Anvil or are used to purchase Equity Interests (other than Disqualified Stock)
of Anvil.
"PURCHASE MONEY LIEN" means a Lien granted on an asset or property to secure
a Purchase Money Obligation permitted to be incurred under the Senior Indenture
and incurred solely to finance the purchase, or the cost of construction or
improvement, of such asset or property; provided however, that such Lien
encumbers only such asset or property and is granted within 180 days of such
acquisition.
"PURCHASE MONEY NOTE" means a promissory note of a Securitization Entity
evidencing a line of credit, which may be irrevocable, from Anvil or any
Subsidiary of Anvil in connection with a Qualified Securitization Transaction to
a Securitization Entity, which note shall be repaid from cash available to the
Securitization Entity, other than amounts required to be established as reserves
pursuant to agreements, amounts paid to investors in respect of interest,
principal and other amounts owing to such investors and amounts owing to such
investors and amounts paid in connection with the purchase of newly generated
receivables.
"PURCHASE MONEY OBLIGATIONS" of any Person means any obligations of such
Person to any seller or any other Person incurred or assumed to finance the
purchase, or the cost of construction or improvement, of real or personal
property to be used in the business of such person or any of its Restricted
Subsidiaries in an amount that is not more than 100% of the cost, or fair market
value, as appropriate, of such property, and incurred within 180 days after the
date of such acquisition (excluding accounts payable to trade creditors incurred
in the ordinary course of business).
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"QUALIFIED SECURITIZATION TRANSACTION" means any transaction or series of
transactions that may be entered into by Anvil or any of its Subsidiaries
pursuant to which Anvil or any or its Subsidiaries may sell, convey or otherwise
transfer to (a) a Securitization Entity (in the case of a transfer by Anvil or
any of its Subsidiaries) and (b) any other Person (in the case of a transfer by
a Securitization Entity), or may grant a security interest in, any accounts
receivable or equipment (whether now existing or arising or acquired in the
future) of Anvil or any of its Subsidiaries, and any assets related thereto
including, without limitation, all collateral securing such accounts receivable
and equipment, all contracts and contract rights and all guarantees or other
obligations in respect of such accounts receivable and equipment, proceeds of
such accounts receivable and equipment and other assets (including contract
rights) which are customarily transferred or in respect of which security
interests are customarily granted in connection with asset securitization
transactions involving accounts receivable and equipment; PROVIDED that such
transaction or transactions are otherwise permitted by the terms of the Senior
Indenture including the provisions set forth under "Repurchase at the Option of
Holders--Asset Sales".
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement,
dated as of the date of the Senior Indenture, by and among Anvil and the other
parties named on the signature pages thereof, as such agreement may be amended,
modified or supplemented from time to time.
"REPRESENTATIVE" means the indenture trustee or other trustee, client or
representative for any senior Indebtedness.
"RESPONSIBLE OFFICER," when used with respect to the Trustee, means any
officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) 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 of his knowledge of
and familiarity with the particular subject.
"RESTRICTED INVESTMENT" means an Investment other than a Permitted
Investment.
"RESTRICTED SUBSIDIARY" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITIZATION ENTITY" means a Wholly Owned Subsidiary of Anvil (or another
Person in which Anvil or any Subsidiary of Anvil makes an Investment and to
which Anvil or any Subsidiary of Anvil transfers accounts receivable or
equipment and related assets) which engages in no activities other than in
connection with the financing of accounts receivable or equipment and which is
designated by the Board of Directors of Anvil (as provided below) as a
Securitization Entity (a) no portion of the Indebtedness or any other
obligations (contingent or otherwise) of which (i) is guaranteed by Anvil or any
Subsidiary of Anvil (excluding guarantees of obligations (other than the
principal of, and interest on, Indebtedness) pursuant to Standard Securitization
Undertakings), (ii) is recourse to or obligates Anvil or any Subsidiary of Anvil
in any way other than pursuant to Standard Securitization Undertakings, or (iii)
subjects any property or asset of Anvil or any Subsidiary of Anvil, directly or
indirectly, contingently or otherwise, to the satisfaction thereof other than
pursuant to Standard Securitization Undertakings, (b) with which neither Anvil
nor any Subsidiary of Anvil has any material contract, agreement, arrangement or
understanding other than on terms no less favorable to Anvil or such Subsidiary
than those that might be obtained at the time from Persons that are not
Affiliates of Anvil, other than fees payable in the ordinary course of business
in connection with servicing receivables of such entity, and (c) to which
neither Anvil nor any Subsidiary of Anvil has any obligation to maintain or
preserve such entity's financial condition or cause such entity to achieve
certain levels of operating results. Any such designation by the Board of
Directors of Anvil shall be evidenced to the Trustee by filing with the Trustee
a certified copy of the resolution of the Board of Directors of Anvil giving
effect to such designation and an officers' certificate certifying that such
designation complied with the foregoing conditions.
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"SENIOR NOTE OFFERING" means the offering of the Senior Notes by Anvil.
"SIGNIFICANT SUBSIDIARY" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Exchange Act, as such Regulation is in effect on the date
hereof.
"STANDARD SECURITIZATION UNDERTAKINGS" means representations, warranties,
covenants and indemnities entered into by Anvil or any Subsidiary of Anvil which
are reasonably customary in an accounts receivable or equipment transaction.
"SUBSIDIARY" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or one or more Subsidiaries
of such Person (or any combination thereof).
"SUBSIDIARY GUARANTORS" means any Restricted Subsidiary that executes a
Subsidiary Guarantee in accordance with the provisions of the Senior Indenture,
and their respective successors and assigns.
"399 VENTURE" means 399 Venture Partners, Inc.
"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939 (15 U.S.C.
SectionSection 77aaa-77bbbb) as in effect on the date on which the Senior
Indenture is qualified under the Trust Indenture Act.
"UNRESTRICTED SUBSIDIARY" means (i) any Subsidiary that is designated by the
Board of Directors as an Unrestricted Subsidiary pursuant to a Board Resolution;
but only to the extent that such Subsidiary: (a) has no Indebtedness other than
Non-Recourse Debt; (b) is not party to any agreement, contract, arrangement or
understanding with Anvil or any Restricted Subsidiary of Anvil unless the terms
of any such agreement, contract, arrangement or understanding are no less
favorable to Anvil or such Restricted Subsidiary than those that might be
obtained at the time from Persons who are not Affiliates of Anvil; (c) is a
Person with respect to which neither Anvil nor any of its Restricted
Subsidiaries has any direct or indirect obligation (x) to subscribe for
additional Equity Interests or (y) to maintain or preserve such Person's
financial condition or to cause such Person to achieve any specified levels of
operating results; and (d) has not guaranteed or otherwise directly or
indirectly provided credit support for any Indebtedness of Anvil or any of its
Restricted Subsidiaries. Any such designation by the Board of Directors shall be
evidenced to the Trustee by filing with the Trustee a certified copy of the
Board Resolution giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing conditions and was
permitted by the covenant described under the caption "--Restricted Payments."
If, at any time, any Unrestricted Subsidiary would fail to meet the foregoing
requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an
Unrestricted Subsidiary for purposes of the Senior Indenture and any
Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted
Subsidiary of Anvil as of such date (and, if such Indebtedness is not permitted
to be incurred as of such date under the covenant described under the caption
"--Incurrence of Indebtedness and Issuance of Preferred Stock," Anvil shall be
in default of such covenant). The Board of Directors of Anvil may at any time
designate any Unrestricted Subsidiary to be a Restricted Subsidiary; PROVIDED
that such designation shall be deemed to be an incurrence of Indebtedness by a
Restricted Subsidiary of Anvil of any outstanding Indebtedness of such
Unrestricted Subsidiary and such designation shall only be permitted if (i) such
Indebtedness is permitted under the covenant described under the caption
"--Incurrence of Indebtedness and Issuance of Preferred Stock," and (ii) no
Default or Event of Default would be in existence following such designation.
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"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (i) the sum of the
products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"WHOLLY OWNED SUBSIDIARY" of any Person means a Restricted 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.
Unrestricted Subsidiaries shall not be included in the definition of Wholly
Owned Subsidiary for any purposes of the Senior Indenture.
UNITS
Concurrent with the Initial Offering, Holdings offered Units in the Initial
Units Offering. Each Unit consisted of $1,000 aggregate liquidation preference
of Old Senior Preferred Stock and 13 shares of Class B Common. The Old Senior
Preferred Stock and the Class B Common comprising each Unit were not separately
tradable until the occurrence of certain events. Prior to such time, the
certificates for the shares of Old Senior Preferred Stock and Class B Common
comprising the Units bore legends restricting the separate transfer thereof.
After such time, the shares of Old Senior Preferred Stock and Class B Common
comprising the Units were transferable separately, subject to such restrictions
on transfer as apply. See "--Senior Preferred Stock," and "--Description of
Capital Stock--Common Stock" for further information regarding the Senior
Preferred Stock and the Class B Common.
SENIOR PREFERRED STOCK
The Senior Preferred Stock were issued by Holdings pursuant to a Certificate
of Designation. The terms of the New Senior Preferred Stock include those stated
in the Certificate of Designation. The forms and terms of the New Senior
Preferred Stock are the same as the form and terms of the Old Senior Preferred
Stock (which they replace) except that (i) the New Senior Preferred Stock bear a
Series B designation, (ii) the New Senior Preferred Stock have been registered
under the Securities Act, and therefore, will not bear legends restricting the
transfer thereof, and (iii) the holders of New Senior Preferred Stock will not
be entitled to certain rights under the Preferred Stock Registration Rights
Agreement, including the provisions providing for liquidated damages in certain
circumstances relating to the timing of the Preferred Exchange Offer, which
rights will terminate when the Preferred Exchange Offer is consummated. The New
Senior Preferred Stock are subject to all such terms, and holders of the New
Senior Preferred Stock are referred to the Certificate of Designation for a
statement of them. The following is a summary of the material terms and
provisions of the New Senior Preferred Stock. This summary does not purport to
be a complete description of the New Senior Preferred Stock and is subject to
the detailed provisions of, and qualified in its entirety by reference to, the
New Senior Preferred Stock and the Certificate of Designation (including the
definitions contained therein). A copy of the Certificate of Designation may be
obtained from Holdings by any holder or prospective investor upon request.
Definitions relating to certain capitalized terms are set forth under
"--Exchange Debentures--Certain Definitions" and throughout this description.
Capitalized terms that are used but not otherwise defined herein have the
meanings assigned to them in the Certificate of Designation and such definitions
are incorporated herein by reference. The Old Senior Preferred Stock and the New
Senior Preferred Stock are sometimes referred to herein collectively as the
"Senior Preferred Stock." Any descriptions of the Senior Preferred Stock
presented in the future tense shall refer to the New Senior Preferred Stock,
where appropriate.
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GENERAL
The Board of Directors of Holdings adopted resolutions creating a maximum of
2,300,000 shares of Senior Preferred Stock outstanding at any one time, which
consist of the 1,200,000 shares of Old Senior Preferred Stock issued in the
Initial Units Offering plus 1,100,000 additional shares of Senior Preferred
Stock which, among other things, may be used to pay certain dividends on the Old
Senior Preferred Stock issued in the Initial Units Offering at the election of
Holdings, and filed a Certificate of Designation with respect thereto with the
Secretary of State of the State of Delaware as required by Delaware law. Subject
to certain conditions, the Senior Preferred Stock will be exchangeable for
Exchange Debentures at the option of Holdings on any dividend payment date. The
New Senior Preferred Stock will be fully paid and non-assessable, and the
holders thereof will not have any subscription or preemptive rights related
thereto. United States Trust Company of New York will be the transfer agent and
registrar for the Senior Preferred Stock.
RANK
The Senior Preferred Stock will, with respect to dividend distributions and
distributions upon the liquidation, winding-up and dissolution of Holdings, rank
(i) senior to all classes of Common Stock of Holdings and each other class of
capital stock or series of Preferred Stock established after the date of the
Prospectus by the Board of Directors of Holdings the terms of which do not
expressly provide that it ranks on a parity with the Senior Preferred Stock as
to dividend distributions and distributions upon the liquidation, winding-up and
dissolution of Holdings (collectively referred to with the Common Stock of
Holdings as "Junior Securities"); and (ii) subject to certain conditions, on a
parity with each series of Preferred Stock existing on the date of the
Prospectus the terms of which do not expressly provide that it ranks junior to
any Senior Preferred Stock as to dividend distributions and distributions upon
the liquidation, winding-up and dissolution of Holdings and any class of capital
stock or series of Preferred Stock established after the date of this Prospectus
by the Board of Directors of Holdings, the terms of which expressly provide that
such class or series will rank on a parity with the Senior Preferred Stock as to
dividend distributions and distributions upon the liquidation, winding-up and
dissolution of Holdings (collectively referred to as "Parity Securities").
Creditors of Holdings will have priority over the Senior Preferred Stock with
respect to claims on the assets of Holdings. In addition, creditors and
stockholders of Holdings' Subsidiaries will have priority over the Senior
Preferred Stock with respect to claims on the assets of such Subsidiaries. The
Senior Preferred Stock will be subject to the issuance of series of Junior
Securities and Parity Securities, PROVIDED that Holdings may not issue any new
class of Parity Securities without the approval of the holders of at least 50%
of the shares of Senior Preferred Stock then outstanding, voting or consenting,
as the case may be, together as one class, except that without the approval of
the holders of Senior Preferred Stock, Holdings may issue and have outstanding
shares of Parity Securities issued from time to time in exchange for, or the
proceeds of which are used to redeem or repurchase, any or all of the shares of
Senior Preferred Stock or other Parity Securities.
DIVIDENDS
Holders of Senior Preferred Stock will be entitled to receive, when, as and
if declared by the Board of Directors of Holdings, out of funds legally
available therefor, dividends on the Senior Preferred Stock at a rate per annum
equal to 13% of the liquidation preference per share of Senior Preferred Stock.
All dividends will be cumulative whether or not earned or declared on a daily
basis from the date of issuance of the Senior Preferred Stock and will be
payable quarterly in arrears on March 15, June 15, September 15 and December 15
of each year, commencing on June 15, 1997. On or before March 15, 2002 Holdings
may, at its option, pay dividends in cash or in additional fully paid and
non-assessable shares of Senior Preferred Stock having an aggregate liquidation
preference equal to the amount of such dividends. After March 15, 2002,
dividends may be paid only in cash. It is not expected that Holdings will pay
any dividends in cash for any period ending on or prior to March 15, 2002. The
terms of certain debt instruments of Holdings and
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Anvil, including the Senior Indenture and the New Credit Agreement, will
restrict the payment of cash dividends by Holdings and the payment to Holdings
of cash dividends by Anvil, and future agreements may provide the same. See
"Risk Factors--Restrictions Imposed by Certain Covenants," "Risk Factors--Risks
Associated with Holding Company Structure," "Description of Securities--Senior
Notes--Certain Covenants" and "Description of Certain Indebtedness." If any
dividend (or portion thereof) payable on any dividend payment date after March
15, 2002 is not declared or paid in full in cash on such dividend payment date,
the amount of such dividend that is payable and that is not paid in cash on such
date will increase at the rate of 13% per annum from such dividend payment date
until declared and paid in full.
No full dividends may be declared or paid or funds set apart for the payment
of dividends on any Parity Securities for any period unless full cumulative
dividends shall have been or contemporaneously are declared and paid in full or
declared and, if payable in cash, a sum in cash set apart for such payment on
the Senior Preferred Stock. If full dividends are not so paid, the Senior
Preferred Stock will share dividends pro rata with the Parity Securities. No
dividends may be paid or set apart for such payment on Junior Securities (except
dividends on Junior Securities in additional shares of Junior Securities) and no
Junior Securities or Parity Securities may be repurchased, redeemed or otherwise
retired nor may funds be set apart for payment with respect thereto, if full
cumulative dividends have not been paid on the Senior Preferred Stock.
OPTIONAL REDEMPTION
The Senior Preferred Stock may be redeemed for cash (subject to contractual
and other restrictions with respect thereto and to the legal availability of
funds therefor) at any time on or after March 15, 2002, in whole or in part, at
the option of Holdings, at the following redemption prices (expressed as
percentages of the liquidation preference thereof) if redeemed during the
12-month period beginning March 15, of each of the years set forth below, in
each case together with an amount in cash equal to all accumulated and unpaid
dividends (including an amount in cash equal to a prorated dividend for the
period from the dividend payment date immediately prior to the redemption date
to the redemption date):
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---------------------------------------------------------------------------------- -----------
<S> <C>
2002.............................................................................. 106.500%
2003.............................................................................. 104.333%
2004.............................................................................. 102.167%
2005 and thereafter............................................................... 100.000%
</TABLE>
In addition, Holdings may redeem the Senior Preferred Stock, in whole or in
part, at the option of Holdings, at a redemption price equal to 113% of the
liquidation preference thereof, plus an amount in cash equal to all accumulated
and unpaid dividends (including an amount in cash equal to a prorated dividend
for the period from the dividend payment date immediately prior to the
redemption date to the redemption date), with the proceeds of a Public Equity
Offering, PROVIDED that such redemption shall occur within 60 days of the date
of the closing of such Public Equity Offering.
No optional redemption may be authorized or made (i) unless prior thereto
full unpaid cumulative dividends shall have been paid or a sum set apart for
such payment on the Senior Preferred Stock or (ii) at less than 101% of the
liquidation preference of the Senior Preferred Stock at any time when Holdings
is making or purchasing shares of Senior Preferred Stock under a Change of
Control Offer (as defined) in accordance with the provisions of "--Repurchase at
the Option of Holders--Change of Control."
In the event of partial redemptions of Senior Preferred Stock, the shares to
be redeemed will be determined PRO RATA or by lot, as determined by Holdings,
except that Holdings may redeem such shares held by any holders of fewer than
100 shares (or shares held by holders who would hold less than 100 shares as a
result of such redemption), without regard to any PRO RATA redemption
requirement. The terms
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of certain debt instruments of Holdings, including the Senior Indenture and the
New Credit Agreement, will restrict, directly or indirectly, the ability of
Holdings to redeem the Senior Preferred Stock, and future agreements to which
Holdings or its subsidiaries are parties may contain similar restrictions. See
"Description of Securities-Senior Notes--Certain Covenants" and "Description of
Certain Indebtedness."
MANDATORY REDEMPTION
On March 15, 2009, Holdings will be required to redeem (subject to the legal
availability of funds therefor) all outstanding shares of Senior Preferred Stock
at a price equal to the then effective liquidation preference thereof, plus an
amount in cash equal to all accumulated and unpaid dividends (including an
amount in cash equal to a prorated dividend for the period from the dividend
payment date immediately prior to the redemption date to the redemption date).
PROCEDURES FOR REDEMPTIONS
On and after a redemption date, unless Holdings defaults in the payment of
the applicable redemption price, dividends will cease to accrue on shares of
Senior Preferred Stock called for redemption and all rights of holders of such
shares will terminate except for the right to receive the redemption price,
without interest. Holdings will send a written notice of redemption by first
class mail to each holder of record of shares of Senior Preferred Stock, not
fewer than 30 days nor more than 60 days prior to the date fixed for such
redemption. Shares of Senior Preferred Stock issued and reacquired will, upon
compliance with the applicable requirements of Delaware law, have the status of
authorized but unissued shares of preferred stock of Holdings undesignated as to
series and may with any and all other authorized but unissued shares of
preferred stock of Holdings be designated or redesignated and issued or
reissued, as the case may be, as part of any series of preferred stock of
Holdings, except that any issuance or reissuance of shares of Senior Preferred
Stock must be in compliance with the Certificate of Designation.
REPURCHASE AT THE OPTION OF HOLDERS
CHANGE OF CONTROL
The Certificate of Designation provides that upon the occurrence of a Change
of Control, each Holder of Senior Preferred Stock will have the right to require
Holdings to repurchase all or any part of such Holder's Senior Preferred Stock
pursuant to the offer described below (the "Change of Control Offer") at an
offer price in cash equal to 101% of the aggregate liquidation preference
thereof, plus an amount in cash equal to all accumulated and unpaid dividends
per share (including an amount in cash equal to a prorated dividend for the
period from the dividend payment date immediately prior to the repurchase date
to the repurchase date) to the date of purchase (the "Change of Control
Payment"). Within 30 days following any Change of Control, Holdings will mail a
notice to each Holder describing the transaction or transactions that constitute
the Change of Control and offering to repurchase Senior Preferred Stock pursuant
to the procedures required by the Certificate of Designation and described in
such notice. Holdings will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of the Senior Preferred Stock as a result of a Change of Control.
The Change of Control Offer will remain open for a period of 20 Business
Days following its commencement and no longer, except to the extent that a
longer period is required by applicable law (the "Change of Control Offer
Period"). No later than five Business Days after the termination of the Offer
Period (the "Change of Control Purchase Date"), Holdings will purchase all
shares of Senior Preferred Stock validly tendered and not properly withdrawn
pursuant to the Change of Control Offer. Payment for any shares of Senior
Preferred Stock so purchased will be made in the same manner as dividend
payments on the Senior Preferred Stock.
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If the Change of Control Purchase Date is on or after a dividend record date
and on or before the related dividend payment date, any accumulated and unpaid
dividends will be paid to the Person in whose name a share of Senior Preferred
Stock is registered at the close of business on such record date, and no
additional dividend will be payable to Holders who tender shares of Senior
Preferred Stock pursuant to the Change of Control Offer.
On the Change of Control Purchase Date, Holdings will, to the extent lawful,
(1) accept for payment all shares of Senior Preferred Stock properly tendered
pursuant to the Change of Control Offer, (2) deposit with the Transfer Agent an
amount equal to the Change of Control Payment in respect of all shares of Senior
Preferred Stock so tendered and (3) deliver or cause to be delivered to the
Transfer Agent the Senior Preferred Stock so accepted together with an Officers'
Certificate stating the total number of shares of Senior Preferred Stock being
purchased by Holdings. The Transfer Agent will promptly mail to each Holder of
shares of Senior Preferred Stock so tendered the Change of Control Payment for
such shares, and the Transfer Agent will promptly authenticate and mail (or
cause to be transferred by book entry) to each Holder a new share certificate
representing any unpurchased shares of the Senior Preferred Stock represented by
the certificate tendered pursuant to the Change of Control Offer, if any.
Holdings will publicly announce the results of the Change of Control Offer on
the Change of Control Purchase Date.
Except as described above, the Certificate of Designation does not contain
provisions that permit the Holders of Senior Preferred Stock to require Holdings
to redeem the Senior Preferred Stock in the event of a takeover,
recapitalization or similar restructuring, including an issuer recapitalization
or similar transaction with management. Consequently, the Change of Control
provisions will not afford any protection in a highly leveraged transaction,
including such a transaction initiated by Holdings, management of Holdings or an
Affiliate of Holdings, if such transaction does not result in a Change of
Control. In addition, the existence of the Holder's right to require Holdings to
repurchase such Holder's Senior Preferred Stock upon the occurrence of a Change
of Control may or may not deter a third party from seeking to acquire Holdings
in a transaction that would constitute a Change of Control.
Holdings' ability to repurchase shares of Senior Preferred Stock pursuant to
a Change of Control Offer may be limited by a number of factors. The New Credit
Agreement will provide that certain change of control events with respect to
Holdings and/or Anvil would constitute a default thereunder permitting the
lending parties thereto to accelerate the Indebtedness thereunder. In addition,
certain events that may obligate Holdings or Anvil to offer to repay all
outstanding obligations under the New Credit Agreement may not constitute a
Change of Control under the Certificate of Designation. However, neither
Holdings nor Anvil may have sufficient resources to repay Indebtedness under the
New Credit Agreement and Holdings may not have sufficient resources to
repurchase tendered shares of Senior Preferred Stock. Furthermore, any future
credit agreements or other agreements relating to senior Indebtedness to which
Holdings or Anvil become a party may contain similar restrictions and
provisions. In the event a Change of Control occurs at a time when Holdings
and/or Anvil is directly or indirectly prohibited from purchasing Senior
Preferred Stock, Holdings and/or Anvil could seek the consent of its lenders to
the purchase of Senior Preferred Stock or could attempt to refinance the
borrowings that contain such prohibition. If Holdings and/or Anvil do not obtain
such a consent or repay such borrowings, the purchase of Senior Preferred Stock
will remain prohibited. Holdings' failure to purchase tendered Senior Preferred
Stock would constitute a breach of the Certificate of Designation which would,
in turn, constitute a default under the New Credit Agreement and could lead to
the acceleration of the indebtedness thereunder. In any such event, the
structural and legal subordination of the Senior Preferred Stock and the
security granted in respect of the New Credit Agreement would likely result in
the Holders of the Senior Preferred Stock receiving less ratably than creditors
of Holdings.
In addition, the terms of the Senior Notes of Anvil include provisions
similar to those contained in the Senior Preferred Stock enabling holders
thereof to require Anvil to repurchase all or any part of such securities under
circumstances constituting a Change of Control. However, Holdings and Anvil may
not
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have sufficient resources to repurchase tendered shares of Senior Preferred
Stock and/or Senior Notes and any such failure may constitute a default under
the terms of the New Credit Agreement, the Senior Notes, the Senior Indenture
and the Certificate of Designation. Again, in any such event, the structural and
legal subordination of the Senior Preferred Stock and the security granted in
respect of the New Credit Agreement would likely result in the Holders of the
Senior Preferred Stock receiving less ratably than creditors of Holdings.
The definition of Change of Control includes a phrase relating to the sale,
lease or transfer of "all or substantially all" of the assets of Holdings and
its Restricted Subsidiaries, taken as a whole. Although there is a developing
body of case law interpreting the phrase "substantially all," there is no
precise definition of the phrase under applicable law. Accordingly, the ability
of a Holder of Senior Preferred Stock to require Holdings to repurchase such
shares as a result of a sale, lease or transfer of less than all of the assets
of Holdings and its Restricted Subsidiaries taken as a whole to another Person
or group may be uncertain.
LIQUIDATION PREFERENCE
Upon any voluntary or involuntary liquidation, dissolution or winding-up of
Holdings, holders of Senior Preferred Stock will be entitled to be paid, out of
the assets of Holdings available for distribution, the liquidation preference
per share, plus an amount in cash equal to all accumulated and unpaid dividends
thereon to the date fixed for liquidation, dissolution or winding-up (including
an amount equal to a prorated dividend for the period from the last dividend
payment date to the date fixed for liquidation, dissolution or winding-up),
before any distribution is made on any Junior Securities, including, without
limitation, Common Stock of Holdings. If, upon any voluntary or involuntary
liquidation, dissolution or winding-up of Holdings, the amounts payable with
respect to the Senior Preferred Stock and all other Parity Securities are not
paid in full, the holders of the Senior Preferred Stock and the Parity
Securities will share equally and ratably in any distribution of assets of
Holdings in proportion to the full liquidation preference and accumulated and
unpaid dividends to which each is entitled. After payment of the full amount of
the liquidation preferences and accumulated and unpaid dividends to which they
are entitled, the holders of shares of Senior Preferred Stock will not be
entitled to any further participation in any distribution of assets of Holdings.
However, neither the sale, conveyance, exchange or transfer (for cash, shares of
stock, securities or other consideration) of all or substantially all of the
property or assets of Holdings nor the consolidation or merger of Holdings with
or into one or more corporations will be deemed to be a liquidation, dissolution
or winding-up of Holdings.
The Certificate of Designation for the Senior Preferred Stock does not
contain any provision requiring funds to be set aside to protect the liquidation
preference of the Senior Preferred Stock, although such liquidation preference
will be substantially in excess of the par value of such shares of Senior
Preferred Stock. In addition, Holdings is not aware of any provision of Delaware
law or any controlling decision of the courts of the State of Delaware (the
state of incorporation of Holdings) that requires a restriction upon any surplus
of Holdings solely because the liquidation preference of the Senior Preferred
Stock will exceed its par value. Consequently, there will be no restriction upon
any surplus of Holdings solely because the liquidation preference of the Senior
Preferred Stock will exceed the par value and there will be no remedies
available to holders of the Senior Preferred Stock before or after the payment
of any dividend, other than in connection with the liquidation of Holdings,
solely by reason of the fact that such dividend would reduce the surplus of
Holdings to an amount less than the difference between the liquidation
preference of the Senior Preferred Stock and its par value.
VOTING RIGHTS
Holders of the Senior Preferred Stock have no voting rights with respect to
general corporate matters except as provided by law or as set forth in the
Certificate of Designation. The Certificate of Designation provides that (a) if
(i) dividends on the Senior Preferred Stock are in arrears and unpaid (and, in
the case
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of dividends payable after March 15, 2002, are not paid in cash) for four
consecutive quarterly periods, (ii) Holdings fails to discharge any redemption
obligation with respect to the Senior Preferred Stock (whether or not Holdings
is permitted to do so by the terms of the Senior Indenture, the New Credit
Agreement or any other obligation of Holdings), (iii) Holdings fails to make an
offer to purchase all of the outstanding shares of Senior Preferred Stock
following a Change of Control (whether or not Holdings is permitted to do so by
the terms of the Senior Indenture, the New Credit Agreement or any other
obligation of Holdings) or fails to purchase shares of Senior Preferred Stock
from holders who elect to have such shares purchased pursuant to the Change of
Control Offer, (iv) a breach or violation of the provisions described under the
caption "--Certain Covenants" occurs and the breach or violation continues for a
period of 30 days or more, or (v) a default occurs on the obligation to pay
principal of, interest on or any other payment obligation when due (a "Payment
Default") at final maturity on one or more classes of Indebtedness of Holdings
or any Subsidiary of Holdings, whether such Indebtedness exists on the Senior
Preferred Stock Issue Date or is incurred thereafter, having individually or in
the aggregate an outstanding principal amount of $25,000,000 or more, or any
other Payment Default occurs on one or more such classes of Indebtedness and
such class or classes of Indebtedness are declared due and payable prior to
their respective maturities, then the number of directors constituting the Board
of Directors of Holdings will be adjusted to permit the holders of the majority
of the then outstanding Senior Preferred Stock, voting separately as a class, to
elect two directors, and (b) the approval of holders of a majority of the
outstanding shares of Senior Preferred Stock, voting as a separate class, will
be required for (i) any merger, consolidation or sale of assets of Holdings
except as permitted pursuant to the covenant below entitled "Merger or
Consolidation" and (ii) for any modification of the Exchange Debenture
Indenture. Each such event described in clause (a) above is referred to herein
as a "Voting Rights Triggering Event." Voting rights arising as a result of a
Voting Rights Triggering Event will continue until such time as all dividends in
arrears on the Senior Preferred Stock are paid in full (and after March 15,
2002, paid in cash) and any failure, breach or default referred to in clause (a)
is remedied.
In addition, the Certificate of Designation provides that, except as stated
above under "--Ranking," Holdings will not authorize any class of Parity
Securities without the affirmative vote or consent of holders of at least 50% of
the shares of Senior Preferred Stock then outstanding, voting or consenting, as
the case may be, as one class. The Certificate of Designation also provides that
Holdings may not amend the Certificate of Designation so as to affect adversely
the specified rights, preferences, privileges or voting rights of holders of
shares of the Senior Preferred Stock, or authorize the issuance of any
additional shares of Senior Preferred Stock, without the affirmative vote or
consent of the holders of at least 50% of the then outstanding shares of Senior
Preferred Stock, voting or consenting, as the case may be, as one class. The
Certificate of Designation also provides that, except as set forth above, (a)
the creation, authorization or issuance of any shares of Junior Securities or
Parity Securities, (b) the decrease in the amount of authorized capital stock of
any class, including any Preferred Stock or (c) the increase in the amount of
authorized capital stock of any class of Junior Securities shall not require the
consent of the holders of Senior Preferred Stock and shall not be deemed to
affect adversely the rights, preferences, privileges or voting rights of holders
of shares of Senior Preferred Stock.
Under Delaware law, holders of Senior Preferred Stock will be entitled to
vote as a class upon a proposed amendment to the Certificate of Incorporation,
whether or not entitled to vote thereon by the Certificate of Incorporation, if
the amendment would increase or decrease the par value of the shares of such
class, or alter or change the powers, preferences or special rights of the
shares or such class so as to affect them adversely.
CERTAIN COVENANTS
MERGER OR CONSOLIDATION. The Certificate of Designation provides that,
without the consent of holders of a majority of the outstanding shares of Senior
Preferred Stock, voting as a separate class, Holdings shall not, in a single
transaction or series of related transactions, consolidate or merge with or into
(whether or
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not Holdings is the surviving corporation), or directly and/or indirectly
through its Restricted Subsidiaries sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of its properties or assets
determined on a consolidated basis for Holdings and its Restricted Subsidiaries
taken as a whole in one or more related transactions, to another corporation,
Person or entity unless (i) Holdings is the surviving corporation or the entity
or the Person formed by or surviving any such consolidation or merger (if other
than Holdings) or to which such sale, assignment, transfer, lease, conveyance or
other disposition will have been made is a corporation organized or existing
under the laws of the United States, any state thereof or the District of
Columbia; (ii) the Senior Preferred Stock shall be converted into or exchanged
for and shall become shares of the entity or Person formed by or surviving any
such consolidation or merger (if other than Holdings) or the entity or Person to
which such sale, assignment, transfer, lease, conveyance or other disposition
such successor, transferee or resulting corporation, having in respect of such
successor, transferee or resulting corporation substantially the same powers,
preferences and relative participating, optional or other special rights, and
the qualifications, limitations or restrictions thereon, that the Senior
Preferred Stock had immediately prior to such consolidation, merger, sale,
assignment, transfer, lease, conveyance or other disposition; (iii) immediately
after such transaction, no Voting Rights Triggering Event, and no event that
after the giving of notice or lapse of time or both would become a Voting Rights
Triggering Event, shall have occurred and be continuing; (iv) the entity or
Person formed by or surviving any such consolidation or merger or to which such
sale, assignment, transfer, lease, conveyance or other disposition will have
been made will have Consolidated Net Worth immediately after the transaction
equal to or greater than the Consolidated Net Worth of Holdings immediately
preceding the transaction; and (v) prior to the consummation of any such
proposed transaction, Holdings shall have delivered to the Transfer Agent an
Officers' Certificate and an opinion of counsel to the effect that such
transaction complies with the terms of the Certificate of Designation and that
all conditions precedent to such transaction have been satisfied.
JUNIOR PAYMENTS. The Certificate of Designation provides that Holdings will
not, directly or indirectly, (i) declare or pay any dividend or make any
distribution on account of any Junior Securities (other than dividends or
distributions payable in Junior Securities (other than Disqualified Stock)),
(ii) purchase, redeem or otherwise acquire or retire for value any Junior
Securities or (iii) make any Restricted Investment (all such dividends,
distributions, purchases, redemptions, acquisitions, retirements and Restricted
Investments being collectively referred to as "Junior Payments"), if, at the
time of such Junior Payment:
(i) a Voting Rights Triggering Event shall have occurred and be
continuing or would occur as a consequence thereof; or
(ii) all dividends on the Senior Preferred Stock payable on dividend
payment dates after March 15, 2002, have not been declared and paid in cash.
Notwithstanding the foregoing, the Certificate of Designation shall not
prohibit as Junior Payments:
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(a) the payment of any dividend within 60 days after the date of
declaration thereof, if at said date of declaration, such payment would
comply with all of the provisions of the Certificate of Designation
(including, but not limited to, the "Junior Payments" covenant);
(b) the making of any Restricted Investment in exchange for, or out of
the proceeds of, the substantially concurrent sale (other than to a
Subsidiary of Holdings) of, or from substantially concurrent additional
capital contributions in respect of, Equity Interests of Holdings (other
than Disqualified Stock);
(c) (X) the redemption, repurchase, retirement or other acquisition of
any Parity Securities of Holdings in exchange for, or out of the proceeds
of, the substantially concurrent sale (other than to a Subsidiary of
Holdings) of, or from substantially concurrent additional capital
contributions in respect of, other Parity or Junior Securities of Holdings
(other than any Disqualified Stock) and (Y) the redemption, repurchase,
retirement or other acquisition of any Junior Securities of Holdings in
exchange for, or out of the proceeds of, the substantially concurrent sale
(other than to a Subsidiary of Holdings) of, or from substantially
concurrent additional capital contributions in respect of, other Junior
Securities of Holdings (other than any Disqualified Stock);
(d) the repurchase, redemption or other acquisition or retirement for
value of any Equity Interests of Holdings or any of its Restricted
Subsidiaries held by any member of Holdings' (or any of its Restricted
Subsidiaries') management pursuant to any management agreement, stock option
agreement or plan or stockholders agreement; PROVIDED that (X) the aggregate
price paid for all such repurchased, redeemed, acquired or retired Equity
Interests will not exceed $2.0 million in any fiscal year (plus any amount
available for such payments hereunder since the date of the Certificate of
Designation which have not been used for such purpose) or (Y) $8.0 million
in the aggregate (in each case, net of the cash proceeds received by
Holdings from subsequent reissuances of such Equity Interests to new members
of management);
(e) loans to members of management of Holdings or any Restricted
Subsidiary the proceeds of which are used for a concurrent purchase of
Equity Interests of Holdings;
(f) the payment of director's fees and reasonable expenses of its
directors in an aggregate amount not to exceed $125,000 per year (including
indemnification obligations and professional fees and expenses) and to pay
salaries and other compensation of employees who perform services for both
Anvil and Holdings;
(g) an amount not to exceed $200,000 in aggregate to enable Holdings to
make payments to holders of Capital Stock in lieu of issuing fractional
shares thereof;
(h) repurchases of Capital Stock deemed to occur upon exercise of stock
options or warrants if such Capital Stock represents a portion of the
exercise price thereof; and
(i) payments in connection with the application of the net proceeds of
the Recapitalization as set forth under "Use of Proceeds".
TRANSACTIONS WITH AFFILIATES. The Certificate of Designation provides that
Holdings will not, and will not permit any of its Restricted Subsidiaries to,
sell, lease, transfer or otherwise dispose of any of its properties or assets
to, or purchase any property or assets from, or enter into or make any contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless
(i) such Affiliate Transaction is on terms that are no less favorable to
Holdings or the relevant Restricted Subsidiary than those that would have been
obtained in a comparable transaction by Holdings or such Restricted Subsidiary
with an unrelated Person and (ii) Holdings delivers to the Transfer Agent (a)
with respect to any Affiliate Transaction entered into after the date of the
Certificate of Designation involving aggregate consideration in excess of $2.0
million, a resolution of the Board of Directors set forth in an Officers'
Certificate certifying that such Affiliate
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Transaction complies with clause (i) above and that such Affiliate Transaction
has been approved by a majority of the disinterested members of the Board of
Directors and (b) with respect to any Affiliate Transaction involving aggregate
consideration in excess of $7.5 million, an opinion as to the fairness to
Holdings or such Restricted Subsidiary of such Affiliate Transaction from a
financial point of view issued by an investment banking firm of national
standing; PROVIDED that the following will not be deemed to be Affiliate
Transactions: (o) reasonable fees and compensation paid to, and indemnity
provided on behalf of, officers and directors of Holdings, Anvil or any
Restricted Subsidiary as determined in good faith by the appropriate Board of
Directors or senior management; (p) the provision of administrative or
management services by Holdings or any of its officers to Holdings or any of its
Restricted Subsidiaries in the ordinary course of business consistent with past
practice, (q) transactions between Holdings or one or more of its Restricted
Subsidiaries and the relevant Securitization Entity effected as part of a
Qualified Securitization Transaction; (r) any agreement as in effect as of the
Senior Preferred Stock Issue Date (including, without limitation, the New Credit
Agreement) or any amendment thereto or any transactions contemplated thereby
(including pursuant to any amendment thereto) and any replacement agreement so
long as any such amendment or replacement agreement is not more disadvantageous
to the Holders of Senior Preferred Stock or Exchange Debentures in any material
respect than the original agreement as in effect on the Senior Preferred Stock
Issue Date; (s) payments or loans to employees or consultants which are approved
by the Board of Directors of Holdings in good faith; (t) the existence of, or
the performance by Holdings or any of its Restricted Subsidiaries of its
obligations under the terms of, any stockholders agreement (including any
registration rights agreement or purchase agreement related thereto) to which it
is a party as of the Senior Preferred Stock Issue Date and any similar agreement
which it may enter into thereafter; provided however, that the existence of, or
the performance by Holdings or any of its Restricted Subsidiaries of obligations
under any similar agreement entered into after the Senior Preferred Stock Issue
Date shall only be permitted by this clause (t) to the extent that the terms of
any such new agreement are not otherwise disadvantageous to the Holders of the
Senior Preferred Stock or Exchange Debentures in any material respect; (u)
transactions with customers, clients, suppliers, joint venture partners or
purchasers or sellers of goods or services, in each case in the ordinary course
of business (including, without limitation, pursuant to joint venture
agreements) and otherwise in compliance with the terms of the Exchange Debenture
Indenture which are at least as favorable as might reasonably have been obtained
at such time from an unaffiliated party; (v) any employment agreement entered
into by Holdings or any of its Restricted Subsidiaries in the ordinary course of
business and consistent with the past practice of Holdings or such Restricted
Subsidiary (including, without limitation, any such employment agreements
existing prior to the Senior Preferred Issue Date); (w) the granting of stock
options to employees and directors of Holdings and its Restricted Subsidiaries
in accordance with the New Stock Option Plan at exercise prices equal to the
fair market value of the Common Stock and the issuance of Common Stock upon the
exercise of such options; (x) transactions between or among Holdings and/or its
Wholly Owned Subsidiaries, (y) (i) the payment of customary management,
consulting and advisory fees and related expenses to BRS and 399 Venture and
their Affiliates not to exceed $750,000 per year in aggregate and (ii) payments
by Anvil or any of its Restricted Subsidiaries to BRS and 399 Venture and their
Affiliates made pursuant to any financial advisory, financing, underwriting or
placement agreement or in respect of other investment banking activities,
including, without limitation, in connection with acquisitions or divestitures
which are approved by the Board of Directors of Anvil, Holdings or such
Restricted Subsidiary in good faith not to exceed $750,000 per year in
aggregate; and (z) transactions permitted by the covenant described in "--Junior
Payments."
REPORTS. The Certificate of Designation provides that, whether or not
required by the rules and regulations of the Commission, so long as any shares
of Senior Preferred Stock are outstanding, Holdings will furnish to the Holders
of Senior Preferred Stock, within 15 days after it is or would have been
required to file such with the Commission, (i) all quarterly and annual
financial information that would be required to be contained in a filing with
the Commission on Forms 10-Q and 10-K if Holdings were required to file such
Forms, including a "Management's Discussion and Analysis of Financial Condition
and Results of
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Operations" and, with respect to the annual information only, a report thereon
by Holdings' certified independent accountants and (ii) all current reports that
would be required to be filed with the Commission on Form 8-K if Holdings was
required to file such reports. In addition, whether or not required by the rules
and regulations of the Commission, Holdings will file a copy of all such
information and reports with the Commission for public availability (unless the
Commission will not accept such a filing) and make such information available to
securities analysts and prospective investors upon request. In addition,
Holdings has agreed that, for so long as any shares of Senior Preferred Stock
remain outstanding, it will furnish to the Holders and to securities analysts
and prospective investors, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act.
EXCHANGE
Holdings may at its option exchange all, but not less than all, of the then
outstanding shares of Senior Preferred Stock into Exchange Debentures on any
dividend payment date, PROVIDED that on the date of such exchange: (a) there are
no contractual impediments to such exchange; (b) there are legally available
funds sufficient therefor; (c) a registration statement relating to the Exchange
Debentures shall have been declared effective under the Securities Act prior to
such exchange and shall continue to be in effect on the date of such exchange or
Holdings shall have obtained a written opinion of counsel that an exemption from
the registration requirements of the Securities Act is available for such
exchange, and that upon receipt of such Exchange Debentures pursuant to such
exchange made in accordance with such exemption, the holders (assuming such
holder is not an Affiliate of Holdings) thereof will not be subject to any
restrictions imposed by the Securities Act upon the resale thereof and such
exemption is relied upon by Holdings for such exchange; (d) the Exchange
Debenture Indenture and the trustee thereunder shall have been qualified under
the Trust Indenture Act; (e) immediately after giving effect to such exchange,
no Default or Event of Default (each as defined in the Exchange Debenture
Indenture) would exist under the Exchange Debenture Indenture; and (f) Holdings
shall have delivered a written opinion of counsel, dated the date of exchange,
regarding the satisfaction of the conditions set forth in clauses (a), (b), (c),
(d) and (e) and certain other matters. Holdings shall send a written notice of
exchange by mail to each holder of record of shares of Senior Preferred Stock,
which notice shall state, among other things, (i) that Holdings is exercising
its option to exchange the Senior Preferred Stock for Exchange Debentures
pursuant to the Certificate of Designation and (ii) the date of exchange (the
"Exchange Date"), which date shall not be less than 30 days nor more than 60
days following the date on which such notice is mailed. On the Exchange Date,
holders of outstanding shares of Senior Preferred Stock will be entitled to
receive a principal amount of Exchange Debentures equal to the liquidation
preference per share, plus an amount in cash equal to all accrued and unpaid
dividends (including an amount in cash equal to a prorated dividend for the
period from the dividend payment date immediately prior to the Exchange Date to
the Exchange Date), as provided below.
The Exchange Debentures will be issued in registered form, without coupons.
Exchange Debentures issued in exchange for Senior Preferred Stock will be issued
in principal amounts of $1,000 and integral multiples thereof to the extent
possible, and will also be issued in principal amounts less than $1,000 so that
each holder of Senior Preferred Stock will receive certificates representing the
entire amount of Exchange Debentures to which his shares of Senior Preferred
Stock entitle him, PROVIDED that Holdings may, at its option, pay cash in lieu
of issuing an Exchange Debenture in a principal amount less than $1,000. On and
after the Exchange Date, dividends will cease to accrue on the outstanding
shares of Senior Preferred Stock, and all rights of the holders of Senior
Preferred Stock (except the right to receive the Exchange Debentures, an amount
in cash equal to the accrued and unpaid dividends to the Exchange Date and if
Holdings so elects, cash in lieu of any Exchange Debenture which is in an amount
that is not an integral multiple of $1,000) will terminate. The person entitled
to receive the Exchange Debentures issuable upon such exchange will be treated
for an purposes as the registered holder of such Exchange Debentures.
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The New Credit Agreement contains limitations with respect to Holdings'
ability to issue the Exchange Debentures, and any future credit agreements or
other agreements relating to indebtedness to which Holdings or any of its
Subsidiaries become a party may contain similar limitations. See "Description of
Securities-Senior Notes--Certain Covenants" and "Description of Certain
Indebtedness."
Holdings intends to comply with the provisions of Rule 13e-4 promulgated
pursuant to the Exchange Act in connection with any exchange, to the extent
applicable.
TRANSFER AGENT AND REGISTRAR. United States Trust Company of New York is
the transfer agent and registrar for the Senior Preferred Stock.
BOOK-ENTRY, DELIVERY AND FORM
GLOBAL SENIOR PREFERRED STOCK CERTIFICATE
Except as set forth in the next paragraph, the New Senior Preferred Stock
will initially be issued in the form of one global certificate (the "Global
Certificate"). The Global Certificate will be deposited upon issuance of the New
Senior Preferred Stock offered hereby (the "Closing Date") with, or on behalf
of, the Depositary and registered in the name of Cede & Co., as nominee of the
Depositary (such nominee being referred to herein as the "Global Certificate
Holder").
Senior Preferred Stock that were issued as described below under
"--Certificated Securities" will be issued in the form of registered definitive
certificates (the "Certificated Securities"). Such Certificated Securities may,
unless the Global Certificate has previously been exchanged for Certificated
Securities, be exchanged by a QIB for an interest in the Global Certificate.
The Depositary is a limited-purpose trust company that was created to hold
securities for its participating organizations (collectively, the "Participants"
or the "Depositary's Participants") and to facilitate the clearance and
settlement of transactions in such securities between Participants through
electronic book-entry changes in accounts of its Participants. The Depositary's
Participants include securities brokers and dealers, banks and trust companies,
clearing corporations and certain other organizations. Access to the
Depositary's system is also available to other entities such as banks, brokers,
dealers and trust companies (collectively, the "Indirect Participants" or the
"Depositary's Indirect Participants") that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly. Persons who are
not Participants may beneficially own securities held by or on behalf of the
Depositary only through the Depositary's Participants or the Depositary's
Indirect Participants.
Holdings expects that pursuant to procedures established by the Depositary
(i) upon deposit of the Global Certificate, the Depositary will credit the
accounts of Participants designated by the Exchange Agent with the respective
liquidation preference of the individual beneficial interests represented by
such Global Certificate and (ii) ownership of the Senior Preferred Stock
evidenced by the Global Certificate will be shown on, and the transfer of
ownership thereof will be effected only through, records maintained by the
Depositary (with respect to the interests of the Depositary's Participants), the
Depositary's Participants and the Depositary's Indirect Participants.
Prospective investors are advised that the laws of some states require that
certain persons take physical delivery in definitive form of securities that
they own. Consequently, the ability to transfer Senior Preferred Stock evidenced
by the Global Certificate will be limited to such extent.
So long as the Global Certificate Holder is the registered owner of any
Senior Preferred Stock, the Global Certificate Holder will be considered the
sole Holder under the Certificate of Designation of any Senior Preferred Stock
evidenced by the Global Certificate. Beneficial owners of Senior Preferred Stock
evidenced by the Global Certificate will not be considered the owners or Holders
thereof under the Certificate of Designation for any purpose. Neither Holdings
nor the transfer agent and registrar will have any responsibility or liability
for any aspect of the records of the Depositary or for maintaining, supervising
or reviewing any records of the Depositary relating to the Senior Preferred
Stock.
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Payments in respect of the liquidation preference, redemption price,
dividends and Liquidated Damages, if any, on any Senior Preferred Stock
registered in the name of the Global Certificate Holder on the applicable record
date will be payable to or at the direction of the Global Certificate Holder in
its capacity as the registered Holder under the Certificate of Designation.
Under the terms of the Certificate of Designation, Holdings and the transfer
agent and registrar may treat the persons in whose names Senior Preferred Stock,
including the Global Certificate, are registered as the owners thereof for the
purpose of receiving such payments. Consequently, neither Holdings nor the
transfer agent and registrar has or will have any responsibility or liability
for the payment of such amounts to beneficial owners of Senior Preferred Stock.
Holdings believes, however, that it is currently the policy of the Depositary to
immediately credit the accounts of the relevant Participants with such payments,
in amounts proportionate to their respective holdings of beneficial interests in
the relevant security as shown on the records of the Depositary. Payments by the
Depositary's Participants and the Depositary's Indirect Participants to the
beneficial owners of Senior Preferred Stock will be governed by standing
instructions and customary practice and will be the responsibility of the
Depositary's Participants or the Depositary's Indirect Participants.
CERTIFICATED SECURITIES
Subject to certain conditions, investors may receive Certificated
Securities. In addition, if (i) Holdings notifies the transfer agent and
registrar in writing that the Depositary is no longer willing or able to act as
a depositary and Holdings is unable to locate a qualified successor within 90
days or (ii) Holdings, at its option, notifies the transfer agent and registrar
in writing that it elects to cause the issuance of Certificated Securities,
then, upon surrender by the Global Certificate Holder of its Global Certificate,
Certificated Securities will be issued to each person that the Global
Certificate Holder and the Depositary identify as being the beneficial owner of
the related Senior Preferred Stock.
Neither Holdings nor the transfer agent and registrar will be liable for any
delay by the Global Certificate Holder or the Depositary in identifying the
beneficial owners of Senior Preferred Stock and Holdings and the transfer agent
and registrar may conclusively rely on, and will be protected in relying on,
instructions from the Global Certificate Holder or the Depositary for all
purposes.
SAME-DAY SETTLEMENT AND PAYMENT
The Certificate of Designation requires that payments in respect of the
Senior Preferred Stock represented by the Global Certificate (including
liquidation preference, redemption price, dividends and Liquidated Damages, if
any) be made by wire transfer of immediately available funds to the accounts
specified by the Global Certificate Holder. With respect to Certificated
Securities, Holdings will make all payments of liquidation preference,
redemption price, dividends and Liquidated Damages, if any, by wire transfer of
immediately available funds to the accounts specified by the Holders thereof or,
if no such account is specified, by mailing a check to each such Holder's
registered address. Secondary trading in preferred stock of corporate issuers is
generally settled in clearing-house or next-day funds. In contrast, the New
Senior Preferred Stock represented by the Global Certificate are expected to
trade in the Depositary's Same-Day Funds Settlement System, and any permitted
secondary market trading activity in such Senior Preferred Stock will,
therefore, be required by the Depositary to be settled in immediately available
funds. Holdings expects that secondary trading in the Certificated Securities
will also be settled in immediately available funds.
EXCHANGE DEBENTURES
GENERAL
The Exchange Debentures, if issued, will be issued under an Indenture (the
"Exchange Debenture Indenture") between Holdings and United States Trust Company
of New York, as trustee (the "Trustee").
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The terms of the Exchange Debentures include those stated in the Exchange
Debenture Indenture and those made part of the Exchange Debenture Indenture by
reference to the Trust Indenture Act of 1939. The Exchange Debentures will be
subject to all such terms, and prospective holders of the Exchange Debentures
are referred to the Exchange Debenture Indenture and the Trust Indenture Act for
a statement of such terms. The following summary of certain provisions of the
Exchange Debenture Indenture does not purport to be complete and is qualified in
its entirety by reference to the Exchange Debenture Indenture, including the
definitions therein of certain terms. Definitions of certain capitalized terms
used in the Exchange Debenture Indenture and in the following summary are set
forth below under "--Certain Definitions."
The Exchange Debentures, if issued, will be general unsecured obligations of
Holdings, subordinated to all existing and future Senior Indebtedness, including
Holdings' Guarantee of the Senior Notes and the guarantee by Holdings of
borrowings under the New Credit Agreement. The Exchange Debentures will be
issued in fully registered form only in denominations of $1,000 and integral
multiples thereof (other than as described in "--Senior Preferred
Stock--Exchange" or with respect to additional Exchange Debentures issued in
lieu of cash interest as described herein).
Restrictions in the Exchange Debenture Indenture on the ability of Holdings
and its Restricted Subsidiaries to incur additional Indebtedness, to make Asset
Sales, to enter into transactions with Affiliates and to enter into mergers,
consolidations or sales of all or substantially all of its assets, may make more
difficult or discourage a takeover of Anvil or Holdings, whether favored or
opposed by the management of Anvil and Holdings. While such restrictions cover a
variety of arrangements which have traditionally been used to effect highly
leveraged transactions, the Exchange Debenture Indenture may not afford holders
of Exchange Debentures protection in all circumstances from the adverse aspects
of a highly leveraged transaction, reorganization, restructuring, merger or
similar transaction.
As of the date hereof, Holdings has five Subsidiaries, all of which
constitute Restricted Subsidiaries for the purposes of the Exchange Debenture
Indenture. Under certain circumstances, Holdings will be able to designate
future Subsidiaries as Unrestricted Subsidiaries. Unrestricted Subsidiaries will
not be subject to many of the restrictive covenants set forth in the Exchange
Debenture Indenture.
PRINCIPAL, MATURITY AND INTEREST
The Exchange Debentures will be limited in aggregate principal amount to
$57,500,000 and will mature on March 15, 2009. Interest on the Exchange
Debentures will accrue at a rate of 13% per annum from the Exchange Date or from
the most recent interest payment date to which interest has been paid or
provided for. Interest will be payable semi-annually in cash (or, on or prior to
March 15, 2002, in additional Exchange Debentures, at the option of Holdings) in
arrears on March 15 and September 15 of each year, commencing with the first
such date after the Exchange Date, to Holders of record on the immediately
preceding March 1 and September 1. Interest on the Exchange Debentures will be
computed on the basis of a 360-day year of twelve 30-day months and the actual
number of days elapsed. Principal, premium, if any, and interest on the Exchange
Debentures will be payable at the office or agency of Holdings maintained for
such purpose within the City and State of New York or, at the option of
Holdings, payment of interest may be made by check mailed to the Holders of the
Exchange Debentures at their respective addresses set forth in the register of
Holders of Exchange Debentures; PROVIDED that all payments with respect to
Global Exchange Debentures and Certificated Securities the Holders of whom have
given wire transfer instructions to Holdings will be required to be made by wire
transfer of immediately available funds to the accounts specified by the Holders
thereof. Until otherwise designated by Holdings, Holdings' office or agency will
be the office of the Trustee maintained for such purpose. Holdings may change
such office without prior notice to holders of the Exchange Debentures, and
Holdings or any of its Subsidiaries may act as Paying Agent or Registrar.
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SUBORDINATION AND RANKING
All obligations in respect of the Exchange Debentures will be subordinated
to the prior payment of all existing and future Senior Indebtedness of Holdings
(including Holdings' Guarantee of the Senior Notes), and will rank PARI PASSU or
senior in right of payment to all other Subordinated Indebtedness of Holdings.
The Exchange Debentures will also effectively rank junior to all indebtedness of
Holdings' Subsidiaries, including the indebtedness evidenced by the Senior
Notes. As of February 1, 1997, on a pro forma basis after giving effect to the
Recapitalization, the aggregate principal amount of Senior Indebtedness of
Holdings (including indebtedness of Holdings' Subsidiaries) would have been
approximately $162.0 million. The Exchange Debenture Indenture permits Holdings
and its Subsidiaries to incur additional Indebtedness, including additional
Senior Indebtedness, subject to certain limitations. In addition, under the
terms of the Exchange Debenture Indenture, Holdings' Subsidiaries may incur
certain Indebtedness pursuant to agreements that may restrict the ability of
such Subsidiaries to make dividends or other intercompany transfers to Holdings
necessary to service Holdings' obligations, including its obligations under the
Exchange Debentures. Any failure by Holdings to satisfy its obligations with
respect to the Exchange Debentures at maturity (with respect to payments of
principal) or prior thereto (with respect to payments of interest or required
repurchases) would constitute a default under the Exchange Debenture Indenture
and the New Credit Agreement and could cause a default under agreements
governing other indebtedness of Holdings and its Subsidiaries. See "Risk
Factors--Risks Associated with Holding Company Structure," "--Restrictions
Imposed by Certain Covenants" and "Description of Certain Indebtedness."
Upon (a) any distribution to creditors of Holdings in a liquidation or
dissolution of Holdings or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to Holdings or its property or (b)
an assignment for the benefit of creditors or any marshalling of Holdings'
assets and liabilities, the holders of Senior Indebtedness will be entitled to
receive payment in full of all Obligations due in respect of such Senior
Indebtedness (including interest after the commencement of any such proceeding
at the rate specified in the applicable Senior Indebtedness) before holders of
the Exchange Debentures will be entitled to receive any payment with respect to
the Exchange Debentures. Until all Obligations with respect to Senior
Indebtedness are paid in full, any distribution to which holders of the Exchange
Debentures would be entitled shall be made to holders of Senior Indebtedness.
However, holders of the Exchange Debentures may receive securities that are
subordinated at least to the same extent as the Exchange Debentures to Senior
Indebtedness and any securities issued in exchange for Senior Indebtedness.
In addition, Holdings may not make any payment upon or in respect of the
Exchange Debentures (except in such subordinated securities) if (a) a default in
the payment of any principal, premium, if any, interest or other Obligations
with respect to any Designated Senior Debt occurs and is continuing beyond any
applicable grace period (whether upon maturity, as a result of acceleration or
otherwise) or (b) any other default occurs and is continuing with respect to any
Designated Senior Debt that permits holders of such Designated Senior Debt to
accelerate its maturity, and Holdings and the Trustee receive a notice of such
default (a "Payment Blockage Notice") from the holders, or from the trustee,
agent or other representative of the holders, of any such Designated Senior
Debt. Payments on the Exchange Debentures may and shall be resumed upon the
earlier of (i) the date upon which the default is cured or waived (or the date
on which the Designated Senior Debt as to which the default relates shall have
ceased to exist by having been discharged or paid in full in cash) or (ii) in
the case of a default referred to in clause (b) above, 179 days after the date
on which the applicable Payment Blockage Notice is received, unless the maturity
of any Designated Senior Debt has been accelerated. No new period of payment
blockage may be commenced within 360 days after the receipt by the Trustee of
any prior Payment Blockage Notice. No nonpayment default that existed or was
continuing on the date of delivery of any Payment Blockage Notice to the Trustee
shall be, or be made, the basis for a subsequent Payment Blockage Notice unless
such default shall have been cured or waived for a period of not less than 180
days.
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If Holdings fails to make any payment on the Exchange Debentures when due or
within any applicable grace period, whether or not on account of the payment
blockage provision referred to above, such failure would constitute an Event of
Default under the Exchange Debenture Indenture and would enable the holders of
the Exchange Debentures to accelerate the maturity thereof.
The Exchange Debenture Indenture further requires that Holdings promptly
notify holders of Senior Indebtedness if payment on the Exchange Debentures is
accelerated because of an Event of Default. In addition, the subordination
provisions of the Exchange Debenture Indenture may not be amended without the
consent of all holders of Designated Senior Debt.
As a result of the subordination provisions described above, the structural
subordination of the Exchange Debentures and the security pledged to the
creditors under the New Credit Agreement, in the event of a liquidation or
insolvency, holders of the Exchange Debentures may recover less ratably that
other creditors of Holdings.
"DESIGNATED SENIOR DEBT" means (a) Holdings' Guarantee of the Senior Notes
and the Senior Indenture, (b) Holdings' guarantee of Indebtedness under the New
Credit Agreement and (c) any other Senior Indebtedness permitted to be incurred
pursuant to the Exchange Debenture Indenture in a principal amount of not less
than $20.0 million designated by Holdings as Designated Senior Debt.
OPTIONAL REDEMPTION
Except as set forth below, the Exchange Debentures may not be redeemed at
the option of Holdings prior to March 15, 2002. Thereafter, the Exchange
Debentures will be subject to redemption for cash at the option of Holdings, in
whole or in part, upon not less than 30 nor more than 60 days' notice to each
holder of Exchange Debentures to be redeemed, at the following redemption prices
(expressed as percentages of principal amount) if redeemed during the
twelve-month period beginning on March 15 of each of the years indicated below,
in each case together with any accrued and unpaid interest thereon to the
applicable redemption date:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---------------------------------------------------------------------------------- -----------
<S> <C>
2002.............................................................................. 106.500%
2003.............................................................................. 104.333%
2004.............................................................................. 102.167%
2005 and thereafter............................................................... 100.000%
</TABLE>
In addition, Holdings may redeem the Exchange Debentures in whole or in
part, at a redemption price equal to 113% of the principal amount thereof, plus
an amount in cash equal to all accrued and unpaid interest thereon to the
redemption date, with the proceeds of a Public Equity Offering, PROVIDED that
such redemption shall occur within 60 days of the date of the closing of such
Public Equity Offering.
No optional redemption of Exchange Debentures may be authorized or made at
less than 101% of the principal amount thereof at any time when Holdings is
making or purchasing Exchange Debentures under a Change of Control Offer in
accordance with the provisions of "--Repurchase at the Option of Holders--
Change of Control."
If less than all of the Exchange Debentures are to be redeemed at any time,
selection of Exchange Debentures for redemption will be made by the Trustee in
compliance with the requirements of the principal national securities exchange,
if any, on which the Exchange Debentures are listed, or, if the Exchange
Debentures are not so listed, on a PRO RATA basis, by lot or by such method as
the Trustee will deem fair and appropriate; provided that no Exchange Debentures
of $1,000 or less will be redeemed in part. Notices of redemption will be mailed
by first class mail at least 30 but not more than 60 days before the redemption
date to each Holder of Exchange Debentures to be redeemed at its registered
address. If any Exchange Debenture is to be redeemed in part only, the notice of
redemption that relates to such
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Exchange Debenture will state the portion of the principal amount thereof to be
redeemed. A new Exchange Debenture in principal amount equal to the unredeemed
portion thereof will be issued in the name of the Holder thereof upon
cancellation of the original Exchange Debenture. On and after the redemption
date, interest will cease to accrue on Exchange Debentures or portions of them
called for redemption unless Holdings defaults in the payment thereof.
MANDATORY REDEMPTION
Except as set forth below under "--Repurchase at the Option of Holders",
Holdings is not required to make any mandatory redemption, purchase or sinking
fund payments with respect to the Exchange Debentures prior to the maturity
date.
REPURCHASE AT THE OPTION OF HOLDERS
CHANGE OF CONTROL
The Exchange Debenture Indenture provides that upon the occurrence of a
Change of Control, each Holder of Exchange Debentures will have the right to
require Holdings to repurchase all or any part of such Holder's Exchange
Debentures pursuant to the offer described below (the "Change of Control Offer")
at an offer price in cash equal to 101% of the aggregate principal amount
thereof, plus an amount in cash equal to all accrued and unpaid interest thereon
to the date of purchase (the "Change of Control Payment"). Within 30 days
following any Change of Control, Holdings will mail a notice to each Holder
describing the transaction or transactions that constitute the Change of Control
and offering to repurchase Exchange Debentures pursuant to the procedures
required by the Exchange Debenture Indenture and described in such notice.
Holdings will comply with the requirements of Rule 14e-1 under the Exchange Act
and any other securities laws and regulations thereunder to the extent such laws
and regulations are applicable in connection with the repurchase of the Exchange
Debentures as a result of a Change of Control.
The Change of Control Offer will remain open for a period of 20 Business
Days following its commencement and no longer, except to the extent that a
longer period is required by applicable law (the "Change of Control Offer
Period"). No later than five Business Days after the termination of the Offer
Period (the "Change of Control Purchase Date"), Holdings will purchase all
Exchange Debentures validly tendered and not properly withdrawn pursuant to the
Change of Control Offer. Payment for any Exchange Debentures so purchased will
be made in the same manner as interest payments are made on the Exchange
Debentures.
If the Change of Control Purchase Date is on or after an interest record
date and on or before the related interest payment date, any accrued and unpaid
interest will be paid to the Person in whose name an Exchange Debenture is
registered at the close of business on such record date, and no additional
interest will be payable to Holders who tender Exchange Debentures pursuant to
the Change of Control Offer.
On the Change of Control Purchase Date, Holdings will, to the extent lawful,
(1) accept for payment all Exchange Debentures or portions thereof properly
tendered pursuant to the Change of Control Offer, (2) deposit with the Paying
Agent an amount equal to the Change of Control Payment in respect of all
Exchange Debentures or portions thereof so tendered and (3) deliver or cause to
be delivered to the Trustee the Exchange Debentures so accepted together with an
Officers' Certificate stating the aggregate principal amount of Exchange
Debentures or portions thereof being purchased by Holdings. The Paying Agent
will promptly mail to each Holder of Exchange Debentures so tendered the Change
of Control Payment for such Exchange Debentures, and the Trustee will promptly
authenticate and mail (or cause to be transferred by book entry) to each Holder
a new Exchange Debenture equal in principal amount to any unpurchased portion of
the Exchange Debentures surrendered, if any; provided that each such new
Exchange Debenture will be in a principal amount of $1,000 or an integral
multiple thereof. Holdings will publicly announce the results of the Change of
Control Offer on the Change of Control Purchase Date.
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Except as described above, the Exchange Debenture Indenture does not contain
provisions that permit the Holders of Exchange Debentures to require Holdings to
redeem the Exchange Debentures in the event of a takeover, recapitalization or
similar restructuring, including an issuer recapitalization or similar
transaction with management. Consequently, the Change of Control provisions will
not afford any protection in a highly leveraged transaction, including such a
transaction initiated by Holdings, management of Holdings or an Affiliate of
Holdings, if such transaction does not result in a Change of Control. In
addition, the existence of the Holder's right to require Holdings to repurchase
such Holder's Exchange Debentures upon the occurrence of a Change of Control may
or may not deter a third party from seeking to acquire Holdings in a transaction
that would constitute a Change of Control.
Holdings' ability to repurchase Exchange Debentures pursuant to a Change of
Control Offer may be limited by a number of factors. The New Credit Agreement
provides that certain change of control events with respect to Holdings and/or
Anvil would constitute a default thereunder permitting the lending parties
thereto to accelerate the Indebtedness thereunder. In addition, certain events
that may obligate Holdings or Anvil to offer to repay all outstanding
obligations under the New Credit Agreement may not constitute a Change of
Control under the Exchange Debenture Indenture. However, neither Holdings nor
Anvil may have sufficient resources to repay Indebtedness under the New Credit
Agreement and Holdings may not have sufficient resources to repurchase tendered
Exchange Debentures. Furthermore, any future credit agreements or other
agreements relating to senior Indebtedness to which Holdings or Anvil become a
party may contain similar restrictions and provisions. In the event a Change of
Control occurs at a time when Holdings and/or Anvil is directly or indirectly
prohibited from purchasing Exchange Debentures, Holdings and/or Anvil could seek
the consent of its lenders to the purchase of Exchange Debentures or could
attempt to refinance the borrowings that contain such prohibition. If Holdings
and/or Anvil do not obtain such a consent or repay such borrowings, the purchase
of Exchange Debentures will remain prohibited. Holdings' failure to purchase
tendered Exchange Debentures would constitute a breach of the Exchange Debenture
Indenture which would, in turn, constitute a default under the New Credit
Agreement and could lead to the acceleration of the indebtedness thereunder. In
any such event, the structural and contractual subordination of the Exchange
Debentures and the security granted in respect of the New Credit Agreement would
likely result in the Holders of the Exchange Debentures receiving less ratably
than other creditors of Holdings.
In addition, the terms of the Senior Notes of Anvil include provisions
similar to those contained in the Exchange Debentures enabling holders thereof
to require Anvil to repurchase all or any part of such securities under
circumstances constituting a Change of Control. However, Holdings and Anvil may
not have sufficient resources to repurchase tendered Exchange Debentures and/or
Senior Notes and any such failure may constitute a default under the terms of
the New Credit Agreement, the Senior Notes, the Senior Indenture, the Exchange
Debentures and the Exchange Debenture Indenture. Again, in any such event, the
structural and contractual subordination of the Exchange Debentures and the
security granted in respect of the New Credit Agreement would likely result in
the Holders of the Exchange Debentures receiving less ratably than other
creditors of Holdings.
The definition of Change of Control includes a phrase relating to the sale,
lease or transfer of "all or substantially all" of the assets of Holdings and
its Restricted Subsidiaries, taken as a whole. Although there is a developing
body of case law interpreting the phrase "substantially all," there is no
precise definition of the phrase under applicable law. Accordingly, the ability
of a Holder of Exchange Debentures to require Holdings to repurchase such shares
as a result of a sale, lease or transfer of less than all of the assets of
Holdings and its Restricted Subsidiaries taken as a whole to another Person or
group may be uncertain.
ASSET SALES
The Exchange Debenture Indenture provides that Holdings will not, and will
not permit any of its Restricted Subsidiaries to, engage in an Asset Sale in
excess of $2.0 million unless (i) Holdings (or the
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Restricted Subsidiary, as the case may be) receives consideration at the time of
such Asset Sale at least equal to the fair market value, and in the case of a
lease of assets, a lease providing for rent and other conditions which are no
less favorable to Holdings (or the Restricted Subsidiary, as the case may be) in
any material respect than the then prevailing market conditions (evidenced in
each case by a resolution of the Board of Directors of such entity set forth in
an Officers' Certificate delivered to the Trustee) of the assets or Equity
Interests sold or otherwise disposed of, and (ii) at least 75% (100% in the case
of lease payments) of the consideration therefor received by Holdings or such
Restricted Subsidiary is in the form of cash or Cash Equivalents; PROVIDED that
the amount of (x) any liabilities (as shown on Holdings' or such Restricted
Subsidiary's most recent balance sheet or in the notes thereto, excluding
contingent liabilities and trade payables), of Holdings or any Restricted
Subsidiary (other than liabilities that are by their terms subordinated to the
Exchange Debentures, or any guarantee thereof) that are assumed by the
transferee of any such assets and (y) any notes or other obligations received by
Holdings or any such Restricted Subsidiary from such transferee that are
promptly, but in no event more than 30 days after receipt, converted by Holdings
or such Subsidiary into cash (to the extent of the cash received), will be
deemed to be cash for purposes of this provision.
Within 365 days after the receipt of any Net Proceeds from an Asset Sale,
Holdings may apply such Net Proceeds (a) to reduce permanently long-term
Indebtedness of a Restricted Subsidiary, (b) to reduce permanently Indebtedness
(and, in the case of revolving Indebtedness, to reduce permanently the
commitments) under the New Credit Agreement, or (c) to an investment in another
business, the making of a capital expenditure or the acquisition of other
tangible assets, in each case, in the same or a similar line of business as
Holdings was engaged in on the date of the Exchange Debenture Indenture. Any Net
Proceeds from Asset Sales that are not applied or invested as provided in the
preceding sentence of this paragraph will be deemed to constitute "Excess
Proceeds." On the earlier of (i) the 366th day after an Asset Sale or (ii) such
date as the Board of Anvil or the Restricted Subsidiary determines not to apply
the Net Proceeds relating to such Asset Sale in the manner set forth in (a), (b)
or (c), if the aggregate amount of Excess Proceeds exceeds $7.5 million,
Holdings will be required to make an offer to all Holders of Exchange Debentures
(an "Asset Sale Offer") to purchase the maximum principal amount of Exchange
Debentures that may be purchased out of the Excess Proceeds, at an offer price
in cash in an amount equal to 100% of the principal amount thereof plus accrued
and unpaid interest thereon to the date of purchase, in accordance with the
procedures set forth in the Exchange Debenture Indenture. To the extent that the
aggregate amount of Exchange Debentures tendered pursuant to an Asset Sale Offer
is less than the Excess Proceeds, Holdings may use any remaining Excess Proceeds
for general corporate purposes. If the aggregate principal amount of Exchange
Debentures surrendered by Holders thereof exceeds the amount of Excess Proceeds,
the Trustee shall select the Exchange Debentures to be purchased on a PRO RATA
basis. Upon completion of such Asset Sale Offer, the amount of Excess Proceeds
shall be reset at zero.
The Asset Sale Offer will remain open for a period of 20 Business Days
following its commencement and no longer, except to the extent that a longer
period is required by applicable law (the "Asset Sale Offer Period"). No later
than five Business Days after the termination of the Asset Sale Offer Period
(the "Asset Sale Purchase Date"), Holdings will purchase the principal amount of
Exchange Debentures required to be purchased pursuant to this covenant (the
"Asset Sale Offer Amount") or, if less than the Asset Sale Offer Amount has been
tendered, all Exchange Debentures tendered in response to the Asset Sale Offer.
Payment for any Exchange Debentures so purchased will be made in the same manner
as interest payments are made on the Exchange Debentures.
If the Asset Sale Purchase Date is on or after an interest record date and
on or before the related interest payment date, any accrued and unpaid interest
will be paid to the Person in whose name an Exchange Debenture is registered at
the close of business on such record date, and no additional interest will be
payable to Holders who tender Exchange Debentures pursuant to the Asset Sale
Offer.
On or before the Asset Sale Purchase Date, Holdings will, to the extent
lawful, accept for payment, on a pro rata basis to the extent necessary, the
Asset Sale Offer Amount of Exchange Debentures or portions
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thereof tendered pursuant to the Asset Sale Offer, or if less than the Asset
Sale Offer Amount has been tendered, all Exchange Debentures tendered, and will
deliver to the Trustee an Officers' Certificate stating that such Exchange
Debentures or portions thereof were accepted for payment by Holdings in
accordance with the terms of this covenant. Holdings, the Depositary or the
Paying Agent, as the case may be, will promptly (but in any case not later than
five days after the Asset Sale Purchase Date) mail or deliver to each tendering
Holder an amount equal to the purchase price of the Exchange Debentures tendered
by such Holder and accepted by Holdings for purchase, and Holdings will promptly
issue a new Exchange Debenture, and the Trustee, upon delivery of an Officers'
Certificate from Holdings will authenticate and mail or deliver such new
Exchange Debenture to such Holder, in a principal amount equal to any
unpurchased portion of the Exchange Debenture surrendered. Any Exchange
Debenture not so accepted will be promptly mailed or delivered by Holdings to
the Holder thereof. Holdings will publicly announce the results of the Asset
Sale Offer on the Asset Sale Purchase Date.
Holdings will comply with the requirements of Rule 14e-1 under the Exchange
Act and any other securities laws and regulations thereunder to the extent such
laws and regulations are applicable in connection with the repurchase of the
Exchange Debentures pursuant to any Asset Sale Offer.
If Holdings is required to make an Asset Sale Offer, the Senior Indenture
under which the Senior Notes will be issued may require Anvil to make a similar
offer to purchase Senior Notes. If either Anvil or Holdings was unable to
purchase all of the Senior Notes or Exchange Debentures it would then be
required to repurchase, an Event of Default may result under the Senior
Indenture and/or the Exchange Debenture Indenture and any such Event of Default
may also constitute an Event of Default under the New Credit Agreement. In any
such event, the subordination provisions of the Exchange Debenture Indenture
would likely result in the Holders of the Exchange Debentures receiving less
ratably than other creditors of Holdings.
The New Credit Agreement permits certain dividends from Holdings'
Subsidiaries to Holdings which may be used to pay interest on the Exchange
Debentures, dividends for purposes such as repurchases of Exchange Debentures by
Holdings upon an Asset Sale may be restricted under the terms of the New Credit
Agreement. In such event, Holdings would need to seek the consent of its lenders
under the New Credit Agreement in order to repurchase Exchange Debentures with
the Net Proceeds of an Asset Sale. See "Risk Factors--Risks Associated with
Holding Company Structure."
CERTAIN COVENANTS
RESTRICTED PAYMENTS
The Exchange Debenture Indenture provides that Holdings will not, and will
not permit any of its Restricted Subsidiaries to, directly or indirectly: (i)
declare or pay any dividend or make any distribution on account of Holdings' or
any of its Restricted Subsidiaries' Equity Interests (including, without
limitation, any payment in connection with any merger or consolidation involving
Holdings) (other than dividends or distributions payable in Equity Interests
(other than Disqualified Stock) of Holdings or dividends or distributions
payable to Holdings or any Wholly Owned Subsidiary of Holdings); (ii) purchase,
redeem or otherwise acquire or retire for value any Equity Interests of Holdings
or any direct or indirect parent of Holdings or other Affiliate or Restricted
Subsidiary of Holdings; (iii) make any principal payment on, or purchase,
redeem, defease or otherwise acquire or retire for value any Indebtedness of
Holdings that is subordinated to the Exchange Debentures, except in accordance
with the scheduled mandatory redemption or repayment provisions set forth in the
original documentation governing such Indebtedness (but not pursuant to any
mandatory offer to repurchase upon the occurrence of any event); or (iv) make
any Restricted Investment (all such payments and other actions set forth in
clauses (i) through (iv) above being collectively referred to as "Restricted
Payments"), unless, at the time of and after giving effect to such Restricted
Payment:
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(a) no Default or Event of Default will have occurred and be continuing
or would occur as a consequence thereof;
(b) Holdings would, at the time of such Restricted Payment and after
giving pro forma effect thereto as if such Restricted Payment had been made
at the beginning of the applicable four quarter period, have been permitted
to incur at least $1.00 of additional Indebtedness pursuant to the Fixed
Charge Coverage Ratio test set forth in the first paragraph of the covenant
described under
"--Incurrence of Indebtedness and Issuance of Preferred Stock"; and
(c) such Restricted Payment, together with the aggregate of all other
Restricted Payments made by Holdings and its Restricted Subsidiaries after
the date of the Exchange Debenture Indenture, is less than the sum of,
without duplication, (i) 50% of the Consolidated Net Income of Holdings for
the period (taken as one accounting period) from the beginning of the first
fiscal quarter commencing after the date of the Exchange Debenture Indenture
to the end of Holdings' most recently ended fiscal quarter for which
internal financial statements are available at the time of such Restricted
Payment (or, if such Consolidated Net Income for such period is a deficit,
less 100% of such deficit), plus (ii) to the extent not included in the
amount described in clause (i) above, 100% of the aggregate net cash
proceeds received after the date of the Exchange Debenture Indenture by
Holdings from the issue or sale of, or from additional capital contributions
in respect of, Equity Interests of Holdings or of debt securities of
Holdings that have been converted into, or cancelled in exchange for, Equity
Interests of Holdings (other than Equity Interests (or convertible debt
securities) sold to a Restricted Subsidiary or an Unrestricted Subsidiary of
Holdings and other than Disqualified Stock or debt securities that have been
converted into Disqualified Stock and less the amount of any loans made
pursuant to clause (vi) of the next succeeding paragraph), plus (iii) 100%
of the cash proceeds realized upon the sale of any Unrestricted Subsidiary
(less the amount of any reserve established for purchase price adjustments
and less the maximum amount of any indemnification or similar contingent
obligation for the benefit of the purchaser, any of its Affiliates or any
other third party in such sale, in each case as adjusted for any permanent
reduction in any such amount on or after the date of such sale, other than
by virtue of a payment made to such Person) following the date of the
Exchange Debenture Indenture, plus (iv) to the extent that any Restricted
Investment that was made after the date of the Exchange Debenture Indenture
is sold to an unaffiliated purchaser for cash or otherwise liquidated or
repaid for cash, the cash proceeds realized with respect to such Restricted
Investment (less the cost of disposition, if any).
The foregoing provisions will not prohibit (i) the payment of any dividend
within 60 days after the date of declaration thereof, if at said date of
declaration such payment would have complied with the provisions of the Exchange
Debenture Indenture; (ii) the making of any Restricted Investment in exchange
for, or out of the proceeds of, the substantially concurrent sale (other than to
a Subsidiary of Holdings) of, or from substantially concurrent additional
capital contributions in respect of, Equity Interests of Holdings (other than
Disqualified Stock); (iii) the redemption, repurchase, retirement or other
acquisition of any Equity Interests of Holdings in exchange for, or out of the
proceeds of, the substantially concurrent sale (other than to a Subsidiary of
Holdings) of, or from substantially concurrent additional capital contributions
in respect of, other Equity Interests of Holdings (other than any Disqualified
Stock); (iv) the defeasance, redemption or repurchase of subordinated
Indebtedness with the net cash proceeds from (X) an incurrence of Permitted
Refinancing Indebtedness or (Y) the substantially concurrent sale (other than to
a Subsidiary of Holdings) of, or from substantially concurrent additional
capital contributions in respect of, Equity Interests of Holdings (other than
Disqualified Stock); (v) the declaration or payment of any dividend to Holdings
for, or the direct repurchase, redemption or other acquisition or retirement for
value of any Equity Interests of Holdings or any Restricted Subsidiary of
Holdings or Holdings held by any member of Holdings' (or any of its Restricted
Subsidiaries') management pursuant to any management agreement, stock option
agreement or plan or stockholders agreement; PROVIDED that (X) the aggregate
price paid for all such repurchased, redeemed, acquired or retired Equity
Interests will not exceed $2.0
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million in any fiscal year (plus any amount available for such payments
hereunder since the date of the Exchange Debenture Indenture which have not been
used for such purpose) or (Y) $8.0 million in the aggregate (in each case, net
of the cash proceeds received by Holdings from subsequent reissuances of such
Equity Interests to new members of management); (vi) loans to members of
management of Holdings or any Restricted Subsidiary the proceeds of which are
used for a concurrent purchase of Equity Interests of Holdings and a capital
contribution in an amount equal to such proceeds to Holdings; (vii) payments in
connection with the application of the net proceeds of the Recapitalization as
set forth under "Use of Proceeds"; (viii) payments to Holdings in respect of
accounting, legal or other administrative expenses incurred by Holdings relating
to the operations of Holdings in the ordinary course of business and in respect
of fees and related expenses associated with registration statements filed with
the Commission and subsequent ongoing public reporting requirements arising from
the issuance of Holdings' Guarantee, the Senior Preferred Stock and the Exchange
Debentures; PROVIDED that the aggregate amount of such payments does not exceed
$500,000 in any fiscal year; (ix) so long as Holdings files consolidated income
tax returns which include Anvil, payments to Holdings in an amount equal to the
amount of income tax that Anvil would have paid if it had filed consolidated tax
returns on a separate-company basis; (x) payments of director's fees and the
reasonable expenses of its directors in an aggregate amount not to exceed
$125,000 per year in aggregate (including indemnification obligations and
professional fees and expenses) by Holdings and payments to Holdings in respect
thereof; (xi) payments to holders of its Capital Stock in lieu of issuing
fractional shares thereof in an amount not to exceed $200,000; (xii) any
payments on the Senior Preferred Stock in connection with the exchange thereof
into Exchange Debentures; (xiii) the acquisition and issuance of Senior
Preferred Stock by Holdings in connection with the exchange offer contemplated
by the Preferred Stock Registration Rights Agreement; (xiv) the making of any
principal payment on, or purchase, redeem, defease or otherwise acquire or
retire for value any Indebtedness that is subordinated to the Exchange
Debentures out of Excess Proceeds available for general corporate purposes after
consummation of purchases of Exchange Debentures pursuant to an Asset Sale
Offer; (xv) the declaration and payment of any dividend or the making of any
other distribution for the purpose of funding any payment in respect of or
repurchase or redemption of Senior Preferred Stock or Exchange Debentures; and
(xvi) the repurchase of the Senior Preferred Stock or the Exchange Debentures in
connection with an offer required to be made therefor in connection with a
Change of Control provided that Anvil has previously paid all amounts required
to be paid in connection with any Change of Control Offer for the Senior Notes;
PROVIDED, HOWEVER, that in the case of any transaction described in clauses (i),
(ii), (iii), (iv) and (v) no Default or Event of Default will have occurred and
be continuing immediately after such transaction. In determining the aggregate
amount of Restricted Payments made after the date of the Exchange Debenture
Indenture, 100% of the amounts expended pursuant to the foregoing clauses (ii),
(iii), (iv)(Y), (v) and (vi) shall be included in such calculation and none of
the amounts expended pursuant to the foregoing clauses (i), (iv)(X), (vii),
(viii), (ix), (x), (xi), (xii), (xiii), (xiv), (xv) and (xvi) shall be included
in such calculation.
As of the date hereof and as of the issue date of the Exchange Debentures,
all of Holdings' Subsidiaries were Restricted Subsidiaries. The Board of
Directors may designate any Subsidiary to be an Unrestricted Subsidiary if such
designation would not cause a Default. For purposes of making such
determination, all outstanding Investments by Holdings and its Restricted
Subsidiaries (except to the extent repaid in cash) in the Subsidiary so
designated will be deemed to be Restricted Payments at the time of such
designation and will reduce the amount available for Restricted Payments under
the first paragraph of this covenant. Such designation will only be permitted if
such Restricted Payment would be permitted at such time and if such Subsidiary
otherwise meets the definition of an Unrestricted Subsidiary.
The amount of all Restricted Payments (other than cash) will be the greater
of (i) book value or (ii) fair market value (evidenced by a resolution of the
Board of Directors set forth in an Officers' Certificate delivered to the
Trustee) on the date of the Restricted Payment of the asset(s) proposed to be
transferred by Holdings or such Restricted Subsidiary, as the case may be,
pursuant to the Restricted Payment. Not later than the date of making any
Restricted Payment, Holdings will deliver to the Trustee an Officers'
Certificate stating that such Restricted Payment is permitted and setting forth
the basis upon which the calculation required by this covenant were computed,
which calculations may be based upon Holdings's latest available financial
statements.
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INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK
The Exchange Debenture Indenture provides that Holdings will not, and will
not permit any of its Restricted Subsidiaries and Unrestricted Subsidiaries to,
directly or indirectly, create, incur, issue, assume, guaranty or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur") any Indebtedness (including Acquired Indebtedness) and
that Holdings will not issue any Disqualified Stock and will not permit any of
its Restricted Subsidiaries to issue any shares of preferred stock; PROVIDED,
HOWEVER, that Holdings and its Restricted Subsidiaries may incur Indebtedness
(including Acquired Indebtedness) or issue shares of Disqualified Stock if: (i)
the Fixed Charge Coverage Ratio for Holdings' most recently ended four full
fiscal quarters for which internal financial statements are available
immediately preceding the date on which such additional Indebtedness is incurred
or such Disqualified Stock is issued would have been at least (A) at any time
prior to March 15, 1999, 2.00 to 1, and (B) thereafter at least 2.25 to 1, in
each case determined on a pro forma basis (including a pro forma application of
the net proceeds therefrom), as if the additional Indebtedness had been
incurred, or the Disqualified Stock had been issued, as the case may be, at the
beginning of such four-quarter period; and (ii) no Default or Event of Default
will have occurred and be continuing or would occur as a consequence thereof;
PROVIDED, that no Guarantee may be incurred pursuant to this paragraph unless
the guaranteed Indebtedness is incurred by Holdings or a Restricted Subsidiary
pursuant to this paragraph.
The foregoing provisions will not apply to:
(i) the incurrence by Holdings and its Restricted Subsidiaries of
Indebtedness and letters of credit pursuant to the New Credit Agreement
(with letters of credit being deemed to have a principal amount equal to the
maximum potential liability of Holdings or the relevant Restricted
Subsidiary thereunder) in a maximum principal amount outstanding at any one
time not to exceed $55.0 million (or in the event of a refinancing of the
Indebtedness under the New Credit Agreement, the greater of $55.0 million or
the Borrowing Base) (1) less the amount of all mandatory principal payments
actually made by Anvil in respect of term loans thereunder (excluding any
such payments to the extent refinanced at the time of payment under a
replaced credit agreement) and (2) in the case of the revolving credit
facility, reduced by any required permanent repayments (which are
accompanied by a corresponding permanent commitment reduction) thereunder;
(ii) the incurrence by Holdings and its Restricted Subsidiaries of the
Existing Indebtedness;
(iii) the incurrence by Anvil and Holdings of Indebtedness represented by
the Senior Notes and Holdings' Guarantee thereof and the incurrence by
Holdings of the Indebtedness represented by the Exchange Debentures;
(iv) the incurrence by Holdings or any of its Restricted Subsidiaries of
Indebtedness represented by Capital Lease Obligations, mortgage financings
or Purchase Money Obligations, in each case incurred for the purpose of
financing all or any part of the purchase price or cost of construction or
improvement of property used in the business of Holdings or such Restricted
Subsidiary, in an aggregate principal amount not to exceed $7.5 million at
any time outstanding;
(v) the incurrence by Holdings or any of its Restricted Subsidiaries of
Permitted Refinancing Indebtedness in exchange for, or the net proceeds of
which are used to extend, refinance, renew, replace, defease or refund,
Indebtedness that was permitted by the Exchange Debenture Indenture to be
incurred;
(vi) the incurrence by Holdings or any of its Restricted Subsidiaries of
intercompany Indebtedness between or among Holdings and any of its Wholly
Owned Subsidiaries or between or among any Wholly Owned Subsidiaries;
PROVIDED, HOWEVER, that (i) any subsequent issuance or transfer of Equity
Interests that results in any such Indebtedness being held by a Person other
than a Wholly Owned Subsidiary and (ii) any sale or other transfer of any
such Indebtedness to a Person that is not either
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Holdings or a Wholly Owned Subsidiary will be deemed, in each case, to
constitute an incurrence of such Indebtedness by Holdings or such
Subsidiary, as the case may be;
(vii) the incurrence by Holdings or any of its Restricted Subsidiaries of
Hedging Obligations that are incurred for the purpose of fixing or hedging
interest rate risk with respect to any floating rate Indebtedness that is
permitted by the Exchange Debenture Indenture to be incurred;
(viii) the incurrence by Holdings and its Restricted Subsidiaries of
Indebtedness (in addition to Indebtedness permitted by any other clause of
this paragraph) in an aggregate principal amount at any time outstanding not
to exceed $20.0 million; PROVIDED that such Indebtedness incurred by foreign
subsidiaries that are Restricted Subsidiaries shall not exceed an aggregate
principal amount at any time outstanding of $7.5 million;
(ix) the incurrence by Holdings' Unrestricted Subsidiaries of
Non-Recourse Debt, PROVIDED, HOWEVER, that if any such Indebtedness ceases
to be Non-Recourse Debt of an Unrestricted Subsidiary, such event will be
deemed to constitute an incurrence of Indebtedness by a Restricted
Subsidiary of Holdings;
(x) Indebtedness incurred by Holdings or any of its Restricted
Subsidiaries arising from agreements providing for indemnification,
adjustment of purchase price or similar obligations, or from guarantees or
letters of credit, surety bonds or performance bonds securing the
performance of Holdings or any of its Restricted Subsidiaries pursuant to
such agreements, in connection with the disposition of any business, assets
or Restricted Subsidiary of Holdings (other than guarantees or similar
credit support by Holdings or any of its Restricted Subsidiaries of
Indebtedness incurred by any Person acquiring all or any portion of such
business, assets or Restricted Subsidiary for the purpose of financing such
acquisition), in a principal amount not to exceed 25.0% of the gross
proceeds (with proceeds other than cash or Cash Equivalents being valued at
the fair market value thereof as determined by the Board of Directors of
Holdings in good faith) actually received by Holdings or any of its
Restricted Subsidiaries in connection with such disposition; and
(xi) the incurrence by a Securitization Entity of Indebtedness in a
Qualified Securitization Transaction that is non-recourse to Holdings or any
Subsidiary of Holdings (except Standard Securitization Undertakings);
PROVIDED, HOWEVER, that the amount of Indebtedness outstanding under clause
(i) above and this clause (xi) shall not in the aggregate exceed $55.0
million at any time outstanding (or in the event of a refinancing of the
Indebtedness under the New Credit Agreement, the greater of $55.0 million or
the Borrowing Base).
Notwithstanding any other provision of this covenant, a guarantee of
Indebtedness permitted by the terms of the Exchange Debenture Indenture at the
time such Indebtedness was incurred will not constitute a separate incurrence of
Indebtedness.
SALE AND LEASEBACK TRANSACTIONS
The Exchange Debenture Indenture provides that Holdings will not, and will
not permit any of its Restricted Subsidiaries to, enter into any sale and
leaseback transaction; PROVIDED that Holdings or any Restricted Subsidiary may
enter into a sale and leaseback transaction if (i) Holdings or such Restricted
Subsidiary could have (a) incurred Indebtedness in an amount equal to the
Attributable Debt relating to such sale and leaseback transaction pursuant to
the Fixed Charge Coverage Ratio test set forth in the first paragraph of the
covenant "--Incurrence of Additional Indebtedness and Issuance of Preferred
Stock" and (b) incurred a Lien to secure such Indebtedness pursuant to the
covenant "Liens," (ii) the net cash proceeds of such sale and leaseback
transaction are at least equal to the fair market value (as determined in good
faith by the Board of Directors and set forth in an Officers' Certificate
delivered to the Trustee) of the property that is the subject of such sale and
leaseback transaction and (iii) the transfer of assets in such
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sale and leaseback transaction is permitted by, and the proceeds of such
transaction are applied in compliance with, the covenant "--Repurchase at Option
of Holders--Asset Sales."
LIENS
The Exchange Debenture Indenture provides that Holdings will not, and will
not permit any of its Restricted Subsidiaries to, directly or indirectly,
create, incur, assume or suffer to exist any Lien on any asset now owned or
hereafter acquired, or any income or profits therefrom or assign or convey any
right to receive income therefrom, except Permitted Liens. The Exchange
Debenture Indenture further provides that Holdings will not, and will not permit
any of its Restricted Subsidiaries to, directly or indirectly, create, incur,
assume or suffer to exist any Lien that secures obligations under any
Subordinated Indebtedness, unless the Exchange Debentures are equally and
ratably secured with the obligations so secured until such time as such
obligations are no longer secured by a Lien.
DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED SUBSIDIARIES
The Exchange Debenture Indenture provides that Holdings will not, and will
not permit any of its Restricted Subsidiaries to, directly or indirectly, create
or otherwise cause or suffer to exist or become effective any encumbrance or
restriction on the ability of any Restricted Subsidiary to (i) (a) pay dividends
or make any other distributions to Holdings or any of its Restricted
Subsidiaries (1) on its Capital Stock or (2) with respect to any other interest
or participation in, or measured by, its profits, or (b) pay any Indebtedness
owed to Holdings or any of its Restricted Subsidiaries, (ii) make loans or
advances to Holdings or any of its Restricted Subsidiaries or (iii) transfer any
of its properties or assets to Holdings or any of its Restricted Subsidiaries,
except for such encumbrances or restrictions existing under or by reason of (a)
Existing Indebtedness as in effect on the date of the Exchange Debenture
Indenture, (b) the New Credit Agreement as in effect as of the date of the
Exchange Debenture Indenture, and any amendments, modifications, restatements,
renewals, increases, supplements, refundings, replacements or refinancings
thereof, PROVIDED THAT such amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings are no more
restrictive with respect to such dividend and other payment restrictions than
those contained in the New Credit Agreement as in effect on the date of the
Exchange Debenture Indenture, (c) the Senior Indenture, the Senior Notes, the
Certificate of Designation, the Senior Preferred Stock, the Exchange Debenture
Indenture and the Exchange Debentures, (d) applicable law, (e) any instrument
governing Acquired Indebtedness or Capital Stock of a Person acquired by
Holdings or any of its Restricted Subsidiaries as in effect at the time of such
acquisition (except to the extent such Acquired Indebtedness was incurred in
connection with or in contemplation of such acquisition), which encumbrance or
restriction is not applicable to any Person, or the properties or assets of any
Person, other than the Person, or the property or assets of the Person, so
acquired, PROVIDED that the Consolidated EBITDA of such Person is not taken into
account in determining whether such acquisition was permitted by the terms of
the Exchange Debenture Indenture, (f) by reason of customary non-assignment
provisions in leases and licenses entered into in the ordinary course of
business and consistent with past practices, (g) purchase money obligations for
property acquired in the ordinary course of business that impose restrictions of
the nature described in clause (iii) above on the property so acquired, (h)
agreements relating to the financing of the acquisition of real or tangible
personal property acquired after the date of the Exchange Debenture Indenture,
provided, that such encumbrance or restriction relates only to the property
which is acquired and in the case of any encumbrance or restriction that
constitutes a Lien, such Lien constitutes a Purchase Money Lien, (i) any
restriction or encumbrance contained in contracts for sale of assets permitted
by the Exchange Debenture Indenture in respect of the assets being sold pursuant
to such contractor or (j) Indebtedness or other contractual requirements of a
Securitization Entity in connection with a Qualified Securitization Transaction;
PROVIDED that such restrictions apply only to such Securitization Entity.
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TRANSACTIONS WITH AFFILIATES
The Exchange Debenture Indenture provides that Holdings will not, and will
not permit any of its Restricted Subsidiaries to, sell, lease, transfer or
otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into or make any contract, agreement,
understanding, loan, advance or guarantee with, or for the benefit of, any
Affiliate (each of the foregoing, an "Affiliate Transaction"), unless (i) such
Affiliate Transaction is on terms that are no less favorable to Holdings or the
relevant Restricted Subsidiary than those that would have been obtained in a
comparable transaction by Holdings or such Restricted Subsidiary with an
unrelated Person and (ii) Holdings delivers to the Trustee (a) with respect to
any Affiliate Transaction entered into after the date of the Exchange Debenture
Indenture involving aggregate consideration in excess of $2.0 million, a
resolution of the Board of Directors set forth in an Officers' Certificate
certifying that such Affiliate Transaction complies with clause (i) above and
that such Affiliate Transaction has been approved by a majority of the
disinterested members of the Board of Directors and (b) with respect to any
Affiliate Transaction involving aggregate consideration in excess of $7.5
million, an opinion as to the fairness to Holdings or such Restricted Subsidiary
of such Affiliate Transaction from a financial point of view issued by an
investment banking firm of national standing; PROVIDED that the following will
not be deemed to be Affiliate Transactions: (o) reasonable fees and compensation
paid to, and indemnity provided on behalf of, officers and directors of
Holdings, Anvil or any Restricted Subsidiary as determined in good faith by the
appropriate Board of Directors or senior management; (p) the provision of
administrative or management services by Holdings or any of its officers to
Holdings or any of its Restricted Subsidiaries in the ordinary course of
business consistent with past practice, (q) transactions between Holdings or one
or more of its Restricted Subsidiaries and the relevant Securitization Entity
effected as part of a Qualified Securitization Transaction; (r) any agreement as
in effect as of the date of the Exchange Debenture Indenture (including, without
limitation, the New Credit Agreement) or any amendment thereto or any
transactions contemplated thereby (including pursuant to any amendment thereto)
and any replacement agreement thereto so long as any such amendment or
replacement agreement is not more disadvantageous to the Holders of Exchange
Debentures in any material respect than the original agreement as in effect on
the date of the Exchange Debenture Indenture; (s) payments or loans to employees
or consultants which are approved by the Board of Directors of Holdings in good
faith; (t) the existence of, or the performance by Holdings or any of its
Restricted Subsidiaries of its obligations under the terms of, any stockholders
agreement (including any registration rights agreement or purchase agreement
related thereto) to which it is a party as of the date of the Exchange Debenture
Indenture and any similar agreement which it may enter into thereafter;
PROVIDED, HOWEVER, that the existence of, or the performance by Holdings or any
of its Restricted Subsidiaries of obligations under any similar agreement
entered into after the date of the Exchange Debenture Indenture shall only be
permitted by this clause (t) to the extent that the terms of any such new
agreement are not otherwise disadvantageous to the Holders of the Exchange
Debentures in any material respect; (u) transactions with customers, clients,
suppliers, joint venture partners or purchasers or sellers of goods or services,
in each case in the ordinary course of business (including, without limitation,
pursuant to joint venture agreements) and otherwise in compliance with the terms
of the Exchange Debenture Indenture which are at least as favorable as might
reasonably have been obtained at such time from an unaffiliated party; (v) any
employment agreement entered into by Holdings or any of its Restricted
Subsidiaries in the ordinary course of business and consistent with the past
practice of Holdings or such Restricted Subsidiary (including, without
limitation, any such employment agreements existing prior to the date of the
Exchange Debenture Indenture); (w) the granting of stock options to employees
and directors of Holdings and its Restricted Subsidiaries in accordance with the
New Stock Option Plan at exercise prices equal to the fair market value of the
Common Stock and the issuance of Common Stock upon the exercise of such options;
(x) transactions between or among Holdings and/or its Wholly Owned Subsidiaries,
(y) (i) the payment of customary management, consulting and advisory fees and
related expenses to BRS and 399 Venture and their Affiliates not to exceed
$750,000 per year in aggregate and (ii) payments by Anvil or any of its
Restricted Subsidiaries to BRS and 399 Venture and their Affiliates made
pursuant to any financial
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advisory, financing, underwriting or placement agreement or in respect of other
investment banking activities, including, without limitation, in connection with
acquisitions or divestitures which are approved by the Board of Directors of
Anvil, Holdings or such Restricted Subsidiary in good faith not to exceed
$750,000 per year in aggregate; and (z) transactions permitted by the covenant
described in "-- Restricted Payments."
LINE OF BUSINESS
Holdings will not, and will not permit any Restricted Subsidiary to, engage
in any line of business which is not the same, similar, ancillary, complementary
or related to the businesses in which Holdings is engaged on the date of the
Exchange Debenture Indenture.
REPORTS
The Exchange Debenture Indenture provides that, whether or not required by
the rules and regulations of the Commission, so long as any Exchange Debentures
are outstanding, Holdings will furnish to the Holders of Exchange Debentures,
within 15 days after it is or would have been required to file such with the
Commission, (i) all quarterly and annual financial information that would be
required to be contained in a filing with the Commission on Forms 10-Q and 10-K
if Holdings was required to file such Forms, including a "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and,
with respect to the annual information only, reports thereon by the certified
independent accountants of Holdings and (ii) all current reports that would be
required to be filed with the Commission on Form 8-K if Holdings was required to
file such reports. In addition, whether or not required by the rules and
regulations of the Commission, Holdings will file copies of all such information
and reports with the Commission for public availability (unless the Commission
will not accept such a filing) and make such information available to securities
analysts and prospective investors upon request. In addition, Holdings has
agreed that, for so long as any Exchange Debentures remain outstanding, they
will furnish to the Holders and to securities analysts and prospective
investors, upon their request, the information required to be delivered pursuant
to Rule 144A(d)(4) under the Securities Act.
MERGER, CONSOLIDATION OR SALE OF ASSETS
The Exchange Debenture Indenture provides that Holdings shall not, in a
single transaction or series of related transactions, consolidate or merge with
or into (whether or not Holdings is the surviving corporation), or directly
and/or indirectly through its Restricted Subsidiaries sell, assign, transfer,
lease, convey or otherwise dispose of all or substantially all of its properties
or assets determined on a consolidated basis for Holdings and its Restricted
Subsidiaries taken as a whole in one or more related transactions, to another
corporation, Person or entity unless (i) Holdings is the surviving corporation
or the entity or the Person formed by or surviving any such consolidation or
merger (if other than Holdings) or to which such sale, assignment, transfer,
lease, conveyance or other disposition will have been made is a corporation
organized or existing under the laws of the United States, any state thereof or
the District of Columbia; (ii) the entity or Person formed by or surviving any
such consolidation or merger (if other than Holdings) or the entity or Person to
which such sale, assignment, transfer, lease, conveyance or other disposition
will have been made assumes all the obligations of Holdings, under the Exchange
Debentures and the Exchange Debenture Indenture pursuant to a supplemental
indenture in a form reasonably satisfactory to the Trustee; (iii) immediately
after such transaction no Default or Event of Default exists; (iv) Holdings or
the entity or Person formed by or surviving any such consolidation or merger (if
other than Holdings), or to which such sale, assignment, transfer, lease,
conveyance or other disposition will have been made (A) will have Consolidated
Net Worth immediately after the transaction equal to or greater than the
Consolidated Net Worth of Holdings immediately preceding the transaction and (B)
will, at the time of such transaction and after giving pro forma effect thereto
as if such transaction had occurred at the beginning of the applicable
four-quarter period, be permitted to incur at least $1.00 of additional
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Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the
first paragraph of the covenant described above under the caption "--Incurrence
of Indebtedness and Issuance of Preferred Stock"; and (v) Holdings delivers to
the Trustee an Officers' Certificate and an Opinion of Counsel addressed to the
Trustee with respect to the foregoing matters; PROVIDED, HOWEVER, that the
requirement set forth in clause (iv) above shall not apply to a merger between
Holdings and any Wholly Owned Subsidiary or to any merger between Wholly Owned
Subsidiaries.
EVENTS OF DEFAULT AND REMEDIES
The Exchange Debenture Indenture provides that each of the following
constitutes an Event of Default: (i) default for 30 days in the payment when due
of interest on the Exchange Debentures; (ii) default in payment when due of the
principal of or premium, if any, on the Exchange Debentures; (iii) failure by
Holdings to comply with the provisions described under the captions "--Change of
Control," "--Asset Sales," "--Restricted Payments," "--Incurrence of
Indebtedness and Issuance of Preferred Stock," "--Sale and Leaseback
Transactions" or "--Merger, Consolidation or Sale of Assets"; (iv) failure by
Holdings for 60 days after notice to comply with any of its other agreements in
the Exchange Debenture Indenture or the Exchange Debentures; (v) default under
any mortgage, indenture or instrument under which there may be issued or by
which there may be secured or evidenced any Indebtedness for money borrowed by
Holdings or any of its Restricted Subsidiaries or Holdings (or the payment of
which is guaranteed by Holdings or any of its Restricted Subsidiaries or
Holdings) whether such Indebtedness or Guarantee now exists, or is created after
the date of the Exchange Debenture Indenture, which default (a) is caused by a
failure to pay principal of or premium, if any, or interest on such Indebtedness
prior to the expiration of the grace period provided in such Indebtedness on the
date of such default (a "Payment Default") or (b) results in the acceleration of
such Indebtedness prior to its express maturity and, in each case, the principal
amount of any such Indebtedness, together with the principal amount of any other
such Indebtedness under which there has been a Payment Default or the maturity
of which has been so accelerated, aggregates $7.5 million or more; (vi) failure
by Holdings or any of its Restricted Subsidiaries to pay final judgments
aggregating in excess of $4.0 million, which judgments are not paid, discharged
or stayed for a period of 60 days; and (vii) certain events of bankruptcy or
insolvency with respect to Holdings, Anvil or any of Holdings' other Significant
Subsidiaries or group of Restricted Subsidiaries that, together, would
constitute a Significant Subsidiary.
If any Event of Default occurs and is continuing, the Trustee or the Holders
of at least 25% in principal amount of the then outstanding Exchange Debentures
may declare all the Exchange Debentures to be due and payable immediately.
Notwithstanding the foregoing, in the case of an Event of Default arising from
certain events of bankruptcy or insolvency with respect to Holdings, Anvil, any
other Significant Subsidiary or any group of Subsidiaries that, taken together,
would constitute a Significant Subsidiary, all outstanding Exchange Debentures
will become due and payable without further action or notice. Holders of
Exchange Debentures may not enforce the Exchange Debenture Indenture or the
Exchange Debentures except as provided in the Exchange Debenture Indenture.
Subject to certain limitations, Holders of a majority in principal amount of the
then outstanding Exchange Debentures may direct the Trustee in its exercise of
any trust or power. The Trustee may withhold from Holders of the Exchange
Debentures notice of any continuing Default or Event of Default (except a
Default or Event of Default relating to the payment of principal or interest) if
it determines that withholding notice is in their interest.
The Holders of a majority in aggregate principal amount of the Exchange
Debentures then outstanding by notice to the Trustee may on behalf of the
Holders of all of the Exchange Debentures waive any existing Default or Event of
Default and its consequences under the Exchange Debenture Indenture except a
continuing Default or Event of Default in the payment of interest on, or the
principal of, premium, if any, on the Exchange Debentures.
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Holdings is required to deliver to the Trustee annually a statement
regarding compliance with the Exchange Debenture Indenture, and Holdings is
required upon becoming aware of any Default or Event of Default, to deliver to
the Trustee a statement specifying such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of Holdings, as
such, will have any liability for any obligations of Holdings under the Exchange
Debentures, the Exchange Debenture Indenture or for any claim based on, in
respect of, or by reason of, such obligations or their creation. Each Holder of
Exchange Debentures by accepting an Exchange Debenture waives and releases all
such liability. The waiver and release are part of the consideration for
issuance of the Exchange Debentures. Such waiver may not be effective to waive
liabilities under the federal securities laws and it is the view of the
Commission that such a waiver is against public policy.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Holdings may, at its option and at any time, elect to have all of its
obligations discharged with respect to the outstanding Exchange Debentures
("Legal Defeasance") except for (i) the rights of Holders of outstanding
Exchange Debentures to receive payments in respect of the principal of, premium,
if any, and interest on such Exchange Debentures when such payments are due from
the trust referred to below, (ii) Holdings' obligations with respect to the
Exchange Debentures concerning issuing temporary Exchange Debentures,
registration of Exchange Debentures, mutilated, destroyed, lost or stolen
Exchange Debentures 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 Holdings' obligations in connection
therewith and (iv) the Legal Defeasance provisions of the Exchange Debenture
Indenture. In addition, Holdings may, at its option and at any time, elect to
have the obligations of Holdings released with respect to certain covenants that
are described in the Exchange Debenture Indenture ("Covenant Defeasance") and
thereafter any omission to comply with such obligations will not constitute a
Default or Event of Default with respect to the Exchange Debentures. In the
event Covenant Defeasance occurs, certain events (not including nonpayment,
bankruptcy, receivership, rehabilitation and insolvency events) described under
"Events of Default" will no longer constitute an Event of Default with respect
to the Exchange Debentures.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i)
Holdings must irrevocably deposit with the Trustee, in trust, for the benefit of
the Holders of the Exchange Debentures, cash in U.S. dollars, non-callable
Government Securities, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent public
accountants, to pay the principal of, premium, if any, and interest on the
outstanding Exchange Debentures on the stated maturity or on the applicable
redemption date, as the case may be, and Holdings must specify whether the
Exchange Debentures are being defeased to maturity or to a particular redemption
date; (ii) in the case of Legal Defeasance, Holdings will have delivered to the
Trustee an opinion of counsel in the United States reasonably acceptable to the
Trustee confirming that (A) Holdings has received from, or there has been
published by, the Internal Revenue Service a ruling or (B) since the date of the
Exchange Debenture Indenture, 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 will confirm that, the Holders of the outstanding Exchange
Debentures will not recognize income, gain or loss for federal income tax
purposes as a result of such Legal 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 Legal Defeasance had not occurred; (iii) in the
case of Covenant Defeasance, Holdings will have delivered to the Trustee an
opinion of counsel in the United States reasonably acceptable to the Trustee
confirming that the Holders of the outstanding Exchange Debentures 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;
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(iv) no Default or Event of Default will have occurred and be continuing on the
date of such deposit (other than a Default or Event of Default resulting from
the borrowing of funds to be applied to such deposit) or insofar as Events of
Default from bankruptcy or insolvency events are concerned, at any time in the
period ending on the 91st day after the date of deposit; (v) such Legal
Defeasance or Covenant Defeasance will not result in a breach or violation of,
or constitute a default under any material agreement or instrument (other than
the Exchange Debenture Indenture) to which Holdings or any of its Subsidiaries
is a party or by which Holdings or any of its Subsidiaries is bound (including,
without limitation, the New Credit Agreement); (vi) Holdings must have delivered
to the Trustee an opinion of counsel to the effect that on the 91st day
following the deposit, the trust funds will not be subject to the effect of any
applicable bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally; (vii) Holdings must deliver to the Trustee an
Officers' Certificate stating that the deposit was not made by Holdings with the
intent of preferring the Holders of Exchange Debentures over the other creditors
of Holdings with the intent of defeating, hindering, delaying or defrauding
creditors of Holdings or others; and (viii) Holdings must deliver to the Trustee
an Officers' Certificate and an opinion of counsel, each stating that all
conditions precedent provided for relating to the Legal Defeasance or the
Covenant Defeasance have been complied with.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange Exchange Debentures in accordance with the
Exchange Debenture Indenture. The Registrar and the Trustee may require a
Holder, among other things, to furnish appropriate endorsements and transfer
documents and Holdings may require a Holder to pay any taxes and fees required
by law or permitted by the Exchange Debenture Indenture. Holdings is not
required to transfer or exchange any Exchange Debenture selected for redemption.
Also, Holdings is not required to transfer or exchange any Exchange Debenture
for a period of 15 days before a selection of Exchange Debentures to be
redeemed.
The registered Holder of an Exchange Debenture will be treated as the owner
of it for all purposes.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next two succeeding paragraphs, the Exchange
Debenture Indenture or the Exchange Debentures may be amended or supplemented
with the consent of the Holders of at least a majority in principal amount of
the Exchange Debentures then outstanding (including consents obtained in
connection with a tender offer or exchange offer for Exchange Debentures), and
any existing default or compliance with any provision of the Exchange Debenture
Indenture or the Exchange Debentures may be waived with the consent of the
Holders of a majority in principal amount of the then outstanding Exchange
Debentures (including consents obtained in connection with a tender offer or
exchange offer for Exchange Debentures).
Without the consent of each Holder affected, an amendment or waiver may not
(with respect to any Exchange Debentures held by a non-consenting Holder): (i)
reduce the principal amount of Exchange Debentures whose Holders must consent to
an amendment, supplement or waiver, (ii) reduce the principal of or change the
fixed maturity of any Exchange Debenture or alter the provisions with respect to
the redemption of the Exchange Debentures (other than provisions relating to the
covenants described above under the caption "--Repurchase at the Option of
Holders"), (iii) reduce the rate of or change the time for payment of interest
on any Exchange Debenture, (iv) waive a Default or Event of Default in the
payment of principal of or premium, if any, or interest on the Exchange
Debentures (except a rescission of acceleration of the Exchange Debentures by
the Holders of at least a majority in aggregate principal amount of the Exchange
Debentures and a waiver of the payment default that resulted from such
acceleration), (v) make any Exchange Debenture payable in money other than that
stated in the Exchange Debentures, (vi) make any change in the provisions of the
Exchange Debenture Indenture relating to waivers of past Defaults or the rights
of Holders of Exchange Debentures to receive payments of principal
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of or premium, if any, or interest on the Exchange Debentures, (vii) waive a
redemption payment with respect to any Exchange Debenture or (viii) make any
change in the foregoing amendment and waiver provisions.
Notwithstanding the foregoing, without the consent of any Holder of Exchange
Debentures, Holdings and the Trustee may amend or supplement the Exchange
Debenture Indenture or the Exchange Debentures to cure any ambiguity, defect or
inconsistency, to provide for uncertificated Exchange Debentures in addition to
or in place of certificated Exchange Debentures, to provide for the assumption
of Holdings' obligations to Holders of Exchange Debentures in the case of a
merger or consolidation, to make any change that would provide any additional
rights or benefits to the Holders of Exchange Debentures or that does not
adversely affect the legal rights under the Exchange Debenture Indenture of any
such Holder, or to comply with requirements of the Commission in order to effect
or maintain the qualification of the Exchange Debenture Indenture under the
Trust Indenture Act.
Notwithstanding anything to the contrary, the subordination provisions of
the Exchange Debentures may not be amended or modified without the prior
consent, authorization or approval by all holders of Designated Senior Debt.
CONCERNING THE TRUSTEE
The Exchange Debenture Indenture contains certain limitations on the rights
of the Trustee, should it become a creditor of Holdings, to obtain payment of
claims in certain cases, or to realize on certain property received in respect
of any such claim as security or otherwise. The Trustee will be permitted to
engage in other transactions; however, if it acquires any conflicting interest
it must eliminate such conflict within 90 days, apply to the Commission for
permission to continue or resign.
The Holders of a majority in principal amount of the then outstanding
Exchange Debentures will have the right to direct the time, method and place of
conducting any proceeding for exercising any remedy available to the Trustee,
subject to certain exceptions. The Exchange Debenture Indenture provides that in
case an Event of Default will occur (which will not be cured), the Trustee will
be required, in the exercise of its power, to use the degree of care of a
prudent man in the conduct of his own affairs. Subject to such provisions, the
Trustee will be under no obligation to exercise any of its rights or powers
under the Exchange Debenture Indenture at the request of any Holder of Exchange
Debentures, unless such Holder will have offered to the Trustee security and
indemnity satisfactory to it against any loss, liability or expense.
BOOK-ENTRY, DELIVERY AND FORM
The Exchange Debentures will initially be issued in global form except that
institutional "accredited investors" (within the meaning of Rule 501(a)(1), (2),
(3) or (7) under the Securities Act) will receive securities in the form of
registered definitive certificates. It is expected that the Exchange Debentures
will be subject to arrangements regarding book-entry, delivery and form which
are substantially the same as those with respect to the Senior Preferred Stock
set forth under "--Senior Preferred Stock--Book-Entry, Delivery and Form".
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Exchange Debenture
Indenture and the foregoing summary of the terms of the Exchange Debentures.
Reference is made to the Exchange Debenture Indenture for a full disclosure of
all such terms, as well as any other capitalized terms used herein for which no
definition is provided.
"ACQUIRED INDEBTEDNESS" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary or is designated a Restricted
Subsidiary of such specified Person, including, without limitation, Indebtedness
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incurred in connection with, or in contemplation of, such other Person merging
with or into or becoming a Subsidiary or Restricted Subsidiary of such specified
Person, and (ii) Indebtedness secured by a Lien encumbering any asset acquired
by such specified Person.
"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 purposes of this definition, "control"
(including, which correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control.
"ASSET SALE" means (i) the sale, lease, conveyance or other disposition of
any assets (including, without limitation, by way of a sale and leaseback,
including any disposition by means of a merger, consolidation or similar
transaction and including the issuance, sale or other transfer of any of the
capital stock of any Restricted Subsidiary of such person) other than to
Holdings or to any of its Wholly Owned Subsidiaries (including the receipt of
proceeds of insurance paid on account of the loss of or damage to any asset and
awards of compensation for any asset taken by condemnation, eminent domain or
similar proceeding, and including the receipt of proceeds of business
interruption insurance); and (ii) the issuance of Equity Interests in any
Restricted Subsidiaries or the sale of any Equity Interests in any Restricted
Subsidiaries, in each case, in one or a series of related transactions,
PROVIDED, that notwithstanding the foregoing, the term "Asset Sale" shall not
include: (a) the sale, lease, conveyance, disposition or other transfer of all
or substantially all of the assets of Holdings, as permitted pursuant to the
covenant described under "Merger, Consolidation or Sale of Assets," (b) the sale
or lease of equipment, inventory, accounts receivable or other assets in the
ordinary course of business consistent with past practice, (c) a transfer of
assets by Holdings to a Wholly Owned Subsidiary or by a Wholly Owned Subsidiary
to Holdings or to another Wholly Owned Subsidiary, (d) an issuance of Equity
Interests by a Wholly Owned Subsidiary to Holdings or to another Wholly Owned
Subsidiary, (e) the surrender or waiver of contract rights or the settlement,
release or surrender of contract, tort or other claims of any kind, (f) the
grant in the ordinary course of business of any non-exclusive license of
patents, trademarks, registrations therefor and other similar intellectual
property, (g) Permitted Investments or (h) any cash dividend, distribution,
Investment or payment made pursuant to the first or second paragraph of the
"Restricted Payments" covenant.
"ATTRIBUTABLE DEBT" in respect of a sale and leaseback transaction means, at
the time of determination, the present value (discounted at the rate of interest
implicit in such transaction, determined in accordance with GAAP) of the
obligation of the lessee for net rental payments during the remaining term of
the lease included in such sale and leaseback transaction (including any period
for which such lease has been extended or may, at the option of the lessor, be
extended).
"BOARD OF DIRECTORS" means the Board of Directors of Holdings, or any
authorized committee of the Board of Directors.
"BORROWING BASE" means, as of any date, an amount equal to the sum of (i)
85% of all Eligible Receivables, (ii) 60% of all Eligible Raw Materials
Inventory, (iii) 50% of Eligible Finished Goods Inventory and (iv) 50% of the
fair market value or, if acquired after the date of the Senior Indenture, the
acquisition cost, of appraised equipment and real property owned by Holdings and
its Restricted Subsidiaries, or such lesser amount as may then constitute the
"Borrowing Base" under the New Credit Agreement.
"BRS" means Bruckmann, Rosser, Sherrill & Co., L.P.
"BUSINESS DAY" means any day other than a Legal Holiday.
"CAPITAL LEASE OBLIGATION" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized on a balance sheet in accordance with
GAAP.
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"CAPITAL STOCK" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership, partnership interests
(whether general or limited) and (iv) any other interest or participation that
confers on a Person the right to receive a share of the profits and losses of,
or distributions of assets of, the issuing Person.
"CASH EQUIVALENTS" means (a) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States is pledged in support thereof) having maturities no more than twelve
months from the date of acquisition, (b) U.S. dollar denominated (or foreign
currency fully hedged) time deposits, certificates of deposit, Eurodollar time
deposits or Eurodollar certificates of deposit of (i) any domestic commercial
bank of recognized standing having capital and surplus in excess of $100.0
million or (ii) any bank whose short-term commercial paper rating from S&P is at
least A-1 or the equivalent thereof or from Moody's is at least P-1 or the
equivalent thereof (any such bank being an "Approved Lender"), in each case with
maturities of not more than twelve months from the date of acquisition, (c)
commercial paper and variable or fixed rate notes issued by any Approved Lender
(or by the parent company thereof) or any variable rate notes issued by, or
guaranteed by, any domestic corporation rated A-2 (or the equivalent thereof) or
better by S&P or P-2 (or the equivalent thereof) or better by Moody's and
maturing within twelve months of the date of acquisition, (d) repurchase
agreements with a bank or trust company or recognized securities dealer having
capital and surplus in excess of $100.0 million for direct obligations issued by
or fully guaranteed by the United States of America in which Holdings shall have
a perfected first priority security interest (subject to no other Liens) and
having, on the date of purchase thereof, a fair market value of at least 100% of
the amount of repurchase obligations, and (e) interests in money market mutual
funds which invest solely in assets or securities of the type described in
subparagraphs (a), (b), (c) or (d) hereof.
"CHANGE OF CONTROL" means such time as (i) prior to the initial public
offering by Holdings or any direct or indirect parent of Holdings of its common
stock (other than a public offering pursuant to a registration statement on Form
S-8), Permitted Holders cease to have, directly or indirectly, in the aggregate
at least 51% of the voting power of the voting stock of Anvil or Holdings or any
other direct or indirect parent of Holdings ceases to own, directly or
indirectly, 100% of the voting power of the voting stock of Anvil (other than by
reason of a merger of Holdings and Anvil) or (ii) after the initial public
offering by Holdings or any direct or indirect parent of Anvil of its common
stock (other than a public offering pursuant to a registration statement on Form
S-8), (A) any Schedule 13D, Form 13F or Schedule 13G under the Exchange Act, or
any amendment to such Schedule or Form, is received by Anvil or Holdings which
indicates that, or Anvil or Holdings otherwise becomes aware that, a "person" or
"group" (within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act)
has become, directly or indirectly, the "beneficial owner," by way of merger,
consolidation or otherwise, of 40% or more of the voting power of the voting
stock of Anvil or Holdings on a fully-diluted basis after giving effect to the
conversion and exercise of all outstanding warrants, options and other
securities of Anvil or Holdings, as the case may be (whether or not such
securities are then currently convertible or exercisable) and (B) such person or
group has become, directly or indirectly, the beneficial owner of a greater
percentage of the voting capital stock of Anvil, calculated on such
fully-diluted basis, than beneficially owned by the Permitted Holders, or (iii)
the sale, lease or transfer of all or substantially all of the assets of
Holdings to any person or group (other than the Permitted Holders), or (iv)
during any period of two consecutive calendar years individuals who at the
beginning of such period constituted the Board of Directors of Anvil or Holdings
(together with any new directors whose election by the Board of Directors of
Anvil or Holdings or whose nomination for election by the shareholders of Anvil
or Holdings, as the case may be, was approved by a vote of a majority of the
directors then still in office who either were directors at the beginning of
such period or whose election or nomination for election was previously so
approved or was approved by the Permitted Holders) cease for any reason to
constitute a majority of the directors of Anvil or Holdings, as the case may be,
then in office.
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"COMMISSION" means the Securities and Exchange Commission.
"CONSOLIDATED EBITDA" means, with respect to Holdings and its Restricted
Subsidiaries for any period, the sum of, without duplication, (i) the
Consolidated Net Income for such period, plus (ii) to the extent deducted from
Consolidated Net Income for such period, (x) the Fixed Charges for such period,
plus (y) non-cash dividends on Holdings' preferred stock, plus (iii) provision
for taxes based on income or profits for such period (to the extent such income
or profits were included in computing Consolidated Net Income for such period),
plus (iv) consolidated depreciation, amortization and other non-cash charges of
Holdings and its Restricted Subsidiaries required to be reflected as expenses on
the books and records of Holdings, minus (v) cash payments with respect to any
nonrecurring, non-cash charges previously added back pursuant to clause (iv),
and (vi) excluding the impact of foreign currency translations. Notwithstanding
the foregoing, the provision for taxes based on the income or profits of, and
the depreciation and amortization and other non-cash charges of, a Restricted
Subsidiary of a Person shall be added to Consolidated Net Income to compute
Consolidated EBITDA only to the extent that the Net Income of such Restricted
Subsidiary was included in calculating the Consolidated Net Income of such
Person and only if a corresponding amount would be permitted at the date of
determination to be dividended to Holdings by such Restricted Subsidiary without
prior approval (that has not been obtained), pursuant to the terms of its
charter and all agreements, instruments, judgments, decrees, orders, statutes,
rules and governmental regulations applicable to that Restricted Subsidiary or
its stockholders.
"CONSOLIDATED NET INCOME" means, with respect to any Person for any period,
the aggregate of the Net Income of such Person and its Restricted Subsidiaries
for such period, on a consolidated basis, determined in accordance with GAAP;
PROVIDED that (i) the Net Income (but not loss) of any Person that is not a
Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid in cash to the referent Person or a Wholly Owned Subsidiary
thereof, (ii) the Net Income of, or any dividends or other distributions from,
any Unrestricted Subsidiary, to the extent otherwise included, shall be
excluded, whether or not distributed to Holdings or one of its Restricted
Subsidiaries, (iii) the Net Income of any Restricted Subsidiary shall be
excluded to the extent that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of that Net Income is not at the
date of determination permitted without any prior governmental approval (which
has not been obtained) or, directly or indirectly, by operation of the terms of
its charter or any agreement, instrument, judgment, decree, order, statute, rule
or governmental regulation applicable to that Restricted Subsidiary or its
stockholders, (iv) the Net Income of any Person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition shall
be excluded, (v) the cumulative effect of a change in accounting principles
shall be excluded, (vi) income or loss attributable to discontinued operations
shall be excluded; (vii) any increase in cost of sales or other write-offs
resulting from the purchase accounting treatment of any acquisitions shall be
excluded; and (viii) all other extraordinary, unusual or nonrecurring gains or
losses shall be excluded.
"CONSOLIDATED NET WORTH" of a Person at any date means the amount by which
the assets of such Person and its consolidated Restricted Subsidiaries (less any
revaluation or other write-up subsequent to the date of the Exchange Debenture
Indenture in any such assets (other than write-ups resulting from foreign
currency translations and write-ups of tangible assets of a going concern
business made within twelve months after the acquisition of such business))
exceed the sum of (a) the total liabilities of such Person and its consolidated
Restricted Subsidiaries, plus (b) any Disqualified Stock of such Person or any
consolidated Restricted Subsidiaries of such Person issued to any Person other
than such Person or a Wholly Owned Subsidiary of such Person, in each case
determined in accordance with GAAP.
"DEFAULT" means any event that is or with the passage of time or the giving
of notice or both would be an Event of Default.
"DEPOSITARY" means, with respect to the Exchange Debentures issuable or
issued in whole or in part in global form, the Person specified in the Exchange
Debenture Indenture as the Depositary with respect to the Exchange Debentures,
until a successor shall have been appointed and become such Depositary
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pursuant to the applicable provision of the Exchange Debenture Indenture, and,
thereafter, "Depositary" shall mean or include such successor.
"DISQUALIFIED STOCK" means any Capital Stock that, 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 redeemable at
the option of the Holder thereof, in whole or in part, on or prior to the date
on which is 91 days after the date that the Exchange Debentures mature.
"ELIGIBLE FINISHED GOODS INVENTORY" means, as of any date of determination,
the gross dollar value (valued at the lower of cost or fair market value (on a
first-in, first-out basis)) of all finished goods inventory (including for
purposes hereof, finished goods inventory which is in transit back to Holdings
or any Restricted Subsidiary) of Holdings or any Restricted Subsidiary less
appropriate reserves determined in accordance with GAAP applied on a consistent
basis but excluding in any event and without duplication, to the extent not
treated accordingly by GAAP, (i) inventory subject to any Lien (other than a
Permitted Lien), (ii) inventory which fails to meet standards for sale or use
imposed by governmental agencies, departments or divisions having regulatory
authority over such goods, (iii) inventory which is not useable or saleable at
prices approximating their cost (after taking into account, without duplication,
the amount of any reserves for obsolescence, unsaleability or decline in value),
(iv) inventory located outside of the United States (unless in transit back to
Holdings or any Restricted Subsidiary), (v) inventory in the possession of
domestic contractors (other than Holdings or any Restricted Subsidiary) or other
third parties, and (vi) all work in process.
"ELIGIBLE RAW MATERIALS INVENTORY" means, as of any date of determination,
the gross dollar value (valued at the lower of cost or fair market value (on a
first-in, first-out basis)) of all raw materials (including for purposes hereof,
uncut dyed or greige cloth) of Holdings or any Restricted Subsidiary less
appropriate reserves determined in accordance with GAAP applied on a consistent
basis but excluding in any event, to the extent not treated accordingly by GAAP
and without duplication, (i) inventory subject to any Lien (other than a
Permitted Lien), (ii) inventory which fails to meet standards for sale or use
imposed by governmental agencies, departments or divisions having regulatory
authority over such goods, (iii) inventory which is not useable or saleable at
prices approximating their cost (after taking into account, without duplication,
the amount of any reserves for obsolescence, unsaleability or decline in value),
(iv) inventory located outside of the United States (unless in transit back to
Holdings or any Restricted Subsidiary), (v) inventory in the possession of
domestic contractors (other than Holdings or any Restricted Subsidiary) or other
third parties, and (vi) all work in process (except uncut dyed or greige cloth).
"ELIGIBLE RECEIVABLES" means, as of any date of determination, the aggregate
gross amount of all accounts receivable, receivables and obligations for payment
created or arising from the sale of inventory or the rendering of services in
the ordinary course of business, owned by or owing to Holdings or any Restricted
Subsidiary, net of allowances and reserves for doubtful or uncollectible
accounts and sales adjustments consistent with Holdings' internal policies and
in any event in accordance with GAAP applied on a consistent basis, (hereinafter
sometimes referred to collectively as "Receivables"), but excluding, without
duplications in any event (i) Receivables subject to a Lien (other than a
Permitted Lien), (ii) Receivables which are outstanding more than 90 days from
the due date of the original invoice or more than 180 days from the date of
shipment, (iii) Receivables evidenced by notes, chattel paper or other
instruments, unless such notes, chattel paper or instruments have been delivered
to and are in the possession of such parties as may be specified in the New
Credit Agreement, (iv) Receivables with respect to which the account debtor is
not solvent or is the subject of any bankruptcy or insolvency proceedings of any
kind, (v) Receivables owing by an account debtor located outside of the United
States (unless payment for the goods shipped is secured by an irrevocable letter
of credit in a form and from an institution acceptable to such parties as may be
specified in the New Credit Agreement), (vi) Receivables which are contingent or
subject to offset, deduction, counterclaim, dispute or other defense to payment,
in each case
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to the extent of such offset, deduction, counterclaim dispute or other defense,
and (vii) Receivables arising out of transactions with Subsidiaries or
Affiliates of Holdings.
"EQUITY INTERESTS" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXISTING INDEBTEDNESS" means the Indebtedness of Holdings and its
Restricted Subsidiaries (other than Indebtedness under the New Credit Agreement)
in existence on the date of the Exchange Debenture Indenture, until such amounts
are repaid.
"FIXED CHARGES" means, with respect to any Person for any period, the sum,
without duplication, of (i) the consolidated interest expense of such Person and
its Restricted Subsidiaries for such period, whether paid or accrued (including,
without limitation, amortization of original issue discount, non-cash interest
payments, the interest component of any deferred payment obligations, the
interest component of all payments associated with Capital Lease Obligations,
commissions, discounts and other fees and charges incurred in respect of letter
of credit or bankers' acceptance financings, and net payments (if any) pursuant
to Hedging Obligations), and (ii) the consolidated interest expense of such
Person and its Restricted Subsidiaries that was capitalized during such period,
and (iii) any interest expense on Indebtedness of another Person that is
guaranteed by such Person or one of its Restricted Subsidiaries or secured by a
Lien on assets of such Person or one of its Restricted Subsidiaries (whether or
not such guarantee or Lien is called upon), and (iv) the product of (a) all cash
dividend payments (and non-cash dividend payments in the case of a Person that
is a Restricted Subsidiary) on any series of preferred stock of such Person
payable to a party other than Holdings or a Wholly Owned Subsidiary, times (b) a
fraction, the numerator of which is one and the denominator of which is one
minus the then current combined federal, state and local statutory tax rate of
such Person, expressed as a decimal, on a consolidated basis and in accordance
with GAAP, but excluding from the calculation of fixed charges amortization of
financing costs (except to the extent referred to in the parenthetical in clause
(i) of this definition).
"FIXED CHARGE COVERAGE RATIO" means with respect to any Person for any
period, the ratio of the Consolidated EBITDA of such Person and its Restricted
Subsidiaries for such period to the Fixed Charges of such Person and its
Restricted Subsidiaries for such period. In the event that Holdings or any of
its Restricted Subsidiaries incurs, assumes, guarantees or repays any
Indebtedness (other than the incurrence or repayment of revolving credit
borrowings used for working capital, except to the extent that a repayment is
accompanied by a permanent reduction in revolving credit commitments) or issues
preferred stock subsequent to the commencement of the four-quarter reference
period for which the Fixed Charge Coverage Ratio is being calculated but prior
to the date on which the event for which the calculation of the Fixed Charge
Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge Coverage
Ratio shall be calculated giving pro forma effect to such incurrence,
assumption, guarantee or redemption of Indebtedness, or such issuance or
redemption of preferred stock, as if the same had occurred at the beginning of
the applicable four-quarter reference period. For purposes of making the
computation referred to above, (i) acquisitions that have been made by Holdings
or any of its Restricted Subsidiaries, including through mergers or
consolidations and including any related financing transactions, during the
four-quarter reference period or subsequent to such reference period and on or
prior to the Calculation Date shall be deemed to have occurred on the first day
of the four quarter reference period and shall give pro forma effect to the
Consolidated EBITDA and Indebtedness of the Person which is the subject of any
such acquisition, and (ii) the Consolidated EBITDA attributable to discontinued
operations, as determined in accordance with GAAP, and operations or businesses
disposed of prior to the Calculation Date, shall be excluded, and (iii) the
Fixed Charges attributable to discontinued operations, as determined in
accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded, but only to the extent that the obligations
giving rise to such Fixed Charges will not be obligations of the referent Person
or any of its Restricted Subsidiaries following the Calculation Date.
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"GAAP" means generally accepted accounting principles 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 have been approved by a significant segment of the accounting
profession, which are in effect on the date of the Exchange Debenture Indenture.
"GOVERNMENT SECURITIES" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States is pledged.
"GUARANTEE" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"HEDGING OBLIGATIONS" means, with respect to any Person, the obligations of
such Person under (i) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements and (ii) other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates.
"HOLDER" means a Person in whose name a share of Senior Preferred Stock or
Exchange Debenture is registered on the Registrar's books.
"INDEBTEDNESS" means, with respect to any Person, any indebtedness of such
Person, whether or not contingent, in respect of borrowed money or evidenced by
bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or banker's acceptances or
representing Capital Lease Obligations or the balance deferred and unpaid of the
purchase price of any property or representing any Hedging Obligations, except
any such balance that constitutes an accrued expense or trade payable, if and to
the extent any of the foregoing indebtedness (other than letters of credit and
Hedging Obligations) would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP, as well as all indebtedness of others
secured by a Lien on any asset of such Person (whether or not such indebtedness
is assumed by such Person), the maximum fixed repurchase price of Disqualified
Stock issued by such Person in each case, if held by any Person other than
Holdings or a Wholly Owned Subsidiary of Holdings, and, to the extent not
otherwise included, the guarantee by such Person of any indebtedness of any
other Person.
"INVESTMENTS" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances (other than advances to customers in the ordinary course of business
that are recorded as accounts receivable on the books of such Person) or capital
contributions (excluding commission, travel, relocation and similar advances to
officers and employees made in the ordinary course of business), purchases or
other acquisitions for consideration of Indebtedness, Equity Interests or other
securities and all other items that are or would be classified as investments on
a balance sheet prepared in accordance with GAAP; PROVIDED that an acquisition
of assets, Equity Interests or other securities by Holdings for consideration
consisting of common equity securities of Holdings or of any direct or indirect
parent of Holdings shall not be deemed to be an Investment.
"LEGAL HOLIDAY" means a Saturday, a Sunday or a day on which federal offices
or banking institutions in the City of New York, in the city of the Corporate
Trust Office of the Trustee, or at a place of payment are authorized by law,
regulation or executive order to remain closed. If a payment date is a Legal
Holiday, payment may be made on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset, whether
or not filed, recorded or otherwise perfected under applicable law (including
any conditional sale or other title retention agreement, any lease in the
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nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"LIQUIDATED DAMAGES" means all liquidated damages owing pursuant to the
Registration Rights Agreement.
"NET INCOME" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP, and before reduction for
non-cash preferred stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (b) the
disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries, (ii) any extraordinary or nonrecurring gain (but
not loss), together with any related provision for taxes on such extraordinary
or nonrecurring gain (but not loss).
"NET PROCEEDS" means the aggregate cash proceeds received by Holdings or any
of its Restricted Subsidiaries in respect of any Asset Sale (including, without
limitation, any cash received upon the sale or other disposition of any non-cash
consideration received in any Asset Sale), net of the direct costs relating to
such Asset Sale (including, without limitation, legal, accounting and investment
banking fees, and sales commissions) and any relocation expenses incurred as a
result thereof, taxes paid or payable as a result thereof (after taking into
account any available tax credits or deductions and any tax sharing
arrangements), and any reserve for adjustment in respect of the sale price of
such asset or assets established in accordance with GAAP and net of any Purchase
Money Obligations relating to the assets comprising such Asset Sale.
"NEW CREDIT AGREEMENT" means, collectively, (i) that certain Amended and
Restated Credit Agreement, as in effect on the date of the Exchange Debenture
Indenture, by and among Anvil, Holdings, the lenders that may be from time to
time parties thereto and NationsBank, N.A., as administrative agent, as the
foregoing may from time to time be amended, renewed, supplemented or otherwise
modified at the option of the parties thereto, including increases in the
principal amount thereof (subject to such increases otherwise being in
conformity with the terms of the Exchange Debenture Indenture); and (ii) after
NationsBank, N.A., as administrative agent, has acknowledged in writing that the
Credit Agreement described in clause (i) above has been terminated and all then
outstanding Indebtedness thereunder or with respect thereto have been repaid in
full in cash and discharged, any successors to or replacements of (as designated
by the Board of Directors of Holdings in its sole judgment, and evidenced by a
resolution) such Credit Agreement, as such successors or replacements may from
time to time be amended, renewed, supplemented, modified or replaced, including
increases in the principal amount thereof (subject to such increases otherwise
being in conformity with the terms of the Exchange Debenture Indenture).
"NEW STOCK OPTION PLAN" means Holdings' 1997 Stock Option Plan to be
approved by the Board of Directors of Holdings providing for the issuance of
options to purchase Common Stock to directors and employees of Holdings, Anvil
or its Restricted Subsidiaries or any successor plan thereto.
"NON-RECOURSE DEBT" means Indebtedness (i) as to which neither Holdings nor
any of its Restricted Subsidiaries (a) provides credit support of any kind
(including any undertaking, agreement or instrument that would constitute
Indebtedness), (b) is directly or indirectly liable (as a guarantor or
otherwise), or (c) constitutes the lender; and (ii) no default with respect to
which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of Holdings
or any of its Restricted Subsidiaries to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its stated maturity; and (iii) as to which the lenders have been notified in
writing that they will not have any recourse to the stock or assets of Holdings
or any of its Restricted Subsidiaries.
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"OBLIGATIONS" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"OFFERINGS" means the Unit Offering and the Senior Note Offering.
"OFFICER" means, with respect to any Person, the Chairman of the Board, the
Chief Executive Officer, the President, the Chief Operating Officer, the Chief
Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the
Secretary or any Vice President of such Person.
"PERMITTED HOLDERS" means, collectively, (i) BRS and its Affiliates, and
their respective employees and directors, (ii) 399 Venture and its Affiliates,
and their respective employees and directors, (iii) all full-time executive
officers of Holdings and its Subsidiaries who acquire Capital Stock of Holdings
and (iv) (A) any spouse, lineal descendant (including by adoption and
stepchildren), or sibling of such natural persons and (B) any trust,
corporation, limited liability company or partnership, the beneficiaries,
members, stockholders or partners of which consist entirely of such natural
persons or the individuals described in clause (A) above.
"PERMITTED INVESTMENTS" means (a) any Investments in Holdings or in a Wholly
Owned Subsidiary of Holdings that is engaged in the same or a similar line of
business as Holdings and its Restricted Subsidiaries were engaged in on the date
of the Exchange Debenture Indenture and reasonable extensions or expansions
thereof; (b) any Investments in Cash Equivalents; (c) Investments by Holdings or
any Restricted Subsidiary of Holdings in a Person if as a result of such
Investment (i) such Person becomes a Wholly Owned Subsidiary of Holdings that is
engaged in the same or a similar line of business as Holdings and its Restricted
Subsidiaries were engaged in on the date of the Exchange Debenture Indenture and
reasonable extensions or expansions thereof or (ii) such Person is merged,
consolidated or amalgamated with or into, or transfers or conveys substantially
all of its assets to, or is liquidated into, Holdings or a Wholly Owned
Subsidiary of Holdings that is engaged in the same or a similar line of business
as Holdings and its Restricted Subsidiaries were engaged in on the date of the
Exchange Debenture Indenture and reasonable extensions or expansions thereof;
(d) Investments made as a result of the receipt of non-cash consideration from
an Asset Sale that was made pursuant to and in compliance with the covenant
described under "--Asset Sales"; (e) Investments by Holdings or any Restricted
Subsidiary in cash in an amount not to exceed $10.0 million in the aggregate at
any one time; (f) stock, obligations or securities received in settlement of
debts created in the ordinary course of business and owing to Anvil or any
Subsidiary or in satisfaction of judgments or pursuant to any plan of
reorganization or similar arrangement upon the bankruptcy or insolvency of
Anvil's trade creditors or customers; (g) the contribution of shares of stock or
other equity securities of an Unrestricted Subsidiary to another Subsidiary; (h)
loans and advances to employees and officers of Anvil and its Restricted
Subsidiaries in the ordinary course of business not to exceed an aggregate of
$750,000; (i) accounts receivable created or acquired in the ordinary course of
business; (j) currency agreements and interest swap obligations entered into in
the ordinary course of Anvil's or its Restricted Subsidiaries' businesses and
otherwise in compliance with the Exchange Debenture Indenture; and (k) any
Investment by Anvil or a Wholly Owned Subsidiary of Anvil in a Securitization
Entity or any Investment by a Securitization Entity in any other Person in
connection with a Qualified Securitization Transaction; PROVIDED that any
Investment in a Securitization Entity is in the form of a Purchase Money Note or
an Equity Interest.
"PERMITTED LIENS" means (i) Liens securing (a) Indebtedness permitted by the
first paragraph of the covenant entitled "--Incurrence of Indebtedness and
Issuance of Preferred Stock," and Indebtedness permitted by clauses (i) , (ii),
(iv) or (viii) under the covenant entitled "Incurrence of Indebtedness and
Issuance of Preferred Stock" and (b) related Hedging Obligations; (ii) Liens in
favor of Holdings or any Wholly Owned Subsidiary; (iii) Liens on property of a
Person existing at the time such Person is merged into or consolidated with
Holdings or any Restricted Subsidiary of Holdings; PROVIDED that such Liens were
in existence prior to the contemplation of such merger or consolidation and do
not extend to any assets other than those of the Person merged into or
consolidated with Holdings; (iv) Liens on property of a
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Person existing at the time such Person becomes a Restricted Subsidiary of
Holdings; (v) Liens on property existing at the time of acquisition thereof by
Holdings or any Restricted Subsidiary of Holdings, PROVIDED that such Liens were
in existence prior to the contemplation of such acquisition; (vi) Liens to
secure the performance of statutory obligations, surety or appeal bonds,
performance bonds or other obligations of a like nature incurred in the ordinary
course of business; (vii) Liens existing on the date of the Exchange Debenture
Indenture; (viii) Liens for taxes, assessments or governmental charges or claims
that are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded, PROVIDED
that any reserve or other appropriate provision as shall be required in
conformity with GAAP shall have been made therefor; (ix) carriers',
warehousemen's, mechanics', materialmen's, repairmen's, or other similar Liens
arising in the ordinary course of business which are not overdue for a period of
more than 60 days or which are being contested in good faith by appropriate
proceedings diligently conducted; (x) statutory Liens of landlords or of
mortgagees of landlords arising by operation of law, provided that the rental
payments secured thereby are not yet due and payable; (xi) Liens incurred in the
ordinary course of business of Holdings or any Restricted Subsidiary of Holdings
with respect to obligations that do not exceed $2.5 million at any one time
outstanding and that (a) are not incurred in connection with the borrowing of
money or the obtaining of advances or credit (other than trade credit in the
ordinary course of business) and (b) do not in the aggregate materially detract
from the value of the property or materially impair the use thereof in the
operation of business by Holdings or such Restricted Subsidiary; (xii)
nonconsensual Liens incurred in the ordinary course of business of any foreign
subsidiary that is a Restricted Subsidiary that (a) are not incurred in
connection with the borrowing of money or the obtaining of advances of credit
(other than trade credit in the ordinary course of business) and (b) do not in
the aggregate materially detract from the value of the property or materially
impair the use thereof in the operation of business by such Restricted
Subsidiary; (xiii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance and
other types of social security; (xiv) easements, rights-of-way, restrictions,
minor defects or irregularities in title and other similar charges or
encumbrances not interfering in any material respect with the business of
Holdings or any of its Restricted Subsidiaries; (xv) Purchase Money Liens
(including extensions and renewals thereof); (xvi) judgment and attachment Liens
not giving rise to an Event of Default; (xvii) Liens arising out of consignment
or similar arrangements for the sale of goods; (xviii) any interest or title of
a lessor in property subject to any capital lease obligation or operating lease;
(xix) Liens arising from filing Uniform Commercial Code financing statements
regarding leases; (xx) Liens encumbering deposits made to secure obligations
arising from statutory or regulatory requirements of Anvil or any of its
Restricted Subsidiaries, including rights of offset and set-off, arising in the
ordinary course of business; (xxi) Liens on assets transferred to a
Securitization Entity or on assets of a Securitization Entity, in either case
incurred in connection with a Qualified Securitization Transaction; and (xxii)
Liens in favor of customs and revenue authorities arising as a matter of law to
secure payment of custom duties in connection with the importation of goods.
"PERMITTED REFINANCING INDEBTEDNESS" means any Indebtedness of Holdings or
any of its Restricted Subsidiaries issued in exchange for, or the net proceeds
of which are used to extend, refinance, renew, replace, defease or refund other
Indebtedness of Holdings or any of its Restricted Subsidiaries; PROVIDED that:
(i) the principal amount of such Permitted Refinancing Indebtedness does not
exceed the principal amount of the Indebtedness so extended, refinanced,
renewed, replaced, defeased or refunded (plus the amount of reasonable expenses
incurred in connection therewith); (ii) such Permitted Refinancing Indebtedness
has a final maturity date at least as late as the final maturity date of, and
has a Weighted Average Life to Maturity equal to or greater than the Weighted
Average Life to Maturity of, the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded; (iii) if the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded is subordinated in
right of payment to the Exchange Debentures, such Permitted Refinancing
Indebtedness has a final maturity date later than the final maturity date of,
and is subordinated in right of payment to, the Exchange Debentures on terms at
least as favorable to the Holders of Exchange Debentures as those contained in
the
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documentation governing the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; and (iv) such Indebtedness is incurred either by
Holdings or by the Restricted Subsidiary who is the obligor on the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded.
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, limited
liability company, or other business entity or government or agency or political
subdivision thereof (including any subdivision or ongoing business of any such
entity or substantially all of the assets of any such entity, subdivision or
business).
"PUBLIC EQUITY OFFERING" means an underwritten public offering pursuant to a
registration statement filed with the Commission in accordance with the
Securities Act of (i) Equity Interests other than Disqualified Stock of Holdings
or (ii) of Equity Interests other than Disqualified Stock of Holdings' parent or
indirect parent corporation to the extent that the cash proceeds therefrom are
contributed to the equity capital of Holdings or are used to purchase Equity
Interests (other than Disqualified Stock) of Holdings.
"PURCHASE MONEY LIEN" means a Lien granted on an asset or property to secure
a Purchase Money Obligation permitted to be incurred under the Exchange
Debenture Indenture and incurred solely to finance the purchase, or the cost of
construction or improvement, of such asset or property; PROVIDED HOWEVER, that
such Lien encumbers only such asset or property and is granted within 180 days
of such acquisition.
"PURCHASE MONEY NOTE" means a promissory note of a Securitization Entity
evidencing a line of credit, which may be irrevocable, from Holdings or any
Subsidiary of Holdings in connection with a Qualified Securitization Transaction
to a Securitization Entity, which note shall be repaid from cash available to
the Securitization Entity, other than amounts required to be established as
reserves pursuant to agreements, amounts paid to investors in respect of
interest, principal and other amounts owing to such investors and amounts owing
to such investors and amounts paid in connection with the purchase of newly
generated receivables.
"PURCHASE MONEY OBLIGATIONS" of any Person means any obligations of such
Person to any seller or any other Person incurred or assumed to finance the
purchase, or the cost of construction or improvement, of real or personal
property to be used in the business of such person or any of its Restricted
Subsidiaries in an amount that is not more than 100% of the cost, or fair market
value, as appropriate, of such property, and incurred within 180 days after the
date of such acquisition (excluding accounts payable to trade creditors incurred
in the ordinary course of business).
"QUALIFIED SECURITIZATION TRANSACTION" means any transaction or series of
transactions that may be entered into by Holdings or any of its Subsidiaries
pursuant to which Holdings or any or its Subsidiaries may sell, convey or
otherwise transfer to (a) a Securitization Entity (in the case of a transfer by
Holdings or any of its Subsidiaries) and (b) any other Person (in the case of a
transfer by a Securitization Entity), or may grant a security interest in, any
accounts receivable or equipment (whether now existing or arising or acquired in
the future) of Holdings or any of its Subsidiaries, and any assets related
thereto including, without limitation, all collateral securing such accounts
receivable and equipment, all contracts and contract rights and all guarantees
or other obligations in respect of such accounts receivable and equipment,
proceeds of such accounts receivable and equipment and other assets (including
contract rights) which are customarily transferred or in respect of which
security interests are customarily granted in connection with asset
securitization transactions involving accounts receivable and equipment;
PROVIDED that such transaction or transactions are otherwise permitted by the
terms of the Exchange Debenture Indenture including the provisions set forth
under "Repurchase at the Option of Holders--Asset Sales".
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement,
dated as of the date of the Exchange Debenture Indenture, by and among Holdings
and the other parties named on the signature pages thereof, as such agreement
may be amended, modified or supplemented from time to time.
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"REPRESENTATIVE" means the indenture trustee or other trustee, client or
representative for any senior Indebtedness.
"RESPONSIBLE OFFICER," when used with respect to the Trustee, means any
officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) 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 of his knowledge of
and familiarity with the particular subject.
"RESTRICTED INVESTMENT" means an Investment other than a Permitted
Investment.
"RESTRICTED SUBSIDIARY" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITIZATION ENTITY" means a Wholly Owned Subsidiary of Holdings (or
another Person in which Holdings or any Subsidiary of Holdings makes an
Investment and to which Holdings or any Subsidiary of Holdings transfers
accounts receivable or equipment and related assets) which engages in no
activities other than in connection with the financing of accounts receivable or
equipment and which is designated by the Board of Directors of Holdings (as
provided below) as a Securitization Entity (a) no portion of the Indebtedness or
any other obligations (contingent or otherwise) of which (i) is guaranteed by
Holdings or any Subsidiary of Holdings (excluding guarantees of obligations
(other than the principal of, and interest on, Indebtedness)) pursuant to
Standard Securitization Undertakings, (ii) is recourse to or obligates Holdings
or any Subsidiary of Holdings in any way other than pursuant to Standard
Securitization Undertakings, or (iii) subjects any property or asset of or any
Subsidiary of Holdings, directly or indirectly, contingently or otherwise, to
the satisfaction thereof other than pursuant to Standard Securitization
Undertakings, (b) with which neither Holdings nor any Subsidiary of Holdings has
any material contract, agreement, arrangement or understanding other than on
terms no less favorable to Holdings or such Subsidiary than those that might be
obtained at the time from Persons that are not Affiliates of Holdings, other
than fees payable in the ordinary course of business in connection with
servicing receivables of such entity, and (c) to which neither Holdings nor any
Subsidiary of Holdings has any obligation to maintain or preserve such entity's
financial condition or cause such entity to achieve certain levels of operating
results. Any such designation by the Board of Directors of Holdings shall be
evidenced to the Trustee by filing with the Trustee a certified copy of the
resolution of the Board of Directors of Holdings giving effect to such
designation and an officers' certificate certifying that such designation
complied with the foregoing conditions.
"SENIOR INDEBTEDNESS" means: (i) all Obligations (including any interest
accruing subsequent to the filing of a petition of bankruptcy at the rate
provided for in the documentation with respect thereto, whether or not such
interest is an allowed claim under applicable law) on any Indebtedness of
Holdings, whether outstanding on the date of issuance of the Exchange Debentures
or thereafter created, incurred or assumed, of the following types: (A) all
Indebtedness of Holdings (including without limitation the Senior Notes and
borrowings under the New Credit Agreement) for money borrowed, and (B) all
Indebtedness evidenced by notes, debentures, bonds or other similar instruments
for the payment of which Holdings is responsible or liable; (ii) all capitalized
lease obligations of Holdings; (iii) all Obligations of Holdings: (A) for the
reimbursement of any obligor on any letter of credit, banker's acceptance or
similar credit transaction, including, without limitation, any such transaction
made pursuant to the New Credit Agreement, (B) constituting Hedging Obligations,
or (C) issued as the deferred purchase price of property and all conditional
sale Obligations of Holdings and all Obligations of Holdings under any title
retention agreement; (iv) all guarantees of Holdings with respect to Obligations
of other persons of the type referred to in clauses (ii) and (iii) and with
respect to the payment of dividends of other persons; and (v) all Obligations of
Holdings consisting of modifications, renewals, extensions, replacements and
refundings of any Obligations described in clauses (i), (ii), (iii) or (iv)
unless, in the instrument creating or evidencing the
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same or pursuant to which the same is outstanding, it is expressly provided that
such Obligations are subordinated or junior in right of payment to the Exchange
Debentures; PROVIDED, HOWEVER, that Senior Indebtedness shall not be deemed to
include: (1) any Obligation of Holdings to any Subsidiary, (2) any liability for
federal, state, local or other taxes owed or owing by Holdings, (3) any accounts
payable or other liability to trade creditors arising in the ordinary course of
business (including guarantees thereof or instruments evidencing such
liabilities), (4) any Indebtedness, guarantee or Obligation of Holdings that is
contractually subordinated or junior in any respect to any other Indebtedness,
guarantee or Obligation of Holdings, or (5) any Indebtedness to the extent the
same is incurred in violation of the Indenture. Senior Indebtedness shall
include all Obligations in respect of Holdings Guarantee of the Senior Notes and
the Senior Indenture of Anvil.
"SENIOR NOTE OFFERING" means the offering by Anvil of the Senior Notes of
Anvil.
"SIGNIFICANT SUBSIDIARY" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Exchange Act, as such Regulation is in effect on the date
hereof.
"STANDARD SECURITIZATION UNDERTAKINGS" means representations, warranties,
covenants and indemnities entered into by Anvil or any Subsidiary of Anvil which
are reasonably customary in an accounts receivable or equipment transaction.
"SUBORDINATED INDEBTEDNESS" means all Obligations of the type referred to in
clauses (i) through (v) of the definition of Senior Indebtedness, if the
instrument creating or evidencing the same, or pursuant to which the same is
outstanding, designates such Obligations as subordinated or junior in right of
payment to Senior Indebtedness.
"SUBSIDIARY" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or one or more Subsidiaries
of such Person (or any combination thereof).
"399 VENTURE" means 399 Venture Partners, Inc.
"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939 (15 U.S.C.
SectionSection 77aaa-77bbbb) as in effect on the date on which the Exchange
Debenture Indenture is qualified under the Trust Indenture Act.
"UNITS OFFERING" means the offering by Holdings of units consisting of $30.0
million aggregate liquidation preference of Senior Preferred Stock and 390,000
shares of Class B Common.
"UNRESTRICTED SUBSIDIARY" means (i) any Subsidiary that is designated by the
Board of Directors as an Unrestricted Subsidiary pursuant to a Board Resolution;
but only to the extent that such Subsidiary: (a) has no Indebtedness other than
Non-Recourse Debt; (b) is not party to any agreement, contract, arrangement or
understanding with Holdings or any Restricted Subsidiary of Holdings unless the
terms of any such agreement, contract, arrangement or understanding are no less
favorable to Holdings or such Restricted Subsidiary than those that might be
obtained at the time from Persons who are not Affiliates of Holdings; (c) is a
Person with respect to which neither Holdings nor any of its Restricted
Subsidiaries has any direct or indirect obligation (x) to subscribe for
additional Equity Interests or (y) to maintain or preserve such Person's
financial condition or to cause such Person to achieve any specified levels of
operating results; and (d) has not guaranteed or otherwise directly or
indirectly provided credit support for any Indebtedness of Holdings or any of
its Restricted Subsidiaries. Any such designation by the Board of Directors
shall be evidenced to the Trustee by filing with the Trustee a certified copy of
the Board
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Resolution giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing conditions and was
permitted by the covenant described under the caption "-- Restricted Payments."
If, at any time, any Unrestricted Subsidiary would fail to meet the foregoing
requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an
Unrestricted Subsidiary for purposes of the Exchange Debenture Indenture and any
Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted
Subsidiary of Holdings as of such date (and, if such Indebtedness is not
permitted to be incurred as of such date under the covenant described under the
caption "--Incurrence of Indebtedness and Issuance of Preferred Stock," Holdings
shall be in default of such covenant). The Board of Directors of Holdings may at
any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary;
PROVIDED that such designation shall be deemed to be an incurrence of
Indebtedness by a Restricted Subsidiary of Holdings of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation shall only be
permitted if (i) such Indebtedness is permitted under the covenant described
under the caption "--Incurrence of Indebtedness and Issuance of Preferred
Stock," and (ii) no Default or Event of Default would be in existence following
such designation.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (i) the sum of the
products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"WHOLLY OWNED SUBSIDIARY" of any Person means a Restricted 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.
Unrestricted Subsidiaries shall not be included in the definition of Wholly
Owned Subsidiary for any purposes of the Exchange Debenture Indenture.
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DESCRIPTION OF CAPITAL STOCK
The following summarizes certain provisions of Holdings' Second Amended and
Restated Certificate of Incorporation (the "Restated Certificate") and Bylaws,
which became effective pursuant to the Recapitalization. Such summaries do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, all of the provisions of the Restated Certificate and the
Bylaws, including the definitions therein of certain terms, copies of which may
be obtained from Holdings upon request.
GENERAL
The Restated Certificate provides for, among other things, the authorization
of 500,000 shares of Class A Common, 7,500,000 shares of Class B Common,
1,400,000 shares of Class C Common Stock, $.01 per share par value (the "Class C
Common"), 2,300,000 shares of Senior Preferred Stock and 500,000 shares of
undesignated, serial preferred stock (the "Serial Preferred Stock"). Class A
Common, Class B Common and Class C Common sometimes are referred to in this
section collectively as the "Common Stock."
Holdings has outstanding 290,000 shares of Class A Common, 3,200,000 shares
of Class B Common, no shares of Class C Common, 1,200,000 shares of Senior
Preferred Stock and no shares of Serial Preferred Stock.
COMMON STOCK
All of the issued and outstanding shares of Common Stock are fully paid and
non-assessable. The Class B Common and Class C Common are substantially
identical except with respect to voting and conversion rights. Holders of Class
B Common are entitled to one vote per share on all matters to be voted on by
stockholders while holders of Class A Common and Class C Common have no right to
vote on any matters except in special circumstances including a merger or
consolidation of Holdings or a recapitalization or reorganization as specified
in the Restated Certificate. Subject to the rights of the holders of preferred
stock and the restrictions, if any, imposed by indebtedness outstanding from
time to time, the holders of Common Stock are entitled to dividends and other
distributions, as and when declared or paid, whether in cash, property or
securities of Holdings by the Board of Directors of Holdings out of assets
legally available therefore. Holders of Common Stock are entitled to share in
such dividends or distributions on a pro rata basis, except that the holders of
Class A Common are entitled to a priority on all such dividends in an amount
equal to the then outstanding Class A Preference. The holders of Common Stock
have no preemptive, subscription, redemption or sinking fund rights under the
terms of the Restated Certificate.
Upon any voluntary or involuntary liquidation, dissolution or winding up of
Holdings, holders of Class A Common are entitled to be paid out of the assets of
Holdings then available for distribution, the Class A Preference of $100 per
share before any distribution is paid on any other shares of Common Stock. The
Class A Preference accretes at a rate of 12.5% per annum. After satisfaction of
all its liabilities, the payment of the liquidation preference of any
outstanding shares of preferred stock and the payment of the Class A Preference,
the holders of shares of Common Stock are entitled to share ratably in the
distribution of all of Holdings' assets remaining available for distribution. If
Holdings in any manner subdivides or combines the outstanding shares of any
class of Common Stock, the outstanding shares of all other classes of Common
Stock will be proportionately subdivided.
Shares of Class A Common and Class B Common are not convertible. Shares of
Class C Common are convertible at the option of the holders representing a
majority of the outstanding Class C Common, into an equal number of shares of
Class B Common.
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PREFERRED STOCK
For a description of the Senior Preferred Stock, see "Description of
Securities--Senior Preferred Stock."
The Restated Certificate authorizes the Board of Directors to create and
issue one or more series of Serial Preferred Stock and determine the rights and
preferences of each series, to the extent permitted by the Restated Certificate
and applicable law. Among other rights, the Board of Directors may determine,
without the further vote or action by the Company's stockholders, subject to
certain limitations set forth in the Certificate of Designation: (i) the number
of shares constituting the series and the distinctive designation of the series;
(ii) the dividend rate on the shares of the series, whether dividends will be
cumulative and, if so, from which date or dates, and the relative rights of
priority, if any, of payment of dividends on shares of the series; (iii) whether
the series shall have voting rights, in addition to the voting rights provided
by law and, if so, the terms of such voting rights; (iv) whether the series
shall have conversion privileges, and, if so, the terms and conditions of such
conversion, including provision for adjustment of the conversion rate in such
events as the Board of Directors shall determine; (v) whether or not the shares
of that series shall be redeemable or exchangeable and, if so, the terms and
conditions of such redemption or exchange, as the case may be, and the amount
per share payable in case of redemption, which amount may vary under different
conditions and at different redemption dates; (vi) whether the series shall have
a sinking fund for the redemption or purchase of shares of that series and, if
so, the terms and amount of such sinking fund; and (vii) the rights of the
shares of the series in the event of voluntary or involuntary liquidation,
dissolution or winding up of Holdings and the relative rights or priority, if
any, of payment of shares of the series. Except for any difference so provided
by the Board of Directors, the shares of all series of Serial Preferred Stock
rank on a parity with respect to the payment of dividends and the distribution
of assets upon liquidation.
ANTI-TAKEOVER PROVISIONS OF RESTATED CERTIFICATE AND BYLAWS
The rights of Holdings' stockholders are governed by the Delaware General
Corporation Law, the Restated Certificate and the Bylaws. Certain provisions of
the Restated Certificate and Bylaws, which are summarized below, may discourage
or make more difficult a takeover attempt that a stockholder might consider in
its best interest. Such provisions may also adversely affect the prevailing
market price for the Common Stock.
SERIAL PREFERRED STOCK. Subject to certain limitations set forth in the
Certificate of Designation, the Board of Directors has the authority, without
action by Holdings' stockholders, to fix the rights, privileges and preferences
of, and to issue up to 500,000 shares of Serial Preferred Stock. The issuance of
such Serial Preferred Stock may have the effect of delaying, deferring or
preventing a change in control of Holdings without further action by the
stockholders and may adversely affect the voting and other rights of the holders
of the Common Stock, including the loss of voting control to others. Holdings
currently has no plans to issue any additional shares of Serial Preferred Stock.
ADVANCE NOTICE REQUIREMENTS FOR STOCKHOLDER PROPOSALS. The Bylaws establish
advance notice procedures with regard to stockholder proposals. These procedures
provide that the notice of stockholder proposals must be received by Holdings no
later than (i) with respect to an annual meeting of stockholders, 60 days prior
to the anniversary date of the immediately preceding annual meeting of
stockholders and (ii) with respect to a special meeting of stockholders, no
later than the close of business on the tenth day following the date on which
notice of such meeting is first sent or given to stockholders. Each stockholder
proposal must set forth certain information as specified in the Bylaws.
SECURITYHOLDERS AGREEMENT
In connection with the Initial Units Offering, Holdings, 399 Venture, BRS
and the Initial Purchaser entered into a Registration Rights and Securityholders
Agreement (the "Securityholders Agreement")
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relating to the Class B Common. Each holder of shares of Holdings' Class B
Common included in the Initial Units Offering (including all transferees of such
holders) (collectively, the "Class B Holders") are entitled to the benefits and
subject to the obligations arising under such Securityholders Agreement.
Pursuant to the Securityholders Agreement, each Class B Holder has certain
piggyback registration rights, as well as certain participation rights with
respect to certain third-party sales of Class B Common by 399 Venture or BRS.
With respect to the piggyback registration rights, each Class B Holder has the
right to include its Class B Common in any registration of Class B Common (other
than pursuant to a registration statement on Form S-8 or S-4 or any similar form
or in connection with a registration the primary purpose of which is to register
debt securities (i.e., in connection with a so-called "equity kicker"));
PROVIDED, HOWEVER, that the amount of shares of Class B Common which may be
registered pursuant to an exercise of piggyback rights may be reduced (including
a reduction to zero) if the managing underwriters advise Holdings that in their
opinion the aggregate number of shares of Class B Common which may be included
in such offering exceeds the number which can be sold in such offering without
adversely affecting the marketability of such offering. See "Security Ownership
of Certain Beneficial Owner and Management-- Registration Rights Agreement."
The Securityholders Agreement grants each Class B Holder participation
rights, which provide that prior to any sale, transfer, assignment, pledge or
other disposal (a "Transfer") by Bruckmann, Rosser, Sherrill & Co., L.P., 399
Venture Partners, Inc. or CCT II Partners, L.P. (collectively, the "Fund
Investors") of Class B Common by a Fund Investor, the Fund Investor making such
a Transfer shall deliver a written notice to Holdings and registered Class B
Holders specifying in reasonable detail the identity of the prospective
transferee(s) and the terms and conditions of the Transfer. Each Class B Holder
may elect to participate in the contemplated Transfer by delivering written
notice to the transferring securityholder within 10 days after delivery of the
sale notice. If any Class B Holder has elected to participate in such Transfer,
each such Class B Holder shall be entitled to sell in the contemplated Transfer,
at the same price and on the same terms, a number of shares equal to the product
of (i) the quotient determined by dividing the number of shares owned by such
Class B Holder by the aggregate number of shares of Common Stock (other than
Class A Common) outstanding on a fully diluted basis prior to giving effect to
such Transfer and (ii) the aggregate number of shares to be sold in the
contemplated Transfer. Each Class B Holder transferring shares in a Transfer
shall pay its pro rata share (based on the number of shares to be sold) of the
expenses incurred by the securityholders in connection with such transfer.
Notwithstanding the foregoing, the following Transfers shall not be subject
to participation rights: any Transfer of shares by any Fund Investor (i) among
its Affiliates, employees and consultants, (ii) to any employee, prospective
employee, director or prospective director of Holdings or any Affiliate of
Holdings, (iii) to any former or prospective employee, director or prospective
director of an Investor or any Affiliate of such Affiliate or (iv) to any person
in order to resolve a certain regulatory issues. In addition, these restrictions
and obligations shall not apply to a Transfer or Transfers by Fund Investors of
shares representing an aggregate of up to 5% of Holdings' outstanding shares of
Common Stock (other than Class A Common) or in connection with registered public
sales or Rule 144 sales by the Fund Investors.
In addition, the Securityholders Agreement confers upon each Class B Holder
drag-along rights, which provide that in the event of a sale of Holdings to an
Independent Third Party or group of Independent Third Parties (as defined in the
Securityholders Agreement) pursuant to which such party or parties acquire (i)
capital stock of Holdings possessing the voting power under normal circumstances
to elect a majority of Holdings' Board of Directors (whether by merger,
consolidation, sale, transfer or exchange of Holdings' capital stock) or (ii)
all or substantially all of Holdings' assets determined on a consolidated basis
approved by the Board of Directors of Holdings and with respect to which all
holders of Common Stock (other than the Class A Common) receive or are generally
offered the same form and amount of per share consideration each Class B Holder
shall sell all of the shares of Class B Common held by it. In the event of a
sale subject to these drag-along rights, each Class B Holder will be obligated
to (i) consent to and raise no objections against the sale and (ii) waive any
dissenter's rights and other similar
139
<PAGE>
rights, and (iii) take all reasonably necessary and desirable actions as
directed by the Board in connection with the consummation of such sale,
provided, that each Class B Holder shall only be required to make customary and
reasonable representations, warranties and indemnities regarding its title to
and ownership of its shares. The obligations of the Class B Holders with respect
to sale are subject to the receipt by Holdings from a nationally recognized
investment bank of a written fairness opinion that the consideration received by
the securityholders is fair and adequate. Class B Holders are liable for their
pro rata share of expenses incurred in connection with a drag-along sale.
The drag-along and participation rights set forth in the Securityholders
Agreement terminate upon the completion of (i) a sale subject to the drag-along
rights or (ii) an underwritten registered public offering of shares of Common
Stock resulting in gross proceeds of at least $30.0 million.
140
<PAGE>
DESCRIPTION OF CERTAIN INDEBTEDNESS
OLD CREDIT AGREEMENT
On January 30, 1995, Anvil, Holdings and their subsidiaries, as guarantors,
entered into the Old Credit Agreement with NationsBank, N.A. (Carolinas), as
Agent, and The Chase Manhattan Bank, N.A., as Documentation Agent, for various
lending institutions thereto. The Old Credit Agreement provided for Term Loans
of $52.5 million in the form of a dual-tranche facility and a revolving credit
facility, as amended, of up to $47.5 million, which included a $5.0 million
sublimit for issuance of letters of credit. The Company used the proceeds of the
Old Credit Agreement to finance a portion of the Acquisition, to pay fees
incurred in connection with the Acquisition and to provide for working capital
and general corporate purposes.
The maturity and interest rates of the Term Loans varied by tranche. The
Tranche A Term Loan was a six-year term loan in the principal amount of $37.5
million due quarterly in variable amounts from April 29, 1995 through February
3, 2001. The Tranche B Term Loan was a seven-year term loan in the principal
amount of $15.0 million due quarterly in variable amounts from April 29, 1995
through February 2, 2002. The overall effective interest rate for borrowings
under the Term Loans as of February 1, 1997 was approximately 8% and borrowings
outstanding as of February 1, 1997 under all tranches were approximately $46.3
million. The Company's borrowing availability under the revolving credit
facility was based on a formula incorporating 85% of eligible receivables, 60%
of eligible raw materials inventory and 50% of eligible finished goods inventory
(each as defined in the Old Credit Agreement). Borrowings outstanding as of
February 1, 1997 amounted to $14.4 million and the weighted average interest
rate thereon was approximately 8%.
NEW CREDIT AGREEMENT
Anvil, along with Holdings and its subsidiaries (excluding Anvil), as
guarantors, entered into the New Credit Agreement with NationsBank, N.A., as
Agent for various lending institutions thereto (the "Agent") and Bank of America
Illinois, Banque Nationale de Paris and Heller Financial, Inc., as co-agents.
The New Credit Agreement provides for a revolving credit facility of up to $55.0
million, which includes a $5.0 million sublimit for issuance of standby and
commercial letters of credit. The Company used $33.3 million of the borrowings
under the New Credit Agreement to finance a portion of the Recapitalization. The
New Credit Agreement is available for working capital and general corporate
purposes, including acquisitions in an aggregate amount not to exceed $20.0
million. Indebtedness under the New Credit Agreement is guaranteed by Holdings
and all existing and after-acquired domestic subsidiaries of the Company. The
Agent has a first priority perfected security interest in all assets and
properties of Anvil and its domestic subsidiaries. In addition, the Agent
received a pledge of all of the capital stock of Anvil and its domestic
subsidiaries. The revolving credit facility terminates and all amounts
outstanding will be due and payable in five years from the closing.
Anvil's borrowing availability under the revolving credit facility is based
on a formula incorporating: (i) 85% of eligible receivables; (ii) 60% of
eligible raw materials inventory; (iii) 50% of eligible finished goods
inventory; and (iv) 50% of appraised equipment and real property (each as
defined in the New Credit Agreement). Interest on borrowings under the revolving
credit facility is payable at a rate equal to LIBOR or the Alternate Base Rate
(defined as the higher of (i) the lender's prime rate and (ii) the Federal Funds
rate plus 0.50%), each plus an applicable margin. Anvil may select various
interest periods for LIBOR loans, subject to availability. The applicable
margins for borrowing under the revolving credit facility range from 1.25% to
2.50% for LIBOR loans, range from 0.25% to 1.50% for Alternate Base Rate loans
and is determined based upon the results of a financial ratio calculation. There
is a per annum commitment fee calculated on the unused portion of the revolving
credit facility and payable quarterly. The commitment fee varies based upon the
results of a financial ratio calculation and ranges from 0.31%
141
<PAGE>
to 0.50%. Letter of credit fees are due quarterly and are equal to the interest
rate spread on LIBOR loans on a per annum basis plus a fronting fee of 0.25% per
annum.
The New Credit Agreement requires prepayment of the revolving credit
facility by an amount equal to 100% of the cash proceeds from all assets sales
by Holdings or any subsidiary, subject to certain exceptions.
The New Credit Agreement requires the Company to meet certain financial
tests (as defined therein), including minimum net worth, minimum fixed charge
coverage ratio, interest coverage and maximum leverage ratio. The New Credit
Agreement also contains covenants which, among other things, limit: (i) the
incurrence of additional indebtedness; (ii) payment of dividends; (iii)
transactions with affiliates; (iv) asset sales, acquisitions and mergers; (v)
prepayments of other indebtedness; (vi) creation of liens and encumbrances; and
(vii) other matters customarily restricted in such agreements. The New Credit
Agreement will contain customary events of default, including: (i) payment
defaults; (ii) breach of representations and warranties; (iii) covenant
defaults; (iv) cross-defaults to certain other indebtedness; (v) certain events
of bankruptcy and insolvency; (vi) ERISA; (vii) judgment defaults; (viii)
failure of any guaranty or security agreement supporting the New Credit
Agreement to be in full force; and (ix) Change in Control (as defined therein).
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion is based upon current provisions of the Internal
Revenue Code of 1986, as amended, applicable Treasury regulations, judicial
authority and administrative rulings and practice. There can be no assurance
that the Internal Revenue Service (the "Service") will not take a contrary view,
and no ruling from the Service has been or will be sought. Legislative, judicial
or administrative changes or interpretations may be forthcoming that could alter
or modify the statements and conditions set forth herein. Any such changes or
interpretations may or may not be retroactive and could affect the tax
consequences to holders. Certain holders (including insurance companies, tax
exempt organizations, financial institutions, broker-dealers, foreign
corporations and persons who are not citizens or residents of the United States)
may be subject to special rules not discussed below. Anvil recommends that each
holder consult such holder's own tax advisor as to the particular tax
consequences of exchanging such holder's Old Senior Notes for New Senior Notes,
including the applicability and effect of any state, local or foreign tax laws.
Anvil believes that the exchange of Old Senior Notes for New Senior Notes
pursuant to the Exchange Offer will not be treated as an "exchange" for federal
income tax purposes because the New Senior Notes will not be considered to
differ materially in kind or extent from the Old Senior Notes. Rather, the New
Senior Notes received by a holder will be treated as a continuation of the Old
Senior Notes in the hands of such holder. As a result, there will be no federal
income tax consequences to holders exchanging Old Senior Notes for New Senior
Notes pursuant to the Exchange Offer.
142
<PAGE>
PLAN OF DISTRIBUTION
Each Participating Broker-Dealer that receives New Senior 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 New Senior Notes. This
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 New Senior Notes
received in exchange for Old Senior Notes where such Old Senior Notes were
acquired as a result of market-making activities or other trading activities.
Anvil has agreed that for a period of 180 days after the Expiration Date, it
will make this Prospectus, as amended or supplemented, available to any
Participating Broker-Dealer for use in connection with any such resale. In
addition, until , 1997 (90 days after the commencement of the
Exchange Offer), all dealers effecting transactions in the New Senior Notes,
whether or not participating in this distribution, may be required to deliver a
Prospectus.
Anvil will not receive any proceeds from any sales of the New Senior Notes
by Participating Broker-Dealers. New Senior Notes received by Participating
Broker-Dealers for their own accounts pursuant to the Exchange Offer may be sold
from time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the New Senior Notes
or a combination of such methods of resale, at market prices prevailing at the
time of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such Participating Broker-Dealer and/or the purchasers of
any such New Senior Notes. Any Participating Broker-Dealer that resells the New
Senior Notes that were received by it for its own account pursuant to the
Exchange Offer and any broker or dealer that participates in a distribution of
such New Senior Notes may be deemed to be an "underwriter" within the meaning of
the Securities Act and any profit on any such resale of New Senior Notes and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a Participating Broker-Dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act.
For a period of 180 days after the Expiration Date, Anvil will promptly,
upon request and in no event more than five business days after such request,
send additional copies of this Prospectus and any amendment or supplement to
this Prospectus to any Participating Broker-Dealer that requests such documents
in the Letter of Transmittal.
The Initial Purchasers or their affiliates may have provided and may in the
future provide investment banking or other financial services to 399 Venture,
BRS, Vestar, Holdings, Anvil and their affiliates in the ordinary course of
business. Peter H. Rothschild, a former Director of Anvil and Holdings, is a
Managing Director of Wasserstein Perella & Co., Inc., an Initial Purchaser in
the Initial Offering. In June 1996, the Board authorized the sale of 5,000
shares of Old Common Stock to Peter H. Rothschild for a purchase price of $0.64
per share. The sale was completed thereafter. Pursuant to the Recapitalization,
Mr. Rothschild resigned as a Director of Anvil and Holdings and his Old Common
Stock was repurchased.
NationsBank, an affiliate of NationsBanc Capital Markets, Inc., is a lender
and agent under the Old Credit Agreement and served in a similar capacity under
the New Credit Agreement, for which it received customary fees. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Description of Certain Indebtedness."
LEGAL MATTERS
The validity of the issuance of the New Senior Notes will be passed upon for
Anvil by Kirkland & Ellis, Chicago, Illinois (a partnership which includes
professional corporations).
143
<PAGE>
EXPERTS
The combined statements of operations and cash flows of the Predecessor, for
the year ended January 28, 1995, included in this prospectus and the related
financial statement schedule included elsewhere in the registration statement
have been audited by KPMG Peat Marwick LLP, independent auditors, as stated in
their report appearing herein and elsewhere in the registration statement, and
are included in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.
The consolidated financial statements of the Company as of January 27, 1996
and February 1, 1997 and for the years then ended, included in this prospectus
and the related financial statement schedule included elsewhere in the
registration statement have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their reports appearing herein and elsewhere in the
registration statement, and are included in reliance upon the reports of such
firm given upon their authority as experts in accounting and auditing.
144
<PAGE>
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
The following unaudited pro forma financial statements (the "Pro Forma
Financial Statements") have been derived by the application of pro forma
adjustments to the Company's historical consolidated financial statements
included elsewhere in this Prospectus. The unaudited pro forma statement of
operations for the year ended February 1, 1997 give effect to the
Recapitalization, including the Initial Offerings and the application of the net
proceeds therefrom as described in Note a. of the Notes to the Unaudited Pro
Forma Financial Statements as if such transactions had been consummated on
January 28, 1996. The unaudited pro forma balance sheet gives effect to the
Recapitalization as if the Recapitalization had occurred on February 1, 1997.
The Pro Forma Financial Statements should not be considered indicative of actual
results that would have been achieved had the Recapitalization been consummated
on the date or for the periods indicated and do not purport to indicate balance
sheet data or results of operations as of any future date or for any future
period. The Pro Forma Financial Statements should be read in conjunction with
the Company's historical financial statements and the notes thereto included
elsewhere in the Prospectus.
The Old Senior Notes surrendered in exchange for the New Senior Notes will
be retired and canceled and cannot be reissued. Likewise, the Old Senior
Preferred Stock surrendered in exchange for the New Senior Preferred Stock will
be retired and canceled and cannot be reissued. Accordingly, neither the
issuance of the New Senior Notes nor the New Senior Preferred Stock will result
in any increase or decrease in the indebtedness of the Company. As such, no
effect has been given to the Exchange Offers in the Unaudited Pro Forma
Financial Data.
P-1
<PAGE>
UNAUDITED PRO FORMA BALANCE SHEET
AS OF FEBRUARY 1, 1997
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
------------ --------------- -----------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 1,863 $ -- (b) $ 1,863
Accounts receivable, net.................................. 28,517 -- 28,517
Inventories............................................... 32,471 -- 32,471
Deferred income taxes..................................... 1,629 -- 1,629
Prepaid and refundable income taxes....................... 3,305 4,436 (c) 7,741
Prepaid expenses and other current assets................. 423 -- 423
------------ --------------- -----------
Total current assets.................................. 68,208 4,436 72,644
Property, plant and equipment, net of accumulated
depreciation and amortization............................. 38,830 -- 38,830
Intangible assets, net...................................... 26,568 -- 26,568
Other assets................................................ 3,226 1,098 (d) 4,324
------------ --------------- -----------
$ 136,832 $ 5,534 $ 142,366
------------ --------------- -----------
------------ --------------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 9,360 -- $ 9,360
Accrued expenses and other current liabilities............ 10,130 -- 10,130
Revolving credit facility borrowings...................... 14,400 (14,400 (e) --
Current portion of long-term bank borrowings.............. 4,850 (4,850 (e) --
Borrowings under New Credit Agreement..................... -- 32,069 (e) 32,069
------------ --------------- -----------
Total current liabilities............................. 38,740 12,819 51,559
Long-term bank borrowings................................... 41,475 (41,475 (e) --
Subordinated Promissory Note................................ 7,869 (7,869 (e) --
10 7/8% Senior Notes due 2007............................... -- 126,100 (e) 126,100
Deferred income taxes....................................... 3,535 (1,814 (c) 1,721
Other long-term obligations................................. 1,827 -- 1,827
13% Senior Exchangeable Preferred Stock due 2009, par value
$.01 per share; authorized 2,300,000 shares; cumulative;
1,200,000 shares issued and outstanding; aggregate
liquidation value of $30,000.............................. -- 27,656 (f) 27,656
Stockholders' equity (deficiency):
Preferred Stock:
12.5% Class A, par value $.01 per share; authorized
205,010 shares; cumulative; 129,854 and 0 shares
issued and outstanding; aggregate liquidation value of
$16,575............................................... 1 (1 (g) --
12.5% Class B, par value $.01 per share; authorized
70,420 shares; cumulative; convertible; 70,416 and 0
shares issued and outstanding; aggregate liquidation
value of $9,007....................................... 1 (1 (g) --
Common Stock:
Class A, par value $.01 per share; authorized 500,000
shares; 290,000 shares issued and outstanding;
aggregate liquidation value $29,000................... -- 3 (g) 3
Class B, par value $.01 per share; authorized 7,500,000
shares; 3,590,000 shares issued and outstanding....... -- 36 (g) 36
Old Common Stock:
Class A, par value $.01 per share, authorized 10,600,000
shares; 5,755,000 and
0 shares issued and outstanding....................... 58 (58 (g) --
Class B, par value $.01 per share, authorized 3,200,000
shares; convertible; 2,675,000 and 0 shares issued and
outstanding........................................... 26 (26 (g) --
Class C, par value $.01 per share, authorized 1,650,000
shares; convertible; 1,650,000 shares issued and
outstanding........................................... 17 (17 (g) --
Additional paid-in capital.................................. 23,054 (10,253 (g) 12,801
Retained earnings (deficit)................................. 20,479 (99,816 (g) (79,337 )
Loans receivable--stockholders.............................. (250 ) 250 (g) --
------------ --------------- -----------
Total stockholders' equity (deficiency)................. 43,386 (109,883 ) (66,497 )
------------ --------------- -----------
$ 136,832 $ 5,534 $ 142,366
------------ --------------- -----------
------------ --------------- -----------
</TABLE>
See notes to unaudited pro forma financial statements.
P-2
<PAGE>
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED FEBRUARY 1, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- -----------
<S> <C> <C> <C>
Net sales................................................................... $ 204,154 $ -- $ 204,154
Cost of good sold........................................................... 156,813 -- 156,813
---------- ----------- -----------
Gross profit................................................................ 47,341 -- 47,341
Selling, general and administrative expenses................................ 21,678 -- 21,678
Amortization of intangible assets........................................... 958 -- 958
---------- ----------- -----------
Operating income............................................................ 24,705 -- 24,705
Other income (expense):
Interest expense.......................................................... (7,912) (9,847)(h) (17,759)
Interest income and other--net............................................ 415 -- 415
---------- ----------- -----------
Income before provision for income taxes.................................... 17,208 9,847 7,361
Provision for income taxes.................................................. 6,883 (3,938)(i) 2,945
---------- ----------- -----------
Net income.................................................................. $ 10,325 $ (5,909)(j) $ 4,416
---------- ----------- -----------
---------- ----------- -----------
Pro forma net income (loss) per share (k):
Class A Common Stock...................................................... $ 1.11
-----------
-----------
Class B Common Stock...................................................... $ (.97)
-----------
-----------
Weighted average shares outstanding:
Class A Common Stock...................................................... 290
-----------
-----------
Class B Common Stock...................................................... 3,590
-----------
-----------
OTHER DATA:
Cash interest expense..................................................... $ 6,036 $ 16,752(l)
EBITDA (m)................................................................ $ 32,592 $ 32,592
Capital expenditures...................................................... $ 4,815 $ 4,815
Depreciation and amortization............................................. $ 7,287 $ 7,287
</TABLE>
See notes to unaudited pro forma financial statements.
P-3
<PAGE>
ANVIL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
a. Presentation and Transactions:
The unaudited pro forma financial statements assume the following
transactions occurred on February 1, 1997 for purposes of the unaudited pro
forma balance sheet and January 28, 1996 for purposes of the unaudited pro forma
statement of income.
The Company used approximately $224.2 million to complete the
Recapitalization, including the payment of related fees and expenses. In order
to finance the Recapitalization: (i) Anvil issued $130.0 million in aggregate
principal amount of Senior Notes in the Offering; (ii) Holdings issued 30,000
Units, consisting of an aggregate of 1,200,000 shares of Senior Preferred Stock
and 390,000 shares of Class B Common, in the Units Offering for gross proceeds
of $26.7 million; (iii) Anvil borrowed approximately $32.0 million under the New
Credit Agreement; and (iv) BRS, 399 Venture and the Management Investors made an
Equity Contribution of $35.5 million to Holdings.
The following summarizes the sources and uses of funds relating to the
Recapitalization (in millions):
<TABLE>
<CAPTION>
SOURCES:
<S> <C>
Borrowings under the New Credit Agreement................................. $ 32.0
Senior Notes due 2007..................................................... 130.0
Units..................................................................... 26.7
Equity Contribution....................................................... 35.5
---------
Total sources....................................................... $ 224.2
---------
---------
USES:
Repay borrowings under the Old Credit Agreement........................... $ 60.7
Repay the Subordinated Note............................................... 9.5
Redeem or exchange the Old Preferred Stock................................ 25.6
Repurchase shares of Old Common Stock..................................... 91.6
Payment under the Phantom Equity Plan..................................... 5.3
Payment of Management Bonus............................................... 0.5
Retained shares........................................................... 19.1
Fees and expenses......................................................... 11.9
---------
Total uses.......................................................... $ 224.2
---------
---------
</TABLE>
b. The pro forma adjustments to cash (in thousands):
<TABLE>
<S> <C>
Net Proceeds from Senior Notes............................................ $ 126,100
Net Proceeds from Units................................................... 25,467
Net Proceeds from New Credit Agreement.................................... 30,894
Proceeds from sale of Common Stock to BRS................................. 13,063
Payment of other expenses associated with the Recapitalization............ (5,693)
Repayment of Old Credit Agreement......................................... (60,725)
Repayment of the Subordinated Note........................................ (9,469)
Payment pursuant to Phantom Equity Plan................................... (5,250)
Payment of Management Bonus............................................... (500)
Redemption of the Old Preferred Stock..................................... (22,249)
Repurchase of Old Common Stock............................................ (91,638)
---------
$ --
---------
---------
</TABLE>
P-4
<PAGE>
ANVIL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS (CONTINUED)
c. The pro forma adjustment to deferred income taxes, prepaid and refundable
income taxes represents the tax benefit attributable to the transactions
described herein.
d. The pro forma adjustments to other assets (in thousands):
<TABLE>
<S> <C>
Capitalized fees and expenses related to the Recapitalization..... $ 4,192
Write-off of unamortized deferred financing fees.................. (3,094)
---------
Pro forma adjustments............................................. $ 1,098
---------
</TABLE>
e. The pro forma adjustments to debt (in thousands):
<TABLE>
<CAPTION>
CURRENT SHORT-TERM
LONG-TERM MATURITIES BORROWINGS
----------- ----------- -----------
<S> <C> <C> <C>
Record the issuance of Senior Notes, net of discount............... $ 126,100 $ -- $ --
Record borrowings under New Credit Agreement....................... -- -- 32,069
Repay existing long-term debt and short-term bank borrowings with
proceeds of Recapitalization...................................... (41,475) (4,850) (14,400)
Repay Subordinated Note............................................ (7,869) -- --
</TABLE>
f. Represents the proceeds from the issuance of the Units allocable to the 1.2
million shares of 13% Senior Exchangeable Preferred Stock, net of fair value
allocable to shares of Class B Common and expenses related to Units
Offering.
g. Represents the pro forma adjustments to stockholder's equity (in thousands):
<TABLE>
<CAPTION>
COMMON COMMON PREFERRED
STOCK--NEW STOCK--OLD STOCK
---------------------------- ------------------------------------- -------------
CLASS A CLASS B CLASS A CLASS B CLASS C CLASS A
------------- ------------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Redemption and Exchange of Old
Preferred Stock..................... $ (1)
Repurchase of Old Common Stock,
exercise of
525,000 stock options by management,
and $ (53) $ (31) $ (3)
repayment of Stockholder loans...... 5
Sale of Common Stock to BRS........... $ 1 $ 13
Common Shares issued in Units
Offering............................ 4
Exchange of Retained Shares into
Common Stock........................ 2 19 (5) (14)
Loss on extinguishment of Subordinated
Note................................
Phantom Equity Payment................
Write-off of unamortized debt issuance
costs...............................
Management Bonus......................
Tax benefit on above charges..........
Offering expenses attributable to the
sale of Units.......................
--- --- --- ---
-- --
$ 36 $ (58) $ (26) $ (17)
$ 3 $ (1)
--- --- --- ---
--- --- --- ---
-- --
-- --
<CAPTION>
ADDITIONAL
PAID-IN RETAINED NOTES
CLASS B CAPITAL EARNINGS RECEIVABLE
------------- -------------- ----------- -------------
<S> <C> <C> <C> <C>
Redemption and Exchange of Old
Preferred Stock..................... $ (1) $ (19,998) $ (5,582)
Repurchase of Old Common Stock,
exercise of
525,000 stock options by management,
and (8,563) (84,864) $ 250
repayment of Stockholder loans...... 5,507 (5,176)
Sale of Common Stock to BRS........... 13,049
Common Shares issued in Units
Offering............................ 386
Exchange of Retained Shares into
Common Stock........................
Loss on extinguishment of Subordinated
Note................................ (1,600)
Phantom Equity Payment................ (5,250)
Write-off of unamortized debt issuance
costs............................... (3,094)
Management Bonus...................... (500)
Tax benefit on above charges.......... 6,250
Offering expenses attributable to the
sale of Units....................... (634)
-------------- ----------- -----
--
$ (10,253) $ (99,816) $ 250
$ (1)
-------------- ----------- -----
-------------- ----------- -----
--
--
</TABLE>
P-5
<PAGE>
ANVIL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS (CONTINUED)
h. The pro forma adjustments to interest expense (in thousands):
<TABLE>
<S> <C>
Elimination of interest expense relating to Holdings'
existing debt agreements:
Old Credit Agreement....................................... $ (5,693)
Subordinated Note.......................................... (1,187)
Amortization of deferred financing costs................... (728)
Accretion of discount on Subordinated Note................. (200)
Additional interest expense related to:
Senior Notes (assuming 10.875% interest rate).............. 14,138
Amortization of deferred issuance costs related to the
Senior Notes............................................. 678
Borrowings under New Credit Agreement (assuming 8.0%
interest rate)........................................... 2,614
Amortization of deferred issuance cost related to New
Credit Agreement......................................... 225
-------------
Pro forma adjustment....................................... $ 9,847
-------------
-------------
</TABLE>
i. The pro forma adjustment to provide income taxes at an effective rate of
approximately 40%.
j. Net income does not include total charges of $6.9 million, net of a tax
benefit of $4.5 million consisting of the following items: (i) $1.1 million,
net of a tax benefit of $0.7 million of a loss on extinguishment of the
Subordinated Note; (ii) $2.3 million, net of a tax benefit of $1.5 million
for the write-off of deferred financing costs; (iii) $3.5 million, net of a
tax benefit of $2.3 million of compensation to management (of the $5.8
million pretax amount, $5.3 million is payable pursuant to the Phantom
Equity Plan and the balance of $0.5 million represents transaction bonuses).
If the above charges were included in net income, the net loss on a pro
forma basis would be $2.5 million.
k. Pro forma net income per share is computed by dividing net income applicable
to each class of Common Stock by the average number of shares of such stock
outstanding, as follows (in thousands):
<TABLE>
<S> <C>
Pro forma net income.............................................. $ 4,416
Less: preferred dividends......................................... (4,094)
---------
Net income applicable to Class A Common........................... 322
Less: Accretion of Class A Preference............................. (3,798)
---------
Net loss applicable to Class B Common............................. $(3,476)
---------
---------
</TABLE>
l. Pro forma cash interest expense calculated as follows (in thousands)
<TABLE>
<S> <C>
Senior Notes (assuming 10.875% interest rate)...................... $14,138
New Credit Agreement (assuming 8% interest rate)................... 2,614
---------
Pro forma adjustments.............................................. $16,752
---------
---------
</TABLE>
m. EBITDA is defined as operating income plus depreciation and amortization.
EBITDA excludes a non-cash charge of $0.6 million for the disposal of
certain fixed assets. EBITDA is not a measure of performance under GAAP.
While EBITDA should not be considered in isolation or as a substitute for
net income, cash flows from operating activities and other income or cash
flow statement data prepared in accordance with GAAP, or as a measure of
profitability or liquidity, management understands that EBITDA is commonly
used in evaluating a company's ability to service debt. EBITDA should not be
construed as an indication of the Company's operating performance or as a
P-6
<PAGE>
ANVIL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS (CONTINUED)
measure of liquidity. EBITDA does not take into account the Company's debt
service requirements and other commitments and, accordingly, is not
necessarily indicative of amounts that may be available for discretionary
uses. The EBITDA measure presented in this Prospectus may not be comparable
to other similarly titled measures of other companies.
P-7
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
ANVIL HOLDINGS, INC. AND SUBSIDIARIES
Report of Independent Accountants--Holdings............................................................ F-2
Report of Independent Accountants--Predecessor......................................................... F-3
Consolidated Balance Sheets of the Company at January 27, 1996 and February 1, 1997.................... F-4
Combined Statements of Operations of the Predecessor for the year ended January 28, 1995 and
Consolidated Statements of Operations of the Company for the years ended January 27, 1996 and February
1, 1997............................................................................................... F-5
Consolidated Statements of Changes in Stockholders' Equity of the Company for the years ended January
27, 1996 and February 1, 1997......................................................................... F-6
Combined Statements of Cash Flows of the Predecessor for the year ended January 28, 1995 and
Consolidated Statements of Cash Flows of the Company for the years ended January 27, 1996 and February
1, 1997............................................................................................... F-7
Notes to Combined and Consolidated Financial Statements................................................ F-8
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Anvil Holdings, Inc.
We have audited the accompanying consolidated balance sheet of Anvil
Holdings, Inc. and subsidiaries as of January 27, 1996 and February 1, 1997 and
the related consolidated statements of operations, stockholders' equity, and
cash flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the consolidated financial position of Anvil Holdings,
Inc. and subsidiaries as of January 27, 1996 and February 1, 1997 and the
results of their operations and their cash flows for the years then ended in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
New York, New York
March 28, 1997
F-2
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Anvil Knitwear
We have audited the accompanying combined statement of operations and cash
flows of Anvil Knitwear (a division of McGregor Corporation, which is a
subsidiary of Astrum International Corp.) for the year ended January 28, 1995.
These combined financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on the combined
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the results of operations and cash flows of
Anvil Knitwear for the year ended January 28, 1995, in conformity with generally
accepted accounting principles.
As discussed in Note 1 to the financial statements, Anvil Knitwear was sold
by McGregor Corporation upon the close of business on January 28, 1995.
KPMG PEAT MARWICK LLP
New York, New York
March 24, 1995
F-3
<PAGE>
ANVIL HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA
JANUARY 27, FEBRUARY 1, FEBRUARY 1,
1996 1997 1997
----------- ----------- -----------
<S> <C> <C> <C>
(UNAUDITED)
(NOTE 2)
-----------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents............................................. $ 1,568 $ 1,863 $ 1,863
Accounts receivable, less allowances for doubtful accounts of $451 and
$874................................................................ 21,920 28,517 28,517
Inventories........................................................... 33,927 32,471 32,471
Prepaid and refundable income taxes................................... 4,782 3,305 7,741
Deferred income taxes................................................. 1,062 1,629 1,629
Prepaid expenses and other current assets............................. 644 423 423
----------- ----------- -----------
Total current assets.............................................. 63,903 68,208 72,644
PROPERTY, PLANT AND EQUIPMENT--Net...................................... 40,539 38,830 38,830
INTANGIBLE ASSETS--Net.................................................. 27,403 26,568 26,568
OTHER ASSETS............................................................ 4,682 3,226 4,324
----------- ----------- -----------
$ 136,527 $ 136,832 142,366
----------- ----------- -----------
----------- ----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Revolving credit facility borrowings.................................. $ 27,600 $ 14,400 $ 32,069
Accounts payable...................................................... 7,522 9,360 9,360
Accrued expenses and other current liabilities........................ 8,771 10,130 10,130
Current portion of long-term bank borrowings.......................... 3,850 4,850 --
----------- ----------- -----------
Total current liabilities......................................... 47,743 38,740 51,559
LONG-TERM BANK BORROWINGS............................................... 46,325 41,475 126,100
SUBORDINATED PROMISSORY NOTE............................................ 6,682 7,869 --
DEFERRED INCOME TAXES................................................... 1,046 3,535 1,721
OTHER LONG-TERM OBLIGATIONS............................................. 1,723 1,827 1,827
REDEEMABLE PREFERRED STOCK.............................................. -- -- 27,656
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIENCY):
Preferred stock 2 2 --
Common stock 101 101 39
Additional paid-in capital 23,001 23,054 12,801
Retained earnings (deficit) 10,154 20,479 (79,337)
Loans receivable-stockholders (250) (250) --
----------- ----------- -----------
Total stockholders' equity (deficiency)........................... 33,008 43,386 (66,497)
----------- ----------- -----------
$ 136,527 $ 136,832 $ 142,366
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
See notes to combined and consolidated financial statements.
F-4
<PAGE>
ANVIL HOLDINGS, INC. AND SUBSIDIARIES
STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
PREDECESSOR THE COMPANY
(COMBINED) (CONSOLIDATED)
----------- ------------------------
YEAR YEAR YEAR
ENDED ENDED ENDED
JANUARY 28, JANUARY 27, FEBRUARY 1,
1995 1996 1997
----------- ----------- -----------
<S> <C> <C> <C>
<CAPTION>
<S> <C> <C> <C>
NET SALES........................................................................ $ 169,923 $ 193,389 $ 204,154
COST OF GOODS SOLD............................................................... 131,906 149,723 156,813
----------- ----------- -----------
Gross profit............................................................... 38,017 43,666 47,341
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES..................................... 14,704 17,778 21,678
AMORTIZATION OF INTANGIBLE ASSETS................................................ 13,435 736 958
----------- ----------- -----------
Operating income........................................................... 9,878 25,152 24,705
OTHER INCOME (EXPENSE):
Interest expense............................................................... (227) (8,844) (7,912)
Interest income and other--net................................................. 2,451 616 415
----------- ----------- -----------
Income before provision for income taxes................................... 12,102 16,924 17,208
PROVISION FOR INCOME TAXES....................................................... 11,045 6,770 6,883
----------- ----------- -----------
NET INCOME....................................................................... $ 1,057 $ 10,154 $ 10,325
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
See notes to combined and consolidated financial statements.
F-5
<PAGE>
ANVIL HOLDINGS, INC. AND SUBSIDIARIES
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
THE COMPANY
(CONSOLIDATED)
----------------------------------------------------------------------------
PREFERRED STOCK COMMON STOCK
------------------ ------------------
CLASS CLASS CLASS CLASS CLASS CLASS
A B C A B C
----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Balance at January 29, 1995................ $ 1 $ 1 $ -- $ 58 $ 26 $ 17
Net income.................................
----- ----- ----- --- --- ---
Balance at January 27, 1996................ 1 1 -- 58 26 17
Exercise of stock options.................. --
Net income.................................
----- ----- ----- --- --- ---
Balance at February 1, 1997................ $ 1 $ 1 $ -- $ 58 $ 26 $ 17
----- ----- ----- --- --- ---
----- ----- ----- --- --- ---
<CAPTION>
ADDITIONAL LOANS
PAID-IN RETAINED RECEIVABLE--
CAPITAL EARNINGS STOCKHOLDERS TOTAL
----------- ----------- ------------- ---------
<S> <C> <C> <C> <C>
Balance at January 29, 1995................ $ 23,001 $ -- $ (250) $ 22,854
Net income................................. 10,154 10,154
----------- ----------- ------------- ---------
Balance at January 27, 1996................ 23,001 10,154 (250) 33,008
Exercise of stock options.................. 53 53
Net income................................. 10,325 10,325
----------- ----------- ------------- ---------
Balance at February 1, 1997................ $ 23,054 $ 20,479 $ (250) $ 43,386
----------- ----------- ------------- ---------
----------- ----------- ------------- ---------
</TABLE>
See notes to combined and consolidated financial statements.
F-6
<PAGE>
ANVIL HOLDINGS, INC. AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
PREDECESSOR THE COMPANY
(COMBINED) (CONSOLIDATED)
----------- ------------------------
<S> <C> <C> <C>
YEAR YEAR YEAR
ENDED ENDED ENDED
JANUARY 28, JANUARY 27, FEBRUARY 1,
1995 1996 1997
----------- ----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................................................... $ 1,057 $ 10,154 $ 10,325
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization.............................................. 18,761 6,463 7,287
Amortization of other assets............................................... -- 728 728
Write-off of inventory step-up............................................. -- 1,746 --
Provision for accounts receivable allowances............................... 993 451 440
Write down of property and equipment....................................... -- -- 600
Noncash interest expense on subordinated promissory note................... -- 1,182 1,187
Deferred income taxes...................................................... 831 1,656 1,922
Changes in operating assets and liabilities, net of acquisition:
Accounts receivable........................................................ (3,181) 683 (5,878)
Inventories................................................................ (6,589) (8,267) 2,917
Prepaid and refundable income taxes........................................ -- (4,782) 1,477
Accounts payable........................................................... 3,208 913 707
Accrued expenses........................................................... (54) (893) 1,169
Other--net................................................................. (1,372) (2,871) 930
----------- ----------- -----------
Net cash provided by operating activities................................ 13,654 7,163 23,811
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition, net of cash acquired............................................ -- -- (1,728)
Purchases of property and equipment, net..................................... (7,888) (7,703) (4,791)
----------- ----------- -----------
Net cash used in investing activities.................................... (7,888) (7,703) (6,519)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from (repayments) of revolving credit facility, net................. -- 3,100 (13,200)
Repayments of long-term debt................................................. -- (2,325) (3,850)
Advances to McGregor Corporation............................................. (5,313) -- --
Proceeds from the exercise of stock options.................................. -- -- 53
----------- ----------- -----------
Net cash (used in) provided financing activities......................... (5,313) 775 (16,997)
----------- ----------- -----------
INCREASE IN CASH AND CASH EQUIVALENTS.......................................... 453 235 295
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR................................... 546 1,333 1,568
----------- ----------- -----------
CASH AND CASH EQUIVALENTS, END OF YEAR......................................... $ 999 $ 1,568 $ 1,863
----------- ----------- -----------
----------- ----------- -----------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest....................................................... $ 227 $ 5,946 $ 6,036
----------- ----------- -----------
----------- ----------- -----------
Cash paid for income taxes................................................... -- $ 9,834 $ 3,484
----------- ----------- -----------
----------- ----------- -----------
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Fair value of assets acquired, excluding cash................................ $ 3,049
Liabilities assumed.......................................................... (1,194)
Expenses incurred............................................................ (127)
-----------
Cash paid.................................................................... $ 1,728
-----------
-----------
Promissory note issued $ 250
-----------
-----------
</TABLE>
See notes to combined and consolidated financial statements.
F-7
<PAGE>
ANVIL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
1. ACQUISITIONS
On January 28, 1995, Anvil Holdings, Inc. (the "Company") and its
wholly-owned subsidiary, Anvil Knitwear, Inc. ("Anvil"), acquired the assets and
assumed certain liabilities of the Anvil Knitwear division from McGregor
Corporation ("McGregor") (the "Acquisition") for an aggregate purchase price of
approximately $105,000, plus acquisition costs. The Acquisition was funded with
the proceeds of $20,000 of preferred stock, $6,400 of common stock, $52,500 of
long-term bank debt, $7,500 in subordinated notes and the balance with a
revolving line of credit.
The Acquisition was a leveraged buyout transaction in which Culligan
International Company ("Culligan"), an affiliate of McGregor, retained an
ownership interest of approximately 30.6% in the common stock of the Company.
Accordingly, in allocating the purchase price to the net assets acquired, the
net assets were valued at the sum of (i) their carryover cost basis to the
extent of 30.6% plus (ii) their estimated fair market values, to the extent of
the new ownership interest 69.4%. The excess of the purchase price over the
estimated fair value of the net assets acquired, related to the new ownership
interest, which amounted to approximately $23,000, was recognized as goodwill
and is being amortized over a period of 35 years. The fair market value
attributable to the interest in the net assets retained by the predecessor owner
has been recorded as a reduction to stockholders' equity.
In connection with the Acquisition, the Company also acquired the entire
ownership interest in Anvil s.r.o., an entity located in the Czech Republic.
Concurrent with the Acquisition, the Company determined to close down the
operations of Anvil s.r.o. and accordingly, provided for the estimated closedown
costs in recording the assets acquired and liabilities assumed from the
Acquisition.
On January 31, 1997, the Company completed the acquisition of "Cottontops,
Inc." a marketer and distributor of activewear products which, prior to the
acquisition, sold finished activewear products to the Company as well as
directly into the retail market. The aggregate amount of consideration payable
in connection with this acquisition (including the Company's assumption of
certain liabilities) totaled $3.5 million, subject to adjustments in certain
circumstances.
2. RECAPITALIZATION AND NOTES AND UNITS OFFERINGS
On March 11, 1997, the Company Anvil VT, Inc., Vestar Equity Partners, L.P.
("Vestar"), 399 Venture Partners, Inc. and certain of its employees and
affiliates (collectively, "399 Venture"), the Management Investors (as defined)
and other existing shareholders of the Company (collectively, the "Existing
Shareholders") and Bruckmann, Rosser, Sherill & Co., L.P. and certain of its
employees and affiliates (collectively, "BRS") completed a reorganization (the
"Reorganization") pursuant to which: (i) the Company redeemed or repurchased a
substantial portion of its outstanding shares of capital stock; (ii)
contribution by BRS of $13,063 for the purchase of new common stock; (iii) 399
Venture and the Management Investors reinvested a portion of their existing
shares of common stock of the Company, which were converted into shares of newly
issued common stock; and (iv) 399 Venture exchanged a portion of its existing
preferred stock for 3,333 shares of Redeemable Preferred Stock and new common
stock.
Concurrently with the Recapitalization, the Company sold 30,000 Units
consisting of $30,000, 13% Senior Exchangeable Preferred Stock due 2009, and
390,000 shares of common stock (the "Units Offering"). Additionally, on March
11, 1997, Anvil sold $130,000 of 10 7/8% Senior Notes due 2007 ("Senior Notes")
in connection with the Recapitalization.
F-8
<PAGE>
ANVIL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
2. RECAPITALIZATION AND NOTES AND UNITS OFFERINGS (CONTINUED)
The net proceeds from the Units and Notes offerings and borrowings under the
New Credit Agreement (see Note 8) were used by the Company to: (i) redeem the
outstanding common stock and preferred stock; (ii) repay the balance outstanding
under the Credit Agreement; (iii) repay the subordinated debt; (iv) pay fees and
expenses; (v) pay a management bonus; and (vi) pay amounts due in accordance
with the Phantom Equity Plan (see Note 18).
The unaudited pro forma balance sheet gives effect to the Recapitalization,
the borrowings under the New Credit Agreement and the Notes and Units Offerings
and the application of the proceeds therefrom in connection with the repayment
of the Credit Agreement, the payment of the Phantom Equity Plan and certain
other transactions as if they had occurred on February 1, 1997. The unaudited
pro forma balance sheet data for February 1, 1997 does not purport to indicate
balance sheet data as of any future date.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS--The Company is engaged in the business of designing, manufacturing
and marketing quality casual knitwear and athletic wear for men, women and
children. The Company markets and distributes its products, under private label
and brand names, primarily to wholesalers and screen printers, principally in
the United States. Anvil's operations are on a "52/53-week" fiscal year ending
on the Saturday closest to January 31.
BASIS OF PRESENTATION--THE COMPANY--The accompanying consolidated financial
statements include the accounts of the Company and its wholly-owned
subsidiaries, after elimination of significant intercompany accounts and
transactions.
BASIS OF PRESENTATION--PREDECESSOR--The combined statement of operations and
cash flows of Anvil Knitwear, a division of McGregor Corporation ("McGregor"), a
wholly-owned subsidiary of Astrum International Corp. ("Astrum") include the
divisional accounts of McGregor that relate to Anvil Knitwear, the accounts of
Winston Mills, Inc., a subsidiary of McGregor ("Winston Mills"), whose operation
solely serviced Anvil Knitwear, and the accounts of Anvil Knitwear's
wholly-owned foreign subsidiary, Anvil s.r.o. All intercompany accounts and
transactions between Anvil Knitwear, Winston Mills and Anvil s.r.o. have been
eliminated.
ASTRUM REORGANIZATION--On May 25, 1993, the United States Bankruptcy Court
confirmed Astrum's amended plan of reorganization (the "Plan"). Pursuant to the
terms of the Plan, which became effective June 8, 1993, Astrum completed a
comprehensive financial reorganization which reduced its debt and interest
expense (the "reorganization").
The reorganization has been accounted for pursuant to the American Institute
of Certified Public Accountants Statement of Position 90-7, entitled FINANCIAL
REPORTING BY ENTITIES IN REORGANIZATION UNDER THE BANKRUPTCY CODE" ("SOP 90-7").
SOP 90-7 requires that Astrum's assets be adjusted to their fair market value
("fresh-start" values), and that a new reporting entity be created. In adopting
"fresh-start" reporting, Astrum determined its reorganization value, which
approximated the fair value of Astrum before considering liabilities. In
allocating the reorganization value, Anvil's assets were recorded at their fair
value with the excess value reported as the intangible asset "reorganization
value in excess of amounts allocable to identifiable assets." The Plan and SOP
90-7 were adopted for accounting purposes on June 30, 1993.
F-9
<PAGE>
ANVIL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
USE OF ESTIMATES--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make certain
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS--Cash and cash equivalents include all highly
liquid investments with an original maturity of 90 days or less.
PROPERTY, PLANT AND EQUIPMENT--Property, plant and equipment are depreciated
for financial reporting purposes principally using the straight-line method over
the estimated useful lives of the assets, ranging from 4 to 25 years. Leasehold
improvements are amortized over the lesser of the estimated useful life or the
term of the lease.
INVENTORIES--Inventories, are stated at the lower of cost or market, with
cost being determined by the first-in, first-out (FIFO) method. Cost of goods
sold for the year ended January 27, 1996 includes approximately $1,746 of
charges related to the initial allocation of purchase price to inventory in
connection with the Acquisition.
INTANGIBLE ASSETS--Intangible assets of the Company consist of trademarks
and goodwill. Trademarks are being amortized over their estimated useful life of
17 years. Goodwill is being amortized over the period of expected benefit of 35
years. Intangible assets of the Predecessor consisted of the reorganization
value of the Predecessor in excess of amounts allocable to identifiable assets
and was being amortized on the straight-line method over three years.
EVALUATION OF LONG-LIVED ASSETS--Long-lived assets are assessed for
recoverability on an on-going basis. In evaluating the fair value and future
benefits of long-lived assets, their carrying value would be reduced by the
excess, if any, of the long-lived asset over management's estimate of the
anticipated undiscounted future net cash flows of the related long-lived asset.
The Company recorded a charge of $600 for the disposal of certain fixed assets
in the year ended February 1, 1997. There were no other adjustments to the
carrying amount of long-lived assets for the years ended January 27, 1996 or
February 1, 1997 resulting from the Company's evaluation.
DEFERRED FINANCING FEES--Included in other assets are deferred financing
fees (approximately $3,800 and $3,100 at January 27, 1996 and February 1, 1997,
respectively), which are being amortized over approximately six years to
coincide with the term of the underlying credit agreement.
INTEREST RATE SWAPS--Gains and losses related to interest rate swaps that
qualify as hedges of existing liabilities are included in the carrying amount of
those liabilities and are ultimately recognized in income as adjustments to the
recorded interest expense.
REVENUE RECOGNITION--Revenue is recognized at the time merchandise is
shipped.
INCOME TAXES--Income taxes have been accounted for in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 109, ACCOUNTING FOR
INCOME TAXES, which requires the use of an asset and liability approach for
financial accounting and reporting of income taxes.
RECLASSIFICATIONS--Certain reclassifications have been made to prior years
financial statements to conform to current presentation.
F-10
<PAGE>
ANVIL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
ACCOUNTING FOR STOCK-BASED COMPENSATION--Effective January 28, 1996, the
Company adopted SFAS No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION. The
statement requires expanded disclosures of stock-based compensation arrangements
and encourages, but does not require, compensation cost to be measured based on
the fair value of the equity instrument awarded. The Company will adopt only the
disclosure provision of SFAS No. 123 and continue to account for stock-based
compensation under APB No. 25 which recognizes compensation cost based on the
intrinsic value of the equity instrument awarded.
4. INVENTORIES
<TABLE>
<CAPTION>
JANUARY 27, FEBRUARY 1,
1996 1997
----------- -----------
<S> <C> <C>
Finished goods.................................................................. $ 25,414 $ 21,545
Work-in-process................................................................. 2,890 4,326
Raw materials and supplies...................................................... 5,623 6,600
----------- -----------
$ 33,927 $ 32,471
----------- -----------
----------- -----------
</TABLE>
5. PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
JANUARY 27, FEBRUARY 1,
1996 1997
----------- -----------
<S> <C> <C>
Land............................................................................ $ 882 $ 882
Buildings and improvements...................................................... 14,538 15,034
Machinery, equipment, furniture and fixtures.................................... 30,846 34,895
----------- -----------
46,266 50,811
Less accumulated depreciation and amortization.................................. (5,727) (11,981)
----------- -----------
$ 40,539 $ 38,830
----------- -----------
----------- -----------
</TABLE>
6. INTANGIBLE ASSETS
<TABLE>
<CAPTION>
JANUARY 27, FEBRUARY 1,
1996 1997
----------- -----------
<S> <C> <C>
Trademarks--net of accumulated amortization of $286 and $572.................... $ 4,572 $ 4,286
Goodwill--net of accumulated amortization of $450 and $1,122.................... 22,831 22,282
----------- -----------
$ $27,403 $ 26,568
----------- -----------
----------- -----------
</TABLE>
F-11
<PAGE>
ANVIL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
7. ACCRUED EXPENSES
<TABLE>
<CAPTION>
JANUARY 27, FEBRUARY 1,
1996 1997
----------- -----------
<S> <C> <C>
Accrued wages and bonuses........................................... $ 2,766 $ 3,044
Other............................................................... 6,005 7,086
----------- -----------
$ 8,771 $ 10,130
----------- -----------
----------- -----------
</TABLE>
8. CREDIT AGREEMENT
Long-term debt is comprised of the following:
<TABLE>
<CAPTION>
JANUARY 27, FEBRUARY 1,
1996 1997
----------- -----------
<S> <C> <C>
Bank Debt:
Tranche A......................................................... $ 35,250 $ 31,500
Tranche B......................................................... 14,925 14,825
----------- -----------
50,175 46,325
Less current portion................................................ 3,850 4,850
----------- -----------
$ 46,325 $ 41,475
----------- -----------
----------- -----------
</TABLE>
On January 30, 1995, Anvil entered into a Credit Agreement, amended on
various dates through March 30, 1996 (the "Credit Agreement"), providing a
$47,500 credit facility for revolving loans (with a sublimit for letters of
credit of $5,000) and $52,500 of term loans, expiring January 30, 2001, subject
to certain maximum levels of borrowing based upon asset levels. The amount of
financing available under the revolving credit facility is based upon a formula
incorporating 85% of eligible receivables (80% prior to March 1996), 60% of
eligible raw materials inventory and 50% of eligible finished goods inventory,
all as defined in the Credit Agreement. As of January 27, 1996 and February 1,
1997 approximately $4,810 and $22,375, respectively, was available for borrowing
under the revolving credit facility.
Interest on direct borrowings is payable, at least quarterly, at either the
Base Rate (8.5% and 8.25% at January 27, 1996 and February 1, 1997) or at the
Eurodollar Rate (5.5% and 5.6% at January 27, 1996 and February 1, 1997,
respectively), each plus an applicable margin, at the election of Anvil. The
applicable margins for borrowings under the revolving credit facility range from
.75% to 1.25% for Base Rate loans and 2% to 2.5% for Eurodollar loans and are
determined quarterly based upon the results of a financial ratio calculation.
There is a commitment fee of .5% per annum on the unused portion of the
revolving credit facility, payable quarterly. Letter of credit fees are equal to
.5% of the amount drawn under letters of credit and 2.25% to 2.75% per annum,
determined quarterly based upon the results of a financial ratio calculation, on
the amount available for borrowings. At least once during each calendar year,
for a period of 30 consecutive days, the loans under the revolving credit
facility must be repaid so that the aggregate outstanding amount does not exceed
$25,000 during such 30-day period. Borrowings outstanding at January 27, 1996
and February 1, 1997 amounted to $27,600 and $14,600, respectively, and the
weighted average interest rate thereon was 7.73% and 8.0% at January 27, 1996
and February 1, 1997, respectively.
F-12
<PAGE>
ANVIL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
8. CREDIT AGREEMENT (CONTINUED)
The term loans are comprised of two tranches. Tranche A is a six-year term
loan in the principal amount of $37,500 due quarterly in varying amounts from
April 29, 1995 through February 3, 2001. Amounts outstanding under the Tranche A
loan bear interest, payable at least quarterly, at either the Base Rate, plus an
applicable margin, or at the Eurodollar Rate, plus an applicable margin, at the
election of Anvil. The applicable margins for borrowings outstanding under
Tranche A range from 1% to 1.5% for Base Rate loans and 2.25% to 2.75% for
Eurodollar loans and are determined quarterly based upon the results of a
financial ratio calculation.
Tranche B is a seven-year term loan in the principal amount of $15,000 due
quarterly in variable amounts commencing April 29, 1995 through February 2,
2002. Amounts outstanding under the Tranche B loans bear interest, payable at
least quarterly, at either the Base Rate, plus 2%, or at the Adjusted Eurodollar
Rate, plus 3.25%, at the election of Anvil. Borrowings outstanding at January
27, 1996 and February 1, 1997 under Tranche A and Tranche B were $50,175 and
$46,325, respectively and the prevailing interest rate was 8.24% and 8.25% at
January 27, 1996 and February 1, 1997, respectively.
Anvil is required to comply with various covenants, including maintaining
certain financial ratios and interest rate protection agreements (see Note 13),
restrictions on additional indebtedness, capital expenditures, declaration of
dividends, and acquisition of the Company's common stock. Additionally, the net
proceeds from certain asset sales must, in certain circumstances, be used to
prepay the term loans and Anvil may be obligated to make mandatory prepayments
of the term loans in the event of excess cash flow, as defined. All borrowings
under the credit facility are secured by substantially all of the assets of
Anvil, including accounts receivable, inventory and property and equipment.
Further, the Company has guaranteed repayment of these loans. All amounts under
the Credit Agreement were repaid on March 14, 1997 in connection with the
Recapitalization. In connection with the repayment of the Credit Agreement, the
Company will record a charge of $3,010 before a tax benefit of $1,204, to write
off the balance of the deferred financing fees.
NEW CREDIT AGREEMENT--In March 1997, Anvil entered into an Amended and
Restated Credit Agreement (the "New Credit Agreement") providing a $55,000
revolving credit facility, with a sublimit of $5,000 for letters of credit
expiring March 14, 2002, subject to certain maximum levels of borrowings based
upon asset levels. Anvil used $33,250 of the borrowings under the New Credit
Agreement to finance a portion of the Recapitalization.
Anvil's borrowing availability under the revolving credit facility is based
on a formula incorporating: (i) 85% of eligible receivables; (ii) 60% of
eligible raw materials inventory; (iii) 50% of eligible finished goods
inventory; and (iv) 50% of appraised equipment and real property (each as
defined in the New Credit Agreement). Interest on borrowings under the revolving
credit facility is payable at a rate equal to LIBOR or the Alternate Base Rate
(defined as the higher of (i) the lender's prime rate and (ii) the Federal Funds
rate plus 0.5%), each plus an applicable margin ranging from 1.25% to 2.50% for
LIBOR loans and 0.25% to 1.50% for Alternate Base Rate loans, determined based
upon attainment of certain financial ratios. An annual commitment fee ranging
from 0.31% to 0.50% is payable on the unused portion of the revolving credit
facility.
The New Credit Agreement requires Anvil to comply with various covenants,
including maintaining certain financial ratios, additional indebtedness, the
payment of dividends, asset sales, acquisitions and mergers. Additionally, the
net proceeds from certain asset sales must, in circumstances, be used to prepay
F-13
<PAGE>
ANVIL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
8. CREDIT AGREEMENT (CONTINUED)
borrowings under the credit facility. All borrowings under the credit facility
are secured by substantially all the assets of Anvil including accounts
receivable, inventories and property and equipment.
9. SENIOR NOTES
On March 14, 1997, Anvil issued $130,000 of 10 7/8% Senior Notes (the
"Senior Notes") due March 15, 2007, at a discount of $3,900. Interest on the
notes is payable semiannually on March 15 and September 15. Prior to March 15,
2000, the Company may redeem up to 40% of the aggregate principal amount of the
Senior Notes outstanding at a redemption price of 110%. The Company may redeem
the Senior Notes at a redemption price of 105.438%, 103.625%, and 101.813% at
any time during the 12-month period beginning on March 15, 2002, 2003 and 2004,
respectively and at 100% thereafter.
The Senior Notes are senior unsecured obligations of the Company and will
rank senior in right of payment to all subordinated indebtedness of the Company
and PARI PASSU in right of payment with all existing and future senior
indebtedness, including borrowings under the New Credit agreement. The indenture
contains certain covenants, including restrictions on additional indebtedness,
certain asset sales, and the payment of dividends.
The Senior Notes are guaranteed by the Company and Cottontops, Inc.
10. SUBORDINATED PROMISSORY NOTE
In connection with the Acquisition (see Note 1), the Company issued a
subordinated promissory note (the "Note") to Culligan in the principal amount of
$7,500, due January 30, 2005, or earlier upon a change in ownership, as defined.
The Note was recorded at the fair value of the property received and the
discount ($1,800 and $1,600 at January 27, 1996 and February 1, 1997,
respectively) was being amortized on a straight-line basis over the term of the
Note. The recorded balance of the Note includes interest accrued at 12%,
compounded semi-annually. The Note was prepaid on March 14, 1997 at an amount
equal to the principal value and accrued interest thereon. In connection with
such payment, the Company will record a charge of approximately $1,580, before a
tax benefit of $630 representing the balance of the unamortized debt discount.
11. RELATED PARTY TRANSACTIONS
THE COMPANY--The Company entered into a management agreement with Vestar
Equity Partners L.P. ("Vestar"), Citicorp Venture Capital, Ltd. ("CVC") and
Culligan through January 2005, whereby Vestar provided advisory and consulting
services to the Company and its subsidiaries, and CVC and Culligan, in turn,
provided consulting services to Vestar, when requested in connection with the
fulfillment by Vestar, of Vestar's obligation to the Company. In exchange for
these services, the Company paid, semi-annually in advance, a management fee
aggregating $200, $120 and $180, per annum to Vestar, CVC and Culligan,
respectively. Pursuant to the terms and conditions of the Recapitalization and
the Units and Notes Offerings, the management agreement was terminated.
In connection with the Acquisition, the Company paid transaction costs of
approximately $1,563 to Vestar and $938 to CVC.
F-14
<PAGE>
ANVIL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
11. RELATED PARTY TRANSACTIONS (CONTINUED)
PREDECESSOR--McGregor and certain affiliates provided various services to
the Predecessor, including purchasing and administration related to taxes,
insurance, employee benefit plans, management and other matters. There were no
charges for such services for the year ended January 28, 1995.
12. INCOME TAXES
The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
PREDECESSOR THE COMPANY
(COMBINED) (CONSOLIDATED)
----------- --------------------------------
YEAR YEAR YEAR
ENDED ENDED ENDED
JANUARY 28, JANUARY 27, FEBRUARY 1,
1995 1996 1997
----------- --------------- ---------------
<S> <C> <C> <C>
Current:
Federal........................................ $ 8,445 $ 4,475 $ 4,337
State and local................................ 1,769 639 624
Deferred......................................... 831 1,656 1,922
----------- ------ ------
$ 11,045 $ 6,770 $ 6,883
----------- ------ ------
----------- ------ ------
</TABLE>
Prior to the Acquisition, the operations of the Predecessor were included in
the consolidated U.S. Federal and certain unitary state and local income tax
returns of Astrum and McGregor. The provisions shown in the accompanying
combined statements of earnings represent an amount equivalent to income taxes
which would have been payable if the Predecessor was filing its own returns.
Deferred income taxes (benefit), resulting from differences between
accounting for financial statement purposes and accounting for tax purposes were
as follows:
<TABLE>
<CAPTION>
YEAR YEAR
ENDED ENDED
JANUARY 27, FEBRUARY 1,
1996 1997
----------- -----------
<S> <C> <C>
Depreciation.................................................................... $ 331 $ 2,268
Expenses capitalized to inventory............................................... (326) 57
Amortization of goodwill........................................................ 2,087 300
Accretion of Subordinated Promissory Note....................................... (80) (80)
Insurance reserves.............................................................. -- (240)
Accrued expenses not deductible until paid...................................... (356) (383)
----------- -----------
$ 1,656 $ 1,922
----------- -----------
----------- -----------
</TABLE>
F-15
<PAGE>
ANVIL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
12. INCOME TAXES (CONTINUED)
A reconciliation of the statutory Federal tax rate and the effective rate
follows:
<TABLE>
<CAPTION>
PREDECESSOR THE COMPANY
(COMBINED) (CONSOLIDATED)
--------------- ----------------------------
<S> <C> <C> <C>
YEAR YEAR YEAR
ENDED ENDED ENDED
JANUARY 28, JANUARY 27, FEBRUARY 1,
1995 1996 1997
--------------- ------------- -------------
Federal statutory tax rate................................................. 35% 35% 35%
State and local taxes--net of Federal income tax benefit................... 9 5 5
Losses of Anvil s.r.o., not currently deductible........................... 6 -- --
Amortization............................................................... 39 -- --
Other...................................................................... 2 -- --
--
--- ---
91% 40% 40%
--
--
--- ---
--- ---
</TABLE>
The tax effects of temporary differences that give rise to a significant
portion of the deferred tax assets and liabilities are presented below:
<TABLE>
<CAPTION>
JANUARY 27, FEBRUARY 1,
1996 1997
----------- -----------
<S> <C> <C>
Deferred tax assets:
Inventories....................................................... 640 583
Property, plant and equipment..................................... 1,000 --
Trademarks........................................................ 785 712
Reserves not currently deductible................................. -- 240
Accounts receivable reserves and other............................ 423 806
----------- -----------
Total deferred tax assets..................................... 2,848 2,341
----------- -----------
Deferred tax liabilities:
Property, plant and equipment..................................... -- (1,268)
Goodwill.......................................................... (2,112) (2,339)
Subordinated Promissory Note...................................... (720) (640)
----------- -----------
Total deferred tax liabilities................................ (2,832) (4,247)
----------- -----------
Net deferred tax asset (liability).................................. $ 16 $ (1,906)
----------- -----------
----------- -----------
</TABLE>
13. FAIR VALUE OF FINANCIAL INSTRUMENTS
Under the terms of its Credit Agreement (see Note 8), in March 1995, Anvil
entered into interest rate swap agreements for an aggregate notional amount of
$25,000 to manage its interest rate risk. Under these interest rate swaps, Anvil
receives interest at LIBOR, reset quarterly, and pays interest at the weighted
average fixed rate of 7.3%. Interest payments and receipts commenced September
1995 and occur quarterly. The swap agreements have terms of three and five
years. The Company does not hold or issue financial instruments for trading
purposes.
F-16
<PAGE>
ANVIL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
13. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
The Company is exposed to credit-related losses in the event of
nonperformance by counterparties to swap agreements, but it does not expect any
counterparties to fail to meet their obligations given their high credit
ratings. The fair value of interest rate swaps at January 27, 1996, and February
1, 1997 is approximately $1,527 and $705, respectively and reflects the
estimated amount that the Company would pay to terminate the contracts at the
reporting date. The fair value information has been obtained from dealer
quotations.
The carrying amounts of all other financial instruments reported on the
balance sheet at January 27, 1996 and February 1, 1997 approximate their fair
value. Considerable judgment is required in interpreting certain market data to
develop estimated fair values for certain financial instruments. Accordingly,
the estimates presented herein are not necessarily indicative of the amounts
that the Company could realize in a current market exchange.
14. PROFIT-SHARING RETIREMENT PLAN
The Company has a savings plan (the "Plan") under which eligible employees
may contribute up to 16%, subject to certain limitations, of their compensation.
The Company will match 100% of the contributions up to the first 3% and 50% on
the next 3%. During the year ended January 27, 1996 and February 1, 1997, the
Company made contributions to the Plan aggregating approximately $918 and
$1,059, respectively.
Prior to the Acquisition, employees of the Predecessor were eligible to
participate in a savings and investment plan sponsored by McGregor. Expense
attributable to the Predecessor's portion of the plan for the year ended January
28, 1995, was approximately $800.
F-17
<PAGE>
ANVIL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
15. PREFERRED AND COMMON STOCK
The components of preferred and common stock are as follows:
<TABLE>
<CAPTION>
JANUARY 27, FEBRUARY 1,
1996 1997
------------- -------------
<S> <C> <C>
Preferred Stock:
12.5% Class A, $.01 par value, authorized 205,010 shares;
cumulative, 129,854 shares issued and outstanding at January 27,
1996 and February 1, 1997, respectively; aggregate liquidation
value of $14,656 and $16,575, respectively...................... $ 1 $ 1
12.5% Class B, $.01 par value, authorized 70,420 shares;
cumulative, convertible; 70,416 shares issued and outstanding at
January 27, 1996 and February 1, 1997, respectively; aggregate
liquidation value of $7,964 and $9,007, respectively............ 1 1
12.5% Class C, $.01 par value, authorized 5,000 shares;
cumulative, convertible; none issued............................ -- --
----- -----
$ 2 $ 2
----- -----
----- -----
Common Stock:
Class A, par value $.01 per share, authorized 10,600,000 shares,
5,750,000 and 5,755,000 shares issued and outstanding at January
27, 1996 and February 1, 1997, respectively..................... $ 58 $ 58
Class B, par value $.01 per share, authorized 3,200,000 shares;
convertible; 2,600,000 and 2,675,000 shares issued and
outstanding at January 27, 1996 and February 1, 1997,
respectively.................................................... 26 26
Class C, par value $.01 per share, authorized 1,650,000 shares;
convertible; 1,650,000 shares issued and outstanding at January
27, 1996 and February 1, 1997, respectively..................... 17 17
----- -----
$ 101 $ 101
----- -----
----- -----
</TABLE>
16. CAPITAL STOCK
PREFERRED STOCK--The Company has three classes of preferred stock: Class A,
Class B and Class C (collectively the "Preferred Stock"). Dividends accrue at
12.5% on the sum of the liquidation value ($100 per share) plus accumulated and
unpaid dividends thereon, compounded quarterly. The Preferred Stock is
redeemable, in whole or in part, at the option of the Company at the liquidation
value, plus the accumulated unpaid dividends thereon. The Preferred Stock ranks
senior to the Company's common stock as to dividends and liquidation rights.
Holders of Class A preferred stock are entitled to one vote per share on all
matters to be voted on by the Company's stockholders. Holders of Class B and
Class C preferred stock have no voting rights with respect to matters to be
voted on by the Company's stockholders; however, under certain circumstances,
such holders may be entitled to vote as a separate class on any proposed
F-18
<PAGE>
ANVIL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
16. CAPITAL STOCK (CONTINUED)
merger, consolidation, recapitalization or reorganization. At January 27, 1996
and February 1, 1997 dividends in arrears on the Preferred Stock amounted to
approximately $2,620 and $5,582, respectively. The Preferred Stock was redeemed
in connection with the Recapitalization.
COMMON STOCK--The Company has three classes of common stock: Class A, Class
B and Class C. Holders of Class A common stock are entitled to one vote per
share on all matters to be voted on by the Company's stockholders. Holders of
Class B and Class C common stock have no voting rights with respect to matters
to be voted on by the Company's stockholders; however, under certain
circumstances, such holders were entitled to vote as a separate class on any
proposed merger, consolidation, recapitalization or reorganization.
Certain members of management obtained loans from the Company to partially
finance the purchase of common and preferred stock. Such loans bore interest at
7.19%, were due January 30, 2002 and are classified as a reduction to
stockholders' equity. Management repaid the above loans including accrued
interest, as part of the Recapitalization.
17. NEW CAPITAL STRUCTURE
REDEEMABLE PREFERRED STOCK--In connection with the Units Offering, in March
1997, the Company issued 1,200,000 shares of 13% Senior Exchangeable Preferred
Stock ("Redeemable Preferred Stock") due 2009. Total shares authorized are
2,300,000. Dividends accrue quarterly at 13% on the sum of the liquidation value
($25 per share) plus accumulated and unpaid dividends thereon. On or before
March 15, 2002 the Company may, at its option, pay dividends in cash or in
additional fully paid and non-assessable shares of Redeemable Preferred Stock
having an aggregate liquidation preference equal to the amount of such
dividends. On any scheduled dividend payment date, the Company may, at its
option, but subject to certain conditions, exchange all but not less than all of
the shares of Redeemable Preferred Stock then outstanding for the Company's 13%
Subordinated Exchange Debentures due 2009. The Redeemable Preferred Stock or the
Exchange Debentures, if issued will be redeemable at the option of the Company,
in whole or in part, at any time on or after March 15, 2002, at the redemption
price of 101% of the liquidation preference or aggregate principal amount (as
the case may be) thereof, plus, in the case of the Redeemable Preferred Stock,
an amount equal to all accumulated and unpaid dividends per share to the date of
purchase, or in the case of the Exchange Debentures, an amount equal to all
accumulated and unpaid interest thereon to the date of purchase. On March 15,
2009, the Company is required to redeem all outstanding shares of the Redeemable
Preferred Stock at an amount equal to the liquidation preference and all
accumulated and unpaid dividends. The Redeemable Preferred Stock was recorded at
an amount equal to the proceeds (net of discounts) less an amount attributable
to the Class B Common Stock issued in Connection with the Units Offering.
COMMON STOCK--Following the Recapitalization in which the old common shares
were redeemed or exchanged, the Company has the following issues of common
stock:
12.5% Class A, $.01 par value, authorized 500,000 shares; cumulative;
290,000 shares; issued and outstanding at March 14, 1997; aggregate
liquidation value of $29,000 at March 14, 1997.
Class B, $.01 par value, authorized 7,500,000 shares; 3,590,000 shares
issued and outstanding at March 14, 1997.
F-19
<PAGE>
ANVIL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
17. NEW CAPITAL STRUCTURE (CONTINUED)
Class C, $.01 par value, authorized 1,400,000 shares, convertible; none
issued at March 14, 1997.
The Class A common stock will accrete at a rate of 12.5% per annum,
compounded quarterly, payable in shares of Class A Common Stock.
Holders of Class B Stock will be entitled to one vote per share on all
matters to be voted on by stockholders while holders of Class A Common Stock and
Class C Common Stock will have no right to vote on any matters except in special
circumstances including a merger or consolidation of the Company or a
recapitalization or reorganization.
18. STOCK OPTION PLANS AND AGREEMENTS
STOCK OPTION PLAN--The Company had a stock option plan (the "Stock Option
Plan") pursuant to which options to purchase 600,000 shares of common stock at
an exercise price of $.64 may be awarded to certain senior executives
("Management Investors"). At January 27, 1996, options to purchase 75,000 shares
at $.64 were outstanding, all of which were exercised during the year ended
February 1, 1997. At February 1, 1997 an additional 75,000 options were granted
at $.64. In March 1997, in connection with the Recapitalization, the remaining
additional 450,000 management options vested and were immediately exercised, at
which time all Class A and B shareholders, including optionees, received $10.50
per share of common stock. The 525,000 options had a value of $5,200 at the date
of exercise, which will be charged to compensation expense with a corresponding
credit to shareholders' equity in the year ending January 31, 1998.
PHANTOM EQUITY PLAN--Upon sale of the Company, or under certain
circumstances as provided for in the agreement, the Management Investors will be
paid 5% of the excess of the aggregate sale price over $100,000. In connection
with the Recapitalization, the Management Investors were paid $5,300 in
accordance with the Phantom Equity Plan at which time the Phantom Equity Plan
was terminated. The $5,300 will be charged to expense in the year ending January
31, 1998.
19. COMMITMENTS AND CONTINGENCIES
LEASES--The Company is obligated under various leases for equipment, office
space and distribution facilities which expire at various dates through 2002.
Future minimum rental commitments under noncancelable operating leases, with
terms in excess of one year are as follows:
<TABLE>
<CAPTION>
FISCAL YEAR
ENDING AMOUNT
----------- ---------
<S> <C>
1998................................................................................. 648
1999................................................................................. 611
2000................................................................................. 408
2001................................................................................. 364
2002................................................................................. 364
Thereafter........................................................................... 152
---------
Total............................................................................ $ 2,547
---------
---------
</TABLE>
F-20
<PAGE>
ANVIL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
19. COMMITMENTS AND CONTINGENCIES (CONTINUED)
Rental expense for the years ended January 28, 1995, January 27, 1996 and
February 1, 1997, was approximately $755, and $620, respectively.
LITIGATION--The Company is a party to various litigation matters incidental
to the conduct of its business. The Company does not believe that the outcome of
any of the matters in which it is currently involved will have a material
adverse effect on the financial condition or results of operations of the
Company.
Prior to the Acquisition, groundwater contamination was discovered at the
Asheville, North Carolina facility. In 1990, Winston Mills, Inc., a subsidiary
of McGregor, entered into an Administrative Order on Consent ("AOC") with the
North Carolina Department of Environment, Health and Natural Resources ("DEHNR")
concerning such contamination. Since that time, McGregor has been conducting
investigation and corrective action under DEHNR oversight and has remained
responsible to the DEHNR with respect to the contamination that is subject to
the AOC. While the total cost of the cleanup at the facility will depend upon
the extent of contamination and the corrective action approved by the DEHNR,
preliminary cleanup cost estimates range from $1.0 to $4.0 million. McGregor
continues to be a party to the Asheville, North Carolina facility's hazardous
waste permit and Culligan, an affiliate of McGregor, has guaranteed McGregor's
obligations under the AOC. McGregor also contractually agreed to fully indemnify
the Company with respect to the contamination as part of the terms of the
Acquisition. This indemnity is guaranteed by Culligan and by Astrum (now known
as Samsonite Corporation) in the event Culligan is unable to perform its
guarantor obligations. The Company could be held responsible for the cleanup of
this contamination if McGregor and Culligan were to become unable to fulfill
their obligations to DEHNR and the Company was not successful in obtaining
indemnification for the clean-up from either McGregor, Culligan or Astrum.
McGregor also agreed to fully indemnify the Company for any costs associated
with certain other environmental matters identified at the time of the
Acquisition. The Company believes that, even if McGregor were unable to fulfill
its indemnification obligations, these other matters would not have a material
adverse effect on the Company. McGregor also agreed to indemnify the Company,
subject to certain limitation, with respect to environmental liabilities that
arise from events that occurred or conditions in existence prior to the
Acquisition. Culligan and Astrum have also guaranteed McGregor's obligations
under these indemnities.
EMPLOYMENT AGREEMENTS--The Company has entered into employment agreements
expiring January 31, 1999, with annual renewals thereafter, with certain senior
executives providing for minimal annual compensation, plus bonuses equal to 4%
of the Company's annual profits, as defined. At February 1, 1997, the aggregate
minimum obligation under the remaining terms of these employment agreements is
approximately $1,930. If an executive is terminated without cause, or if the
executive terminates his employment under certain circumstances, as provided,
the Company is liable for termination payments through the end of the agreement.
Additionally, under certain circumstances, the Company may be liable for
additional termination benefits up to a period not exceeding two years.
F-21
<PAGE>
ANVIL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
20. FOREIGN OPERATIONS
In addition to the United States, the Predecessor, through its wholly-owned
subsidiary, Anvil s.r.o., had operations in the Czech Republic. Income (loss)
before income taxes consisted of the following:
<TABLE>
<CAPTION>
YEAR
ENDED
JANUARY 28,
1995
-----------
<S> <C>
United States.................................................................... $ 14,169
Foreign.......................................................................... (2,067)
-----------
$ 12,102
-----------
-----------
</TABLE>
21. SUMMARIZED FINANCIAL DATA OF ANVIL KNITWEAR, INC.
Summarized financial data of Anvil Knitwear, Inc. is as follows:
<TABLE>
<CAPTION>
JANUARY 27, FEBRUARY 1,
1996 1997
----------- -----------
<S> <C> <C>
Current assets..................................................... $ 63,903 $ 68,208
----------- -----------
----------- -----------
Total assets....................................................... 136,527 $ 136,832
----------- -----------
----------- -----------
Current liabilities................................................ $ 47,743 $ 38,740
----------- -----------
----------- -----------
Long-term liabilities.............................................. $ 49,094 $ 46,837
----------- -----------
----------- -----------
Total liabilities.................................................. $ 96,837 $ 85,577
----------- -----------
----------- -----------
Stockholder's equity............................................... $ 39,690 $ 51,255
----------- -----------
----------- -----------
<CAPTION>
YEAR ENDED YEAR ENDED
JANUARY 27, FEBRUARY 1,
1996 1997
----------- -----------
<S> <C> <C>
Net sales.......................................................... $ 193,389 $ 204,154
----------- -----------
----------- -----------
Operating income................................................... $ 25,152 $ 24,705
----------- -----------
----------- -----------
Interest expense................................................... $ 7,662 $ 6,725
----------- -----------
----------- -----------
Net income......................................................... $ 10,864 $ 11,037
----------- -----------
----------- -----------
</TABLE>
Anvil Knitwear, Inc. is a wholly-owned subsidiary of Anvil Holdings, Inc.
Anvil Holdings, Inc. has fully and unconditionally guaranteed the Old Senior
Notes and the New Senior Notes. Complete financial statements and other
disclosures concerning Anvil Knitwear, Inc. are not presented because management
has determined they are not meaningful to investors.
F-22
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESMAN OR ANY OTHER PERSON IS AUTHORIZED IN CONNECTION WITH ANY
OFFERING MADE HEREBY TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT
CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY ANVIL,
HOLDINGS OR COTTONTOPS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR
A SOLICITATION OF AN OFFER TO BUY ANY SECURITY OTHER THAN THE SECURITIES OFFERED
HEREBY, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY PERSON IN ANY JURISDICTION IN
WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION TO SUCH PERSON. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE 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.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Available Information............................ iv
Summary.......................................... 1
Risk Factors..................................... 12
The Recapitalization............................. 21
Use of Proceeds.................................. 22
Capitalization................................... 24
Dividend Policy.................................. 24
Selected Historical Financial Data............... 25
Management's Discussion and Analysis of Financial
Condition and Results of Operations............ 27
Business......................................... 33
Management....................................... 43
Security Ownership of Certain Beneficial Owners
and Management................................. 49
Certain Relationships and Related Transactions... 51
The Exchange Offer............................... 53
Description of Securities........................ 62
Description of Capital Stock..................... 137
Description of Certain Indebtedness.............. 141
Certain Federal Income Tax Consequences.......... 142
Plan of Distribution............................. 143
Legal Matters.................................... 143
Experts.......................................... 144
Unaudited Pro Forma Financial Statements......... P-1
Index to Financial Statements.................... F-1
</TABLE>
UNTIL , 1997 (90 DAYS AFTER THE COMMENCEMENT OF THE EXCHANGE OFFER),
ALL DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS DELIVERY REQUIREMENT 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.
---------------------
PROSPECTUS
---------------------
$130,000,000
ANVIL KNITWEAR, INC.
OFFER TO EXCHANGE
ITS 10 7/8 SERIES B SENIOR NOTES
DUE 2007
FOR ANY AND ALL
OF ITS OUTSTANDING
10 7/8 SENIOR NOTES DUE 2007
, 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
GENERAL CORPORATION LAW
Anvil, Holdings and Cottontops are each incorporated under the laws of the
State of Delaware. Section 145 ("Section 145") of the General Corporation Law of
the State of Delaware, as the same exists or may hereafter be amended (the
"General Corporation Law"), INTER ALIA, provides that a Delaware corporation may
indemnify any persons who were, are or are threatened to be made, parties to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of such corporation), by reason of the fact that such person is or was an
officer, director, employee or agent of such corporation, or is or was serving
at the request of such corporation as a director, officer employee or agent of
another corporation, or enterprise. The indemnity may include expenses
(including attorneys's fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such action,
suit or proceeding, provided such person acted in good faith and in a manner he
reasonably believed to be in or not opposed to the corporation's best interests
and, with respect to any criminal action or proceeding, had no reasonable cause
to believe that his conduct was illegal. A Delaware corporation may indemnify
any persons who are, were or are threatened to be made, a party to any
threatened, pending or completed action or suit by or in the right of the
corporation by reasons of the fact that such person was a director, officer,
employee or agent of such corporation, or is or was serving at the request of
such corporation as a director, officer, employee or agent of another
corporation or enterprise. The indemnity may include expenses (including
attorney's fees) actually and reasonably incurred by such person in connection
with the defense or settlement of such action or suit, provided such person
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the corporation's best interests, provided that no indemnification is
permitted without judicial approval if the officer, director, employee or agent
is adjudged to be liable to the corporation. Where an officer, director,
employee or agent is successful on the merits or otherwise in the defense of any
action referred to above, the corporation must indemnify him against the
expenses which such officer or director has actually and reasonably incurred.
Section 145 further authorizes a corporation to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation or enterprise,
against any liability asserted against him and incurred by him in any such
capacity, arising out of his status as such, whether or not the corporation
would otherwise have the power to indemnify him under Section 145.
CERTIFICATES OF INCORPORATION
Each of Anvil's, Holdings's and Cottontops' Certificate of Incorporation
("Certificate") provides that, to the fullest extent by the General Corporation
Law, a director of Anvil, Holdings or Cottontops (as the case may be) shall not
be liable to Anvil, Holdings or Cottontops (as the case may be) or its
stockholders for monetary damages for a breach of fiduciary duty as a director.
In addition, Holdings' Certificate provides that, to the fullest extent
permitted by the General Corporation Law, Holdings shall indemnify any director
from and against any and all expenses, liabilities or other losses of any
nature. Anvil's Certificate states that, to the fullest extent permitted by the
General Corporation Law, Anvil shall indemnify any director or officer from and
against any and all expenses, liabilities or other losses of any nature.
Cottontops' Certificate states that a director shall be liable to the extent
provided by applicable law, (i) for breach of the director's duty of loyalty to
Cottontops or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a
II-1
<PAGE>
knowing violation of law, (iii) pursuant to Section 174 of the General
Corporation Law or (iv) for any transaction from which the director derived an
improper personal benefit.
BY-LAWS
Article V of the By-laws of Anvil ("Anvil's Article V") provides, among
other things, that each person who was or is a party or is threatened to be made
a part to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of Anvil) by reason of the fact that he or she is or was a
director, officer, employee, or agent of another corporation, or is or was
serving at the request of Anvil as a director, officer, employee, or agent of
another corporation, partnership, joint venture, trust or other enterprise,
shall be indemnified and held harmless by Anvil to the fullest extent which it
is empowered to do so by the General Corporation Law against all expenses
(including attorneys' fees), judgements, fines and amounts paid in settlement
actually and reasonably incurred by him or her in connection with such action,
suit or proceeding if he or she acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of Anvil, and
with respect to any criminal action or proceeding, had no reasonable cause to
believe his or her conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
the person did not act in good faith and in a manner which he or she reasonably
believed to be in or not opposed to the best interests of Anvil, and, with
respect to any criminal action or proceeding, had reasonable cause to believe
that his or her conduct was lawful.
Anvil's Article V further provides that Anvil shall indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of Anvil to procure a judgment in
its favor by reason of the fact that he or she is or was a director, officer,
employee or agent of Anvil or is or was serving at the request of Anvil as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprises, against expenses (including attorney's
fees) actually and reasonably incurred by him or her in connection with the
defense or settlement of such action or suit if he or she acted in good faith
and in a manner he or she reasonably believed to be in or not opposed to the
best interests of Anvil, except that no indemnification shall be made in respect
of any claim, issue or matter as to which such person shall have been adjudged
to be liable to Anvil unless and only to the extent that the court in which such
action or suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses which
the court shall deem proper. The indemnification and advancement of expenses
provided by, or granted pursuant to Anvil's Article V, unless otherwise provided
when authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and inure to the benefit of the heirs,
executors and administrators of such a person.
Moreover, Anvil's Article V provides that to the extent that a director,
officer, employee or agent of Anvil has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in Anvil's
Article V or in defense of any claim, issue or matter therein, he or she shall
be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him or her in connection therewith. Any indemnification
under Anvil's Article V (unless ordered by a court) shall be made by Anvil only
as authorized in the specific case upon a determination that indemnification of
the director, officer, employee, or agent is proper in the circumstances because
he or she has met the applicable standard of conduct set for in Anvil's Article
V.
Article V of the By-laws of Cottontops ("Cottontops' Article V") provides,
among other things, that each person who was or is made a party or is threatened
to be made a party to or is involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (hereinafter a "Proceeding"),
by reason of the fact that he or she, is or was a director or officer, of
Cottontops or is or was serving at the request of Cottontops as a director,
officer, employee, fiduciary, or agent of another corporation or of a
II-2
<PAGE>
partnership, joint venture, trust or other enterprise including service with
respect to employee benefit plans, whether the basis of such Proceeding is
alleged action in an official capacity as a director, officer, employee,
fiduciary or agent or in any other capacity while serving as a director,
officer, employee, fiduciary or agent, shall be indemnified and held harmless by
Cottontops to the fullest extent which it is empowered to do so by the General
Corporation Law against all expense, liability and loss (including attorneys'
fees actually and reasonably incurred by such person in connection with such
Proceeding) and such indemnification shall inure to the benefit of his or her
heirs, executors and administrators; provided, however, that, except in certain
circumstances, Cottontops shall indemnify any such person seeking
indemnification in connection with a Proceeding initiated by such person only if
such Proceeding was authorized by the board of directors of Cottontops. The
right to indemnification conferred in Cottontops' Article V shall be a contract
right and shall include the right to be paid by Cottontops the expenses incurred
in defending any such Proceeding in advance of its final disposition. Cottontops
may, by action of its board of directors, provide indemnification to employees
and agents of Cottontops with the same scope and effect as the foregoing
indemnification of directors and officers.
Cottontops's Article V further provides that any indemnification of a
director, officer, employee, fiduciary or agent of Cottontops under Cottontops'
Article V or advance of expenses shall be made promptly, and in any event within
30 days, upon the written request of the director, officer, employee, fiduciary
or agent. If a determination (as defined in the General Corporation Law) by
Cottontops that the director, officer, employee, fiduciary or agent is entitled
to indemnification pursuant to Cottontops' Article V is required, and Cottontops
fails to respond within sixty days to a written request for indemnity,
Cottontops shall be deemed to have approved the request. If Cottontops denies a
written request for indemnification or advancing of expenses, in whole or in
part, or if payment in full pursuant to such request is not made within 30 days,
the right to indemnification or advances as granted by Cottontops' Article V
shall be enforceable by the director, officer, employee, fiduciary or agent in
any court of competent jurisdiction. Such person's costs and expenses incurred
in connection with successfully establishing his or her right to
indemnification, in whole or in part, in any such action shall also be
indemnified by Cottontops. It shall be a defense to any such action (other than
an action brought to enforce a claim for expenses incurred in defending any
Proceeding in advance of its final disposition where the required undertaking,
if any, has been tendered to Cottontops) that the claimant has not met the
standards of conduct which make it permissible under the General Corporation Law
for Cottontops to indemnify the claimant for the amount claimed, but the burden
of such defense shall be on Cottontops. Neither the failure of Cottontops
(including its board of directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in the
General Corporation Law, nor an actual determination by Cottontops (including
its board of directors, independent legal counsel, or its stockholders) that the
claimant has not met such applicable standard of conduct, shall be a defense to
the action or create a presumption that the claimant has not met the applicable
standard of conduct. Persons who are not covered by the Cottontops' article V
and who are or were employees or agents of Cottontops, or who are or were
serving at the request of Cottontops as employees or agents of another
corporation, partnership, joint venture, trust or other enterprise, may be
indemnified to the extent authorized at any time or from time to time by the
board of directors.
Holdings' By-Laws do not contain specific indemnification provisions.
INSURANCE
Anvil's Article V states that Anvil shall have the power to purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of Anvil or was serving at the request of Anvil director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise against any liability asserted against him or her and
incurred by him or her in any such capacity,
II-3
<PAGE>
or arising out of his or her status as such, whether or not Anvil would have the
power to indemnify him or her against such liability under the provisions of
Anvil's Article V.
Similarly, Cottontops' Article V provides that Cottontops may purchase and
maintain insurance on its own behalf and on behalf of any person who is or was a
director, officer, employee, fiduciary, or agent of Cottontops or was serving at
the request of Cottontops as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against him or her and incurred by him or her in any such
capacity, whether or not Cottontops would have the power to indemnify such
person against such liability under Cottontops' Article V.
All of Anvil's, Holdings' and Cottontops' directors and officers will be
covered by insurance policies intended to be obtained by Anvil, Holdings and
Cottontops, respectively, against certain liabilities for actions taken in such
capacities, including liabilities under the Securities Act of 1933.
II-4
<PAGE>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits.
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------ --------------------------------------------------------------------------
<C> <S>
2.1 Recapitalization Agreement, dated as of February 12, 1997, by and among
Citicorp Venture Capital, Ltd., Bruckmann, Rosser, Sherrill & Co., Inc.
("BRS & Co."), Holdings, Anvil VT, Inc. And the stockholders and voting
trust certificate holders named on the signature pages thereto, as
amended by the certain Amendment and Consent to Assignment dated as of
February 21, 1997 and that Waiver and Second Amendment to the
Recapitalization Agreement dated as of March 13, 1997.+
3.1 Certificate of Incorporation of Anvil.
3.2 Restated Certificate of Incorporation of Holdings.
3.3 Certificate of Incorporation of Cottontops.
3.4 By-Laws of Anvil.
3.5 By-Laws of Holdings.
3.6 By-Laws of Cottontops.
3.7 Certificate of Designation of Holdings.*
4.1 Purchase Agreement, dated as of March 14, 1997, by and among Donaldson,
Lufkin & Jenrette Securities Corporation ("DLJ"), Wasserstein Perella
Securities, Inc. ("Wasserstein"), NationsBanc Capital Markets, Inc.
("NationsBanc"), Anvil and Holdings.
4.2 Senior Indenture, dated as of March 14, 1997, by and among the Anvil,
Holdings, Cottontops and the other Subsidiary Guarantors and United
States Trust Company of New York, as trustee.
4.3 Form of 10 7/8% Senior Notes and Guarantees.*
4.4 Form of Series B 10 7/8% Senior Notes and Guarantees.*
4.5 Amended and Restated Credit Agreement, dated as of March 14, 1997, among
Anvil, as Borrower, Holdings, Cottontops and certain subsidiaries, as
Guarantor, the Banks Identified therein as lending institutions,
NationsBank, N.A. ("NationsBank"), as Agent, and Bank of America
Illinois, Banque Nationale de Paris and Heller Financial Inc., as co-
agents.+
4.6 Amended and Restated Pledge and Security Agreement, dated as of March 14,
1997, by and among Anvil, Holdings and NationsBank.+
4.7 Registration Rights Agreement, dated as of March 14, 1997, by and among
Anvil, Holdings, Cottontops and DLJ, Wasserstein and NationsBanc, as
Initial Purchasers.
5.1 Opinion of Kirkland & Ellis.*
10.1 Employment Agreement, dated as of January 31, 1995, by and between Anvil
and Bernard Geller.
10.2 Employment Agreement, dated as of January 31, 1995, by and between Anvil
and Jacob Hollander.
10.3 Employment Agreement, dated as of January 31, 1995, by and between Anvil
and William H. Turner.
10.4 Employment Agreement, dated as of January 31, 1995, by and between Anvil
and Anthony Corsano.
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------ --------------------------------------------------------------------------
<C> <S>
10.5 Asset Purchase Agreement, dated as of December 29, 1994, by and among
McGregor Corporation, Winston Mills, Inc., Anvil and Holdings.+*
10.6 Guaranty Agreement, dated as of January 28, 1995, by and among Culligan
International Company, Astrum International Company and Anvil.
10.7 Units Purchase Agreement, dated as of March 14, 1997, by and between DLJ
and Holdings.
10.8 Unit Agreement, dated as of March 14, 1997, by and between Holdings and
United States Trust Company of New York, as trustee.
10.9 Exchange Debenture Indenture, dated as of March 14, 1997, by and between
Holdings and United States Trust Company of New York, as trustee.
10.10 Registration Rights Agreement, dated as of March 14, 1997, by and between
Holdings and DLJ, as the Initial Purchaser.
10.11 Registration Rights and Securityholders Agreement, dated as of March 14,
1997, by and among Holdings, BRS & Co., 399 Venture Partners, Inc. ("399
Venture Partners"), CCT II Partners, L.P. ("CCT") and DLJ.
10.12 Registration Rights Agreement, dated as of March 14, 1997, by and among
Holdings, BRS & Co., 399 Venture Partners, CCT, Bernard Geller, Anthony
Corsano, William Turner, Jacob Hollander and each other executive of
Holdings or its subsidiaries who acquires common stock from Holdings
after the date thereof and executes a joinder thereto, the persons set
forth on the signature pages thereto and DLJ.
10.13 Stockholders Agreement, dated as of March 14, 1997, by and among Holding,
BRS & Co., 399 Venture Partners, CCT, Bernard Geller, Anthony Corsano,
William Turner, Jacob Hollander and each other executive of Holdings or
its subsidiaries who acquires common stock from Holdings after the date
thereof and executes a joinder thereto.
10.14 Stock Option Plan.*
10.15 Form of Unit.*
12.1 Statement Regarding Computation of Ratios of Earnings to Fixed Charges.*
12.2 Statement Regarding Computation of Pro Forma Earnings to Fixed Charges.*
21.1 Subsidiaries of Anvil, Holdings and Cottontops.
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of KPMG Peat Marwick LLP.
23.3 Consent of Kirkland & Ellis (included in Exhibit 5.1).*
24.1 Powers of Attorney (included in Part I to the Registration Statement).
25.1 Statement of Eligibility of Trustee on Form T-1.
27.1 Financial Data Schedule.
99.1 Form of Letter of Transmittal.*
99.2 Form of Notice of Guaranteed Delivery*
99.3 Form of Tender Instructions.*
</TABLE>
- ------------------------
* To be filed by amendment.
+ Anvil agrees to furnish supplementally to the Commission a copy of any
omitted schedule or exhibit to such agreement upon request by the
Commission.
II-6
<PAGE>
(B) FINANCIAL STATEMENT SCHEDULES.
Schedule II--Anvil Holdings, Inc. -- Valuation and Qualifying Accounts.
All other schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under the
related instructions, are inapplicable or not material, or the information
called for thereby is otherwise included in the financial statements and
therefore has been omitted.
ITEM 22. UNDERTAKINGS.
The undersigned registrants hereby undertake:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at the time shall be deemed to
be the initial bonafide offering thereof;
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering; and
(4) The undersigned registrants hereby undertake as follows: that prior
to any public reoffering of the securities registered hereunder through use
of a prospectus which is a part of this registration statement, by any
person or party who is deemed to be an underwriter within the meaning of
Rule 145(c), the issuer undertakes that such reoffering prospectus will
contain the information called for by the applicable registration form with
respect to reofferings by persons who may be deemed underwriters, in
addition to the information called for by the other items of the applicable
form.
(5) The registrants undertake that every prospectus: (i) that is filed
pursuant to paragraph (1) immediately preceding, or (ii) that purports to
meet the requirements of Section 10(a)(3) of the Act and is used in
connection with an offering of securities subject to Rule 415, will be filed
as part of an amendment to the registration statement and will not be used
until such amendment is effective, and that, for purposes of determining any
liability under the Securities Act of 1933, each such post-effective
amendment 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.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Securities Act") may be permitted to directors, officers and
controlling persons of the registrants pursuant to the provisions described
under Item 20 or otherwise, the registrants have been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrants of expenses incurred or
paid by a director, officer or
II-7
<PAGE>
controlling person of the registrants 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 registrants will, unless
in the opinion of their 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
Securities Act and will be governed by the final adjudication of such issue.
(6) 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 registrants 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.
(7) 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 therein, and the offering of such securities at that
time shall be deemed to be the initial BONA FIDE offering thereof.
(8) The undersigned registrants hereby undertake 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.
(9) The undersigned registrants hereby undertake to supply by means of a
post-effective amendment all information 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-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Anvil Knitwear,
Inc. has duly caused this Registration Statement on Form S-4 to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
State of New York on May 13, 1997.
ANVIL KNITWEAR, INC.
By: /s/ BERNARD GELLER
-----------------------------------------
Bernard Geller
CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Jacob Hollander and Bernard Geller and each of
them, his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any or all amendments (including post-effective
amendments) to this registration statement (and any registration statement filed
pursuant to Rule 462(b) under the Securities Act of 1933, as amended, for the
offerings which this Registration Statement relates), and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, or their or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement and power of attorney have been signed by the following
persons in the capacities and on the dates indicated:
SIGNATURE CAPACITY DATES
- ------------------------------ ----------------------------- ---------------
Chief Executive Officer,
/s/ BERNARD GELLER Chairman of the Board and
- ------------------------------ Director (Principal May 13, 1997
Bernard Geller Executive and Financial
Officer)
Executive Vice President,
/s/ JACOB HOLLANDER Chief Administrative
- ------------------------------ Officer, Secretary, General May 13, 1997
Jacob Hollander Counsel and Director
/s/ PASQUALE BRANCHIZIO Vice President of Finance
- ------------------------------ (Principal Accounting May 13, 1997
Pasquale Branchizio Officer)
/s/ BRUCE C. BRUCKMANN
- ------------------------------ Director May 13, 1997
Bruce C. Bruckmann
/s/ STEPHEN F. EDWARDS
- ------------------------------ Director May 13, 1997
Stephen F. Edwards
/s/ DAVID F. THOMAS
- ------------------------------ Director May 13, 1997
David F. Thomas
/s/ JOHN D. WEBER
- ------------------------------ Director May 13, 1997
John D. Weber
II-9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Anvil Holdings,
Inc. has duly caused this Registration Statement on Form S-4 to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
State of New York on May 13, 1997.
ANVIL HOLDINGS, INC.
By: /s/ BERNARD GELLER
-----------------------------------------
Bernard Geller
PRESIDENT
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Jacob Hollander and Bernard Geller and each of
them, his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any or all amendments (including post-effective
amendments) to this registration statement (and any registration statement filed
pursuant to Rule 462(b) under the Securities Act of 1933, as amended, for the
offerings which this Registration Statement relates), and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, or their or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement and power of attorney have been signed by the following
persons in the capacities and on the dates indicated:
SIGNATURE CAPACITY DATES
- ------------------------------ ----------------------------- ---------------
President, Chairman of the
/s/ BERNARD GELLER Board and Director
- ------------------------------ (Principal Executive and May 13, 1997
Bernard Geller Financial Officer)
/s/ JACOB HOLLANDER Vice President, Secretary,
- ------------------------------ General Counsel and May 13, 1997
Jacob Hollander Director
/s/ PASQUALE BRANCHIZIO Vice President of Finance
- ------------------------------ (Principal Accounting May 13, 1997
Pasquale Branchizio Officer)
/s/ BRUCE C. BRUCKMANN
- ------------------------------ Director May 13, 1997
Bruce C. Bruckmann
/s/ STEPHEN F. EDWARDS
- ------------------------------ Director May 13, 1997
Stephen F. Edwards
/s/ DAVID F. THOMAS
- ------------------------------ Director May 13, 1997
David F. Thomas
/s/ JOHN D. WEBER
- ------------------------------ Director May 13, 1997
John D. Weber
II-10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Cottontops, Inc.
has duly caused this Registration Statement on Form S-4 to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
State of New York on May 13, 1997.
COTTONTOPS, INC.
By: /s/ BERNARD GELLER
-----------------------------------------
Bernard Geller
CHAIRMAN OF THE BOARD
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Jacob Hollander and Bernard Geller and each of
them, his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any or all amendments (including post-effective
amendments) to this registration statement (and any registration statement filed
pursuant to Rule 462(b) under the Securities Act of 1933, as amended, for the
offerings which this Registration Statement relates), and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, or their or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement and power of attorney have been signed by the following
persons in the capacities and on the dates indicated:
SIGNATURE CAPACITY DATES
- ------------------------------ ----------------------------- ---------------
Chairman of the Board and
/s/ BERNARD GELLER Director (Principal
- ------------------------------ Executive and Financial May 13, 1997
Bernard Geller Officer)
/s/ JACOB HOLLANDER
- ------------------------------ Vice President, Secretary and May 13, 1997
Jacob Hollander Director
/s/ PASQUALE BRANCHIZIO Vice President of Finance
- ------------------------------ (Principal Accounting May 13, 1997
Pasquale Branchizio Officer)
/s/ TOM GLENNON
- ------------------------------ Director May 13, 1997
Tom Glennon
II-11
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
Anvil Knitwear
In connection with our audit of the combined statements of operations and cash
flows of Anvil Knitwear, a division of McGregor Corporation, which is a
subsidiary of Astrum International Corp., for the year ended January 28, 1995,
which financial statements are included in the Prospectus, we have also audited
the financial statement schedule of Valuation and Qualifying Accounts.
In our opinion, this financial statement schedule, when considered in relation
to the basic financial statements taken as a whole, presents fairly, in all
material respects, the information required to be included therein.
KPMG Peat Marwick LLP
New York, New York
March 24, 1995
S-1
<PAGE>
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
BALANCE AT CHARGED TO CHARGED TO BALANCE AT
BEGINNING COSTS AND OTHER END OF
DESCRIPTION OF YEAR EXPENSES ACCOUNTS DEDUCTIONS YEAR
- ---------------------------------------------------- ----------- ------------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Predecessor (Combined)
Year ended January 28, 1995
Allowance for doubtful accounts................... $ 1,232 $ 501 $ (629)(b) $ 371(a) $ 733
----------- ----- ----- ----- -----------
----------- ----- ----- ----- -----------
The Company (Consolidated)
Year ended January 27, 1996
Allowance for doubtful accounts................... $ 733 $ 435 $ -- $ 717(a) $ 451
----------- ----- ----- ----- -----------
----------- ----- ----- ----- -----------
The Company (Consolidated)
Year ended February 1, 1997
Allowance for doubtful accounts..................... $ 451 $ 440 $ $ 17(a) $ 874
----------- ----- ----- ----- -----------
----------- ----- ----- ----- -----------
</TABLE>
- ------------------------
(a) Accounts written-off as uncollectible.
(b) Recoveries of previously written-off accounts.
S-2
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------ --------------------------------------------------------------------------
<C> <S> <C>
2.1 Recapitalization Agreement, dated as of February 12, 1997, by and among
Citicorp Venture Capital, Ltd., Bruckmann, Rosser, Sherrill & Co., Inc.
("BRS & Co."), Holdings, Anvil VT, Inc. And the stockholders and voting
trust certificate holders named on the signature pages thereto, as
amended by the certain Amendment and Consent to Assignment dated as of
February 21, 1997 and that Waiver and Second Amendment to the
Recapitalization Agreement dated as of March 13, 1997.+
3.1 Certificate of Incorporation of Anvil.
3.2 Restated Certificate of Incorporation of Holdings.
3.3 Certificate of Incorporation of Cottontops.
3.4 By-Laws of Anvil.
3.5 By-Laws of Holdings.
3.6 By-Laws of Cottontops.
3.7 Certificate of Designation of Holdings.*
4.1 Purchase Agreement, dated as of March 14, 1997, by and among Donaldson,
Lufkin & Jenrette Securities Corporation ("DLJ"), Wasserstein Perella
Securities, Inc. ("Wasserstein"), NationsBanc Capital Markets, Inc.
("NationsBanc"), Anvil and Holdings.
4.2 Senior Indenture, dated as of March 14, 1997, by and among the Anvil,
Holdings, Cottontops and the other Subsidiary Guarantors and United
States Trust Company of New York, as trustee.
4.3 Form of 10 7/8% Senior Notes and Guarantees.*
4.4 Form of Series B 10 7/8% Senior Notes and Guarantees.*
4.5 Amended and Restated Credit Agreement, dated as of March 14, 1997, among
Anvil, as Borrower, Holdings, Cottontops and certain subsidiaries, as
Guarantor, the Banks Identified therein as lending institutions,
NationsBank, N.A. ("NationsBank"), as Agent, and Bank of America
Illinois, Banque Nationale de Paris and Heller Financial Inc., as
co-agents.+
4.6 Amended and Restated Pledge and Security Agreement, dated as of March 14,
1997, by and among Anvil, Holdings and NationsBank.+
4.7 Registration Rights Agreement, dated as of March 14, 1997, by and among
Anvil, Holdings, Cottontops and DLJ, Wasserstein and NationsBanc, as
Initial Purchasers.
5.1 Opinion of Kirkland & Ellis.*
10.1 Employment Agreement, dated as of January 31, 1995, by and between Anvil
and Bernard Geller.
10.2 Employment Agreement, dated as of January 31, 1995, by and between Anvil
and Jacob Hollander.
10.3 Employment Agreement, dated as of January 31, 1995, by and between Anvil
and William H. Turner.
10.4 Employment Agreement, dated as of January 31, 1995, by and between Anvil
and Anthony Corsano.
10.5 Asset Purchase Agreement, dated as of December 29, 1994, by and among
McGregor Corporation, Winston Mills, Inc., Anvil and Holdings.+*
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------ --------------------------------------------------------------------------
<C> <S> <C>
10.6 Guaranty Agreement, dated as of January 28, 1995, by and among Culligan
International Company, Astrum International Company and Anvil.
10.7 Units Purchase Agreement, dated as of March 14, 1997, by and between DLJ
and Holdings.
10.8 Unit Agreement, dated as of March 14, 1997, by and between Holdings and
United States Trust Company of New York, as trustee.
10.9 Exchange Debenture Indenture, dated as of March 14, 1997, by and between
Holdings and United States Trust Company of New York, as trustee.
10.10 Registration Rights Agreement, dated as of March 14, 1997, by and between
Holdings and DLJ, as the Initial Purchaser.
10.11 Registration Rights and Securityholders Agreement, dated as of March 14,
1997, by and among Holdings, BRS & Co., 399 Venture Partners, Inc. ("399
Venture Partners"), CCT II Partners, L.P. ("CCT") and DLJ.
10.12 Registration Rights Agreement, dated as of March 14, 1997, by and among
Holdings, BRS & Co., 399 Venture Partners, CCT, Bernard Geller, Anthony
Corsano, William Turner, Jacob Hollander and each other executive of
Holdings or its subsidiaries who acquires common stock from Holdings
after the date thereof and executes a joinder thereto, the persons set
forth on the signature pages thereto and DLJ.
10.13 Stockholders Agreement, dated as of March 14, 1997, by and among Holding,
BRS & Co., 399 Venture Partners, CCT, Bernard Geller, Anthony Corsano,
William Turner, Jacob Hollander and each other executive of Holdings or
its subsidiaries who acquires common stock from Holdings after the date
thereof and executes a joinder thereto.
10.14 Stock Option Plan.*
10.15 Form of Unit.*
12.1 Statement Regarding Computation of Ratios of Earnings to Fixed Charges.*
12.2 Statement Regarding Computation of Pro Forma Earnings to Fixed Charges.*
21.1 Subsidiaries of Anvil, Holdings and Cottontops.
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of KPMG Peat Marwick LLP.
23.3 Consent of Kirkland & Ellis (included in Exhibit 5.1).*
24.1 Powers of Attorney (included in Part I to the Registration Statement).
25.1 Statement of Eligibility of Trustee on Form T-1.
27.1 Financial Data Schedule.
99.1 Form of Letter of Transmittal.*
99.2 Form of Notice of Guaranteed Delivery*
99.3 Form of Tender Instructions.*
</TABLE>
- ------------------------
* To be filed by amendment.
+ Anvil agrees to furnish supplementally to the Commission a copy of any
omitted schedule or exhibit to such agreement upon request by the
Commission.
<PAGE>
RECAPITALIZATION AGREEMENT
----------------------------
among
CITICORP VENTURE CAPITAL, LTD.
BRUCKMANN, ROSSER, SHERRILL & CO., L.P.
the Stockholders Party Hereto
ANVIL VT, INC.
and
ANVIL HOLDINGS, INC.
-----------------------------
February 12, 1997
<PAGE>
TABLE OF CONTENTS
PAGE
----
ARTICLE I......................................................................1
DEFINITIONS..............................................................1
ARTICLE II.....................................................................8
THE RECAPITALIZATION.....................................................8
2.1. Recapitalization Transactions..................................8
2.2. Closing........................................................9
2.3. Exchange of Shares.............................................9
ARTICLE III...................................................................10
REPRESENTATIONS AND WARRANTIES OF THE PARTIES...........................10
3.1. Representations and Warranties of the Company. ..............10
3.2. Representations and Warranties of CVC. .......................20
3.3. Representations and Warranties of BRS. .......................20
3.4. Representations and Warranties of the Stockholders............21
3.5. Representations and Warranties of Anvil VT....................22
3.6. Representations and Warranties of the Management Stockholders.23
ARTICLE IV....................................................................24
COVENANTS OF THE PARTIES................................................24
4.1. Mutual Covenants..............................................24
4.2. Covenants of the Acquiring Investors..........................24
4.3. Covenants of the Company......................................24
4.4. Covenants of the Stockholders.................................27
ARTICLE V.....................................................................27
CONDITIONS PRECEDENT TO
OBLIGATIONS OF THE PARTIES..........................................27
5.1. Conditions Precedent to the Acquiring Investors' Obligations..27
5.2. Conditions Precedent to the Company's Obligations.............29
5.3. Conditions Precedent to the Stockholders' Obligations.........30
ARTICLE VI....................................................................30
TERMINATION.............................................................30
6.1. Termination of Agreement......................................30
6.2. Effect of Termination.........................................31
ARTICLE VII...................................................................31
MISCELLANEOUS...........................................................31
7.1. Survival. ....................................................31
- i -
<PAGE>
7.2. Interpretive Provisions. ....................................31
7.3. Press Releases and Announcements. ...........................32
7.4. Entire Agreement. ............................................32
7.5. Succession and Assignment.....................................32
7.6. Counterparts. ...............................................32
7.7. Headings. ....................................................32
7.8. Notices. ....................................................32
7.9. Governing Law. ...............................................33
7.10. Amendments and Waivers. ......................................34
7.11. Severability. ...............................................34
7.12. Expenses. ....................................................34
7.13. Construction. ...............................................35
7.15. Other Agreements..............................................35
Exhibit A Capital Contributions/ Issuance of Capital Stock
Exhibit B Redemption/Issuance of Capital Stock
Exhibit C Financial Statements
Exhibit D Divisional Financial Statements
Exhibit E Management Bonus
- ii -
<PAGE>
RECAPITALIZATION AGREEMENT
This Recapitalization Agreement (this "Agreement") is entered into as of
February 12, 1997 by and among Citicorp Venture Capital, Ltd., a New York
corporation ("CVC"), Bruckmann, Rosser, Sherrill & Co., L.P., a Delaware limited
partnership ("BRS") (collectively, the "Acquiring Investors"), the stockholders
and the voting trust certificateholders named on the signature pages hereto and
who execute this Agreement (collectively, the "Stockholders"), Anvil VT, Inc., a
Delaware corporation ("Anvil VT") and Anvil Holdings, Inc., a Delaware
corporation (the "Company"). The Acquiring Investors, the Stockholders, Anvil VT
and the Company are each referred to individually as a "Party" and collectively
as the "Parties."
RECITALS
WHEREAS, the board of directors of the Company has determined that the
recapitalization of the Company in accordance with the terms of this Agreement
is in the best interests of the Stockholders of the Company and, by resolutions
duly adopted, have approved and adopted this Agreement.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the Parties agree as
follows.
ARTICLE I
DEFINITIONS
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Anvil" means Anvil Knitwear, Inc., a Delaware corporation.
"Anvil VT" has the meaning set forth in the preface above.
"Acquiring Investors" has the meaning set forth in the preface above.
"Acquiring Investors' Certificates" has the meaning set forth in Section
5.2(c) below.
"BRS" has the meaning set forth in the preface above.
"Business Day" means any day that is not a Saturday, Sunday, or any other
day on which banks in the State of New York are authorized or required by law to
close.
"CVC" has the meaning set forth in the preface above.
"CERCLA" has the meaning set forth in Section 3.1(l) below.
"Certificate" has the meaning set forth in Section 2.3 below.
- 1 -
<PAGE>
"Class A Common" means the Class A Common Stock, par value $.01 per share,
of the Company.
"Class B Common" means the Class B Common Stock, par value $.01 per share,
of the Company.
"Class C Common" means the Class C Common Stock, par value $.01 per share,
of the Company.
"Class A Preferred" means the 12.5% Class A Preferred Stock, par value $.01
per share, of the Company.
"Class B Preferred" means the 12.5% Class B Convertible Preferred Stock,
par value $.01 per share, of the Company.
"Class C Preferred" means the 12.5% Class C Convertible Preferred Stock,
par value $.01 per share, of the Company.
"Closing" has the meaning set forth in Section 2.2 below.
"Closing Date" has the meaning set forth in Section 2.2 below.
"Closing Transactions" has the meaning set forth in Section 2.1(d) below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" means, collectively the Class A Common, Class B Common and
Class C Common.
"Common Stock Consideration" means (i) $111,400,000 plus (ii) $100,000 per
day beginning March 15, 1997 through and including the Closing Date.
"Company" has the meaning set forth in the preface above.
"Company's Certificate" has the meaning set forth in Section 5.1(c) below.
"Company Transaction Expenses" means all expenses incurred by the Company
in connection with the negotiation of this Agreement, including the fees and
expenses of consultants, financial advisers, lawyers and accountants, and any
fees payable to Vestar or any of its Affiliates (other than the Recapitalization
Consideration payable to such entities pursuant to Section 2.1) which fees
payable to Vestar or its Affiliates shall not exceed $1,000,000; provided,
however that the Company Transaction Expenses shall not include any expenses
incurred in connection with the Recapitalization.
- 2 -
<PAGE>
"Competing Transaction" has the meaning set forth in Section 4.3(d) below.
"Compliance Certificates" has the meaning set forth in Section 5.3(c)
below.
"Condition Letter" means that letter by and among CVC, BRS, Vestar and the
Company of even date herewith relating to certain Closing conditions and
obligations.
"Confidential Information" means any non-public information concerning the
businesses and affairs of the Company.
"Confidentiality Agreement" means the confidentiality agreement dated as of
February 12, 1997 among the Company, CVC and BRS.
"Contracts" has the meaning set forth in Section 3.1(j) below.
"Cottontops DE" means Cottontops, Inc., a Delaware corporation.
"Cottontops NC" means Cottontops, Inc., a North Carolina corporation.
"Cottontops Note" means that certain Non-Negotiable Promissory Note issued
on January 31, 1997, by Cottontops DE to Cottontops NC in the initial principal
amount of $250,000.
"Credit Agreement" means the Credit Agreement dated as of January 30, 1995,
among Anvil, as Borrower, the Company and certain subsidiaries, as Guarantors,
the Banks identified therein as lending institutions, NationsBank, N.A.
(Carolinas), as Agent, and The Chase Manhattan Bank, N.A., as Documentation
Agent, as amended, restated or modified from time to time.
"Czech" means Anvil (Czech), Inc., a Delaware corporation.
"Defaulting Party" has the meaning set forth in Section 6.2 below.
"Disclosure Schedule" has the meaning set forth in Section 3.1 below.
"Division" has the meaning set forth in Section 3.1(f) below.
"Divisional Financial Statements" has the meaning set forth in Section
3.1(f) below.
"Encumbrances" has the meaning set forth in Section 3.1(m) below.
"Employment Agreements" means (i) the Employment Agreement, dated as of
January 31, 1995, between Anvil and Bernard Geller, (ii) the Employment
Agreement, dated as of January 31, 1995, between Anvil and Anthony Corsano,
(iii) the Employment Agreement,
- 3 -
<PAGE>
dated as of January 31, 1995, between Anvil and Jacob Hollander, and (iv) the
Employment Agreement, dated as of January 31, 1995, between Anvil and William
Turner, in each case as amended, restated or modified from time to time.
"Environmental and Safety Requirements" means all federal, state and local
statutes, regulations, ordinances and similar provisions having the force and
effect of law, all judicial and administrative orders and all common law
concerning employee health and safety, pollution or protection of the
environment, including without limitation all those relating to the presence,
use, production, generation, handling, transportation, treatment, storage,
disposal, distribution, labeling, processing, discharging, release, or
threatened release, or cleanup of any hazardous materials, substances or wastes,
chemical substances or mixtures, pesticides, pollutants, contaminants, toxic
chemicals, petroleum products or byproducts, asbestos, polychlorinated
biphenyls, noise or radiation.
"ERISA" has the meaning set forth in Section 3.1(p) below.
"ERISA Affiliate" means any person who, together with the Company, is
treated as a single employer under Sections 414(b), 414(c), 414(m) or 414(o) of
the Code.
"Financial Statements" has the meaning set forth in Section 3.1(f) below.
"Funded Indebtedness" means, with respect to the Company and its
Subsidiaries, the sum of all obligations for indebtedness for borrowed money and
capitalized leases (as determined in accordance with GAAP), including, without
limitation, all obligations for principal, interest, premiums, fees, expenses,
overadvances, overdrafts, reimbursement obligations, breakage costs and
indemnities due in connection therewith, as of the Closing Date, including,
without limitation, all amounts required to be paid pursuant to the Credit
Agreement at the Closing; provided, however, that in no event shall Funded
Indebtedness include the Seller Notes or the Cottontops Note.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time, applied on a consistent basis.
"Governmental Entity" has the meaning set forth in Section 3.1(c) below.
"Holder" has the meaning set forth in Section 2.3 below.
"Intellectual Property Rights" has the meaning set forth in Section 3.1(n)
below.
"Leases" means any lease or sublease in which the Company or any Subsidiary
has a leasehold or subleasehold interest.
"Liquidation Value" means, with respect to any share of Preferred Stock,
$100.
- 4 -
<PAGE>
"Majority-in-Interest" means a majority of all Shares of Common Stock (in
the case of Shares of Common Stock subject to the Voting Trust Agreement, the
Voting Trust Certificates representing such Shares) which are issued and
outstanding before giving effect to the transactions contemplated hereby and the
Recapitalization, without regard to whether such shares are voting or
non-voting.
"Management Loans" means the unpaid principal balance under (i) the
Promissory Note issued on January 30, 1995, by Bernard Geller to Anvil in the
initial principal amount of $125,000, and (ii) the Promissory Note issued on
January 30, 1995, by Anthony Corsano to Anvil in the initial principal amount of
$125,000 (collectively, the "Promissory Notes"), plus all accrued and unpaid
interest on such Promissory Notes through the Closing Date.
"Management Bonus" means the bonus, in the aggregate amount of $500,000, to
be paid to the Management Stockholders in the amounts set forth on Exhibit E,
attached hereto.
"Management Stockholders" means Bernard Geller, Anthony Corsano, Jacob
Hollander and William Turner.
"Material Adverse Effect" means, (i) with respect to the Company and its
Subsidiaries, a material adverse effect on the properties, assets, business,
results of operations or financial condition of the Company and its
Subsidiaries, taken as a whole, or on the ability of the Company, Anvil or Anvil
VT to consummate the transactions contemplated hereby, (ii) with respect to the
Acquiring Investors, a material adverse effect on the ability of the Acquiring
Investors to consummate the transactions contemplated hereby, and (iii) with
respect to any Stockholder, a material adverse effect on the ability of such
Stockholder to consummate the transactions contemplated hereby.
"Most Recent Financial Statements" has the meaning set forth in Section
3.1(f) below.
"New Common Stock" means the common stock of the Company, par value $.01
per share.
"Notes Offering Memorandum" means a draft of that certain Offering
Memorandum, dated as of February 2, 1997, for $130,000,000 in Senior Notes due
in 2007, to be issued by Anvil.
"Option" means the options to acquire 600,0000 shares of Class A Common at
an exercise price of $.64 per share (of which 525,000 remaining outstanding as
of the date hereof), issued pursuant to part IV of Exhibit A to the Employment
Agreements.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Owned Real Property" has the meaning set forth in Section 3.1(m) below.
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"PBGC" has the meaning set forth in Section 3.1(p) below.
"Party" and "Parties" has the meaning set forth in the preface above.
"Permits" has the meaning set forth in Section 3.1(i) below.
"Permitted Encumbrances" has the meaning set forth in Section 3.1(m) below.
"Phantom Payment" means the payment of $5,250,000 to be made pursuant to
the Phantom Equity Plan (the terms of which are set forth in part V of Exhibit A
to the Employment Agreements).
"Plan" has the meaning set forth in Section 3.1(p) below.
"Preferred Stock" means, collectively, the Class A Preferred, Class B
Preferred and Class C Preferred.
"Preferred Stock Consideration" means the aggregate Liquidation Value of
all shares of Preferred Stock issued and outstanding at Closing, plus all
accrued and unpaid dividends in respect of such Preferred Stock through the
Closing Date, payable in cash.
"Pro Rata Share" means the percentage resulting from dividing the number
one (1) by the aggregate number of issued and outstanding shares of Preferred
Stock as of the Closing Date in the case of Preferred Stock and the aggregate
number of issued and outstanding shares of Common Stock (including as issued all
shares of Common Stock which may be acquired pursuant to unexercised Options and
any other options, warrants or securities convertible into or exchangeable for
Common Stock) as of the Closing Date in the case of Common Stock (immediately
prior to giving effect to the issuance of any shares of New Common Stock
pursuant to Section 2.1 below or in connection with the transactions
contemplated by the Units Offering Memorandum).
"Recapitalization" means the transactions contemplated by the Notes
Offering Memorandum and the Units Offering Memorandum.
"Recapitalization Consideration" has the meaning set forth in Section 2.3
below.
"Redeemed Shares" has the meaning set forth in Section 2.1(d) below.
"Refinancing Transactions" means (1) the issuance of Senior Notes and
Senior Preferred Units as contemplated in the Notes Offering Memorandum and
Units Offering Memorandum, respectively, and (2) the consummation of a revolving
credit facility in an approximate amount of $50,000,000.
"Required Consents" has the meaning set forth in Section 5.1(e) below.
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"Required Governmental Consents" has the meaning set forth in Section
5.1(f) below.
"Retained Shares" has the meaning set forth in Section 2.1(d) below.
"SWDA" has the meaning set forth in Section 3.1(l) below.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Securityholders Agreement" means the Securityholders Agreement dated as of
January 30, 1995, among the Company and the parties thereto, as amended,
restated or modified from time to time.
"Seller Note Amount" means the unpaid principal under that certain
Subordinated Promissory Note issued on January 30, 1995, by the Company to
Culligan International Company (the "Payee") in the initial principal amount of
$7,500,000 and subsequent notes issued to the Payee as payments of interest (the
original note and all notes subsequently issued in respect of such note are the
"Seller Notes"), plus all accrued and unpaid interest, and any premiums and
penalties payable, on the Seller Notes through the Closing Date.
"Share" means any share of Common Stock and any share of Preferred Stock,
as applicable.
"Stockholder" has the meaning set forth in the preface above.
"Subsidiary" means the entities set forth in Section 3.1(e) of the
Disclosure Schedule.
"Tax" means any federal, state, local or foreign income, gross receipts,
franchise, estimated, alternative minimum, add-on minimum, sales, use, transfer,
real property gains, registration, value added, excise, natural resources,
severance, stamp, occupation, windfall profits, environmental (liability under
Section 59A of the Code), customs, duties, real property, personal property,
capital stock, social security, unemployment, disability, payroll, license,
employee or other withholding, or other tax, of any kind whatsoever, including
any interest, penalties or additions to tax or similar items in respect of the
foregoing (whether disputed or not).
"Tax Return" means any return, report, declaration, claim for refund,
information return or other document (including any related or supporting
schedule, statement or information and any amendment to any of the foregoing)
filed or required to be filed in connection with the determination, assessment
or collection of any Tax of any party or the administration of any laws,
regulations or administrative requirements relating to any Tax.
"Termination Date" has the meaning set forth in Section 7.12 below.
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"Title Company" has the meaning set forth in Section 5.1(p) below.
"Units Offering Memorandum" means a draft of that certain Offering
Memorandum, dated as of February 1, 1997, for Units, consisting of Senior
Exchangeable Preferred Stock of the Company and common stock.
"Vestar" means Vestar Capital Partners, a New York general partnership.
"Voting Trust Agreement" means the Voting Trust Agreement, dated as of
January 30, 1995, among the Company, Anvil VT and the Stockholders party
thereto, as amended, restated or modified from time to time.
"Voting Trust Certificate" means the Voting Trust Certificates representing
beneficial ownership of the Shares of Common Stock subject to the Voting Trust
Agreement.
ARTICLE II
THE RECAPITALIZATION
2.1. Recapitalization Transactions. Pursuant to the terms and subject to
the conditions of this Agreement, at the Closing (as defined below):
(a) Acquiring Investors Obligations. BRS (and its Affiliates and
designees) shall make the capital contributions set forth opposite their
respective names on Exhibit A hereto in exchange for the number of shares of New
Common Stock set forth opposite their respective names on Exhibit A.
(b) Anvil VT Obligations. Anvil VT shall take all commercially
reasonable actions necessary to cause the termination of the Voting Trust
Agreement and upon such termination shall surrender to the Company certificates
for all Shares of Common Stock and Preferred Stock held by Anvil VT duly
endorsed in blank, with stock powers duly executed in blank, in proper form for
transfer.
(c) Stockholders Obligations. Each Stockholder (including CVC (or any
of its Affiliates) in its capacity as a Stockholder) shall (i) surrender to the
Company certificates for the number of Shares of Common Stock (in the case of
Stockholders that are party to the Voting Trust Agreement, the Voting Trust
Certificates representing such number of Shares of Common Stock) and the number
of Shares of Preferred Stock (in the case of Stockholders that are party to the
Voting Trust Agreement, the Voting Trust Certificates representing such number
of Shares of Preferred Stock) set forth opposite such Stockholder's name on
Exhibit B hereto, with stock powers duly executed in blank, in proper form for
transfer, (ii) exchange any remaining Shares of Common Stock (in the case of
Stockholders that are party to the Voting Trust Agreement, the Voting Trust
Certificates representing such number of Shares of Common Stock) held by such
Stockholder for the number of shares of New Common Stock set forth opposite such
Stockholder's name on Exhibit B hereto, and (iii) take all commercially
reasonable actions,
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including voting the voting securities held by such Stockholder, necessary to
(A) terminate the Voting Trust Agreement, (B) terminate the Securityholders
Agreement, (C) enable the Refinancing Transactions to be consummated, and (D)
cause the Company to consummate the Closing Transactions (provided that with
respect to CVC and its Affiliates, their obligations under clauses (C) and (D)
above shall be governed by Section 4.1 below).
(d) Company Obligations. The Company shall (i) issue New Common Stock
to the Acquiring Investors in the amounts set forth opposite their respective
names on Exhibit A hereto, (ii) redeem all of the issued and outstanding Shares
of Preferred Stock (in the case of Stockholders that are party to the Voting
Trust Agreement, the Voting Trust Certificates representing such number of
Shares of Preferred Stock) in exchange for the Preferred Stock Consideration
pursuant to Section 2.3 below, (iii) redeem from each Stockholder the number of
shares of issued and outstanding Shares of Common Stock (in the case of
Stockholders that are party to the Voting Trust Agreement, the Voting Trust
Certificates representing such number of Shares of Common Stock) set forth
opposite such Stockholder's name on Exhibit B hereto in exchange for a pro-rata
share of the Common Stock Consideration pursuant to Section 2.3 below (the
"Redeemed Shares"), (iv) issue to CVC (or one of its Affiliates) and the
Management Stockholders the number of shares of New Common Stock set forth
opposite their respective names on Exhibit B hereto in exchange for the Voting
Trust Certificates representing Shares of Common Stock not required to be
redeemed pursuant to this Section 2.1 (the "Retained Shares"), (v) pay or cause
to be paid (A) the Seller Note Amount, (B) the Funded Indebtedness, (C) the
Company Transaction Expenses and all expenses incurred by the Company in
connection with the Recapitalization through the Closing Date, (D) the Phantom
Payment, and (E) the Management Bonus, by wire transfer of immediately available
funds to such bank account or accounts as per written instructions of the
parties receiving payments pursuant to this Section 2.1(d), given to the Company
at least two Business Days prior to the Closing Date, and (vi) upon the
consummation of the Refinancing Transactions, enter into, or cause any of its
Subsidiaries to enter into, such other agreements as are required to consummate
the Refinancing Transactions (collectively, the "Closing Transactions").
(e) Management Loans. The Stockholders who are obligors under the
Management Loans shall cause such Management Loans to be repaid in accordance
with their terms.
2.2. Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Kirkland & Ellis,
153 East 53rd Street, New York, New York 10022, commencing at 10:00 a.m. local
time on the second Business Day following the satisfaction or waiver of all
conditions to the obligations of the Parties to consummate the transactions
contemplated hereby (other than conditions with respect to actions the
respective Parties will take at the Closing itself) or such other date as the
Parties may mutually determine (the "Closing Date").
2.3. Exchange of Shares. Upon surrender to the Company by a Stockholder of
a certificate representing a Share or in the case of Shares subject to the
Voting Trust Agreement, a Voting Trust Certificate representing a number or
Shares (each, a "Certificate") pursuant to
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Section 2.1 above, the holder of such Certificate (the "Holder") shall
receive in exchange therefor (i) with respect to each share of Preferred Stock,
an amount of cash equal to a Pro Rata Share of the Preferred Stock
Consideration, (ii) with respect to each Redeemed Share, an amount of cash equal
to a Pro Rata Share of the Common Stock Consideration, or (iii) with respect to
each Retained Share, 1 share of New Common Stock, as the case may be
(collectively, the "Recapitalization Consideration"). All cash consideration
payable in respect of such Shares under clauses (i) and (ii) above, shall be
paid by wire transfer of immediately available funds to such bank account or
accounts as per written instructions of the Stockholder receiving such payment,
given to the Company at least two Business Days prior to the Closing Date. The
Certificates surrendered pursuant to this Section 2.3 shall be canceled. In the
event any Certificate shall have been lost, stolen or destroyed, upon the making
of an affidavit of that fact by the registered holder of such lost, stolen or
destroyed Certificate in form and substance acceptable to the Company and the
Acquiring Investors, the Company will issue in exchange for such lost, stolen or
destroyed Certificate the Recapitalization Consideration due in respect thereof
in the manner set forth in this Section 2.3.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PARTIES
3.1. Representations and Warranties of the Company. The Company represents
and warrants to the Acquiring Investors and the Stockholders that the statements
contained in this Section 3.1 are correct and complete as of the date of this
Agreement, except as disclosed in the disclosure schedule delivered in
connection with Article III hereof on or prior to the date of this Agreement
(the "Disclosure Schedule").
(a) Organization, Qualification, and Corporate Power. The Company is a
corporation validly existing and in good standing under the laws of the State of
Delaware. The Company is duly authorized to conduct business and is in good
standing under the laws of each jurisdiction in which the nature of its
businesses or the ownership or leasing of its properties requires such
qualification, except where the lack of such qualification would not have a
Material Adverse Effect. The Company has full corporate power and authority and
all material licenses, permits and authorizations necessary to carry on the
businesses in which it is engaged and to own and use the material properties
owned and used by it.
(b) Authority. The Company has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated by this Agreement. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Company, except for
such approval of the Stockholders as may be required by law. This Agreement has
been duly executed and delivered by the Company, and constitutes a valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms. Section 3.1(b) of the Disclosure Schedule sets forth a list of
the officers and directors of the Company.
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(c) No Conflicts. The execution and delivery of this Agreement do not,
and the consummation by the Company of the transactions contemplated hereby and
by the Recapitalization in accordance with the terms of this Agreement will not,
result in any violation of or default under (with or without notice or lapse of
time, or both), or give rise to a right of termination, cancellation or
acceleration of any obligation under, (i) any provision of the certificate of
incorporation or bylaws of the Company or any of its Subsidiaries, or (ii) any
material agreement, indenture, instrument, order, judgment or decree applicable
to the Company or any of its Subsidiaries or their properties or assets. No
consent, approval, order or authorization of, or registration, declaration or
filing with, any court, administrative agency or commission or other
governmental authority or instrumentality (a "Governmental Entity"), is required
by or with respect to the Company in connection with the execution and delivery
of this Agreement or the consummation by the Company of the transactions
contemplated hereby or by the Recapitalization.
(d) Capitalization. The entire authorized capital stock of the Company
consists of (i) 10,605,000 shares of Class A Common, of which 5,830,000 shares
are issued and outstanding, and owned beneficially and of record by the persons
set forth on Section 3.4(d) of the Disclosure Schedule, as of the date hereof,
(ii) 3,200,000 shares of Class B Common, of which 2,600,000 shares are issued
and outstanding and owned beneficially, and of record by the persons set forth
on Section 3.4(d) of the Disclosure Schedule, as of the date hereof, (iii)
1,650,000 shares of Class C Common, of which 1,650,000 shares are issued and
outstanding, and owned beneficially and of record by the persons set forth on
Section 3.4(d) of the Disclosure Schedule, as of the date hereof, (iv) 205,010
shares of Class A Preferred, of which 129,584 are issued and outstanding, and
owned beneficially and of record by the persons set forth on Section 3.4(d) of
the Disclosure Schedule, as of the date hereof, (v) 70,420 shares of Class B
Preferred, of which 70,416 are issued and outstanding, and owned beneficially
and of record by the persons set forth on Section 3.4(d) of the Disclosure
Schedule, as of the date hereof, and (vi) 5,000 shares of Class C Preferred,
none of which are outstanding as of the date hereof. As of the date hereof, the
Company had outstanding incentive and other stock options exercisable for an
aggregate of 525,000 shares of Class A Common. Except as set forth above or in
the Company's certificate of incorporation, there are no outstanding options,
warrants, rights, contracts, calls, puts, rights to subscribe, conversion
rights, or other agreements or commitments to which the Company is a party or
which are binding upon the Company providing for the issuance, disposition, or
acquisition of any of its capital stock. There are no outstanding stock
appreciation, phantom stock, or similar rights with respect to the Company. All
of the issued and outstanding Shares have been duly authorized and are validly
issued, fully paid, and nonassessable.
(e) Subsidiaries. Section 3.1(e) of the Disclosure Schedule sets forth
for each Subsidiary of the Company (i) its name and jurisdiction of
incorporation, (ii) the number of shares of authorized capital stock of each
class of its capital stock, (iii) the number of issued and outstanding shares of
each class of its capital stock (if applicable), the names of the holders
thereof, and the number of shares held by each such holder, (iv) the number of
shares of its capital stock held in treasury, and (v) its directors and
officers. Each Subsidiary of the Company is a corporation duly organized,
validly existing, and in good standing under the laws of the jurisdiction of its
incorporation. Each Subsidiary of the Company is duly authorized to conduct
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business and is in good standing under the laws of each jurisdiction where such
qualification is required, except where the lack of such qualification would not
have a Material Adverse Affect on Company or such Subsidiary. Each Subsidiary of
the Company has full corporate power and authority to carry on the businesses in
which it is engaged and to own and use the properties owned and used by it.
Except as set forth above or in the certificate of incorporation of any
Subsidiary, there are no outstanding options, warrants, rights, contracts,
calls, puts, rights to subscribe, conversion rights, or other agreements or
commitments to which any Subsidiary is a party or which are binding upon any
Subsidiary providing for the issuance, disposition, or acquisition of any of its
capital stock. There are no outstanding stock appreciation, phantom stock, or
similar rights with respect to any Subsidiary. All of the issued and outstanding
shares of capital stock of each Subsidiary have been duly authorized and are
validly issued, fully paid, and nonassessable. One of the Company and its
Subsidiaries holds of record and owns beneficially all of the outstanding shares
of each Subsidiary of the Company.
(f) Financial Statements. Attached hereto as Exhibit C are the
following financial statements (collectively the "Financial Statements"): (i)
audited consolidated balance sheet and statement of income and cash flows as of
and for the fiscal year ended January 27, 1996, for the Company and its
Subsidiaries, and (ii) unaudited consolidated balance sheet and statement of
income and cash flows (the "Most Recent Financial Statements") as of and for the
eleven months ended December 28, 1996, for the Company and its Subsidiaries. The
Financial Statements (including the notes thereto) have been prepared from the
books and records of the Company in accordance with GAAP applied on a consistent
basis throughout the period covered thereby and present fairly the financial
position of the Company and its Subsidiaries as of such dates and the results of
operations of the Company and its Subsidiaries for such period; provided,
however, that the Most Recent Financial Statements are subject to normal
year-end adjustments and lack footnotes and other presentation items. Attached
hereto as Exhibit D are the audited combined balance sheets as of January 28,
1995 and January 29, 1994, and the statements of earnings and cash flows for the
year ended January 28, 1995, the seven months ended January 29, 1994, the five
months ended June 30, 1993 and year ended January 31, 1993, for Anvil Knitwear
(the "Division"), a division of McGregor Corporation (the "Divisional Financial
Statements"). The Divisional Financial Statements have been prepared in
accordance with GAAP applied on a consistent basis (except as disclosed therein)
throughout the periods covered thereby and present fairly the financial position
of the Division as of such dates and the results of operations of the Division
for such periods.
(g) Events Subsequent to Most Recent Financial Statements. Since the
Most Recent Financial Statements, there has not been any material adverse change
in the assets, liabilities, business, financial condition, operations or results
of operations of the Company and its Subsidiaries taken as a whole. Without
limiting the generality of the foregoing, except as set forth on Section 3.1(g)
of the Disclosure Schedule or as expressly contemplated by this Agreement, since
the date of the Most Recent Financial Statements, none of the Company nor any of
its Subsidiaries has:
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(i) experienced any material changes in any relationship with its
suppliers, customers, distributors, brokers, lessors or others, other than
changes in the Ordinary Course of Business;
(ii) sold, leased, transferred, or assigned any of its material
assets, tangible or intangible (including, without limitation, the
Intellectual Property Rights) other than for fair consideration in the
Ordinary Course of Business;
(iii) engaged in any activity which has resulted in any
acceleration or delay of the collection of its material accounts or notes
receivable or any delay in the payment of its material accounts payable, in
each case other than in the Ordinary Course of Business;
(iv) accelerated, terminated, modified or canceled any permit or
agreement, contract, lease, or license involving more than $200,000,
individually, to which it is a party or by which it is bound;
(v) suffered any material damage, destruction, or loss, whether or
not covered by insurance, affecting any material property or assets owned
or used by it;
(vi) adopted, modified, amended, or terminated, in any material
respect, any bonus, profit-sharing, incentive, severance, or other similar
plan, contract, or commitment for the benefit of any of its directors,
officers, or employees, or otherwise made any material change in the
employment terms (including any increase in the base compensation) for any
of its officers and employees except in the Ordinary Course of Business;
(vii) made any capital expenditure or any other investment (or
series of related investments) in excess of $200,000, other than in the
Ordinary Course of Business.
(viii) issued any note, bond, or other debt security, or created,
incurred, assumed, or guaranteed any indebtedness involving more than
$200,000, individually, or in the aggregate;
(ix) canceled, compromised, waived, or released any right or claim
(or series of related rights and claims) either involving more than
$200,000, individually or in the aggregate, or outside the Ordinary Course
of Business;
(x) made or authorized any change in its certificate of
incorporation or bylaws;
(xi) issued, sold, or otherwise disposed of any of its capital
stock, or granted, modified, or amended any options, warrants, stock
appreciation rights, or other
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rights to purchase or obtain (including upon conversion, exchange,
or exercise) any of its capital stock or participate in any change in the
value thereof;
(xii) made or been subject to any material change in its
accounting practices, procedures, or methods, or in its cash management
practices;
(xiii) entered into or become party to any agreement, arrangement,
or transaction with any of its Affiliates or any of their respective
directors, officers, employees (other than in the Ordinary Course of
Business, consistent with past custom and practice), shareholders or
relatives, including, without limitation, any (A) loan or
advance of funds, or made any other payments, to any of its directors,
officers, employees, shareholders, or Affiliates, (B) creation
or discharge of any intercompany account, or (C) any payment or declaration
of any dividend, redemption or other distribution with respect to their
respective capital stock;
(xiv) granted any license or sublicense of any rights under,
allowed to lapse, disposed of, or otherwise experienced any material
adverse changes with respect to the Intellectual Property Rights;
(xv) experienced any material changes in the amount or scope of
coverage of insurance now carried by them; or
(xvi) committed to do any of the foregoing.
(h) Absence of Liabilities. Except as set forth on the Financial
Statements (or in the notes thereto), neither the Company nor any of its
Subsidiaries has any obligation or liability (whether accrued, absolute,
contingent, unliquidated or otherwise, whether due or to become due), that is
material to the Company or any of its Subsidiaries and required to be reported
as a liability on the consolidated financial statements of the Company and its
Subsidiaries or in the footnotes (if any) thereto under GAAP, other than
borrowings under its existing loan agreements in the Ordinary Course of Business
and other liabilities arising or incurred since the Most Recent Financial
Statements in the Ordinary Course of Business (none of which are liabilities for
breach of agreement, breach of warranty, tort, infringement, violation of law,
or an environmental liability).
(i) Compliance With Laws. The Company and its Subsidiaries are in
compliance, in all material respects, with all applicable laws, rules,
regulations, ordinances, decrees or orders of any Governmental Entity. The
Company and its Subsidiaries have all material governmental permits, licenses
and authorizations necessary for the conduct of their businesses as presently
conducted in all material respects ("Permits") and are in compliance, in all
material respects, with the terms of the Permits.
(j) Contracts. Section 3.1(j) of the Disclosure Schedule contains a
complete and correct list of all material agreements, contracts, commitments,
Leases, and other material instruments and arrangements (whether written or
oral) to which the Company or any of its
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Subsidiaries is a party (the "Contracts"); provided, however that the Company
shall not be required to disclose on Section 3.1(j) of the Disclosure Schedule
any purchase or sale orders incurred in the Ordinary Course of Business. The
Company has made available to Acquiring Investors complete and correct copies of
all written Contracts, together with all amendments thereto, and accurate
descriptions of all oral Contracts which, if reduced to written form, would be
required to be set forth in Section 3.1(j) of the Disclosure Schedule. All
Contracts are in full force and effect. There does not exist under any Contract
any event of default or event or condition that, after notice or lapse of time
or both, would constitute a violation, breach or event of default thereunder on
the part of the Company or any of its Subsidiaries or, to the best knowledge of
Company, any other party thereto except as set forth in Section 3.1(j) of the
Disclosure Schedule. Except as set forth in Section 3.1(j) of the Disclosure
Schedule, no consent of any third party is required under any Contract as a
result of or in connection with, and the enforceability of any contract will not
be affected in any manner by, the execution, delivery and performance of this
Agreement or the consummation of the transactions contemplated hereby and the
Recapitalization.
(k) Litigation. There are no material actions, suits, proceedings,
orders, investigations or claims pending or, to the knowledge of the Company's
officers and directors, threatened against the Company or any of its
Subsidiaries at law or in equity, or before or by any Governmental Entity. There
are no material arbitration proceedings pending against the Company or any of
its Subsidiaries, including without limitation proceedings under collective
bargaining agreements. To the knowledge of the Company's officers and directors,
there are no federal, state or local governmental inquiries involving the
Company or any of its Subsidiaries, including without limitation inquiries as to
the qualification of the Company or any of its Subsidiaries to hold or receive
any license or permit.
(l) Environmental Matters. Except as would not, individually or in the
aggregate, be reasonably likely to have a Material Adverse Effect, to the
knowledge of the Company: (i) the Company and its Subsidiaries are in compliance
with all Environmental and Safety Requirements; (ii) the Company and its
Subsidiaries have obtained and are in compliance with all permits, licenses and
other authorizations required pursuant to Environmental and Safety Requirements
for the occupation of their facilities and properties and the operation of their
businesses; (iii) neither the Company nor any Subsidiary has received any notice
regarding any actual or alleged violation of Environmental and Safety
Requirements, or any liabilities or potential liabilities arising under
Environmental and Safety Requirements; (iv) none of the following exists at any
property or facility currently owned or operated by the Company or any
Subsidiary: (A) underground storage tanks, (B) friable asbestos-containing
material, (C) materials or equipment containing polychlorinated biphenyls, or
(D) landfills, surface impoundments, or disposal areas; (v) neither the Company
nor any Subsidiary has treated, stored, disposed of, arranged for or permitted
the disposal of, transported, handled, or released any substance, including
without limitation any hazardous substance, or owned or operated any property or
facility (and no such property or facility is contaminated by any such
substance) in a manner that has given or will give rise to material liabilities,
including any material liability for response costs, corrective action costs,
personal injury, property damage, natural resources damages or attorney fees, or
any investigative, corrective or remedial obligations, pursuant to the
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Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended ("CERCLA") or the Solid Waste Disposal Act, as amended ("SWDA") or any
other Environmental and Safety Requirements; (vi) neither the Company nor any
Subsidiary has assumed or undertaken either expressly or by operation of law any
liability, including without limitation any obligation for corrective or
remedial action, of any other person or entity arising under Environmental and
Safety Requirements. The Acquiring Investors and the Company agree that this
Section 3.1(l) contains the sole and exclusive representations and warranties of
the Company regarding environmental, health, or safety matters, including
without limitation, any matters arising under Environmental and Safety
Requirements.
(m) Title to Assets and Real Property.
(i) Each of the Company and its Subsidiaries has good title (or
leasehold interest with respect to capital leases) to all of the assets and
properties which are material to the conduct of the business of the Company
(including those reflected on the Financial Statements), except for assets
and properties sold, consumed or otherwise disposed of in the Ordinary
Course of Business since the date of the Most Recent Financial Statements,
free and clear of all imperfections to title, liens, claims, security
interests, pledges, charges or other encumbrances ("Encumbrances"), except
(i) mechanic's, materialmen's, landlord's, carrier's, warehousemen's and
other similar Encumbrances and Encumbrances incurred in the Ordinary Course
of Business in connection with workers compensation, unemployment
insurance, social security benefits and other similar matters for sums (A)
not yet due and payable or (B) being contested in good faith, (ii) purchase
money liens and Encumbrances securing rental payments under capital lease
arrangements, (iii) with respect to Owned Real Property only, all
covenants, conditions, easements, rights-of-way, restrictions, utility
agreements, consents, agreements, reservations, encroachments, patents, all
other matters of public record, imperfections of title and other similar
charges and Encumbrances which do not affect materially and adversely the
ability of the Company to conduct its business as currently conducted or
materially increases its cost of doing business, (iv) with respect to Owned
Real Property only, zoning, entitlement, building, environmental and other
land use rules, laws and regulations which are applicable to the Owned Real
Property, (v) with respect to Owned Real Property only, matters that would
be disclosed by an accurate survey conforming to 1992 ALTA/ACSM Minimum
Standard Detail Requirements so long as such matters do not have a Material
Adverse Effect, (vi) matters and Encumbrances set forth or identified in
the documents listed in Section 3.1(m) of the Disclosure Schedule, and
(vii) liens for Taxes not yet due and payable or being contested in good
faith by appropriate proceedings (the matters set forth in the foregoing
clauses being referred to herein as the "Permitted Encumbrances").
(ii) Section 3.1(m) of the Disclosure Schedule sets forth a list
of all owned U.S. real property and owned foreign real property
(collectively, the "Owned Real Property") used by the Company and its
Subsidiaries in the
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operation of the business of the Company and its Subsidiaries. With respect
to each such parcel of Owned Real Property: (i) such parcel is free and
clear of all Encumbrances, except Permitted Encumbrances, (ii) there are no
leases, subleases, licenses, concessions, or other agreements, written or
oral, granting to any person the right of use or occupancy of any portion
of such parcel; and (iii) there are no outstanding actions or rights of
first refusal to purchase such parcel, or any portion thereof or interest
therein. Except as set forth in Section 3.1(m) of the Disclosure Schedule,
there is no material real property other than the Owned Real Property which
is owned by the Company or any of its Subsidiaries in connection with the
business of the Company or its Subsidiaries.
(n) Intellectual Property. Section 3.1(n) of the Disclosure Schedule
contains a complete and accurate list or description of all material (i)
trademarks, trade names, service marks, and all registrations, applications and
renewals therefor, (ii) registered and unregistered copyrights, applications and
renewals therefor, and (iii) patents and patent applications, presently owned or
used by the Company or any of its Subsidiaries in the conduct of the business of
the Company and its Subsidiaries. The foregoing items and any goodwill
associated therewith, along with all other material trade dress, logos,
inventions, discoveries, processes, improvements, technical and computer data,
documentation and software, trade secrets, know-how and other confidential and
proprietary information owned or used by the Company or any Subsidiary, and the
Company's and any such Subsidiary's rights under any license or other agreement
relating to such intellectual property (whether as licensee or licensor
thereunder), are referred to in this Agreement as the "Intellectual Property
Rights." Except as indicated on Section 3.1(n) of the Disclosure Schedule, (A)
the Company or one of its Subsidiaries owns or has the right to use, pursuant to
a valid and enforceable license, all Intellectual Property Rights, except where
the failure to own or have such right to use would not, in the aggregate, have a
Material Adverse Effect, and the Intellectual Property Rights comprise all of
the intellectual property rights necessary for the conduct of the business of
the Company and its Subsidiaries in all material respects in the same manner as
the business of the Company and each of the Subsidiaries has been conducted
prior to the date hereof, (B) neither the Company nor any Subsidiary has
received any written notice of a claim or demand of any person or entity
relating to, or any proceedings which are pending or threatened which challenge,
the rights of the Company or any Subsidiary in respect of any material
Intellectual Property Rights, and (C) to the knowledge of the Company, neither
the Company nor any Subsidiary has infringed upon or misappropriated any
material intellectual property rights of a third party. The Company and its
Subsidiaries have taken all necessary action to maintain and protect the
registered or patented intellectual Property Rights or applications therefor,
except to the extent that failure to maintain and protect the same would not
have a Material Adverse Effect.
(o) Taxation Matters.
(i) Each of Company and its Subsidiaries has (A) filed, or timely
applied for extensions of time in which to file, all required material Tax
Returns and all such Tax Returns are true and correct in all material
respects, (B) paid all material Taxes which it owes or which it is
obligated to withhold from
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amounts owing to any employee, creditor or third party, except with respect
to matters contested in good faith and for which adequate reserves have
been provided, and (C) not waived any statute of limitation with respect to
Taxes or agreed to any extension of time with respect to a tax assessment
or deficiency;
(ii) There are no pending (or, to the knowledge of the officers
and directors of the Company, threatened) audits, examinations,
investigations or other proceedings in respect of Taxes or Tax matters;
(iii) Neither the Company nor any Subsidiary has made any
payments, is not obligated to make any payments, nor is a party to any
agreement that under certain circumstances could obligate it to make any
payments that will not be deductible under Section 280G of the Code;
(iv) No claim has ever been made in writing to the Company by a
taxing authority in a jurisdiction where the Company or any Subsidiary does
not pay Taxes or file Tax Returns that the Company or any Subsidiary is or
may be subject to Taxes assessed by such jurisdiction;
(v) Neither the Company nor any Subsidiary is a party to any Tax
allocation or sharing agreement; and
(vi) Neither the Company nor any Subsidiary (A) has been a member
of an affiliated group filing a consolidated federal income Tax Return
other than an affiliated group of which the Company is the common parent or
(B) has any liability for the Taxes of any person, corporation, association
or business entity (other than the Company or any Subsidiary) under Treas.
Reg. ss.1.1502-6 (or any similar provision of state, local, or foreign
law), as a transferee or successor, by contract, or otherwise.
(p) ERISA Matters.
(i) Section 3.1(p) of the Disclosure Schedule sets forth all of
the Company's and its Subsidiaries' material bonus, deferred or incentive
compensation, profit sharing, retirement, vacation, sick leave,
hospitalization or severance plans, and all "employee pension benefit
plans" (as defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) or "employee welfare benefit
plans" (as defined in Section 3(1) of ERISA) (the "Plans"). None of the
Plans are subject to Title IV of ERISA nor provide for medical or life
insurance benefits to retired or former employees of the Company (other
than as required under Code Section 4980B, or similar state law). The
Company is not a participating or contributing employer in any
"multiemployer plan" (as defined in Section 3(37) of ERISA) with respect to
employees of the Company or its Subsidiaries nor has the Company or its
Subsidiaries incurred any withdrawal liability with respect to any
multiemployer
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plan or any liability in connection with the termination or reorganization
of any multiemployer plan;
(ii) Each Plan is in all material respects in compliance, and has
been administered in all material respects in accordance, with the
applicable provisions of ERISA and the Code and all other applicable laws,
rules and regulations, including, but not limited to, medical continuation
under Code Section 4980B. Neither the Company nor any Subsidiary has
engaged in any non-exempt transaction prohibited by ERISA or the Code;
(iii) All contributions, premiums or payments which are due on or
before the Closing Date have been paid or properly accrued;
(iv) Each Plan which is intended to be qualified under Section
401(a) of the Code has received a determination from the Internal Revenue
Service that such Plan is so qualified, and nothing has occurred since the
date of such determination that would result in the loss of such
qualification;
(v) Neither the Company nor any Subsidiary has incurred and has
any reason to expect that it will incur, any liability to the Pension
Benefit Guaranty Corporation ("PBGC") (other than PBGC premium payments) or
otherwise under Title IV of ERISA (including any withdrawal liability) or
under the Code with respect to any "employee pension benefit plan" (as
defined in Section 3(2) of ERISA) that the Company or any ERISA Affiliate
maintains or ever has maintained or to which any of them contributes, ever
has contributed, or ever has been required to contribute.
(q) Insurance. Section 3.1(q) of the Disclosure Schedule sets forth a
description of each material insurance policy (including policies providing
property, casualty, liability, and workers' compensation coverage and bond and
surety arrangements) with respect to which any of the Company and its
Subsidiaries is a party, a named insured, or otherwise the beneficiary of
coverage. With respect to each such insurance policy: (i) to the knowledge of
the Company, the policy is in full force and effect in all material respects;
(ii) all premiums have been paid, to the extent currently due and payable, and
(iii) the Company has not received any notice of termination and the
consummation of the transactions contemplated by this Agreement and the
Recapitalization will not cause any termination, modification, or acceleration,
under such policy. Section 3.1(q) of the Disclosure Schedule describes any
material self-insurance arrangements affecting any of the Company and its
Subsidiaries.
(r) Employees. Neither the Company nor any of its Subsidiaries is a
party to or bound by any collective bargaining agreement, nor has the Company or
any of its Subsidiaries experienced any strike or material grievance, claim of
unfair labor practices, or other collective bargaining dispute within the past
three years. Neither the Company nor any of its Subsidiaries has committed any
material unfair labor practice. The Company has no knowledge of any
organizational effort presently being made or threatened by or on behalf of any
labor union with
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respect to employees of the Company or any of its Subsidiaries. Section 3.1(r)
of the Disclosure Schedule sets forth a list of all employees of the Company or
any of its Subsidiaries that receive an annual salary in excess of $50,000.
Within the past six months, neither the Company nor any of its Subsidiaries has
implemented any plant closing or mass layoff of employees that could implicate
the Worker Adjustment Retraining and Notification Act of 1988, as amended, or
any similar state or local law or regulation, and no such layoffs will be
implemented before Closing without advance notification to the Acquiring
Investors.
(s) Certain Business Relationships With the Company and Its
Subsidiaries. None of the Stockholders and their Affiliates has been involved in
any material business arrangement or relationship with any of the Company and
its Subsidiaries within the past 12 months, and none of the Stockholders and
their Affiliates owns any material asset, tangible or intangible, which is used
in the business of the Company or any of its Subsidiaries.
(t) Records. The minute books of the Company are complete and correct
in all material respects and the books of account of the Company are sufficient
to prepare the Financial Statements.
(u) Company Transaction Expenses. The Company Transaction Expenses
shall not exceed $1,500,000.
(v) Brokers' Fees. The Company has no liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Acquiring Investors,
Anvil VT, any Subsidiary or the Stockholders could become liable or obligated.
3.2. Representations and Warranties of CVC. CVC (in its capacity as an
Acquiring Investor only) represents and warrants to the Company and the
Stockholders that the statements contained in this Section 3.2 are correct and
complete as of the date of this Agreement, except as disclosed in the Disclosure
Schedule.
(a) Organization. CVC is a corporation validly existing and in good
standing under the laws of the jurisdiction of its incorporation.
(b) Authority. CVC has all requisite power and authority to enter into
this Agreement and to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all necessary
action on the part of CVC. This Agreement has been duly executed and delivered
by CVC and constitutes a valid and binding obligation of CVC, enforceable
against CVC in accordance with its terms.
(c) No Conflicts. The execution and delivery of this Agreement do not,
and the consummation by CVC of the transactions contemplated hereby in
accordance with the terms of this Agreement will not, result in any violation of
or default under (with or without notice or lapse of time, or both), or give
rise to a right of termination, cancellation or acceleration of any
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obligation under, (i) any provision of the certificate of incorporation or
bylaws of CVC or (ii) any material agreement, indenture, instrument, order,
judgment or decree applicable to CVC or its properties or assets. No consent,
approval, order or authorization of, or registration, declaration or filing
with, any Governmental Entity is required by or with respect to CVC in
connection with the execution and delivery of this Agreement or the consummation
by CVC of the transactions contemplated hereby.
(d) Brokers' Fees. CVC has no liability or obligation to pay any fees
or commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement for which the Company, Anvil VT, any Subsidiary
or the Stockholders could become liable or obligated.
3.3. Representations and Warranties of BRS. BRS represents and warrants to
the Company and the Stockholders that the statements contained in this Section
3.3 are correct and complete as of the date of this Agreement, except as
disclosed in the Disclosure Schedule.
(a) Organization. BRS is a limited partnership validly existing and in
good standing under the laws of the jurisdiction of its formation.
(b) Authority. BRS has all requisite power and authority to enter into
this Agreement and to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all necessary
action on the part of BRS. This Agreement has been duly executed and delivered
by BRS and constitutes a valid and binding obligation of BRS, enforceable
against BRS in accordance with its terms.
(c) No Conflicts. The execution and delivery of this Agreement do not,
and the consummation by BRS of the transactions contemplated hereby in
accordance with the terms of this Agreement will not, result in any violation of
or default under (with or without notice or lapse of time, or both), or give
rise to a right of termination, cancellation or acceleration of any obligation
under, (i) any provision of the certificate of limited partnership or limited
partnership agreement of BRS or (ii) any material agreement, indenture,
instrument, order, judgment or decree applicable to BRS or its properties or
assets. No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required by or with
respect to BRS in connection with the execution and delivery of this Agreement
or the consummation by BRS of the transactions contemplated hereby.
(d) Brokers' Fees. BRS has no liability or obligation to pay any fees
or commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement for which the Company, Anvil VT, any Subsidiary
or the Stockholders could become liable or obligated.
3.4. Representations and Warranties of the Stockholders. Each of the
Stockholders represents and warrants to the Company and the Acquiring Investors
that the statements
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contained in this Section 3.4 are correct and complete as of the date of this
Agreement, except as disclosed in the Disclosure Schedule.
(a) Organization of Certain Stockholders. If such Stockholders is a
corporation it is duly organized, validly existing, and in good standing under
the laws of the jurisdiction of its incorporation and if such Stockholder is a
limited partnership it is duly organized, validly existing, and in good standing
under the jurisdiction of its formation.
(b) Authority. Such Stockholder has full power and authority
(including, if such Stockholder is a corporation, full corporate power and
authority) to execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement constitutes the valid and legally binding obligation
of such Stockholder, enforceable in accordance with its terms and conditions.
Such Stockholder is not required to give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any Governmental Entities in
order to consummate the transactions contemplated by this Agreement.
(c) No Conflicts. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby and by
the Recapitalization, will (i) violate any constitution, statute, regulation,
rule, injunction, judgment, order, decree, ruling, charge, or other restriction
of any Governmental Entities, or court to which such Stockholders is subject,
(ii) if such Stockholder is a corporation, violate any provision of its
certificate of incorporation or bylaws, (iii) if such Stockholder is a limited
partnership, violate any provision of its certificate of limited partnership or
limited partnership agreement, or (iv) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any material agreement, contract, lease, license, instrument, or other
arrangement to which such Stockholders is a party or by which he or it is bound
or to which any of his or its assets is subject. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity is required by or with respect to such Stockholder in connection with the
execution and delivery of this Agreement or the consummation by such Stockholder
of the transactions contemplated hereby.
(d) Company Shares. Such Stockholder holds of record or owns
beneficially, and as of the Closing Date shall hold of record or own
beneficially, the number of Shares set forth next to such Stockholders name in
Section 3.4(d) of the Disclosure Schedule, free and clear of any restrictions on
transfer (other than restrictions under the Securities Act and state securities
laws), taxes, Encumbrances, options, warrants, purchase rights, contracts,
commitments, equities, claims, and demands. Such Stockholder is not a party to
any option, warrant, purchase right, or other contract or commitment that could
require such Stockholder to sell, transfer, or otherwise dispose of any capital
stock of the Company (other than this Agreement). Such Stockholder is not a
party to any voting trust, proxy, or other agreement or understanding with
respect to the voting of any capital stock of the Company, except for this
Agreement.
(e) Brokers' Fees. Such Stockholders has no liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated
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by this Agreement for which the Company, the Acquiring Investors, Anvil VT, any
Subsidiary or any other Stockholder could become liable or obligated.
3.5. Representations and Warranties of Anvil VT. Anvil VT represents and
warrants to the Company, the Acquiring Investors and the Stockholders that the
statements contained in this Section 3.5 are correct and complete as of the date
of this Agreement, except as disclosed in the Disclosure Schedule.
(a) Organization of Anvil VT. Anvil VT is a corporation, duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation.
(b) Authority. Anvil VT has all requisite corporate power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement constitutes the valid and legally binding obligation
of Anvil VT, enforceable in accordance with its terms and conditions. Anvil VT
is not required to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any Governmental Entities in order to
consummate the transactions contemplated by this Agreement.
(c) No Conflicts. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby and by
the Recapitalization, will (i) violate any constitution, statute, regulation,
rule, injunction, judgment, order, decree, ruling, charge, or other restriction
of any Governmental Entities, or court to which such Stockholders is subject,
(ii) violate any provision of its certificate of incorporation or bylaws, or
(iii) conflict with, result in a breach of, constitute a default under, result
in the acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any material agreement, contract,
lease, license, instrument, or other arrangement to which Anvil VT is a party or
by which he or it is bound or to which any of its assets is subject. No consent,
approval, order or authorization of, or registration, declaration or filing
with, any Governmental Entity is required by or with respect to Anvil VT in
connection with the execution and delivery of this Agreement or the consummation
by Anvil VT of the transactions contemplated hereby.
(d) Brokers' Fees. Anvil VT has no liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Company, the Acquiring
Investors, any Subsidiary or the Stockholders could become liable or obligated.
3.6. Representations and Warranties of the Management Stockholders. Each of
the Management Stockholders represents and warrants to the Company and the
Acquiring Investors that the statements contained in this Section 3.6 are
correct and complete as of the date of this Agreement, except as disclosed in
the Disclosure Schedule.
(a) Such Management Stockholder holds of record or owns beneficially,
and as of the Closing Date shall hold of record or own beneficially, the
number of Options set forth next to such Management Stockholders name in
Section 3.6(a) of the Disclosure Schedule, free and clear of any
restrictions on
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transfer (other than restrictions under the Securities Act and state
securities laws), taxes, Encumbrances, options, warrants, purchase rights,
contracts, commitments, equities, claims, and demands.
(b) Such Management Stockholder has not assigned to any third party
and as of the Closing Date will not have assigned to any third party, such
Management Stockholder's right to receive the Phantom Payment.
(c) Such Management Stockholder has no right to acquire the capital
stock of the Company other than pursuant to the exercise of the Options and
no right to receive payment from the Company in connection with or as a
result of the consummation of the transactions contemplated by this
Agreement other than the Phantom Payment and the Management Bonus.
ARTICLE IV
COVENANTS OF THE PARTIES
The Parties agree as follows with respect to the period from and after
the execution of this Agreement.
4.1. Mutual Covenants.
(a) General. Each of the Parties will use its commercially reasonable
best efforts to take all action and to do all things necessary, proper or
advisable to consummate and make effective the transactions contemplated by this
Agreement (including satisfying the conditions precedent to the Refinancing
Transactions and obtaining the Required Consents).
(b) Governmental Matters. Each of the Parties will use its
commercially reasonable best efforts to take any additional action that may be
necessary, proper or advisable in connection with any other notices to, filings
with, and authorizations, consents and approvals of Governmental Entities that
it may be required to give, make or obtain (including all Required Government
Consents).
(c) Options. Notwithstanding any performance or other vesting criteria
set forth in the Employment Agreements, each of the Parties agrees that
immediately prior to the Closing all Options shall be fully vested and
exercisable.
4.2. Covenants of the Acquiring Investors.
(a) Indemnification. The Acquiring Investors will cause the Company to
maintain for a period of seven years after the date of this Agreement all
exculpatory, indemnification and expense reimbursement and advance provisions
now existing in the
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certificate of incorporation or bylaws of the Company for the benefit of any
individual who served as a director or officer of the Company at any time prior
to the Closing Date.
(b) Insurance. The Acquiring Investors shall cause the Company to
obtain and maintain officers' and directors' liability insurance substantially
similar to that currently maintained by the Company, if available, for a period
of not less than seven years after the Closing Date; provided that the Company
may substitute therefor policies of insurers with at least equal rating with at
least the same coverage containing terms and conditions which are no less
advantageous to the beneficiaries thereof and that the premiums for such
coverage shall not exceed 250% of the premiums paid during the first full fiscal
year after the Closing Date.
4.3. Covenants of the Company.
(a) Full Access. From and after the date of this Agreement until the
consummation of the transactions contemplated hereunder (or the termination of
this Agreement), the Company will, and will cause the Subsidiaries to, permit
representatives of the Acquiring Investors and its financing sources to have
full access at all reasonable times, and in a manner so as not to interfere with
the normal business operations of the Company, to all premises, personnel,
properties, customers, suppliers, books, records, contracts, tax records and
documents of or pertaining to the Company and its Subsidiaries, including all
information necessary to satisfy closing conditions for obtaining the financing
for the transactions contemplated hereby. The Acquiring Investors will treat and
hold as confidential any Confidential Information it receives from the Company
and its Subsidiaries in the course of the review contemplated by this Section
4.3(a), will not, prior to the consummation of the transactions contemplated
hereby, use any of the Confidential Information except in connection with this
Agreement and, if this Agreement is terminated for any reason whatsoever, agrees
to return to the Company all tangible embodiments (and all copies) thereof which
are in its possession; provided, however, that this sentence shall not apply to
any information (i) which, at the time of disclosure, is available publicly, or
(ii) which, after disclosure, becomes available publicly through no fault of the
Acquiring Investors.
(b) Operation of the Company's Business. During the period from the
date of this Agreement to the time of consummation of the transactions
contemplated by this Agreement, except as contemplated hereby, the Company
shall, and will cause its Subsidiaries to, conduct its operations in the
Ordinary Course of Business and shall use commercially reasonable best efforts
to:
(i) keep in full force and effect its corporate existence and all
material rights, franchises, Intellectual Property Rights, and goodwill
relating to its business;
(ii) cause each of the Company and its Subsidiaries to be duly
qualified and in good standing as a foreign corporation in each
jurisdiction in which the nature of its business or the ownership of its
property makes such qualification necessary, except where the failure to be
so qualified does not have a Material Adverse Effect;
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(iii) preserve its present material relationships with customers,
suppliers, contractors, and distributors;
(iv) maintain the Intellectual Property Rights so as not to affect
adversely any registration or application for registration thereof or the
validity or enforcement thereof, maintain its other assets in customary
repair, order and condition and maintain insurance reasonably comparable to
that in effect on the date of this Agreement, in each case, in a manner
consistent with past practice;
(v) perform in all material respects all of its obligations under
all Contracts to which the Company or any Subsidiary is a party or by which
any of them, or any of their respective properties or assets, may be bound
and not enter into, assume or amend any such contract or commitment other
than in the Ordinary Course of Business;
(vi) prepare and file all Tax Returns and other Tax reports,
filings and amendments thereto required to be filed by it, on a timely
basis; and
(vii) to retain the services of its officers and key employees.
Without limiting the generality of the foregoing, during the period from the
date of this Agreement to the consummation of the transactions contemplated by
this Agreement, the Company shall not, except as expressly provided herein or in
the Disclosure Schedules, without the prior written consent of the Acquiring
Investors:
(i) (A) adjust, split, combine or reclassify its capital stock,
(B) make, declare or pay any dividend or distribution on, or directly or
indirectly redeem, purchase or otherwise acquire, any shares of its capital
stock or any securities or obligations convertible into or exchangeable for
any shares of its capital stock, (C) grant any person any right to acquire
any shares of its capital stock, or (D) issue, deliver or sell or agree to
issue, deliver or sell any additional shares of its capital stock or any
securities or obligations convertible into or exchangeable or exercisable
for any shares of its capital stock or such securities (except pursuant to
the exercise of any outstanding Options or the conversion of any
outstanding Shares);
(ii) sell, transfer, pledge, mortgage, encumber or otherwise
dispose of any of its property or assets other than any such disposition
made in the Ordinary Course of Business;
(iii) make or propose any changes in its certificate of
incorporation or bylaws;
(iv) merge or consolidate with any other person or acquire, other
than in the Ordinary Course of Business, in excess of $200,000 of the
assets of any other person; and
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(v) incur, create, assume or otherwise become liable for any
indebtedness in an amount in excess of $200,000, other than in the Ordinary
Course of Business.
(vi) change any of its material accounting policies or cash
management practices;
(vii) incur, create, or suffer to exist any Encumbrance on (A) the
shares of capital stock of its Subsidiaries, or (B) any assets of the
Company and the Subsidiaries (other than Permitted Encumbrances); or
(viii) enter into, or become party to, any agreement, arrangement,
or transaction with any of its Affiliates or any of their respective
directors, officers, employees (other than in the Ordinary Course of
Business), shareholders or relatives, including, without limitation, any
(A) loan or advance of funds, or make any other payments, to any of its
directors, officers, employees, shareholders, or Affiliates, except for the
Management Loans, or (B) creation of any intercompany account.
(c) Transaction Expenses. The Company shall cause each of the persons
entitled to payments which constitute Company Transaction Expenses and other
amounts payable under Section 2.1(d)(v)(C) to provide a final bill for such fees
and expenses prior to the Closing Date.
(d) No Negotiations, etc. The Stockholders will not, and the Company
will not, and the Company will cause its directors, officers, employees, agents,
Subsidiaries, Stockholders and their Affiliates not to, directly or indirectly,
make, solicit, initiate, negotiate, discuss, or encourage the submission of
inquiries, proposals, or offers from any person (including any of its officers
or employees) relating to any merger, consolidation or other business
combination involving the Company or any of its Subsidiaries, any sale of all or
any substantial portion of the assets of the Company or any of its Subsidiaries,
or the sale of any material equity interest in the Company or any of its
Subsidiaries (any of the foregoing, a "Competing Transaction") or enter into any
agreement requiring it to abandon or terminate the transactions contemplated
hereby. The Company and Stockholders will not, directly or indirectly,
participate in any negotiations regarding, or furnish to any other person any
information with respect to, or otherwise cooperate in any way with, or assist
or participate in, facilitate or encourage, any effort or attempt by any other
person to effect any Competing Transaction, and the Company and Stockholders
shall immediately cease and cause to be terminated all such contacts or
negotiations with third parties. The Company and the Stockholders will notify
the Acquiring Investors of any proposals or inquiries received with respect to
any Competing Transactions. Neither the Company or any of its Subsidiaries nor
any of the Stockholders is bound by any agreement with respect to any Competing
Transactions other than this Agreement.
4.4. Covenants of the Stockholders.
- 27 -
<PAGE>
(a) Obligations of the Stockholders. Each Stockholder agrees that it
shall be bound by all actions, waivers and agreements related to the
transactions contemplated by this Agreement that are consented to by the
Stockholders (in its capacity as a Stockholder and not as an Acquiring Investor)
holding or beneficially owning a Majority-in-Interest; provided that no
Stockholder shall be bound by any action, waiver or agreement that results in
any share of Preferred Stock being treated differently from any other share of
Preferred Stock or any share of Common Stock being treated differently from any
other share of Common Stock, except as contemplated hereunder.
ARTICLE V
CONDITIONS PRECEDENT TO
OBLIGATIONS OF THE PARTIES
5.1. Conditions Precedent to the Acquiring Investors' Obligations. The
obligations of the Acquiring Investors to consummate the transactions
contemplated hereby (including without limitation, the obligations of CVC (or
its Affiliates) to retain its Retained Shares) are subject to satisfaction (or
written waiver) at or prior to the Closing of the following conditions:
(a) The Company and the Stockholders shall have performed and
complied in all material respects with the agreements and covenants
contained herein to be performed by them on or prior to the Closing Date.
(b) The representations and warranties (without giving effect to
any materiality qualification therein) of the Company and the Stockholders
contained herein shall be true and correct as of the date of this Agreement
and the Closing Date; provided that this condition shall be deemed
satisfied unless such failures to be true and correct, individually or in
the aggregate, are likely to result in a Material Adverse Effect.
(c) The Acquiring Investors shall have received a certificate of
the Company, dated as of the Closing Date and signed by the President and
any Vice President of the Company, certifying the fulfillment by the
Company of the conditions set forth in this Section 5.1 (the "Company's
Certificate"), together with good standing certificates and certified
copies of stockholders' and board of directors' resolutions.
(d) No order, decree or injunction of any court or government
authority shall be in effect which prohibits the consummation of the
transactions contemplated hereby.
(e) The Company shall have received all material consents,
authorizations and approvals from non-governmental third parties, in form
reasonably acceptable to the Acquiring Investors, which are necessary in
order to enable (i) the Acquiring Investors to consummate the transactions
contemplated hereby and (ii) the Company and its Subsidiaries to conduct
their businesses after the Closing Date on the same basis as conducted
prior to the date hereof (except with respect to clauses (i) and (ii)
- 28 -
<PAGE>
for consents necessary to permit outstanding indebtedness to remain
outstanding after the Closing Date) (the "Required Consents").
(f) All consents, approvals, authorizations, exemptions and
waivers from Governmental Entities that shall be required in order to (i)
enable the Acquiring Investors to consummate the transactions contemplated
hereby (except for such consents, approvals, authorizations, exemptions and
waivers, the absence of which would not prohibit consummation of such
transactions or render such consummation illegal) and (ii) enable the
Company and its Subsidiaries to conduct their businesses after the Closing
Date on the same basis as conducted prior to the date hereof shall have
been obtained (the "Required Government Consents").
(g) To the extent requested by the Acquiring Investors, the
Company shall have obtained "payoff" letters or similar customary documents
or comparable arrangements, in a form reasonably satisfactory to the
Acquiring Investors, from the lenders releasing the Company from all
liability for obligations then due and payable under the Credit Agreement
and the Seller Notes as of the Closing Date, together with releases
(including UCC-3 termination statements), in appropriate forms, of all
security interests in assets of the Company and its Subsidiaries securing
such obligations, in each case to become effective upon full payment of all
amounts then due and payable under the Credit Agreement, the Seller Notes
and related documents.
(h) since the Most Recent Financial Statements, there shall have
been no facts or circumstances which constitute a Material Adverse Effect;
(i) the Refinancing Transactions shall have been consummated and
the cash proceeds from the Refinancing Transactions together with the
capital contributions to be made pursuant to Section 2.1 above shall be
sufficient to allow the Company to consummate the Closing Transactions, pay
related fees and expenses, and to fund the working capital requirements of
the Company and its Subsidiaries after the Closing on terms reasonably
satisfactory to the Acquiring Investors;
(j) the Acquiring Investors shall have received the resignations,
effective as of the Closing, of each director of the Company and its
Subsidiaries unless notified otherwise by the Acquiring Investors;
(k) the Acquiring Investors shall have received evidence
reasonably satisfactory to them that all arrangements and obligations among
the Stockholders (and their Affiliates) regarding the Common Stock and the
Preferred Stock, including without limitation the Voting Trust Agreement,
the Securityholders Agreement the Options and the Phantom Payment, shall be
terminated as of the Closing;
(l) an amended and restated certificate of incorporation of the
Company authorizing the New Common Stock and the Units described in the
Units Offering Memorandum shall have been filed as of the Closing;
- 29 -
<PAGE>
(m) the Management Stockholders shall have executed releases with
respect to the Options and the Phantom Payment reasonably satisfactory to
the Acquiring Investors;
(n) the Management Loans shall have been repaid in accordance with
their terms as of the Closing;
(o) the Company shall have received all certificates for all
issued and outstanding Shares held by the Stockholders, duly endorsed in
blank, with stock powers duly executed in blank, in proper form for
transfer, in accordance with Section 2.1 above;
5.2. Conditions Precedent to the Company's Obligations. The obligations of
Company to consummate the transactions contemplated hereby are subject to
satisfaction (or written waiver) at or prior to the Closing of the following
conditions:
(a) The Acquiring Investors each shall have performed and complied in
all material respects with the agreements and covenants contained herein to
be performed by them on or prior to the Closing Date.
(b) The representations and warranties of Acquiring Investors
contained herein shall be true and correct in all material respects as of
the date of this Agreement; provided that this condition shall be deemed
satisfied unless such failures to be true and correct, individually or in
the aggregate, result in a Material Adverse Effect.
(c) The Company shall have received certificates from the Acquiring
Investors, dated as of the Closing Date and signed by two officers from
each of the Acquiring Investors, certifying the fulfillment by the
Acquiring Investors of the conditions set forth in this Section 5.2 (the
"Acquiring Investors' Certificate").
(d) No order, decree or injunction of any court or government
authority shall be in effect which prohibits the consummation of the
transactions contemplated hereby.
5.3. Conditions Precedent to the Stockholders' Obligations. The obligations
of the Stockholders to consummate the transactions contemplated hereby are
subject to satisfaction (or written waiver) at or prior to the Closing of the
following conditions:
(a) The Acquiring Investors each shall have performed and complied in
all material respects with the agreements and covenants contained herein to
be performed by them on or prior to the Closing Date.
(b) The Company shall have proffered to the Stockholders the
Recapitalization Consideration pursuant to the terms of Section 2.1 above.
(c) The representations and warranties of Acquiring Investors
contained herein shall be true and correct in all material respects as of
the date of this Agreement;
- 30 -
<PAGE>
provided that this condition shall be deemed satisfied unless such failures
to be true and correct, individually or in the aggregate, result in a
Material Adverse Effect.
(d) The Company shall have received certificates from the Acquiring
Investors and the Company, dated as of the Closing Date and signed by two
officers from each of the Acquiring Investors and the Company, certifying
the fulfillment by such Parties of the conditions set forth in this Section
5.3 (the "Compliance Certificates").
ARTICLE VI
TERMINATION
6.1. Termination of Agreement. This Agreement may be terminated at any time
prior to the Closing:
(a) By the mutual written consent of the Acquiring Investors and the
Company; or
(b) By either the Company or the Acquiring Investors in writing,
without liability to the terminating Party on account of such termination
(except as otherwise provided in Section 6.2), if the Closing shall not
have occurred on or before March 31, 1997; provided that the right to
terminate this Agreement under this Section 6.1(b) shall not be available
to the party whose action or failure to act has been the cause of or
resulted in the failure of the consummation of the transactions
contemplated by this Agreement on or before such date if such action or
failure to act constitutes a breach of this Agreement; or
(c) By either the Company or the Acquiring Investors if any permanent
injunction or other order of a Governmental Entity preventing the
consummation of the transactions contemplated by this Agreement shall have
become final and non-appealable.
(d) By the Acquiring Investors by written notice to the Company on
or before February 20, 1997, in the event that the Acquiring Investors are (i)
not reasonably satisfied with the results of the accounting due diligence review
conducted by Price Waterhouse, L.L.P. or (ii) not able to agree with the
Management Stockholders on the terms of employment agreements and
securityholders agreements on terms reasonably satisfactory to the Acquiring
Investors.
6.2. Effect of Termination. Termination of this Agreement pursuant to this
Article VI shall terminate all obligations of the Parties hereunder, except for
the obligations under Sections 6.2, 7.3, 7.9 and 7.12 and the Confidentiality
Agreement; provided, however, that nothing in this Section 6.2 shall relieve or
limit the liability or obligations hereunder of any Party (the "Defaulting
Party") to the other Party or Parties on account of a breach of a covenant or
agreement contained herein, or any willful misrepresentation or willful breach
of warranty
- 31 -
<PAGE>
contained herein by the Defaulting Party. In the case of such a willful and
intentional breach or fraud, in addition to any damages for which the Defaulting
Party may be liable, the Defaulting Party shall reimburse the other Party or
Parties for any expenses incurred by such Party or Parties in order to enforce
its or their rights under this Agreement (including reasonable attorney's fees
and expenses).
ARTICLE VII
MISCELLANEOUS
7.1. Survival. None of the representations and warranties in this Agreement
or any certificate delivered pursuant to this Agreement shall survive the
Closing Date.
7.2. Interpretive Provisions. Whenever used in this Agreement, "to the
Company's knowledge" or "to the knowledge of the Company" shall mean the actual
knowledge of those persons who are listed on Schedule 7.2(a) and "to Acquiring
Investors' knowledge" or "to the knowledge of Acquiring Investors" shall mean
the actual knowledge of the persons listed on Schedule 7.2(b). The inclusion of
any information on the Disclosure Schedule shall not be deemed to be an
admission or acknowledgment by the Company, in and of itself, that such
information is required to be listed on the Disclosure Schedules or is material
to or outside the ordinary course of the business of the Company and its
Subsidiaries.
7.3. Press Releases and Announcements. Prior to Closing, no Party shall
issue any press release or announcement relating to the subject matter of this
Agreement without the prior written approval of the other Parties; provided,
however, that any Party may make any public disclosure required by law or
regulation (in which case the disclosing Party will advise the other Parties
prior to making the disclosure). At Closing, Vestar and the Acquiring Investors
may each issue a press release or announcement relating to the subject matter of
this Agreement; provided that Vestar and the Acquiring Investors give each give
the other the opportunity to review and approve (which approval shall not be
unreasonably withheld) any such press release or announcement prior to its
release or distribution.
7.4. Entire Agreement. This Agreement (including the Disclosure Schedule
and all Exhibits hereto), the Confidentiality Agreement and the Condition Letter
constitute the sole understanding of the Parties with respect to the subject
matter hereof. Matters the nature of which are obvious on their face that are
disclosed in the Disclosure Schedule pursuant to any Section of this Agreement
shall be deemed to be disclosed with respect to all other relevant Sections of
this Agreement.
7.5. Succession and Assignment. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective successors and
assigns of the Parties hereto; provided, however, that this Agreement may not be
assigned by any Party without the prior written consent of the other Parties and
any such attempted assignments shall be null and
- 32 -
<PAGE>
void, except that the Acquiring Investors may assign this Agreement to any
of their affiliates, but no such assignment shall release the Acquiring
Investors from any liability hereunder.
7.6. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
7.7. Headings. The headings of the Articles, Sections and paragraphs of
this Agreement are inserted for convenience only and shall not be deemed to
constitute part of this Agreement or to affect the construction hereof.
7.8. Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to the Company: with a copy to:
Anvil Holdings, Inc. Kirkland & Ellis
c/o Vestar Capital Partners 655 Fifteenth Street, N.W.
245 Park Avenue, 41st Floor Suite 1200
New York, NY 10167 Washington, DC 20005-5793
Attn: Prakash A. Melwani Attn: Jack M. Feder
Fax: 212-808-4922 Fax: 202-879-5200
Anvil Knitwear, Inc.
228 East 45th Street
New York, New York 10017
Attn: Bernard Geller
Fax: (212) 476-0333
If to the Acquiring Investors: with a copy to:
Citicorp Venture Capital Kirkland & Ellis
399 Park Avenue, 14th Floor 153 East 53rd Street
New York, NY 10043 New York, NY 10022-4675
Attn: David F. Thomas Attn: Kirk A. Radke
Fax: 212-858-2940 Fax: 212-446-4900
and
Bruckmann, Rosser, Sherrill & Co., Inc.
126 East 56th Street
New York, NY 10022
- 33 -
<PAGE>
Attn: Bruce C. Bruckmann
Fax: 212-521-3799
Any Party may give any notice, request, demand, claim, or other communication
hereunder using any other means (including personal delivery, expedited courier,
messenger service, telecopy, telex, ordinary mail, or electronic mail), but no
such notice, request, demand, claim, or other communication shall be deemed to
have been duly given unless and until it actually is received by the individual
for whom it is intended. Any Party may change the address to which notices,
requests, demands, claims, and other communications hereunder are to be
delivered by giving the other Parties notice in the manner herein set forth.
7.9. Governing Law. This Agreement shall be construed in accordance with
and governed by the laws of the State of New York applicable to agreements made
and to be performed wholly within such jurisdiction. Each of the Parties hereto
hereby irrevocably and unconditionally consents to submit to the exclusive
jurisdiction of the courts of the State of New York and of the United States of
America, in each ease located in County of New York, for any litigation arising
out of or relating to this Agreement and the transactions contemplated hereby
(and agrees not to commence any litigation relating thereto except in such
courts), and further agrees that: service of any process, summons, notice or
document by U.S. registered mail to its respective address set forth in Section
7.8 shall be effective service of process for any litigation brought against it
in any such court. Each of the Parties hereto hereby irrevocably and
unconditionally waives any objection to the laying of venue of any litigation
arising out of this Agreement or the transactions contemplated hereby in the
courts of the State of New York or the United States of America, in each case
located in County of New York, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such litigation brought in any such court has been brought in an
inconvenient forum.
7.10. Amendments and Waivers. No amendment, modification or alteration of
the terms or provisions of this Agreement shall be binding unless the same shall
be in writing and duly executed by the Company, the Acquiring Investors, and the
Stockholders holding or beneficially owning a Majority-in-Interest, except that
any of the terms or provisions of this Agreement may be waived in writing at any
time by the Party which is entitled to the benefits of such waived terms or
provisions. No waiver of any of the provisions of this Agreement shall be deemed
to or shall constitute a waiver of any other provision hereof (whether or not
similar). No delay on the part of any Party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof.
7.11. Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision
- 34 -
<PAGE>
that is valid and enforceable and that comes closest to expressing the intention
of the invalid or unenforceable term or provision, and this Agreement shall be
enforceable as so modified after the expiration of the time within which the
judgment may be appealed.
7.12. Expenses. The Acquiring Investors shall each pay their own costs and
expenses (including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby and the Company shall pay the
Company Transaction Expenses and all costs and expenses (including legal fees
and expenses) incurred in connection with the Recapitalization; provided,
however, that in the event that this Agreement is terminated pursuant to Section
6.1 above (the "Termination Date"), if a transaction substantially similar to
the Recapitalization or a merger, consolidation or other business combination
involving the Company or any of its Subsidiaries, any sale of all or any
substantial portion of the assets of the Company or any of its Subsidiaries, or
the sale of any material equity interest in the Company or any of its
Subsidiaries does not occur within 90 days of the Termination Date, the
Acquiring Investors shall pay to the Company an amount equal to one- half of all
out-of-pocket third party expenses incurred by the Company in connection with
the Recapitalization provided that the aggregate amount of such out-of-pocket
expenses for purposes of this Section 7.12 shall not exceed $1,000,000. All such
expenses related to the Refinancing Transactions incurred beginning on the date
hereof through the Termination Date shall be expenses of the Acquiring
Investors.
7.13. Construction. The language used in this Agreement will be deemed to
be the language chosen by the Parties hereto to express their mutual intent, and
no rule of strict construction shall be applied against any Party. Any reference
to any federal, state, local, or foreign statute or law shall be deemed also to
refer to all rules and regulations promulgated thereunder, unless the context
otherwise requires.
7.14. Specific Performance. Each of the Parties acknowledges and agrees
that the other Parties would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the Parties agrees that
the other Parties shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in any
court of the United States or any state thereof having jurisdiction over the
Parties and the matter (subject to the provisions set forth in Section 7.9
above) in addition to any other remedy to which they may be entitled, at law or
in equity.
7.15. Other Agreements. To the extent that any action to be taken pursuant
to the terms of this Agreement violates any provision of (i) the Securityholders
Agreement, (ii) the Employment Agreements (including, without limitation,
arrangements regarding the Phantom Payment and the Options), and (iii) the
Voting Trust Agreement, such violation shall be deemed waived upon the execution
of this Agreement by the Parties hereto.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
- 35 -
<PAGE>
[SIGNATURE PAGE FOLLOWS]
-36-
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date first above written.
ANVIL HOLDINGS, INC.
By:
-------------------------------------
Name:
Title:
CITICORP VENTURE CAPITAL, LTD.
By:
-------------------------------------
Name:
Title:
BRUCKMANN, ROSSER, SHERRILL & CO.,
L.P.
By: BRS Partners, Limited Partnership,
its General Partner
By:
-------------------------------------
Name:
Title:
ANVIL VT, INC.
By:
-------------------------------------
Name:
Title:
STOCKHOLDERS:
<PAGE>
VESTAR EQUITY PARTNERS, L.P.
By: Vestar Associates, L.P.,
its general partner
By: Vestar Associates Corporation,
its general partner
By:
-------------------------------------
Name:
Title:
--------------------------------------
LEONARD LIEBERMAN
--------------------------------------
BERNARD GELLER
--------------------------------------
ANTHONY CORSANO
--------------------------------------
WILLIAM TURNER
--------------------------------------
JACOB HOLLANDER
SEELIG FAMILY LIFETIME TRUST
By:
-----------------------------------
Name:
Title:
--------------------------------------
BRUCE C. BRUCKMANN
--------------------------------------
DAVID THOMAS
<PAGE>
NATASHA PARTNERSHIP
By:
-----------------------------------
Name:
Title:
--------------------------------------
STEPHEN SHERRILL
--------------------------------------
JOSEPH SILVESTRI
--------------------------------------
JOHN WEBER
--------------------------------------
NOELLE COURNOYER DOUMAR
--------------------------------------
JAMES URRY
CCT PARTNERS II, L.P.
By:
-----------------------------------
Name:
Title:
COURT SQUARE CAPITAL LIMITED
By:
-----------------------------------
Name:
Title:
-------------------------------------
PETER H. ROTHSCHILD
<PAGE>
CULLIGAN INTERNATIONAL COMPANY
By:
----------------------------------
Name:
Title:
<PAGE>
EXHIBIT A
CAPITAL CONTRIBUTIONS/ISSUANCE OF CAPITAL STOCK
CAPITAL SHARES OF NEW
------- -------------
PARTY CONTRIBUTION COMMON STOCK
----- ------------ ------------
BRS $13,012,079.6965 1,238,717.1661
<PAGE>
EXHIBIT B
<TABLE>
<CAPTION>
STOCKHOLDER PRE-RECAPITALIZATION REDEEMED SHARES RETAINED SHARES
- ------------------------------ ------------------------------------------------------------ --------------- ---------------
Class A Class B Class C Total
------------ ------------ ----------- -------------
<S> <C> <C> <C> <C> <C>
Vestar Equity Partners, L.P. 3,564,809.00 3,564,809.00 3,564,809.0000 0.0000
Culligan International Company 460,000.00 2,600,000.00 3,060,000.00 3,060,000.0000 0.0000
Leonard Lieberman 1,782.00 1,782.00 1,782.0000 0.0000
Bernard Geller 1,050,000.00 1,050,000.00 812,006.2837 237,993.7163
Anthony Corsano 350,000.00 350,000.00 270,668.7612 79,331.2388
William Turner 350,000.00 350,000.00 270,668.7612 79,331.2388
Jacob Hollander 350,000.00 350,000.00 270,668.7612 79,331.2388
Seelig Family Lifetime Trust 3,409.00 3,409.00 3,409.0000 0.0000
Bruce Bruckmann 5,500.00 41,250.00 46,750.00 12,983.6455 33,766.3545
David Thomas 5,500.00 41,250.00 46,750.00 12,983.6455 33,766.3545
Natasha Partnership 4,490.00 33,679.00 38,169.00 10,600.4869 27,568.5131
Stephen Sherrill 3,616.00 27,123.00 30,739.00 8,536.9899 22,202.0101
Joseph Silvestri 1,206.00 9,041.00 10,247.00 2,845.8485 7,401.1515
John Weber 724.00 5,425.00 6,149.00 1,707.7313 4,441.2687
Noelle Cournoyer Doumar 482.00 3,616.00 4,098.00 1,138.1172 2,959.8828
James Urry 482.00 3,616.00 4,098.00 1,138.1172 2,959.8828
CCT Partners II, L.P. 29,700.00 222,750.00 252,450.00 70,111.6855 182,338.3145
399 Venture Partners, Inc. 168,300.00 1,262,250.00 1,430,550.00 397,299.5511 1,033,250.4489
Peter H. Rothschild 5,000.00 5,000.00 5,000.0000 0.0000
------------ ------------ ----------- ------------- -------------- --------------
Total 6,355,000.00 2,600,000.00 1,650,000.00 10,605,000.00 8,778,358.3858 1,826,641.6142
</TABLE>
<PAGE>
EXHIBIT C
FINANCIAL STATEMENTS
<PAGE>
EXHIBIT D
DIVISIONAL FINANCIAL STATEMENTS
<PAGE>
EXHIBIT E
MANAGEMENT BONUS
MANAGEMENT STOCKHOLDER BONUS AMOUNT
Bernard Geller $250,000
Anthony Corsano $83,333.33
William Turner $83,333.33
Jacob Hollander $83,333.33
<PAGE>
AMENDMENT AND CONSENT TO ASSIGNMENT
This AMENDMENT AND CONSENT TO ASSIGNMENT (this "Amendment"), is entered
into as of February 21, 1997, by and among Citicorp Venture Capital, Ltd., a New
York corporation ("CVC"), Bruckmann, Rosser, Sherrill & Co., L.P., a Delaware
limited partnership ("BRS") (collectively, the "Acquiring Investors"), the
stockholders and the voting trust certificateholders named on the signature
pages hereto (collectively, the "Stockholders"), Anvil VT, Inc., a Delaware
corporation ("Anvil VT") and Anvil Holdings, Inc., a Delaware corporation (the
"Company"). The Acquiring Investors, the Stockholders, Anvil VT and the Company
are each referred to individually as a "Party" and collectively as the
"Parties."
WHEREAS, the Parties desire to amend the Recapitalization Agreement (the
"Recapitalization Agreement"), dated as of February 12, 1997, by and among
Parties hereto.
WHEREAS, Court Square Capital Limited ("CSLP"), one of the Stockholders,
desires to assign 100% of its rights under the Recapitalization Agreement (the
"Assignment") to one of its Affiliates (as defined in the Recapitalization
Agreement), 399 Venture Partners, Inc. ("399 Ventures").
WHEREAS, pursuant to Section 7.5 of the Recapitalization Agreement, the
Assignment requires the consent of the Parties, and the Parties desire to
provide such consent.
NOW, THEREFORE, in consideration of the premises set forth above, the
parties hereto agree as follows.
1. Amendment to Article I (Definitions). The definition of "New Common
Stock" is hereby deleted and replaced, in its entirety, with the following:
"New Common Stock" means, collectively, the Class A Common Stock of the
Company, par value $.01 per share, and the Class B Common Stock of the Company,
par value $.01 per share.
2. Amendment to Exhibit A. Exhibit A (Capital Contributions / Issuance of
Common Stock) is hereby amended to replace (a) the amount "$13,012,079.6965"
with the amount "$11,730,049.03", and (b) the number of shares, "1,238,717.1661"
with "105,643.2987 shares of Class A Common Stock and 1,165,719.1586 shares of
Class B Common Stock".
3. Amendment to Exhibit B. Exhibit B is hereby deleted and replaced, in its
entirety, with the "AMENDED AND RESTATED EXHIBIT B", which is attached hereto.
4. Consent to Assignment. The Parties hereby consent to the Assignment.
* * * * * * *
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have executed this Amendment as of
the date first above written.
ANVIL HOLDINGS, INC.
By:
------------------------------------
Name:
Title:
CITICORP VENTURE CAPITAL, LTD.
By:
------------------------------------
Name:
Title:
BRUCKMANN, ROSSER, SHERRILL & CO., L.P.
By: BRS Partners, Limited Partnership,
its General Partner
By:
------------------------------------
Name:
Title:
ANVIL VT, INC.
By:
------------------------------------
Name:
Title:
<PAGE>
STOCKHOLDERS:
VESTAR EQUITY PARTNERS, L.P.
By:
------------------------------------
Title: General Partner
By:
---------------------------------
Name:
Title:
---------------------------------------
LEONARD LIEBERMAN
---------------------------------------
BERNARD GELLER
---------------------------------------
ANTHONY CORSANO
---------------------------------------
WILLIAM TURNER
---------------------------------------
JACOB HOLLANDER
SEELIG FAMILY LIFETIME TRUST
By:
------------------------------------
Name:
Title:
<PAGE>
---------------------------------------
BRUCE C. BRUCKMANN
---------------------------------------
DAVID THOMAS
NATASHA PARTNERSHIP
By:
------------------------------------
Name:
Title:
---------------------------------------
STEPHEN SHERRILL
---------------------------------------
JOSEPH SILVESTRI
---------------------------------------
JOHN WEBER
---------------------------------------
NOELLE COURNOYER DOUMAR
---------------------------------------
JAMES URRY
CCT PARTNERS II, L.P.
By:
------------------------------------
Title: General Partner
<PAGE>
By:
------------------------------------
Name:
Title:
COURT SQUARE CAPITAL LIMITED
By:
------------------------------------
Name:
Title:
---------------------------------------
PETER H. ROTHSCHILD
CULLIGAN INTERNATIONAL COMPANY
By:
------------------------------------
Name:
Title:
<PAGE>
AMENDED AND RESTATED EXHIBIT B
<TABLE>
<CAPTION>
STOCKHOLDER PRE-RECAPITALIZATION REDEEMED SHARES
- ------------------------------ ---------------------------------------------------------- ---------------
Class A Class B Class C Total
------------ ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
Vestar Equity Partners, L.P. 3,564,809.00 3,564,809.00 3,564,809.0000
Culligan International Company 460,000.00 2,600,000.00 3,060,000.00 3,060,000.0000
Leonard Lieberman 1,782.00 1,782.00 1,782.0000
Bernard Geller 1,050,000.00 1,050,000.00 812,006.2837
Anthony Corsano 350,000.00 350,000.00 270,668.7612
William Turner 350,000.00 350,000.00 270,668.7612
Jacob Hollander 350,000.00 350,000.00 270,668.7612
Seelig Family Lifetime Trust 3,409.00 3,409.00 3,409.0000
Bruce Bruckmann 5,500.00 41,250.00 46,750.00 0.0000
David Thomas 5,500.00 41,250.00 46,750.00 0.0000
Natasha Partnership 4,490.00 33,679.00 38,169.00 0.0000
Stephen Sherrill 3,616.00 27,123.00 30,739.00 0.0000
Joseph Silvestri 1,206.00 9,041.00 10,247.00 0.0000
John Weber 724.00 5,425.00 6,149.00 0.0000
Noelle Cournoyer Doumar 482.00 3,616.00 4,098.00 0.0000
James Urry 482.00 3,616.00 4,098.00 0.0000
CCT Partners II, L.P. 29,700.00 222,750.00 252,450.00 0.0000
399 Venture Partners, Inc. 168,300.00 1,262,250.00 1,430,550.00 397,299.5511
Peter H. Rothschild 5,000.00 5,000.00 5,000.0000
------------ ------------ ------------- ------------- --------------
Total 6,355,000.00 2,600,000.00 1,650,000.00 10,605,000.00 8,656,312.1185
<CAPTION>
STOCKHOLDER RETAINED SHARES
- ------------------------------ -----------------------------------------------------------
Class A Class B Total
------------ -------------- --------------
<S> <C> <C> <C>
Vestar Equity Partners, L.P. 0.0000 0.0000 0.0000
Culligan International Company 0.0000 0.0000 0.0000
Leonard Lieberman 0.0000 0.0000 0.0000
Bernard Geller 22,515.5280 248,447.2050 270,962.7329
Anthony Corsano 7,505.1760 82,815.7350 90,320.9110
William Turner 7,505.1760 82,815.7350 90,320.9110
Jacob Hollander 7,505.1760 82,815.7350 90,320.9110
Seelig Family Lifetime Trust 0.0000 0.0000 0.0000
Bruce Bruckmann 4,422.8098 48,803.4181 53,226.2278
David Thomas 4,422.8098 48,803.4181 53,226.2278
Natasha Partnership 3,610.9995 39,845.5115 43,456.5110
Stephen Sherrill 2,908.0802 32,089.1608 34,997.2410
Joseph Silvestri 969.4231 10,697.0829 11,666.5060
John Weber 581.7296 6,419.0849 7,000.8144
Noelle Cournoyer Doumar 387.6936 4,277.9980 4,665.6916
James Urry 387.6936 4,277.9980 4,665.6916
CCT Partners II, L.P. 23,883.1727 263,538.4575 287,421.6302
399 Venture Partners, Inc. 97,751.2336 1,078,634.3018 1,176,385.5354
Peter H. Rothschild 0.0000 0.0000 0.0000
------------ -------------- --------------
Total 184,356.7015 2,034,280.8414 2,218,637.3427
</TABLE>
<PAGE>
WAIVER AND SECOND AMENDMENT
TO THE RECAPITALIZATION AGREEMENT
This WAIVER AND SECOND AMENDMENT TO THE RECAPITALIZATION AGREEMENT
(this "Second Amendment"), is entered into as of March 13, 1997, by and among
Citicorp Venture Capital, Ltd., a New York corporation ("CVC"), Bruckmann,
Rosser, Sherrill & Co., L.P., a Delaware limited partnership ("BRS")
(collectively, the "Acquiring Investors"), the stockholders and the voting trust
certificateholders named on the signature pages hereto (collectively, the
"Stockholders"), Anvil VT, Inc., a Delaware corporation ("Anvil VT") and Anvil
Holdings, Inc., a Delaware corporation (the "Company"). The Acquiring Investors,
the Stockholders, Anvil VT and the Company are each referred to individually as
a "Party" and collectively as the "Parties."
WHEREAS, CVC and certain of its Affiliates (the "CVC Stockholders")
are Stockholders currently holding shares of 12.5% Class A Preferred Stock, par
value $0.01 per share,of the Company ("Class A Preferred"), and in conjunction
with the recapitalization of the Company (the "Recapitalization") pursuant to
the terms of that certain Recapitalization Agreement, by and among Parties
hereto, dated as of February 12, 1997 and amended as of February 21, 1997 (the
"Recapitalization Agreement"), the CVC Stockholders wish to exchange
$3,333,000.00 in original liquidation value of Class A Preferred for
$3,333,000.00 in aggregate principal amount of Units, each consisting of 40
shares of 13% Senior Exchangeable Preferred Stock due 2009 of the Company and 13
shares of Class B Common Stock, par value $0.01 per share, of the Company.
WHEREAS, the Company desires to pay a dividend (the "Dividend") to
certain of the holders of the Class C Common Stock of the Company (the "Class C
Common") in conjunction with the Recapitalization, and whereas Article Fourth,
Part C, Section 2 of the Certificate of Incorporation of the Company, as amended
on January 27, 1995, requires that dividends be paid on all Common Stock ratably
on a per share basis.
WHEREAS, Anthony Corsano, Bernard Geller, Jacob Hollander and William
Turner (collectively, the "Management Investors"), who shall be the only holders
of Common Stock not holding Class C Common as of the time of payment of the
Dividend, and Bruce Bruckmann and Stephen Sherrill (collectively, the "BRS
Investors"), who will be holding Class C Common as of the time of payment of the
Dividend, wish to waive the application of Article Fourth, Part C, Section 2 of
the Certificate of Incorporation of the Company, so as to permit the Dividend to
be paid exclusively to the holders of the Class C Common other than the BRS
Investors.
WHEREAS, the Parties desire to further amend the Recapitalization
Agreement so as to provide for payment of the Dividend, and whereas pursuant to
Section 7.10 of the Recapitalization Agreement, this Second Amendment requires
the consent of the Stockholders holding or beneficially owning a
Majority-In-Interest, and the Stockholders holding or beneficially owning a
Majority-In-Interest desire to provide such consent.
NOW, THEREFORE, in consideration of the premises set forth above, the
parties hereto agree as follows.
1
<PAGE>
1. Amendment to Article I (Definitions).
a. The following defined terms are hereby added to Article I of the
Recapitalization Agreement:
"Dividend" means a dividend in the amount of $1,267,073.30.
"New Class B Common" means the Class B Common Stock, par value $.01
per share, of the Company, after giving effect to the Recapitalization.
"Units" means those certain Units to be issued on the Closing Date,
each consisting of 40 shares of 13% Senior Exchangeable Preferred Stock due
2009 of the Company and 13 shares of New Class B Common.
b. The following defined terms are hereby amended and restated in
Article I of the Recapitalization Agreement:
"Company Transaction Expenses" means all expenses incurred by the
Company in connection with the negotiation of this Agreement, including the
fees and expenses of consultants, financial advisers, lawyers and
accountants, and any fees payable to Vestar or any of its Affiliates (other
than the Recapitalization Consideration payable to such entities pursuant
to Section 2.1) which fees payable to Vestar or its Affiliates shall not
exceed $1,285,000; provided, however that the Company Transaction Expenses
shall not include any expenses incurred in connection with the
Recapitalization.
"Preferred Stock Consideration" means, (a) with respect to the
Preferred Stock which is being redeemed pursuant to the provisions of
clause (ii) of Section 2.1(d), the aggregate Liquidation Value of all
shares of Preferred Stock issued and outstanding at Closing, plus all
accrued and unpaid dividends in respect of such Preferred Stock through the
Closing Date, payable in cash, and (b) with respect to the Preferred Stock
which is being exchanged for Units pursuant to the provisions of clause
(iii) of Section 2.1(d), 3,333 Units, plus all accrued and unpaid dividends
in respect of such Preferred Stock through the Closing Date.
2. Amendment to Article II. Article II (The Recapitalization) is
hereby amended and restated in its entirety, and shall after such amendment and
restatement read as follows (with the deleted language deleted and replaced by a
bold and double-underlined carrot and the new language bolded and
double-underlined for the purpose hereof, but not for the purpose of the
Recapitalization Agreement):
2
<PAGE>
ARTICLE II
THE RECAPITALIZATION
2.1 Recapitalization Transactions. Pursuant to the terms and subject
to the conditions of this Agreement, at the Closing (as defined below):
(a) Acquiring Investors Obligations. BRS (and its Affiliates and
designees) shall make the capital contributions set forth opposite their
respective names on Exhibit A hereto in exchange for the number of shares
of New Common Stock set forth opposite their respective names on Exhibit A.
(b) Anvil VT Obligations. Anvil VT shall take all commercially
reasonable actions necessary to cause the termination of the Voting Trust
Agreement and upon such termination shall surrender to the Company
certificates for all Shares of Common Stock and Preferred Stock held by
Anvil VT duly endorsed in blank, with stock powers duly executed in blank,
in proper form for transfer.
(c) Stockholders Obligations. Each Stockholder (including CVC (or
any of its Affiliates) in its capacity as a Stockholder) shall (i)
surrender to the Company certificates for the number of Shares of Common
Stock (in the case of Stockholders that are party to the Voting Trust
Agreement, the Voting Trust Certificates representing such number of Shares
of Common Stock) ^ set forth opposite such Stockholder's name on Exhibit B
hereto, with stock powers duly executed in blank, in proper form for
transfer, (ii) surrender to the Company certificates for the number of
Shares of Preferred Stock (in the case of Stockholders that are party to
the Voting Trust Agreement, the Voting Trust Certificates representing such
number of Shares of Preferred Stock) set forth opposite such Stockholder's
name on Exhibit C hereto, with stock powers duly executed in blank, in
proper form for transfer, (iii) exchange any remaining Shares of Common
Stock (in the case of Stockholders that are party to the Voting Trust
Agreement, the Voting Trust Certificates representing such number of Shares
of Common Stock) held by such Stockholder for the number of shares of New
Common Stock set forth opposite such Stockholder's name on Exhibit B
hereto, ^(iv) exchange any remaining Shares of Preferred Stock (in the case
of Stockholders that are party to the Voting Trust Agreement, the Voting
Trust Certificates representing such number of Shares of Preferred Stock)
held by such Stockholder for the number of Units set forth opposite such
Stockholder's name on Exhibit C hereto and a Pro Rata Share of the balance
of the applicable Preferred Stock Consideration, and (v) take all
commercially reasonable actions, including voting the voting securities
held by such Stockholder, necessary to (A) terminate the Voting Trust
Agreement, (B) terminate the Securityholders Agreement, (C) enable the
Refinancing Transactions to be consummated, and (D) cause the Company to
consummate the Closing Transactions (provided that with respect to
3
<PAGE>
CVC and its Affiliates, their obligations under clauses (C) and
(D) above shall be governed by Section 4.1 below).
(d) Company Obligations. The Company shall (i) issue New Common
Stock to the Acquiring Investors in the amounts set forth opposite their
respective names on Exhibit A hereto, (ii) redeem ^ from each Stockholder
the number of Shares of Preferred Stock (in the case of Stockholders that
are party to the Voting Trust Agreement, the Voting Trust Certificates
representing such number of Shares of Preferred Stock) set forth opposite
such Stockholder's name on Exhibit C hereto in exchange for a pro-rata
share of the applicable Preferred Stock Consideration pursuant to Section
2.3 below, (iii) issue to CVC (or one of its Affiliates) and its Affiliates
the number of Units set forth opposite their respective names on Exhibit C
hereto, and pay to CVC (or one of its Affiliates) and its Affiliates, in
cash, a pro-rata share of the balance of the applicable Preferred Stock
Consideration, in exchange for the Voting Trust Certificates representing
Shares of Preferred Stock not required to be redeemed pursuant to this
Section 2.1, (iv) redeem from each Stockholder the number of shares of
issued and outstanding Shares of Common Stock (in the case of Stockholders
that are party to the Voting Trust Agreement, the Voting Trust Certificates
representing such number of Shares of Common Stock) set forth opposite such
Stockholder's name on Exhibit B hereto in exchange for a pro-rata share of
the Common Stock Consideration pursuant to Section 2.3 below (the "Redeemed
Shares"), ^(v) issue to CVC (or one of its Affiliates) and the Management
Stockholders the number of shares of New Common Stock set forth opposite
their respective names on Exhibit B hereto in exchange for the Voting Trust
Certificates representing Shares of Common Stock not required to be
redeemed pursuant to this Section 2.1 (the "Retained Shares"), ^(vi) pay or
cause to be paid (A) the Seller Note Amount, (B) the Funded Indebtedness,
(C) the Company Transaction Expenses and all expenses incurred by the
Company in connection with the Recapitalization through the Closing Date,
(D) the Phantom Payment, and (E) the Management Bonus, by wire transfer of
immediately available funds to such bank account or accounts as per written
instructions of the parties receiving payments pursuant to this Section
2.1(d), given to the Company at least two Business Days prior to the
Closing Date, ^(vii) after the consummation of the redemption described in
clause (iv) above, pay the Dividend to the holders of the Class C Common
(other than the BRS Investors), and (viii) upon the consummation of the
Refinancing Transactions, enter into, or cause any of its Subsidiaries to
enter into, such other agreements as are required to consummate the
Refinancing Transactions (collectively, the "Closing Transactions").
(e) Management Loans. The Stockholders who are obligors under the
Management Loans shall cause such Management Loans to be repaid in
accordance with their terms.
2.2 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Kirkland &
Ellis, 153
4
<PAGE>
East 53rd Street, New York, New York 10022, commencing at 10:00 a.m. local
time on the second Business Day following the satisfaction or waiver of all
conditions to the obligations of the Parties to consummate the transactions
contemplated hereby (other than conditions with respect to actions the
respective Parties will take at the Closing itself) or such other date as
the Parties may mutually determine (the "Closing Date").
2.3 Exchange of Shares. Upon surrender to the Company by a Stockholder
of a certificate representing a Share or in the case of Shares subject to
the Voting Trust Agreement, a Voting Trust Certificate representing a
number or Shares (each, a "Certificate") pursuant to Section 2.1 above, the
holder of such Certificate (the "Holder") shall receive in exchange
therefor (i) with respect to each share of Preferred Stock being redeemed
in accordance with clause (ii) of Section 2.1(d) above, an amount of cash
equal to a Pro Rata Share of the applicable Preferred Stock Consideration,
(ii) with respect to each share of Preferred Stock being exchanged in
accordance with clause (iii) of Section 2.1(d) above, a Pro Rata Share of
the applicable Preferred Stock Consideration, (iii) with respect to each
Redeemed Share, an amount of cash equal to a Pro Rata Share of the Common
Stock Consideration, ^ and (iv) with respect to each Retained Share,
1 share of New Common Stock, as the case may be (collectively, the
"Recapitalization Consideration"). All cash consideration payable in
respect of such Shares under clauses (i) ^, (ii) and (iii) above, shall be
paid by wire transfer of immediately available funds to such bank account
or accounts as per written instructions of the Stockholder receiving such
payment, given to the Company at least two Business Days prior to the
Closing Date. The Certificates surrendered pursuant to this Section 2.3
shall be canceled. In the event any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the
registered holder of such lost, stolen or destroyed Certificate in form and
substance acceptable to the Company and the Acquiring Investors, the
Company will issue in exchange for such lost, stolen or destroyed
Certificate the Recapitalization Consideration due in respect thereof in
the manner set forth in this Section 2.3.
3. Schedule C. A new "Schedule C" is hereby added to the
Recapitalization Agreement, which schedule is attached as Schedule C hereto.
4. Waiver. For the purpose of effectuating the transactions
contemplated by this Second Amendment only, the Management Investors and the BRS
Investors hereby waive the application of Article Fourth, Part C, Section 2 of
the Certificate of Incorporation of the Company, with the specific intent of
permitting the Dividend to be paid exclusively to the holders of the Class C
Common other than the BRS Investors.
5. Tax Characterization. The Recapitalization is intended to be a
"recapitalization" described in Section 368(a)(1)(E) of the Internal Revenue
Code of 1986, as amended.
5
<PAGE>
6. Counterparts. This Second Amendment may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
* * * * * * *
6
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have executed this Second Amendment
as of the date first above written.
ANVIL HOLDINGS, INC.
By:
------------------------------------
Name:
Title:
CITICORP VENTURE CAPITAL, LTD.
By:
------------------------------------
Name:
Title:
BRUCKMANN, ROSSER, SHERRILL & CO., L.P.
By: BRS Partners, Limited Partnership,
its General Partner
By:
------------------------------------
Name:
Title:
ANVIL VT, INC.
By:
------------------------------------
Name:
Title:
<PAGE>
STOCKHOLDERS:
VESTAR EQUITY PARTNERS, L.P.
By:
------------------------------------
Title: General Partner
By:
---------------------------------
Name:
Title:
---------------------------------------
LEONARD LIEBERMAN
---------------------------------------
BERNARD GELLER
---------------------------------------
ANTHONY CORSANO
---------------------------------------
WILLIAM TURNER
---------------------------------------
JACOB HOLLANDER
SEELIG FAMILY LIFETIME TRUST
By:
------------------------------------
Name:
Title:
---------------------------------------
BRUCE C. BRUCKMANN
<PAGE>
---------------------------------------
DAVID THOMAS
NATASHA PARTNERSHIP
By:
------------------------------------
Name:
Title:
---------------------------------------
STEPHEN SHERRILL
---------------------------------------
JOSEPH SILVESTRI
---------------------------------------
JOHN WEBER
---------------------------------------
NOELLE COURNOYER DOUMAR
---------------------------------------
JAMES URRY
CCT PARTNERS II, L.P.
By:
------------------------------------
Title: General Partner
By:
---------------------------------
Name:
Title:
<PAGE>
399 VENTURE PARTNERS, INC.
By:
------------------------------------
Name:
Title:
---------------------------------------
PETER H. ROTHSCHILD
CULLIGAN INTERNATIONAL COMPANY
By:
------------------------------------
Name:
Title:
<PAGE>
SCHEDULE C
<TABLE>
<CAPTION>
PREFERRED STOCK UNITS RECEIVED
----------------------------------------- --------------
Securityholder Total Shares Redeemed Exchanged
-------------- ------------ ------------ -----------
<S> <C> <C> <C> <C>
Vestar Equity Partners, L.P. 82,034.0000 82,034.0000 0.0000 0.0000
Culligan International Company 70,416.0000 70,416.0000 0.0000 0.0000
Leonard Lieberman 39.0000 39.0000 0.0000 0.0000
Bernard Geller 2,201.0000 2,201.0000 0.0000 0.0000
Anthony Corsano 733.0000 733.0000 0.0000 0.0000
William Turner 733.0000 733.0000 0.0000 0.0000
Jacob Hollander 733.0000 733.0000 0.0000 0.0000
Seelig Family Lifetime Trust 79.0000 79.0000 0.0000 0.0000
Bruce Bruckmann 1,075.8000 1,075.8000 0.0000 0.0000
David Thomas 1,075.8000 206.5292 869.2708 86.9271
Natasha Partnership 878.3360 168.6206 709.7155 70.9715
Stephen Sherrill 707.3586 707.3586 0.0000 0.0000
Joseph Silvestri 235.8016 45.2685 190.5330 19.0533
John Weber 141.4993 27.1647 114.3347 11.4335
Noelle C. Doumar 94.3022 18.1039 76.1983 7.6198
James Urry 94.3022 18.1039 76.1983 7.6198
CCT Partners II, L.P. 5,809.3200 1,115.2576 4,694.0624 469.4062
399 Venture Partners, Inc. 32,919.4800 6,319.7930 26,599.6870 2,659.9687
Peter H. Rothschild 0.0000 0.0000 0.0000 0.0000
------------ ------------ ----------- ----------
Total 200,000.0000 166,670.0000 33,330.0000 3,333.0000
</TABLE>
<PAGE>
CERTIFICATE OF INCORPORATION
OF
ANVIL KNITWEAR, INC.
FIRST: The name of the corporation (hereinafter referred to as the
"Corporation") is Anvil Knitwear, Inc.
SECOND: The address of its registered office in the State of Delaware is
1209 Orange Street, in the City of Wilmington, County of Castle. The name of its
registered agent at such address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
FOURTH: The total number of shares of stock which the Corporation shall
have authority to issue is one thousand (1,000), all of which shares shall be
Common Stock, par value $.01 per share.
FIFTH: The name and mailing address of the incorporator is as follows:
NAME ADDRESS
Jill Henderson c/o Kirkland & Ellis
655 Fifteenth Street, N.W.
Suite 1200
Washington, D.C. 20005
SIXTH: The Corporation is to have perpetual existence.
SEVENTH: In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is hereby authorized to adopt, amend or repeal
the bylaws of the Corporation.
EIGHTH: Meetings of stockholders may be held within or without the State
of Delaware, as the bylaws may provide. The books of the Corporation may be kept
outside the State of Delaware
-1-
<PAGE>
at such place or places as may be designated from time to time by the Board of
Directors or in the bylaws of the Corporation. Elections of directors need not
be by written ballot unless the bylaws of the Corporation so provide.
NINTH: Whenever a compromise or arrangement is proposed between the
Corporation and its creditors or any class of them and/or between the
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the Corporation or any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the Corporation under the
provisions of Section 291 of Title 8 of the Delaware Code or on the application
of trustees in dissolution or of any receiver or receivers appointed for the
Corporation under the provisions of Section 279 of Title 8 of the Delaware Code,
order a meeting of the creditors or class of creditors, and/or the stockholders
or class of stockholders of the Corporation, as the case may be, to be summoned
in such manner as the said court directs. If a majority in number representing
three-fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the Corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of the
Corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders, or class of
stockholders, of the Corporation, as the case may be, and also on this
Corporation.
TENTH: To the fullest extent permitted by the General Corporation Law of
the State of Delaware (including, without limitation, Section 102(b)(7)), as
amended from time to time, no director of the Corporation shall be liable to the
Corporation or its stockholders for monetary
-2-
<PAGE>
damages for breach of fiduciary duty as a director. Any repeal or amendment of
this Article TENTH or adoption of any provision of the Certificate of
Incorporation inconsistent with this Article TENTH shall have prospective effect
only and shall not adversely affect the liability of a director of the Corpo
ration with respect to any act or omission occurring at or before the time of
such repeal, amendment or adoption of an inconsistent provision.
ELEVENTH: The Corporation shall, to the fullest extent permitted by the
General Corporation Law of the State of Delaware (including, without limitation,
Section 145 thereof), as amended from time to time, indemnify any promoter,
director or officer whom it shall have power to indemnify from and against any
and all of the expenses, liabilities or other losses of any nature. The
indemnification provided in this Article ELEVENTH shall not be deemed exclusive
of any other rights to which those indemnified may be entitled under any bylaw,
agreement, vote of stockholders or disinterested directors or otherwise, both as
to action in his or her official capacity and as to action in another capacity
while holding such office, and shall continue as to a person who has ceased to
be promoter, director or officer and shall inure to the benefit of the heirs,
executors and administrators of such a person.
TWELFTH: The Corporation elects not to be governed by Section 203 of the
General Corporation Law of the State of Delaware.
THIRTEENTH: The Corporation reserves the right to amend or repeal any
provision contained in this Certificate of Incorporation in the manner now or
hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
-3-
<PAGE>
I, THE UNDERSIGNED, being the incorporator hereinafter named, for the
purpose of forming a corporation pursuant to the General Corporation Law of the
State of Delaware, do make this Certificate, hereby declaring and certifying
that this is my act and deed and the facts stated herein are true, and
accordingly, have hereunto set my hand on this 16th day of December, 1994.
--------------------------------------------------
Jill Henderson, Sole Incorporator
-4-
<PAGE>
CERTIFICATE OF
RESTATED CERTIFICATE OF INCORPORATION
OF
ANVIL HOLDINGS, INC.
Jacob Hollander, being the duly elected Vice President, Secretary
and General Counsel of Anvil Holdings, Inc., a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware (the "Corporation"), does hereby certify as follows:
1. That the Corporation filed its original Certificate of
Incorporation with the Delaware Secretary of State on November 23, 1994 (the
"Certificate").
2. That the original name of the Corporation was K-Wear Holdings,
Inc.
3. That the Board of Directors of the Corporation, pursuant to
Sections 141, 242 and 245 of the General Corporation Law of the State of
Delaware, adopted resolutions authorizing the Corporation to amend, integrate
and restate the Corporation's Certificate in its entirety to read as set forth
in Exhibit A attached hereto and made a part hereof (the "Restated
Certificate").
4. That the holders of a majority of the Corporation's issued and
outstanding capital stock approved and adopted the Restated Certificate in
accordance with Sections 228, 242 and 245 of the General Corporation Law of the
State of Delaware. Written notice of the adoption of the Restated Certificate
herein certified has been given to those stockholders who have not consented in
writing thereto, as provided in Section 228 of the General Corporation Law of
the State of Delaware.
IN WITNESS WHEREOF, the undersigned, being the Vice President,
Secretary and General Counsel hereinabove named, for the purpose of amending and
restating the Certificate of Incorporation of the Corporation pursuant to the
General Corporation Law of the State of Delaware, under penalties of perjury
does hereby declare and certify that this is the act and deed of the Corporation
and the facts stated herein are true, and accordingly has hereunto signed this
Certificate of Restated Certificate of Incorporation this 13th day of March,
1997.
By:
-------------------------
<PAGE>
Jacob Hollander
Vice President, Secretary and
General Counsel
- 1 -
<PAGE>
EXHIBIT A
RESTATED CERTIFICATE OF INCORPORATION
OF
ANVIL HOLDINGS, INC.
ARTICLE FIRST
The name of the Corporation is Anvil Holdings, Inc.
ARTICLE SECOND
The address of the Corporation's registered office in the State of
Delaware is 1209 Orange Street, Wilmington Delaware 19805, in the County of New
Castle. The name of the corporation's registered agent at such address shall be
The Corporation Trust Company. The registered office and/or registered agent of
the corporation may be changed from time to time by action of the board of
directors.
ARTICLE THIRD
The nature of the business or purposes to be conducted or promoted
is to engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of the State of Delaware.
ARTICLE FOURTH
1. AUTHORIZED SHARES
The total number of shares of capital stock which the Corporation
has authority to issue is 14,400,000 shares, consisting of:
A. 500,000 shares of Class A Common Stock, par value $0.01 per share
(the "Class A Common"), which shall be designated either Series-1 or
Series-2 Class A Common;
B. 7,500,000 shares of Class B Common Stock, par value $0.01 per share
(the "Class B Common");
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C. 1,300,000 shares of Class C Common Stock, par value $0.01 per share
(the "Class C Common"); and
D. 5,100,000 shares of Preferred Stock, par value $0.01 per share (the
"Preferred Stock").
In addition to any other consent or approval which may be required
pursuant to this Certificate of Incorporation, no amendment or waiver of any
provision of this Section 1 shall be effective without the prior approval of the
holders of a majority of the then outstanding Common Stock voting as a single
class, and no amendment or waiver of any provision of Section 1 which has the
effect of increasing the number of authorized shares of the Class A Common shall
be effective without the prior approval of a majority of the then outstanding
shares of Class A Common voting as a single class. For purposes of votes on
amendments and waivers to this Section 1, each share of capital stock shall be
entitled to one vote.
2. PREFERRED STOCK The Board of Directors is authorized, subject to limitations
prescribed by law, to provide for the issuance of shares of Preferred Stock in
one or more series, to establish the number of shares to be included in each
such series, and to fix the designations, powers, preferences, and rights of the
shares of each such series, and any qualifications, limitations or restrictions
thereof.
3. COMMON STOCK The Common Stock shall be subject to any right or preference of
any series of Preferred Stock. Except as otherwise provided in this Section 3 or
as otherwise required by applicable law, all shares of Common Stock, shall be
identical in all respects and shall entitle the holders thereof to the same
rights and privileges, subject to the same qualifications, limitations and
restrictions.
A. Voting Rights. Except as otherwise provided herein and as
otherwise required by law: (i) the Class A Common shall have no voting rights
(provided, that each holder of Class A Common shall be entitled to notice of all
stockholders meetings at the same time and in the same manner as notice is given
to the stockholders entitled to vote at such meeting; with respect to any issue
required to be voted on and approved by holders of Class A Common, the holders
of Class A Common will vote as a single class, and provided further, that the
holders of Class A Common shall have the right to vote as a separate class on
any merger or consolidation of the Corporation with or into another entity or
entities, or any recapitalization or reorganization of the Corporation); (ii)
the Class B Common shall be entitled to one vote per share on all matters to be
voted on by the Corporation's stockholders; and (iii) the Class C Common shall
have no voting rights (provided, that each holder of Class C Common shall be
entitled to notice of all stockholders meetings at the same time and in the same
manner as notice is given to the stockholders entitled to vote at such meeting;
with respect to any issue required to be voted on and approved by holders of
Class C Common, the holders of Class C Common will vote as a single class, and
provided further, that the holders of Class C Common shall have the right to
vote as a separate class on any merger or consolidation of the Corporation with
or into another entity or entities, or any recapitalization or reorganization of
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the Corporation in which shares of Class C Common would receive or be exchanged
for consideration different on a per share basis from consideration received
with respect to or in exchange for the shares of Class B Common).
B. Distributions. At the time of each Distribution, such
Distribution shall be made to the holders of Series-1 Class A Common, Series-2
Class A Common, Class B Common and Class C Common in the following priority:
(1) The holders of Series-1 Class A Common and Series-2 Class
A Common, together as a group, shall be entitled to receive all or a portion of
such Distribution (ratably among such holders based upon the number of shares of
Series-1 Class A Common and Series-2 Class A Common held by each such holder as
of the time of such Distribution) equal to the aggregate Unpaid Yield on the
outstanding shares of Series-1 Class A Common and Series-2 Class A Common,
respectively, as of the time of such Distribution, and no Distribution or any
portion thereof shall be made under paragraphs B(2) or B(3) below until the
entire amount of the Unpaid Yield on the outstanding shares of Series-1 Class A
Common and Series-2 Class A Common as of the time of such Distribution has been
paid in full. The Distributions made pursuant to this paragraph B(1) to holders
of Series-1 Class A Common and Series-2 Class A Common shall constitute a
payment of Yield on Series-1 Class A Common and Series-2 Class A Common,
respectively.
(2) After the aggregate Unpaid Yield on the outstanding shares
of Series-1 Class A Common and the Series-2 Class A Common has been made in full
pursuant to paragraph B(1) above, the holders of Series-1 Class A Common and
Series-2 Class A Common, together as a group, shall be entitled to receive all
or a portion of any Distribution (ratably among such holders based upon the
number of shares of Series-1 Class A Common and Series-2 Class A Common held by
each such holder as of the time of such Distribution) equal to the aggregate
Unreturned Original Cost of the outstanding shares of Series-1 Class A Common
and Series-2 Class A Common, respectively, as of the time of such Distribution,
and no Distribution or any portion thereof shall be made under paragraph B(3)
below until the entire amount of the Unreturned Original Cost of the outstanding
shares of Series-1 Class A Common and Series-2 Class A Common as of the time of
such Distribution has been paid in full. The Distributions made pursuant to this
paragraph B(2) to holders of Series-1 Class A Common and Series-2 Class A Common
shall constitute a return of Original Cost of Series-1 Class A Common and
Series-2 Class A Common, respectively.
(3) After the required amount of a Distribution has been made
pursuant to paragraphs B(1) and B(2) above, holders of Common Stock as a group,
shall be entitled to receive the remaining portion of such Distribution (ratably
among such holders based upon the number of Common Stock held by each such
holder as of the time of such Distribution).
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C. Optional Redemptions.
(1) Optional Redemptions. The Corporation may at any time
redeem all or any portion of the Class A Common then outstanding for per share
consideration equal to one share of Class B Common plus an additional amount
equal to the Class A Preference; provided, that all partial optional redemptions
of Class A Common pursuant to this Section 3B, shall be made pro rata among the
holders of such Class A Common on the basis of the number of shares held by each
such holder.
(2) Redemption Price. For each share of Class A Common which
is to be redeemed, the Corporation will be obligated on the Redemption Date to
deliver to the holder thereof (upon surrender by such holder at the
Corporation's principal office of the certificate representing such share) an
amount in immediately available funds equal to the Class A Preference plus one
share of duly authorized, fully paid and nonassessable Class B Common. If the
Corporation's funds which are legally available for redemption of shares on any
Redemption Date are insufficient to redeem the total number of shares to be
redeemed on such date, those funds which are legally available will be used to
redeem the maximum possible number of shares ratably among the holders of the
shares to be redeemed based upon the aggregate Class A Preference held by each
such holder. At any time thereafter when additional funds of the Corporation are
legally available for the redemption of shares, such funds will be immediately
used to redeem the balance of the shares which the Corporation has become
obligated to redeem on any Redemption Date but which it has not redeemed.
(3) Notice of Redemption. The Corporation will mail written
notice of each redemption of Class A Common to each record holder not more than
30 nor less than 10 days prior to the date on which such redemption is to be
made. Upon mailing any notice of redemption which relates to a redemption at the
Corporation's option, the Corporation will become obligated to redeem the total
number of shares specified in such notice at the time of redemption specified
therein. In case fewer than the total number of shares represented by any
certificate are redeemed, a new certificate representing the number of
unredeemed shares will be issued to the holder thereof without cost to such
holder within three business days after surrender of the certificate
representing the redeemed shares.
(4) Determination of the Number of Each Holder's shares to be
Redeemed. Except as otherwise provided herein, the number of shares of Class A
Common to be redeemed from each holder thereof in redemptions hereunder will be
the number of shares determined by multiplying the total number of shares to be
redeemed times a fraction, the numerator of which will be the total number of
shares then held by such holder and the denominator of which will be the total
number of shares of Class A Common then outstanding.
(5) Redeemed or Otherwise Acquired shares. Any shares which
are redeemed or otherwise acquired by the Corporation will be canceled and will
not be reissued, sold or transferred.
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D. Priority of Class A Common. So long as any Class A Common remains
outstanding, the Corporation shall not redeem, repurchase, or recapitalize any
Common Stock or declare or pay any dividends on any Common Stock (other than
dividends declared in connection with any stock splits, stock dividends, share
combinations, share exchanges, or other recapitalizations in which such
dividends are made in the form of Class B Common).
E. Conversion of Class C Common.
(1) Right to Convert. At any time and from time to time, each
holder of Class C Common shall be entitled to convert into an equal number of
shares of Class B Common, the specified amount of the shares of such holder's
Class C Common. Additionally, the holder or holders of a majority of the
outstanding shares of Class C Common shall be entitled at any time to cause the
conversion of any or all of the outstanding shares of Class C Common into the
same number of shares of Class B Common. Any such conversion of Class C Common
into Class B Common will be effected among the holders of the Class C Common on
a basis determined by the holder or holders of a majority of outstanding shares
of Class C Common.
(2) Surrender of Certificates. Each conversion of Class C
Common into shares of Class B Common shall be effected by the surrender of the
certificate or certificates representing the shares to be converted at the
principal office of the Corporation at any time during normal business hours,
together with a written notice by the holder of shares of such Class C Common
stating that such holder desires to convert the shares, or a stated number of
the shares of Class C Common represented by such certificate or certificates
into Class B Common. Each conversion of Class C Common shall be deemed to have
been effected as of the close of business on the date on which the Conversion
Notice has been received by the Company, and at such time the rights of the
holder of the converted Class C Common as such holder shall cease, and the
person or persons in whose name or names the certificate or certificates for
shares of Class B Common are to be issued upon such conversion shall be deemed
to have become the holder or holders of record of the shares of Class B Common
represented thereby.
(3) Issuance of Certificates. Promptly after the surrender of
certificates of Class C Common and the receipt of written notice, the
Corporation shall issue and deliver in accordance with the surrendering holder's
instructions the certificate or certificates for the Class B Common issuable
upon such conversion.
(4) No Charge. The issuance of certificates for Class B Common
upon conversion of Class C Common will be made without charge to the holders of
such shares of any issuance tax in respect thereof or other cost incurred by the
Corporation in connection with such conversion and the related issuance of
Corporation in connection with such issuance.
(5) The Corporation shall at all times reserve and keep
available out of its authorized but unissued shares of Class B Common, solely
for the purpose of issuance upon the conversion of the Class C Common, such
number of shares of Class B Common issuable upon the
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conversion of all outstanding Class C Common. All shares of Class B Common which
are so issuable shall, when issued, be duly and validly issued, fully paid and
nonassessable and free from all taxes, liens and charges. The Corporation shall
take all such actions as may be necessary to assure that all such shares of
Class B Common may be so issued without violation of any applicable law or
governmental regulation or any requirements of any domestic securities exchange
upon which shares of Class B Common may be listed (except for official notice of
issuance which shall be immediately transmitted by the Corporation upon
issuance).
F. Stock Splits. If the Corporation in any manner subdivides or
combines the outstanding shares of one class of Common Stock, the outstanding
shares of each other class of Common Stock shall be proportionately subdivided
or combined in a similar manner. All such subdivisions and combinations shall be
payable only in Series-1 Class A Common to the holders of Series-1 Class A
Common, in Series-2 Class A Common to the holders of Series-2 Class A Common, in
Class B Common Stock to the holders of Class B Common Stock and in Class C
Common Stock to the holders of Class C Common Stock. In no event shall a stock
split or stock dividend constitute a payment of Yield or a return of Original
Cost.
G. Registration of Transfer. The Corporation shall keep at its
principal office (or such other place as the Corporation reasonably designates)
a register for the registration of shares of Common Stock. Upon the surrender of
any certificate representing shares of any class of Common Stock at such place,
the Corporation shall, at the request of the record holder of such certificate,
execute and deliver (at the Corporation's expense) a new certificate or
certificates in exchange therefor representing in the aggregate the number of
shares of such class represented by the surrendered certificate and the
Corporation shall forthwith cancel such surrendered certificate. Each such new
certificate shall be registered in such name and shall represent such number of
shares of such class as is requested by the holder of the surrendered
certificate and shall be substantially identical in form to the surrendered
certificate. The issuance of new certificates shall be made without charge to
the holders of the surrendered certificates for any issuance tax in respect
thereof or other cost incurred by the Corporation in connection with such
issuance.
H. Replacement. Upon receipt of evidence reasonably satisfactory to
the Corporation (provided, that an affidavit of the registered holder will be
satisfactory) of the ownership and the loss, theft, destruction or mutilation of
any certificate evidencing one or more shares of any class of Common Stock, and
in the case of any such loss, theft or destruction, upon receipt of indemnity
reasonably satisfactory to the Corporation (provided that if the holder is a
financial institution or other institutional investor its own agreement will be
satisfactory), or, in the case of any such mutilation upon surrender of such
certificate, the Corporation shall (at its expense) execute and deliver in lieu
of such certificate a new certificate of like kind representing the number of
shares of such class represented by such lost, stolen, destroyed or mutilated
certificate and dated the date of such lost, stolen, destroyed or mutilated
certificate.
I. Defined Terms
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"Class A Preference" means, with respect to each share of Class A
Common, an amount per share equal to the sum of (a) the Unpaid Yield and (b) the
Unreturned Original Cost thereof.
"Common Stock" means, collectively, all shares of the Series-1 Class
A Common, Series-2 Class A Common, Class B Common and Class C Common, in each
case as adjusted for any stock split, stock dividend, share combination, share
exchange, recapitalization, merger, consolidation or other reorganization.
"Distribution" means each distribution made by the Corporation to
holders of Common Stock, whether in cash, property, or securities of the
Corporation and whether by dividend, liquidating distributions or otherwise;
provided that neither of the following shall be a Distribution: (a) any
redemption or repurchase by the Corporation of any Common Stock for any reason
or (b) any recapitalization or exchange of any Common Stock, or any subdivision
(by stock split, stock dividend or otherwise) or any combination (by stock
split, stock dividend or otherwise) of any outstanding Common Stock.
"Original Cost" of each share of Class A Common shall be equal to
the amount originally paid for such share when it was issued by the Corporation
(as proportionally adjusted for all stock splits, stock dividends and other
recapitalizations affecting the Class A Common); provided that, with respect to
the Class A Common issued pursuant to the Purchase Agreement, all such shares
shall be deemed to have an Original Cost equal to $100.00 per share (as
proportionally adjusted for all stock splits, stock dividends and other
recapitalizations affecting the Class A Common).
"Person" means an individual, a partnership, a company, an
association, a joint stock corporation, a trust, a joint venture, an
unincorporated organization and a governmental entity or any department, agency
or political subdivision thereof.
"Redemption Date" as to any share of Class A Common means the date
specified in the notice of any redemption at the Corporation's option or the
applicable date specified herein in the case of any other redemption; provided,
that no such date will be a Redemption Date unless the applicable Class A
Preference is actually paid, and if not so paid, the Redemption Date will be the
date on which such Class A Preference is fully paid.
"Unpaid Yield" of any share of Class A Common means an amount equal
to the excess, if any, of (a) the aggregate Yield accrued on such share, over
(b) the aggregate amount of Distributions made by the Corporation that
constitute payment of Yield on such share.
"Unreturned Original Cost" of any share of Class A Common means an
amount equal to the excess, if any, of (a) the Original Cost of such share, over
(b) the aggregate amount of Distributions made by the Corporation that
constitute a return of Original Cost of such share.
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"Yield" means, (a) with respect to each share of Series-1 Class A
Common for each calendar quarter, the amount accruing on such share each day
during such quarter at the rate of 12.5% per annum, and (b) with respect to each
share of Series-2 Class A Common for each calendar quarter, the amount accruing
on such share each day during such quarter at the rate of 12.5% per annum, on
the sum of (x) such share's Unreturned Original Cost, plus (y) the Unpaid Yield
thereon for all prior quarters. In calculating the amount of any Distribution to
be made during a calendar quarter, the portion of a Class A Common share's Yield
for such portion of such quarter elapsing before such Distribution is made shall
be taken into account.
J. Amendment and Waiver No amendment or waiver of any provision of
this Section 3 shall be effective without the prior consent of the holders of at
least 662/3% of the then outstanding shares of Common Stock voting as a single
class; provided, that no amendment, modification or waiver which adversely and
prejudicially affects the holders of the Class A Common vis-a-vis the other
holders of Common Stock shall be effective against the holders of the Class A
Common without the prior written consent of the holders of Class A Common with a
Class A Preference representing at least sixty-six and two-thirds percent
(662/3%) of the aggregate Class A Preference of such Class A Common then
outstanding. For purposes of votes on amendments and waivers to this Section 3,
each share of Common Stock shall be entitled to one vote.
K. Notices. Except as otherwise expressly provided, all notices
referred to herein will be in writing and will be delivered by registered or
certified mail, return receipt requested, postage prepaid and will be deemed to
have been given when so mailed (i) to the Corporation, at its principal
executive offices and (ii) to any stockholder, at such holder's address as it
appears in the stock records of the Corporation (unless otherwise indicated by
any such holder).
L. Effectiveness. Reference is made to that certain Recapitalization
Agreement, dated as of February 12, 1997, by and among the Corporation, certain
of the Corporation's stockholders, Citicorp Venture Capital, Ltd. and Bruckmann,
Rosser, Sherrill & Co., L.P. (the "Recapitalization Agreement"). In the event
that the transactions contemplated by the Recapitalization Agreement are not
consummated by March 20, 1997, the provisions of this Article Fourth shall cease
to have any further force or effect, in which case Article Fourth of the
Corporation's Certificate of Incorporation as in effect immediately prior to the
effectiveness of this Restated Certificate of Incorporation shall govern the
relative rights of the Corporation's stockholders, retroactive to the date of
filing this Restated Certificate of Incorporation.
ARTICLE FIFTH
The Corporation is to have perpetual existence.
ARTICLE SIXTH
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In furtherance and not in limitation of the powers conferred by
statute, the board of directors of the Corporation is expressly authorized to
make, alter or repeal the by-laws of the corporation.
ARTICLE SEVENTH
Meetings of stockholders may be held within or without the State of
Delaware, as the by-laws of the Corporation may provide. The books of the
Corporation may be kept outside the State of Delaware at such place or places as
may be designated from time to time by the board of directors or in the by-laws
of the Corporation. Election of directors need not be by written ballot unless
the by-laws of the Corporation so provide.
ARTICLE EIGHTH
To the fullest extent permitted by the General Corporation Law of
the State of Delaware as the same exists or may hereafter be amended, a director
of this Corporation shall not be liable to the Corporation or its stockholders
for monetary damages for a breach of fiduciary duty as a director. Any repeal or
modification of this ARTICLE EIGHTH shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such repeal
or modification.
ARTICLE NINTH
Whenever a compromise or arrangement is proposed between the
Corporation and its creditors or any class of them and/or between the
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the Corporation or any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the Corporation under the
provisions of Section 291 of Title 8 of the Delaware Code or on the application
of trustees in dissolution or of any receiver or receivers appointed for the
Corporation under the provisions of Section 279 of Title 8 of the Delaware Code,
order a meeting of the creditors or class of creditors, and/or the stockholders
or class of stockholders of the Corporation, as the case may be, to be summoned
in such manner as the said court directs. If a majority in number representing
three-fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the Corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of the
Corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders, or class of
stockholders, of the Corporation, as the case may be, and also on this
Corporation.
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ARTICLE TENTH
To the fullest extent permitted by the General Corporation Law of
the State of Delaware (including, without limitation, Section 102(b)(7)), as
amended from time to time, no director of the Corporation shall be liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director. Any repeal or amendment of this Article TENTH or adoption of
any provision of the Certificate of Incorporation inconsistent with this Article
TENTH shall have prospective effect only and shall not adversely affect the
liability of a director of the Corporation with respect to any act or omission
occurring at or before the time of such repeal, amendment or adoption of an
inconsistent provision.
ARTICLE ELEVENTH
The Corporation shall, to the fullest extent permitted by the
General Corporation Law of the State of Delaware (including, without limitation,
Section 145 thereof), as amended from time to time, indemnify any promoter or
director whom it shall have power to indemnify from and against any and all of
the expenses, liabilities or other losses of any nature. The indemnification
provided in this Article ELEVENTH shall not be deemed exclusive of any other
rights to which those indemnified may be entitled under any bylaw, agreement,
vote of stockholders or disinterested directors or otherwise, both as to action
in his or her official capacity and as to action in another capacity while
holding such office, and shall continue as to a person who has ceased to be
promoter or director and shall inure to the benefit of the heirs, executors and
administrators of such a person.
ARTICLE TWELFTH
The Corporation expressly elects not to be governed by Section 203
of the General Corporation Law of the State of Delaware.
ARTICLE THIRTEENTH
The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this certificate of incorporation in the manner now
or hereafter prescribed herein and by the laws of the State of Delaware, and all
rights conferred upon stockholders herein are granted subject to this
reservation.
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CERTIFICATE OF INCORPORATION
OF
COTTONTOPS, INC.
-------------------------------
FIRST. The name of this Corporation shall be:
COTTONTOPS, INC.
SECOND. Its registered office in the State of Delaware is to be located at
1013 Centre Road, in the City of Wilmington, County of New Castle and its
registered agent at such address is CORPORATION SERVICE COMPANY.
THIRD. The purpose or purposes of the corporation shall be:
To engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
FOURTH. The total number of shares of stock which this corporation is
authorized to issue is:
One Hundred (100) shares with a par value on One Cent ($0.01) per share ,
amounting to One Dollar ($1.00).
FIFTH. The name and address of the incorporator is as follows:
Kathleen Crowley
Corporation Service Company
1013 Centre Road
Wilmington, DE 19805
SIXTH. The Board of Directors shall have the power to adopt, amend or
repeal the by-laws.
SEVENTH. No director shall be personally liable to the Corporation or its
stockholders for monetary damages for any breach of fiduciary duty by such
director as a director. Notwithstanding the foregoing sentence, a director shall
be liable to the extent provided by applicable law, (i) for breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) pursuant to Section 174 of the Delaware General
Corporation Law or (iv) for any transaction from which the director derived an
improper personal benefit. No amendment to or repeal of this Article Seventh
shall apply to or have an effect on the liability or alleged liability of any
director of
<PAGE>
the Corporation for or with respect to any acts or omissions of such director
occurring prior to such amendment.
IN WITNESS WHEREOF, the undersigned, being the incorporator hereinbefore
named, has executed, signed and acknowledged this certificate of incorporation
this eighteenth day of December, A.D., 1996.
----------------------------------------
Kathleen Crowley
Incorporator
2
<PAGE>
AMENDED AND RESTATED
BYLAWS
OF
ANVIL KNITWEAR, INC.
(as of January 30, 1995)
ARTICLE I - OFFICES
Section 1. Registered Office. The registered office in the State of
Delaware shall be at 1209 Orange Street, in the City of Wilmington, County of
Castle. The name of the corporation's registered agent at such address shall be
The Corporation Trust Company. The registered office or registered agent of the
corporation may be changed from time to time by action of the board of directors
on the filing of a certificate or certificates as required by law.
Section 2. Other Offices. The corporation may also have offices at
such other places, both within and without the State of Delaware, as the board
of directors may from time to time determine or the business of the corporation
may require.
ARTICLE II - MEETINGS OF STOCKHOLDERS
Section 1. Place and Time of Meetings. An annual meeting of the
stockholders shall be held each year, beginning in the year 1995, prior to the
last day of June. At such meeting, the stockholders shall elect the directors of
the corporation and conduct such other business as may come before the meeting.
The time and place of the annual meeting shall be determined by the board of
directors. Special meetings of the stockholders for any other purpose may be
held at such time and place, within or without the State of Delaware, as shall
be stated in the notice of the meeting or in a duly executed waiver of notice
thereof. Special meetings of the stockholders may be called by the president or
the chairman of the board for any purpose and shall be called by the secretary
if directed by the board of directors.
Section 2. Notice. Whenever stockholders are required or permitted
to take action at a meeting, written or printed notice of every annual or
special meeting of the stockholders, stating the place, date, time, and, in the
case of special meetings, the purpose or purposes, of such meeting, shall be
given to each stockholder entitled to vote at such meeting not less than l0 nor
more than 60 days before the date of the meeting. All such notices shall be
delivered, either personally or by mail, by or at the direction of the board of
directors, the chairman of the board, the chief executive officer, the president
or the secretary, and if mailed, such notice shall be deemed to be delivered
when deposited in the United States mail with postage prepaid and addressed to
the stockholder at his or her address as it appears on the records of the
corporation.
<PAGE>
Section 3. Stockholders List. The officer having charge of the stock
ledger of the corporation shall make, at least l0 days before every meeting of
the stockholders, a complete list arranged in alphabetical order of the
stockholders entitled to vote at such meeting, specifying the address of and the
number of shares registered in the name of each stockholder. Such list shall be
open to the examination of any stockholder, for any purpose germane to the
meeting, during ordinary business hours, for a period of at least l0 days prior
to the meeting, either at a place within the city where the meeting is to be
held, which place shall be specified in the notice of the meeting or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
Section 4. Quorum. The holders of a majority of the outstanding
shares of capital stock entitled to vote thereat, whether present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders, except as otherwise provided by statute or by the certificate of
incorporation. If a quorum is not present, the holders of the shares present in
person or represented by proxy at the meeting and entitled to vote thereat shall
have the power, by the affirmative vote of the holders of a majority of such
shares, to adjourn the meeting to another time or place. Unless the adjournment
is for more than thirty days or unless a new record date is set for the
adjourned meeting, no notice of the adjourned meeting need be given to any
stockholder, provided that the time and place of the adjourned meeting were
announced at the meeting at which the adjournment was taken. At the adjourned
meeting, the corporation may transact any business which might have been
transacted at the original meeting.
Section 5. Vote Required. When a quorum is present or represented by
proxy at any meeting, the vote of the holders of a majority of the shares
present in person or represented by proxy at the meeting and entitled to vote on
the subject matter shall be the act of the stockholders, unless the question is
one upon which by express provisions of an applicable statute or of the
certificate of incorporation a different vote is required, in which case such
express provision shall govern and control the decision of such question.
Section 6. Voting Rights. Except as otherwise provided by the
Delaware General Corporation Law or by the certificate of incorporation of the
corporation or any amendments thereto and subject to Section 3 of Article VI
hereof, each stockholder shall at every meeting of the stockholders be entitled
to one vote in person or by proxy for each share of capital stock held by such
stockholder.
Section 7. Proxies. Each stockholder entitled to vote at a meeting
of stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him or her
by proxy, but no such proxy shall be voted or acted upon after three years from
its date, unless the proxy provides for a longer period.
Section 8. Action by Written Consent. Any action required to be
taken at any annual or special meeting of stockholders of the corporation, or
any action which may be taken at any annual or special meeting of such
stockholders, may be taken without a meeting, without prior notice and without a
vote, if a consent in writing, setting forth the action so taken, shall be
signed by the
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holders of outstanding stock having not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereon were present and voted, and shall be
delivered to the corporation by delivery to its registered office in the State
of Delaware or the corporation's principal place of business or an officer or
agent of the corporation having custody of the books in which proceedings of
meetings are recorded. All consents delivered in accordance with this section
shall be deemed to be recorded when so delivered. No written consent shall be
effective to take the corporate action referred to therein unless, within sixty
days of the earliest date consent delivered to the corporation as required by
this section, written consents signed by the holders of a sufficient number of
shares to take such corporate action are recorded. Prompt notice of the taking
of the corporate action without a meeting by less than unanimous written consent
shall be given to those stockholders who have not consented in writing. Any
action taken pursuant to such written consent of the stockholders shall have the
same force and effect as if taken by the stockholders at a meeting thereof.
ARTICLE III - DIRECTORS
Section 1. Number, Election and Term of Office. The board of
directors shall be eight (8) in number. The directors shall be elected at the
annual meeting of stockholders, except as provided in Section 3 of this Article
III, and each director elected shall hold office until the next annual meeting
of stockholders and until a successor is duly elected and qualified or until his
or her death, resignation or removal as hereinafter provided.
Section 2. Removal and Resignation. Any director or the entire board
of directors may be removed at any time, with or without cause, by the holders
of a majority of the shares of stock of the corporation then entitled to vote at
an election of directors, except as otherwise provided by statute. Any director
may resign at any time upon written notice to the corporation.
Section 3. Vacancies. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors may be filled
only by the holders of a majority of the shares of stock of the corporation then
entitled to vote at an election of directors at an annual or special meeting of
stockholders, and each director so chosen shall hold office until the next
annual meeting of stockholders and until a successor is duly elected and
qualified or until his or her earlier death, resignation or removal as
hereinafter provided.
Section 4. Annual Meetings. The annual meeting of each newly elected
board of directors shall be held without other notice than this bylaw
immediately after, and at the same place as, the annual meeting of stockholders.
Section 5. Other Meetings and Notice. Regular meetings, other than
the annual meeting, of the board of directors may be held without notice at such
time and at such place as shall from time to time be determined by resolution of
the board. Special meetings of the board of directors may be called by or at the
request of the chairman, the chief executive officer or the president on at
least 24 hours notice to each director, either personally, by telephone, by
mail, or by
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telegraph; in like manner and on like notice the secretary must call a special
meeting on the written request of a majority of directors.
Section 6. Quorum. A majority of the total number of directors shall
constitute a quorum for the transaction of business. The vote of a majority of
directors present at a meeting at which a quorum is present shall be the act of
the board of directors. If a quorum shall not be present at any meeting of the
board of directors, the directors present thereat may adjourn the meeting from
time to time, without notice other than announcement at the meeting, until a
quorum shall be present.
Section 7. Committees. The board of directors may, by resolution
passed by a majority of the whole board, designate one or more committees. Each
committee shall consist of one or more of the directors of the corporation,
which, to the extent provided in such resolution and not otherwise limited by
statute, shall have and may exercise the powers of the board of directors in the
management and affairs of the corporation including without limitation the power
to declare a dividend and to authorize the issuance of stock. The board of
directors may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee. Such committee or committees shall have such name or names as may
be determined from time to time by resolution adopted by the board of directors.
Each committee shall keep regular minutes of its meetings and report the same to
the directors when required.
Section 8. Committee Rules. Each committee of the board of directors
may fix its own rules of procedure and shall hold its meetings as provided by
such rules, except as may otherwise be provided by the resolution of the board
of directors designating such committee, but in all cases the presence of at
least a majority of the members of such committee shall be necessary to
constitute a quorum. In the event that a member and that member's alternate, if
alternates are designated by the board of directors as provided in Section 7 of
this Article III, of such committee is/are absent or disqualified, the member or
members thereof present at any meeting and not disqualified from voting, whether
or not such member or members constitute a quorum, may unanimously appoint
another member of the board of directors to act at the meeting in place of any
such absent or disqualified member.
Section 9. Communications Equipment. Members of the board of
directors or any committee thereof may participate in and act at any meeting of
such board or committee through the use of a conference telephone or other
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in the meeting pursuant to this
section shall constitute presence in person at the meeting.
Section 10. Action by Written Consent. Any action required or
permitted to be taken at any meeting of the board of directors, or of any
committee thereof, may be taken without a meeting if all members of the board or
committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the board of directors or
committee.
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ARTICLE IV - OFFICERS
Section 1. Number. The officers of the corporation shall be elected
by the board of directors and shall consist of a chairman, a chief executive
officer, a president, one or more vice-presidents, a secretary, a treasurer, and
such other officers and assistant officers as may be deemed necessary or
desirable by the board of directors. Any number of offices may be held by the
same person. In its discretion, the board of directors may choose not to fill
any office for any period as it may deem advisable, except the offices of
president and secretary.
Section 2. Election and Term of Office. The officers of the
corporation shall be elected annually by the board of directors at the meeting
of the board of directors held after each annual meeting of stockholders. If the
election of officers shall not be held at such meeting, such election shall be
held as soon thereafter as conveniently may be. Vacancies may be filled or new
offices created and filled at any meeting of the board of directors. Each
officer shall hold office until the next annual meeting of the board of
directors and until a successor is duly elected and qualified or until his or
her earlier death, resignation or removal as hereinafter provided.
Section 3. Removal. Any officer or agent elected by the board of
directors may be removed by the board of directors whenever in its judgment the
best interest of the corporation would be served thereby, but such removal shall
be without prejudice to the contract rights, if any, of the person so removed.
Section 4. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise, may be filled by the board
of directors for the unexpired portion of the term by the board of directors
then in office.
Section 5. Compensation. Compensation of all officers shall be fixed
by the board of directors, and no officer shall be prevented from receiving such
compensation by virtue of the fact that he or she is also a director of the
corporation.
Section 6. Chairman of the Board. The chairman shall preside at all
meetings of the board of directors and all meetings of the stockholders and
shall have such other powers and perform such duties as may from time to time be
assigned to him by the board of directors. In the event there is a deadlock
among directors, the chairman shall be empowered to cast the deciding vote.
Section 7. The Chief Executive Officer. The chief executive officer
of the corporation shall have such powers and perform such duties as are
specified in these bylaws and as may from time to time be assigned to him by the
board of directors.
The chief executive officer shall have overall management of the
business of the corporation and its subsidiaries and shall see that all orders
and resolutions of the boards of directors of the corporation and its
subsidiaries are carried into effect. The chief executive officer shall execute
bonds, mortgages and other contracts requiring a seal, under the seal of the
corporation, except where required or permitted by law to be otherwise signed
and executed and except where the signing and execution thereof shall be
expressly delegated by the board of directors to some other
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officer or agent of the corporation. The chief executive officer shall have
general powers of supervision and shall be the final arbitrator of all
differences among officers of the corporation and its subsidiaries, and such
decision as to any matter affecting the corporation and its subsidiaries subject
only to the boards of directors.
Section 8. The President. The president shall have such powers and
perform such duties as are specified in these bylaws and as may from time to
time be assigned to him by the board of directors.
The president shall have general and active management of the
business of the corporation and shall see that all orders and resolutions of
the board of directors are carried into effect. The president shall execute
bonds, mortgages and other contracts requiring a seal, under the seal of the
corporation, except where required or permitted by law to be otherwise signed
and executed and except where the signing and execution thereof shall be
expressly delegated by the board of directors to some other officer or agent of
the corporation. The president shall have general powers of supervision and
shall be the final arbitrator of all differences between officers of the
corporation, and such decision as to any matter affecting the corporation
subject only to the board of directors.
Section 9. Vice Presidents. The vice-president, or if there shall be
more than one, the vice-presidents in the order determined by the board of
directors, shall, in the absence or disability of the president, perform the
duties and exercise the powers of the president and shall perform such other
duties and have such other powers as the board of directors may, from time to
time, determine or these bylaws may prescribe.
Section 10. The Secretary and Assistant Secretaries. The secretary
shall attend all meetings of the board of directors and all meetings of the
stockholders and record all the proceedings of the meetings of the corporation
and the board of directors in a book to be kept for that purpose and shall
perform like duties for the standing committees when required. The secretary
shall give, or cause to be given, notice of all meetings of the stockholders and
special meetings of the board of directors; perform such other duties as may be
prescribed by the board of directors or president, under whose supervision he or
she shall be; shall have custody of the corporate seal of the corporation and
the secretary, or an assistant secretary, shall have authority to affix the same
to any instrument requiring it and when so affixed, it may be attested by his or
her signature or by the signature of such assistant secretary. The board of
directors may give general authority to any other officer to affix the seal of
the corporation and to attest the affixing by his or her signature. The
assistant secretary, or if there be more than one, the assistant secretaries in
the order determined by the board of directors, shall, in the absence or
disability of the secretary, perform the duties and exercise the powers of the
secretary and shall perform such other duties and have such other powers as the
board of directors may from time to time prescribe.
Section 11. The Treasurer and Assistant Treasurer. The treasurer
shall have the custody of the corporate funds and securities; shall keep full
and accurate accounts of receipts and disbursements in books belonging to the
corporation; shall deposit all monies and other valuable effects in the name and
to the credit of the corporation as may be ordered by the board of directors,
taking proper vouchers for such disbursements; and shall render to the president
and the board of
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directors, at its regular meeting or when the board of directors so
requires, an account of the corporation. If required by the board of directors,
the treasurer shall give the corporation a bond (which shall be rendered every
six years) in such sums and with such surety or sureties as shall be
satisfactory to the board of directors for the faithful performance of the
duties of the office of treasurer and for the restoration to the corporation, in
case of death, resignation, retirement, or removal from office, of all books,
papers, vouchers, money, and other property of whatever kind in the possession
or under the control of the treasurer belonging to the corporation. The
assistant treasurer, or if there shall be more than one, the assistant
treasurers in the order determined by the board of directors, shall in the
absence or disability of the treasurer, perform the duties and exercise the
powers of the treasurer and shall perform such other duties and have such other
powers as the board of directors may from time to time prescribe.
Section 12. Other Officers, Assistant Officers and Agents. Officers,
assistant officers and agents, if any, other than those whose duties are
provided for in these bylaws, shall have such authority and perform such duties
as may from time to time be prescribed by resolution of the board of directors.
ARTICLE V - INDEMNIFICATION OF OFFICERS, DIRECTORS AND OTHERS
Section 1. Each person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the corporation) by reason of the fact that he or she is
or was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee, or
agent of another corporation, partnership, joint venture, trust or other
enterprise shall be indemnified and held harmless by the corporation to the
fullest extent which it is empowered to do so by the Delaware General
Corporation Law against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him or her in
connection with such action, suit or proceeding if he or she acted in good faith
and in a manner he or she reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct was unlawful.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which he or she reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his or her
conduct was unlawful.
Section 2. The corporation shall indemnify any person who was or is
a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he or she is or was a director,
officer, employee or agent of the corporation or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorney's fees) actually and reasonably incurred by him or
her in connection with the defense or settlement of such action or suit if he or
she
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acted in good faith and in a manner he or she reasonably believed to be in or
not opposed to the best interests of the corporation, except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the court
shall deem proper.
Section 3. To the extent that a director, officer, employee or agent
of a corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in Sections 1 and 2 of this Article V
or in defense of any claim, issue or matter therein, he or she shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him or her in connection therewith.
Section 4. Any indemnification under Sections 1 and 2 of this
Article V (unless ordered by a court) shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification of the
director, officer, employee, or agent is proper in the circumstances because he
or she has met the applicable standard of conduct set forth in Sections 1 and 2
of this Article V. Such determination shall be made (1) by the board of
directors by a majority vote of a quorum consisting of directors who were not
parties to such action, suit or proceeding, or (2) if such a quorum is not
obtainable, or, even if obtainable a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (3) by the
stockholders.
Section 5. Expenses incurred in defending a civil or criminal
action, suit or proceeding may be paid by the corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of the director, officer, employee, or agent to
create an obligation to repay such amount if it shall ultimately be determined
that he or she is not entitled to be indemnified by the corporation as
authorized in this Article V.
Section 6. The indemnification and advancement of expenses provided
by or granted pursuant to the other sections of this Article V shall not be
deemed exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any other bylaw, agreement, vote
of stockholders, of disinterested directors or otherwise, both as to action in
his official capacity and as to action in another capacity while holding such
office.
Section 7. The corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against
him or her and incurred by him or her in any such capacity, or arising out of
his or her status as such, whether or not the corporation would have the power
to indemnify him or her against such liability under the provisions of this
Article V.
Section 8. For purposes of this Article V, references to "the
corporation" shall include, in addition to the resulting corporation, any
constituent corporation (including any
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constituent of a constituent) absorbed in a consolidation or merger which, if
its separate existence had continued, would have had power and authority to
indemnify its directors, officers, employees and agents so that any person who
is or was a director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise shall stand in the same position under
the provisions of this Article V with respect to the resulting or surviving
corporation as he or she would have with respect to such constituent corporation
if its separate existence had continued.
Section 9. For purposes of this Article V, references to "other
enterprises" shall include employee benefit plans; references to "fines" shall
include any excise taxes assessed on a person with respect to an employee
benefit plan; and references to "serving at the request of the corporation"
shall include any service as a director, officer, employee or agent of the
corporation which imposes duties on, or involves services by, such director,
officer, employee, or agent with respect to an employee benefit plan, its
participants, or beneficiaries; and a person who acted in good faith and in a
manner he reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the corporation" as referred to in
this Article V.
Section 10. The indemnification and advancement of expenses provided
by, or granted pursuant to this Article V shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
ARTICLE VI - CERTIFICATES OF STOCK
Section 1. Form. Every holder of stock in the corporation shall be
entitled to have a certificate, signed by, or in the name of the corporation by
the president or a vice-president, and the secretary or an assistant secretary
of the corporation, certifying the number of shares owned by him or her in the
corporation. Where a certificate is signed (l) by a transfer agent or an
assistant transfer agent other than the corporation or its employee or (2) by a
registrar, other than the corporation or its employee, the signature of any such
president, vice-president, secretary, or assistant secretary may be facsimile.
In case any officer or officers have signed a certificate or certificates, or
whose facsimile signature or signatures have been used on certificate or
certificates, shall cease to be such officer or officers of the corporation
whether because of death, resignation or otherwise before such certificate or
certificates have been delivered by the corporation, such certificate or
certificates may nevertheless be issued and delivered as though the person or
persons who signed such certificate or certificates or whose facsimile signature
or signatures have been used on such certificate or certificates had not ceased
to be such officer or officers of the corporation. All certificates for shares
shall be consecutively numbered or otherwise identified. The name of the person
to whom the shares represented thereby are issued, with the number of shares and
date of issue, shall be entered on the books of the corporation. All
certificates surrendered to the corporation for transfer shall be cancelled,
and no new certificate shall be issued in replacement until the former
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certificate for a like number of shares shall have been surrendered or
cancelled, except as otherwise provided in Section 2 with respect to lost,
stolen or destroyed certificates.
Section 2. Lost Certificates. The board of directors may direct a
new certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the corporation alleged to have been lost,
stolen, or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen, or destroyed. When
authorizing such issue of a new certificate or certificates, the board of
directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen, or destroyed certificate or
certificates, or his or her legal representative, to give the corporation a bond
in such sum as it may direct as indemnity against any claim that may be made
against the corporation with respect to the certificate alleged to have been
lost, stolen or destroyed.
Section 3. Fixing a Record Date. The board of directors may fix in
advance a record date for the determination of stockholders entitled to notice
of, and to vote at, any meeting of stockholders and any adjournment thereof;
stockholders entitled to consent to corporate action in writing without a
meeting; stockholders entitled to receive payment of any dividend or other
distribution or allotment of rights or entitled to exercise any rights in
respect to any change, conversion or exchange of stock; or, for the purpose of
any other lawful action, which record date may not precede the date on which the
resolution fixing such record date is adopted by the board of directors. The
record date for the determination of stockholders entitled to notice of, and to
vote at, a meeting of stockholders shall not be more than sixty (60) days nor
less than ten (10) days before the date of such meeting. The record date for the
determination of stockholders entitled to consent to corporate action in writing
without a meeting shall not be more than ten (10) days after the date upon which
the resolution fixing the record date is adopted by the board of directors. The
record date for the determination of stockholders with respect to any other
action shall not be more than sixty (60) days before the date of such action. If
no record date is fixed: the record date for determining stockholders entitled
to notice of, and to vote at, a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held; the record date for determining stockholders entitled
to consent to corporate action in writing without a meeting when no prior action
by the board of directors is required by the Delaware General Corporation Law,
shall be the first date on which a signed written consent setting forth the
action taken or proposed to be taken is delivered to the corporation by delivery
to its registered office in the State of Delaware, its principal place of
business, or an officer or agent of the corporation having custody of the book
in which proceedings of meetings of stockholders are recorded; and, the record
date for determining stockholders with respect to any other action shall be the
close of business on the day on which the board of directors adopts the
resolution relating thereto.
ARTICLE VII - GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the
corporation, subject to the provisions of the certificate of incorporation, if
any, may be declared by the board of directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, or
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in shares of the capital stock, subject to the provisions of the certificate of
incorporation. Before payment of any dividend, there may be set aside out of any
funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, equalize dividends, repair or
maintain any property of the corporation, or for any other purpose, and the
directors may modify or abolish any such reserve in the manner in which it was
created.
Section 2. Checks, Drafts or Orders. All checks, drafts, or other
orders for the payment of money by or to the corporation and all notes and other
evidences of indebtedness issued in the name of the corporation shall be signed
by such officer or officers, agent or agents of the corporation, and in such
manner, as shall be determined by resolution of the board of directors or a duly
authorized committee thereof.
Section 3. Contracts. The board of directors may authorize any
officer or officers, or any agent or agents, of the corporation to enter into
any contract or to execute and deliver any instrument in the name of and on
behalf of the corporation, and such authority may be general or confined to
specific instances.
Section 4. Loans. The corporation may lend money to, or guarantee
any obligation of, or otherwise assist any officer or other employee of the
corporation or of its subsidiary, including any officer or employee who is a
director of the corporation or its subsidiary, whenever, in the judgment of the
directors, such loan, guaranty or assistance may reasonably be expected to
benefit the corporation. The loan, guaranty or other assistance may be with or
without interest, and may be unsecured, or secured in such manner as the board
of directors shall approve, including, without limitation, a pledge of shares of
stock of the corporation. Nothing contained in this section shall be deemed to
deny, limit or restrict the powers of guaranty or warranty of the corporation at
common law or under any statute.
Section 5. Fiscal Year. The fiscal year of the corporation shall be
fixed by resolution of the board of directors.
Section 6. Corporate Seal. The board of directors shall provide a
corporate seal which shall be in the form of a circle and shall have inscribed
thereon the name of the corporation and the words "Corporate Seal, Delaware."
The seal may be used by causing it or a facsimile thereof to be impressed or
affixed or reproduced or otherwise.
Section 7. Voting Securities Owned by Corporation. Voting securities
in any other corporation held by the corporation shall be voted by the president
or the vice president, unless the board of directors specifically confers
authority to vote with respect thereto, upon some other person or officer. Any
person authorized to vote securities shall have the power to appoint proxies,
with general power of substitution.
Section 8. Inspection of Books and Records. Any stockholder of
record, in person or by attorney or other agent, shall, upon written demand upon
oath stating the purpose thereof, have the right during the usual hours of
business to inspect for any proper purpose the corporation's stock
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ledger, a list of its stockholders, and its other books and records, and to make
copies or extracts therefrom. A proper purpose shall mean any purpose reasonably
related to such person's interest as a stockholder. In every instance where an
attorney or other agent shall be the person who seeks the right to inspection,
the demand under oath shall be accompanied by a power of attorney or such other
writing which authorizes the attorney or other agent to so act on behalf of the
stockholder. The demand under oath shall be directed to the corporation at its
registered office in the State of Delaware or at its principal place of
business.
Section 9. Section Headings. Section headings in these bylaws are
for convenience of reference only and shall not be given any substantive effect
in limiting or otherwise construing any provision herein.
Section 10. Inconsistent Provisions. In the event that any provision
of these bylaws is or becomes inconsistent with any provision of the certificate
of incorporation, the Delaware General Corporation Law or any other applicable
law, the provision of these bylaws shall not be given any effect to the extent
of such inconsistency but shall otherwise be given full force and effect.
ARTICLE VIII - AMENDMENTS
These bylaws may be amended, altered or repealed and new bylaws
adopted at any meeting of the board of directors by a majority vote, provided
that the affirmative vote of the holders of a majority of the shares of stock of
the corporation then entitled to vote shall be required to adopt any provision
inconsistent with, or to amend or repeal any provision of, Section 1 or 3 of
Article III or this Article VIII. The fact that the power to adopt, amend, alter
or repeal the bylaws has been conferred upon the board of directors shall not
divest the stockholders of the same powers.
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AMENDED AND RESTATED
BY-LAWS
OF
ANVIL HOLDINGS, INC.
A Delaware Corporation
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the corporation in
the State of Delaware shall be located at 1209 Orange Street, Wilmington,
Delaware 19805, in the County of New Castle. The name of the corporation's
registered agent at such address shall be The Corporation Trust Company. The
registered office and/or registered agent of the corporation may be changed from
time to time by action of the board of directors.
Section 2. Other Offices. The corporation may also have offices at such
other places, both within and without the State of Delaware, as the board of
directors may from time to time determine or the business of the corporation may
require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place and Time of Meetings. An annual meeting of the
stockholders shall be held each year for the purpose of electing directors and
conducting such other proper business as may come before the meeting. The date,
time and place of the annual meeting may be determined by resolution of the
board of directors or as set by the president of the corporation.
Section 2. Special Meetings. Special meetings of stockholders may be
called for any purpose (including, without limitation, the filling of board
vacancies and newly created directorships), and may be held at such time and
place, within or without the State of Delaware, as shall be stated in a notice
of meeting or in a duly executed waiver of notice thereof. Such meetings may be
called at any time by two or more members of the board of directors or the
president and shall be called by the president upon the written request of
holders of shares entitled to cast not less than twenty-five percent (25%) of
the outstanding shares of any series or class of the corporation's Capital
Stock.
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Section 3. Place of Meetings. The board of directors, or the president, as
applicable, may designate any place, either within or without the State of
Delaware, as the place of meeting for any annual meeting or for any special
meeting called by the president or the board of directors. If no designation is
made, or if a special meeting be otherwise called, the place of meeting shall be
the principal executive office of the corporation.
Section 4. Notice. Whenever stockholders are required or permitted to take
action at a meeting, written or printed notice stating the place, date, time,
and, in the case of special meetings, the purpose or purposes, of such meeting,
shall be given to each stockholder entitled to vote at such meeting not less
than 10 nor more than 60 days before the date of the meeting. All such notices
shall be delivered, either personally or by mail, by or at the direction of the
board of directors, the president or the secretary, and if mailed, such notice
shall be deemed to be delivered when deposited in the United States mail,
postage prepaid, addressed to the stockholder at his, her or its address as the
same appears on the records of the corporation. Attendance of a person at a
meeting shall constitute a waiver of notice of such meeting, except when the
person attends for the express purpose of objecting at the beginning of the
meeting to the transaction of any business because the meeting is not lawfully
called or convened.
Section 5. Stockholders List. The officer having charge of the stock
ledger of the corporation shall make, at least 10 days before every meeting of
the stockholders, a complete list of the stockholders entitled to vote at such
meeting, arranged in alphabetical order, showing the address of each stockholder
and the number of shares registered in the name of each stockholder. Such list
shall be open to the examination of any stockholder, for any purpose germane to
the meeting, during ordinary business hours, for a period of at least 10 days
prior to the meeting, either at a place within the city where the meeting is to
be held, which place shall be specified in the notice of the meeting or, if not
so specified, at the place where the meeting is to be held. The list shall also
be produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
Section 6. Quorum. Except as otherwise provided by applicable law or by
the Certificate of Incorporation, a majority of the outstanding shares of the
corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of stockholders. If less than a majority of the
outstanding shares are represented at a meeting, a majority of the shares so
represented may adjourn the meeting from time to time in accordance with Section
7 of this Article, until a quorum shall be present or represented.
Section 7. Adjourned Meetings. When a meeting is adjourned to another time
and place, notice need not be given of the adjourned meeting if the time and
place thereof are announced at the meeting at which the adjournment is taken. At
the adjourned meeting the corporation may transact any business which might have
been transacted at the original meeting. If the adjournment is for more than
thirty days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
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Section 8. Vote Required. When a quorum is present, the affirmative vote
of the majority of shares present in person or represented by proxy at the
meeting and entitled to vote on the subject matter shall be the act of the
stockholders, unless the question is one upon which by express provisions of an
applicable law or of the certificate of incorporation a different vote is
required, in which case such express provision shall govern and control the
decision of such question. Where a separate vote by class is required, the
affirmative vote of the majority of shares of such class present in person or
represented by proxy at the meeting shall be the act of such class.
Section 9. Voting Rights. Except as otherwise provided by the General
Corporation Law of the State of Delaware or by the Certificate of Incorporation
of the corporation or any amendments thereto and subject to Section 5 of this
Article III, every stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of common stock held
by such stockholder.
Section 10. Proxies. Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him, her or
it by proxy. Every proxy must be signed by the stockholder granting the proxy or
by his, her or its attorney-in-fact. No proxy shall be voted or acted upon after
three years from its date, unless the proxy provides for a longer period. A duly
executed proxy shall be irrevocable if it states that it is irrevocable and if,
and only as long as, it is coupled with an interest sufficient in law to support
an irrevocable power. A proxy may be made irrevocable regardless of whether the
interest with which it is coupled is an interest in the stock itself or an
interest in the corporation generally.
Section 11. Action by Written Consent. Unless otherwise provided in the
Certificate of Incorporation, any action required to be taken at any annual or
special meeting of stockholders of the corporation, or any action which may be
taken at any annual or special meeting of such stockholders, may be taken
without a meeting, without prior notice and without a vote, if a consent or
consents in writing, setting forth the action so taken and bearing the dates of
signature of the stockholders who signed the consent or consents, shall be
signed by the holders of outstanding stock having not less than a majority of
the shares entitled to vote, or, if greater, not less than the minimum number of
votes that would be necessary to authorize or take such action at a meeting at
which all shares entitled to vote thereon were present and voted and shall be
delivered to the corporation by delivery to its registered office in the state
of Delaware, or the corporation's principal place of business, or an officer or
agent of the corporation having custody of the book or books in which
proceedings of meetings of the stockholders are recorded. Delivery made to the
corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested provided, however, that no consent or consents
delivered by certified or registered mail shall be deemed delivered until such
consent or consents are actually received at the registered office. All consents
properly delivered in accordance with this section shall be deemed to be
recorded when so delivered. No written consent shall be effective to take the
corporate action referred to therein unless, within sixty days of the earliest
dated consent delivered to the corporation as required by this section, written
consents signed by the holders of a sufficient number of shares to take such
corporate action are so recorded. Prompt notice of the taking of the corporate
action without a meeting by less than unanimous written consent shall be given
to those stockholders who have not consented in writing.
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Any action taken pursuant to such written consent or consents of the stock
holders shall have the same force and effect as if taken by the stockholders at
a meeting thereof.
Section 12. Business Brought Before an Annual Meeting. At an annual
meeting of the stockholders, only such business shall be conducted as shall have
been properly brought before the meeting. To be properly brought before an
annual meeting, business must be (i) specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the Board of Directors, (ii)
brought before the meeting by or at the direction of the Board of Directors or
(iii) otherwise properly brought before the meeting by a stockholder. For
business to be properly brought before an annual meeting by a stockholder, the
stockholder must have given timely notice thereof in writing to the secretary of
the Corporation. To be timely, a stockholder's notice must be delivered to or
mailed and received at the principal executive offices of the Corporation, not
less than 60 days nor more than 90 days prior to the meeting; provided, however,
that in the event that less than 70 days' notice or prior public announcement of
the date of the meeting is given or made to stockholders, notice by the
stockholder to be timely must be so received not later than the close of
business on the 10th day following the date on which such notice of the date of
the annual meeting was mailed or such public announcement was made. A
stockholder's notice to the secretary shall set forth as to each matter the
stockholder proposes to bring before the annual meeting (i) a brief description
of the business desired to be brought before the annual meeting, (ii) the name
and address, as they appear on the Corporation's books, of the stockholder
proposing such business, (iii) the class and number of shares of the Corporation
which are beneficially owned by the stockholder and (iv) any material interest
of the stockholder in such business. Notwithstanding anything in these By-laws
to the contrary, no business shall be conducted at an annual meeting except in
accordance with the procedures set forth in this section. The presiding officer
of an annual meeting shall, if the facts warrant, determine and declare to the
meeting that business was not properly brought before the meeting and in
accordance with the provisions of this section; if he should so determine, he
shall so declare to the meeting and any such business not properly brought
before the meeting shall not be transacted. For purposes of this section,
"public announcement" shall mean disclosure in a press release reported by Dow
Jones News Service, Associated Press or a comparable national news service.
Nothing in this section shall be deemed to affect any rights of stockholders to
request inclusion of proposals in the Corporation's proxy statement pursuant to
Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act").
ARTICLE III
DIRECTORS
Section 1. General Powers. The business and affairs of the corporation
shall be managed by or under the direction of the board of directors.
Section 2. Number, Election and Term of Office. The number of directors
which shall constitute the board of directors shall be eight; provided, that in
the event any of the stockholders of the corporation have entered into an
agreement (as the same may be amended from time to time,
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a "Stockholders Agreement") which provides for the manner in which the directors
of the corporation are to be elected, and certain stockholders have the right to
designate and cause the election of a certain number of directors, they need not
designate as many directors as they have the right to designate, in which event
the number of directors which shall constitute the board of directors shall be
such lesser number as the stockholders elect to designate until such
stockholders have elected to designate their full complement of directors.
Otherwise, the number of directors shall be established from time to time by
resolution of the board. The directors shall be elected by a plurality of the
votes of the shares present in person or represented by proxy at the meeting and
entitled to vote in the election of directors. The directors shall be elected in
this manner at the annual meeting of the stockholders, except as provided in
Section 4 of this Article III. Each director elected shall hold office until a
successor is duly elected and qualified or until his or her earlier death,
resignation or removal as hereinafter provided.
Section 3. Removal and Resignation. Any director or the entire board of
directors may be removed at any time, with or without cause, by the holders of a
majority of the shares then entitled to vote at an election of directors;
provided, that in the event any of the stockholders of the corporation have
entered into a Stockholders Agreement which provides for the manner in which the
directors of the corporation are to be elected, and such stockholders have so
caused the election of such directors, a director may be removed from the board
of directors only in accordance with such Stockholders Agreement, for so long as
(i) such agreement has been filed with the corporation and (ii) has not been
terminated. Whenever the holders of any class or series are entitled to elect
one or more directors by the provisions of the corporation's Certificate of
Incorporation, the provisions of this section shall apply, in respect to the
removal without cause of a director or directors so elected, to the vote of the
holders of the outstanding shares of that class or series and not to the vote of
the outstanding shares as a whole. Any director may resign at any time upon
written notice to the corporation.
Section 4. Vacancies. Except as otherwise provided by the Certificate of
Incorporation of the corporation or any amendments thereto, vacancies and newly
created directorships resulting from any increase in the authorized number of
directors may be filled either by a majority vote of the holders of the
corporation's outstanding stock entitled to vote thereon or by a majority vote
of the whole board of directors; provided, that if a Stockholders Agreement is
in force and continuing, and such Stockholders Agreement provides for a
different way to fill a vacancy or newly created directorship, the terms of such
Stockholders Agreement shall control. Each director so chosen shall hold office
until a successor is duly elected and qualified or until his or her earlier
death, resignation or removal as herein provided.
Section 5. Annual Meetings. The annual meeting of each newly elected board
of directors shall be held without notice other than this by-law immediately
after, and at the same place as, the annual meeting of stockholders.
Section 6. Other Meetings and Notice. Regular meetings, other than the
annual meeting, of the board of directors may be held without notice at such
time and at such place as shall from time to time be determined by resolution of
the board. Special meetings of the directors may be called by or at the request
of the president or vice president of the Corporation on at least 24 hours
notice
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to each director, either personally, by telephone, by mail, by facsimile or by
telegraph; in like manner and on like notice the president must call a special
meeting on the written request of at least a majority of the directors.
Section 7. Quorum, Required Vote and Adjournment. A majority of the total
number of directors holding office at any particular time shall constitute a
quorum for the transaction of business; provided, that if a Stockholders
Agreement is in force and continuing, and such Stockholders Agreement provides
that a number of directors which would, but for the terms of this proviso,
otherwise constitute a quorum shall not constitute a quorum, the terms of such
Stockholders Agreement shall control. The vote of a majority of directors
present at a meeting at which a quorum is present shall be the act of the board
of directors; provided, that if a Stockholders Agreement is in force and
continuing, and such Stockholders Agreement provides that to constitute an
action of the corporation's board of directors, such vote shall require the
affirmative vote of the directors required by such Stockholders Agreement. If a
quorum shall not be present at any meeting of the board of directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 8. Committees. The board of directors may, by resolution passed by
a majority of the whole board, designate one or more committees, each committee
to consist of one or more of the directors of the corporation, which to the
extent provided in such resolution or these by-laws shall have and may exercise
the powers of the board of directors in the management and affairs of the
corporation, except as otherwise limited by law or by the provisions of a
Stockholders Agreement. The board of directors may designate one or more
directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. Such committee or
committees shall have such name or names as may be determined from time to time
by resolution adopted by the board of directors. Each committee shall keep
regular minutes of its meetings and report the same to the board of directors
when required.
Section 9. Committee Rules. Each committee of the board of directors may
fix its own rules of procedure and shall hold its meetings as provided by such
rules, except as may otherwise be provided by a resolution of the board of
directors designating such committee. Unless otherwise provided in such a
resolution, the presence of at least a majority of the members of the committee
shall be necessary to constitute a quorum; provided, that a number of members
which would, but for the terms of this proviso, otherwise constitute a quorum
shall not constitute a quorum unless such number of members includes at least
one member who has been designated by 399 Venture Partners, Inc. and at least
one member who has been designated by Bruckmann, Rosser, Sherrill & Co., L.P. In
the event that a member and that member's alternate, if alternates are
designated by the board of directors as provided in Section 8 of this Article
III, of such committee is or are absent or disqualified, the member or members
thereof present at any meeting and not disqualified from voting, whether or not
such member or members constitute a quorum, may unanimously appoint another
member of the board of directors to act at the meeting in place of any such
absent or disqualified member.
Section 10. Communications Equipment. Members of the board of directors or
any committee thereof may participate in and act at any meeting of such board or
committee through the
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use of a conference telephone or other communications equipment by means of
which all persons participating in the meeting can hear each other, and
participation in the meeting pursuant to this section shall constitute presence
in person at the meeting.
Section 11. Waiver of Notice and Presumption of Assent. Any member of the
board of directors or any committee thereof who is present at a meeting shall be
conclusively presumed to have waived notice of such meeting except when such
member attends for the express purpose of objecting at the beginning of the
meeting to the transaction of any business because the meeting is not lawfully
called or convened. Such member shall be conclusively presumed to have assented
to any action taken unless his or her dissent shall be entered in the minutes of
the meeting or unless his or her written dissent to such action shall be filed
with the person acting as the secretary of the meeting before the adjournment
thereof or shall be forwarded by registered mail to the secretary of the
corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to any member who voted in favor of such action.
Section 12. Action by Written Consent. Unless otherwise restricted by the
Certificate of Incorporation, any action required or permitted to be taken at
any meeting of the board of directors, or of any committee thereof, may be taken
without a meeting if all members of the board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the board or committee.
ARTICLE IV
OFFICERS
Section 1. Number. The officers of the corporation shall be elected by the
board of directors and shall consist of a chairman, if any is elected, a
president, one or more vice presidents, a secretary, a treasurer, and such other
officers and assistant officers as may be deemed necessary or desirable by the
board of directors. Any number of offices may be held by the same person, except
that no person may simultaneously hold the office of president and secretary. In
its discretion, the board of directors may choose not to fill any office for any
period as it may deem advisable.
Section 2. Election and Term of Office. The officers of the corporation
shall be elected annually by the board of directors at its first meeting held
after each annual meeting of stockholders or as soon thereafter as conveniently
may be. The president shall appoint other officers to serve for such terms as he
or she deems desirable. Vacancies may be filled or new offices created and
filled at any meeting of the board of directors. Each officer shall hold office
until a successor is duly elected and qualified or until his or her earlier
death, resignation or removal as hereinafter provided.
Section 3. Removal. Any officer or agent elected by the board of directors
may be removed by the board of directors whenever in its judgment the best
interests of the corporation would be served thereby, but such removal shall be
without prejudice to the contract rights, if any, of the person so removed.
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Section 4. Vacancies. Any vacancy occurring in any office because of
death, resignation, removal, disqualification or otherwise, may be filled for
the unexpired portion of the term by the board of directors then in office.
Section 5. Compensation. Compensation of all officers shall be fixed by
the board of directors, and no officer shall be prevented from receiving such
compensation by virtue of his or her also being a director of the corporation.
Section 6. The Chairman of the Board. The Chairman of the Board, if one
shall have been elected, shall be a member of the board, an officer of the
corporation, and, if present, shall preside at each meeting of the board of
directors or shareholders. He shall advise the president, and in the president's
absence, other officers of the corporation, and shall perform such other duties
as may from time to time be assigned to him by the board of directors.
Section 7. The President. The president shall be the chief executive
officer of the corporation. In the absence of the Chairman of the Board, or if a
Chairman of the Board shall have not been elected, the president shall: preside
at all meetings of the stockholders and board of directors at which he or she is
present; subject to the powers of the board of directors, shall have general
charge of the business, affairs and property of the corporation, and control
over its officers, agents and employees; and shall see that all orders and
resolutions of the board of directors are carried into effect. The president
shall have such other powers and perform such other duties as may be prescribed
by the board of directors or as may be provided in these by-laws.
Section 8. Vice-presidents. The vice-president, if any, or if there shall
be more than one, the vice-presidents in the order determined by the board of
directors shall, in the absence or disability of the president, act with all of
the powers and be subject to all the restrictions of the president. The
vice-presidents shall also perform such other duties and have such other powers
as the board of directors, the president or these by-laws may, from time to
time, prescribe.
Section 9. The Secretary and Assistant Secretaries. The secretary shall
attend all meetings of the board of directors, all meetings of the committees
thereof and all meetings of the stockholders and record all the proceedings of
the meetings in a book or books to be kept for that purpose. Under the
president's supervision, the secretary shall give, or cause to be given, all
notices required to be given by these by-laws or by law; shall have such powers
and perform such duties as the board of directors, the president or these
by-laws may, from time to time, prescribe; and shall have custody of the
corporate seal of the corporation. The secretary, or an assistant secretary,
shall have authority to affix the corporate seal to any instrument requiring it
and when so affixed, it may be attested by his or her signature or by the
signature of such assistant secretary. The board of directors may give general
authority to any other officer to affix the seal of the corporation and to
attest the affixing by his or her signature. The assistant secretary, or if
there be more than one, the assistant secretaries in the order determined by the
board of directors, shall, in the absence or disability of the secretary,
perform the duties and exercise the powers of the secretary and shall perform
such other duties and have such other powers as the board of directors, the
president, or secretary may, from time to time, prescribe.
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Section 10. The Treasurer and Assistant Treasurer. The treasurer shall
have the custody of the corporate funds and securities; shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
corporation; shall deposit all monies and other valuable effects in the name and
to the credit of the corporation as may be ordered by the board of directors;
shall cause the funds of the corporation to be disbursed when such disbursements
have been duly authorized, taking proper vouchers for such disbursements; and
shall render to the president and the board of directors, at its regular meeting
or when the board of directors so requires, an account of the corporation; shall
have such powers and perform such duties as the board of directors, the
president or these by-laws may, from time to time, prescribe. If required by the
board of directors, the treasurer shall give the corporation a bond (which shall
be rendered every six years) in such sums and with such surety or sureties as
shall be satisfactory to the board of directors for the faithful performance of
the duties of the office of treasurer and for the restoration to the
corporation, in case of death, resignation, retirement or removal from office,
of all books, papers, vouchers, money and other property of whatever kind in the
possession or under the control of the treasurer belonging to the corporation.
The assistant treasurer, or if there shall be more than one, the assistant
treasurers in the order determined by the board of directors, shall in the
absence or disability of the treasurer, perform the duties and exercise the
powers of the treasurer. The assistant treasurers shall perform such other
duties and have such other powers as the board of directors, the president or
treasurer may, from time to time, prescribe.
Section 11. Other Officers, Assistant Officers and Agents. Officers,
assistant officers and agents, if any, other than those whose duties are
provided for in these by-laws, shall have such authority and perform such duties
as may from time to time be prescribed by resolution of the board of directors.
Section 12. Absence or Disability of Officers. In the case of the absence
or disability of any officer of the corporation and of any person hereby
authorized to act in such officer's place during such officer's absence or
disability, the board of directors may by resolution delegate the powers and
duties of such officer to any other officer or to any director, or to any other
person whom it may select.
ARTICLE V
CERTIFICATES OF STOCK
Section 1. Form. Every holder of stock in the corporation shall be
entitled to have a certificate, signed by, or in the name of the corporation by,
the chairman of the board, the president or a vice-president and the secretary
or an assistant secretary of the corporation, certifying the number of shares
owned by such holder in the corporation. If such a certificate is countersigned
(1) by a transfer agent or an assistant transfer agent other than the
corporation or its employee or (2) by a registrar, other than the corporation or
its employee, the signature of any such chairman of the board, president,
vice-president, secretary or assistant secretary may be facsimiles. In case any
officer or officers who have signed, or whose facsimile signature or signatures
have been used on, any such certificate or certificates shall cease to be such
officer or officers of the corporation whether
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because of death, resignation or otherwise before such certificate or
certificates have been delivered by the corporation, such certificate or
certificates may nevertheless be issued and delivered as though the person or
persons who signed such certificate or certificates or whose facsimile signature
or signatures have been used thereon had not ceased to be such officer or
officers of the corporation. All certificates for shares shall be consecutively
numbered or otherwise identified. The name of the person to whom the shares
represented thereby are issued, with the number of shares and date of issue,
shall be entered on the books of the corporation. Shares of stock of the
corporation shall only be transferred on the books of the corporation by the
holder of record thereof or by such holder's attorney duly authorized in
writing, upon surrender to the corporation of the certificate or certificates
for such shares endorsed by the appropriate person or persons, with such
evidence of the authenticity of such endorsement, transfer, authorization and
other matters as the corporation may reasonably require, and accompanied by all
necessary stock transfer stamps. In that event, it shall be the duty of the
corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate or certificates and record the transaction on its books. The
board of directors may appoint a bank or trust company organized under the laws
of the United States or any state thereof to act as its transfer agent or
registrar, or both in connection with the transfer of any class or series of
securities of the corporation.
Section 2. Lost Certificates. The board of directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates previously issued by the corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the board of
directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or his or her legal representative, to give the corporation a bond
sufficient to indemnify the corporation against any claim that may be made
against the corporation on account of the loss, theft or destruction of any such
certificate or the issuance of such new certificate.
Section 3. Fixing a Record Date for Stockholder Meetings. In order that
the corporation may determine the stockholders entitled to notice of or to vote
at any meeting of stockholders or any adjournment thereof, the board of
directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the board of
directors, and which record date shall not be more than 60 nor less than 10 days
before the date of such meeting. If no record date is fixed by the board of
directors, the record date for determining stockholders entitled to notice of or
to vote at a meeting of stockholders shall be the close of business on the next
day preceding the day on which notice is given, or if notice is waived, at the
close of business on the day next preceding the day on which the meeting is
held. A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the board of directors may fix a new record date for the
adjourned meeting.
Section 4. Fixing a Record Date for Action by Written Consent. In order
that the corporation may determine the stockholders entitled to consent to
corporate action in writing without a meeting, the board of directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the board of directors, and
which date
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shall not be more than ten days after the date upon which the resolution fixing
the record date is adopted by the board of directors. If no record date has been
fixed by the board of directors, the record date for determining stockholders
entitled to consent to corporate action in writing without a meeting, when no
prior action by the board of directors is required by statute, shall be the
first date on which a signed written consent setting forth the action taken or
proposed to be taken is delivered to the corporation by delivery to its
registered office in the State of Delaware, its principal place of business or
an officer or agent of the corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Delivery made to the
corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested. If no record date has been fixed by the board of
directors and prior action by the board of directors is required by statute, the
record date for determining stockholders entitled to consent to corporate action
in writing without a meeting shall be at the close of business on the day on
which the board of directors adopts the resolution taking such prior action.
Section 5. Fixing a Record Date for Other Purposes. In order that the
corporation may determine the stockholders entitled to receive payment of any
dividend or other distribution or allotment or any rights or the stockholders
entitled to exercise any rights in respect of any change, conversion or exchange
of stock, or for the purposes of any other lawful action, the board of directors
may fix a record date, which record date shall not precede the date upon which
the resolution fixing the record date is adopted, and which record date shall be
not more than sixty days prior to such action. If no record date is fixed, the
record date for determining stockholders for any such purpose shall be at the
close of business on the day on which the board of directors adopts the
resolution relating thereto.
Section 6. Registered Stockholders. Prior to the surrender to the
corporation of the certificate or certificates for a share or shares of stock
with a request to record the transfer of such share or shares, the corporation
may treat the registered owner as the person entitled to receive dividends, to
vote, to receive notifications and otherwise to exercise all the rights and
powers of an owner. The corporation shall not be bound to recognize any
equitable or other claim to or interest in such share or shares on the part of
any other person, whether or not it shall have express or other notice thereof.
Section 7. Subscriptions for Stock. Unless otherwise provided for in the
subscription agreement, subscriptions for shares shall be paid in full at such
time, or in such installments and at such times, as shall be determined by the
board of directors. Any call made by the board of directors for payment on
subscriptions shall be uniform as to all shares of the same class or as to all
shares of the same series. In case of default in the payment of any installment
or call when such payment is due, the corporation may proceed to collect the
amount due in the same manner as any debt due the corporation.
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ARTICLE VI
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the corporation,
subject to the provisions of the Certificate of Incorporation, if any, may be
declared by the board of directors at any regular or special meeting, pursuant
to law. Dividends may be paid in cash, in property, or in shares of the capital
stock, subject to the provisions of the Certificate of Incorporation. Before
payment of any dividend, there may be set aside out of any funds of the
corporation available for dividends such sum or sums as the directors from time
to time, in their absolute discretion, think proper as a reserve or reserves to
meet contingencies, or for equalizing dividends, or for repairing or maintaining
any property of the corporation, or any other purpose and the directors may
modify or abolish any such reserve in the manner in which it was created.
Section 2. Checks, Drafts or Orders. All checks, drafts or other orders
for the payment of money by or to the corporation and all notes and other
evidences of indebtedness issued in the name of the corporation shall be signed
by such officer or officers, agent or agents of the corporation, and in such
manner, as shall be determined by resolution of the board of directors or a duly
authorized committee thereof.
Section 3. Contracts. The board of directors may authorize any officer or
officers, or any agent or agents, of the corporation to enter into any contract
or to execute and deliver any instrument in the name of and on behalf of the
corporation, and such authority may be general or confined to specific
instances.
Section 4. Loans. The corporation may lend money to, or guarantee any
obligation of, or otherwise assist any officer or other employee of the
corporation or of its subsidiaries, including any officer or employee who is a
director of the corporation or its subsidiaries, whenever, in the judgment of
the directors, such loan, guaranty or assistance may reasonably be expected to
benefit the corporation. The loan, guaranty or other assistance may be with or
without interest, and may be unsecured, or secured in such manner as the board
of directors shall approve, including, without limitation, a pledge of shares of
stock of the corporation. Nothing in this section contained shall be deemed to
deny, limit or restrict the powers of guaranty or warranty of the corporation at
common law or under any statute.
Section 5. Fiscal Year. The fiscal year of the corporation shall be fixed
by resolution of the board of directors.
Section 6. Corporate Seal. The board of directors shall provide a
corporate seal which shall be in the form of a circle and shall have inscribed
thereon the name of the corporation and the words "Corporate Seal, Delaware".
The seal may be used by causing it or a facsimile thereof to be impressed or
affixed or reproduced or otherwise.
Section 7. Voting Securities Owned By Corporation. Voting securities in
any other corporation held by the corporation shall be voted by the president,
unless the board of directors
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otherwise specifically confers authority to vote with respect thereto, which
authority may be general or confined to specific instances, upon some other
person or officer. Any person authorized to vote securities shall have the power
to appoint proxies, with general power of substitution.
Section 8. Inspection of Books and Records. Any stockholder of record, in
person or by attorney or other agent, shall, upon written demand under oath
stating the purpose thereof, have the right during the usual hours for business
to inspect for any proper purpose the corporation's stock ledger, a list of its
stockholders and its other books and records, and to make copies or extracts
therefrom. A proper purpose shall mean any purpose reasonably related to such
person's interest as a stockholder. In every instance where an attorney or other
agent shall be the person who seeks the right to inspection, the demand under
oath shall be accompanied by a power of attorney or such other writing which
authorizes the attorney or other agent to so act on behalf of the stockholder.
The demand under oath shall be directed to the corporation at its registered
office in the State of Delaware and at its principal place of business.
Section 9. Section Headings. Section headings in these by-laws are for
convenience of reference only and shall not be given any substantive effect in
limiting or otherwise construing any provision herein.
Section 10. Inconsistent Provisions. In the event that any provision of
these by-laws is or becomes inconsistent with any provision of the Certificate
of Incorporation, the General Corporation Law of the State of Delaware or any
other applicable law, the provision of these by-laws shall not be given any
effect to the extent of such inconsistency but shall otherwise be given full
force and effect.
ARTICLE VII
AMENDMENTS
Subject to the provisions of a Stockholders Agreement which may provide
otherwise, these by-laws may be amended, altered or repealed and new by-laws
adopted at any meeting of the board of directors by a majority vote of the
directors constituting a quorum at such meeting. The fact that the power to
adopt, amend, alter or repeal the by-laws has been conferred upon the board of
directors shall not divest the stockholders of the same powers.
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BY-LAWS
OF
COTTONTOPS, INC.
A Delaware Corporation
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the
corporation in the State of Delaware shall be located at 1013 Centre Road, in
the City of Wilmington, County of New Castle. The name of the corporation's
registered agent at such address shall be Corporation Service Company. The
registered office and/or registered agent of the corporation may be changed from
time to time by action of the board of directors.
Section 2. Other Offices. The corporation may also have offices at
such other places, both within and without the State of Delaware, as the board
of directors may from time to time determine or the business of the corporation
may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place and Time of Meetings. An annual meeting of the
stockholders shall be held each year within one hundred twenty (120) days after
the close of the immediately preceding fiscal year of the corporation for the
purpose of electing directors and conducting such other proper business as may
come before the meeting. The date, time and place of the annual meeting shall be
determined by the president of the corporation; provided, that if the president
does not act, the board of directors shall determine the date, time and place of
such meeting.
Section 2. Special Meetings. Special meetings of stockholders may be
called for any purpose and may be held at such time and place, within or without
the State of Delaware, as shall be stated in a notice of meeting or in a duly
executed waiver of notice thereof. Such meetings may be called at any time by
two or more members of the board of directors or the president and shall be
called by the president upon the written request of holders of shares entitled
to cast not less than fifty percent (50%) of the outstanding shares of any
series or class of the corporation's capital stock.
Section 3. Place of Meetings. The board of directors may designate
any place, either within or without the State of Delaware, as the place of
meeting for any annual meeting or for any
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special meeting called by the board of directors. If no designation is made, or
if a special meeting be otherwise called, the place of meeting shall be the
principal executive office of the corporation.
Section 4. Notice. Whenever stockholders are required or permitted
to take action at a meeting, written or printed notice stating the place, date,
time, and, in the case of special meetings, the purpose or purposes, of such
meeting, shall be given to each stockholder entitled to vote at such meeting.
Section 5. Stockholders List. The officer having charge of the stock
ledger of the corporation shall make, at least 10 days before every meeting of
the stockholders, a complete list of the stockholders entitled to vote at such
meeting arranged in alphabetical order, showing the address of each stockholder
and the number of shares registered in the name of each stockholder. Such list
shall be open to the examination of any stockholder, for any purpose germane to
the meeting, during ordinary business hours, for a period of at least 10 days
prior to the meeting, either at a place within the city where the meeting is to
be held, which place shall be specified in the notice of the meeting or, if not
so specified, at the place where the meeting is to be held. The list shall also
be produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
Section 6. Quorum. The holders of a majority of the outstanding
shares of capital stock, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders, except as otherwise
provided by statute or by the certificate of incorporation. If a quorum is not
present, the holders of a majority of the shares present in person or
represented by proxy at the meeting, and entitled to vote at the meeting, may
adjourn the meeting to another time and/or place.
Section 7. Adjourned Meetings. When a meeting is adjourned to
another time and place, notice need not be given of the adjourned meeting if the
time and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting the corporation may transact any business which
might have been transacted at the original meeting. If the adjournment is for
more than thirty days, or if after the adjournment a new record date is fixed
for the adjourned meeting, a notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at the meeting.
Section 8. Vote Required. When a quorum is present, the affirmative
vote of the majority of shares present in person or represented by proxy at the
meeting and entitled to vote on the subject matter shall be the act of the
stockholders, unless the question is one upon which by express provisions of an
applicable law or of the certificate of incorporation a different vote is
required, in which case such express provision shall govern and control the
decision of such question.
Section 9. Voting Rights. Except as otherwise provided by the
General Corporation Law of the State of Delaware or by the certificate of
incorporation of the corporation or any amendments thereto and subject to
Section 3 of Article VI hereof, every stockholder shall at every
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meeting of the stockholders be entitled to one vote in person or by proxy for
each share of common stock held by such stockholder.
Section 10. Proxies. Each stockholder entitled to vote at a meeting
of stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him or her
by proxy, but no such proxy shall be voted or acted upon after three years from
its date, unless the proxy provides for a longer period.
Section 11. Action by Written Consent. Unless otherwise provided in
the certificate of incorporation, any action required to be taken at any annual
or special meeting of stockholders of the corporation, or any action which may
be taken at any annual or special meeting of such stockholders, may be taken
without a meeting, without prior notice and without a vote, if a consent or
consents in writing, setting forth the action so taken and bearing the dates of
signature of the stockholders who signed the consent or consents, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted and
shall be delivered to the corporation by delivery to its registered office in
the state of Delaware, or the corporation's principal place of business, or an
officer or agent of the corporation having custody of the book or books in which
proceedings of meetings of the stockholders are recorded. Delivery made to the
corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested. All consents properly delivered in accordance
with this section shall be deemed to be recorded when so delivered. No written
consent shall be effective to take the corporate action referred to therein
unless, within sixty days of the earliest dated consent delivered to the
corporation as required by this section, written consents signed by the holders
of a sufficient number of shares to take such corporate action are so recorded.
Prompt notice of the taking of the corporate action without a meeting by less
than unanimous written consent shall be given to those stockholders who have not
consented in writing. Any action taken pursuant to such written consent or
consents of the stockholders shall have the same force and effect as if taken by
the stockholders at a meeting thereof.
ARTICLE III
DIRECTORS
Section 1. General Powers. The business and affairs of the
corporation shall be managed by or under the direction of the board of
directors.
Section 2. Number, Election and Term of Office. The number of
directors which shall constitute the first board shall be three (3). Thereafter,
the number of directors shall be established from time to time by resolution of
the board. The directors shall be elected by a plurality of the votes of the
shares present in person or represented by proxy at the meeting and entitled to
vote in the election of directors. The directors shall be elected in this manner
at the annual meeting of the stockholders, except as provided in Section 4 of
this Article III. Each director elected shall hold office until a successor is
duly elected and qualified or until his or her earlier death, resignation or
removal as hereinafter provided.
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Section 3. Removal and Resignation. Any director or the entire board
of directors may be removed at any time, with or without cause, by the holders
of a majority of the shares then entitled to vote at an election of directors.
Whenever the holders of any class or series are entitled to elect one or more
directors by the provisions of the corporation's certificate of incorporation,
the provisions of this section shall apply, in respect to the removal without
cause of a director or directors so elected, to the vote of the holders of the
outstanding shares of that class or series and not to the vote of the
outstanding shares as a whole. Any director may resign at any time upon written
notice to the corporation.
Section 4. Vacancies. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors may be filled
by a majority of the directors then in office, though less than a quorum, or by
a sole remaining director. Each director so chosen shall hold office until a
successor is duly elected and qualified or until his or her earlier death,
resignation or removal as herein provided.
Section 5. Annual Meetings. The annual meeting of each newly elected
board of directors shall be held without other notice than this by-law
immediately after, and at the same place as, the annual meeting of stockholders.
Section 6. Other Meetings and Notice. Regular meetings, other than
the annual meeting, of the board of directors may be held without notice at such
time and at such place as shall from time to time be determined by resolution of
the board. Special meetings of the board of directors may be called by or at the
request of the president on at least 24 hours notice to each director, either
personally, by telephone, by mail, or by telegraph.
Section 7. Quorum, Required Vote and Adjournment. A majority of the
total number of directors shall constitute a quorum for the transaction of
business. The vote of a majority of directors present at a meeting at which a
quorum is present shall be the act of the board of directors. If a quorum shall
not be present at any meeting of the board of directors, the directors present
thereat may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
Section 8. Committees. The board of directors may, by resolution
passed by a majority of the whole board, designate one or more committees, each
committee to consist of one or more of the directors of the corporation, which
to the extent provided in such resolution or these by-laws shall have and may
exercise the powers of the board of directors in the management and affairs of
the corporation except as otherwise limited by law. The board of directors may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. Such
committee or committees shall have such name or names as may be determined from
time to time by resolution adopted by the board of directors. Each committee
shall keep regular minutes of its meetings and report the same to the board of
directors when required.
Section 9. Committee Rules. Each committee of the board of directors
may fix its own rules of procedure and shall hold its meetings as provided by
such rules, except as may
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otherwise be provided by a resolution of the board of directors designating such
committee. In the event that a member and that member's alternate, if alternates
are designated by the board of directors as provided in Section 8 of this
Article III, of such committee is or are absent or disqualified, the member or
members thereof present at any meeting and not disqualified from voting, whether
or not such member or members constitute a quorum, may unanimously appoint
another member of the board of directors to act at the meeting in place of any
such absent or disqualified member.
Section 10. Communications Equipment. Members of the board of
directors or any committee thereof may participate in and act at any meeting of
such board or committee through the use of a conference telephone or other
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in the meeting pursuant to this
section shall constitute presence in person at the meeting.
Section 11. Waiver of Notice and Presumption of Assent. Any member
of the board of directors or any committee thereof who is present at a meeting
shall be conclusively presumed to have waived notice of such meeting except when
such member attends for the express purpose of objecting at the beginning of the
meeting to the transaction of any business because the meeting is not lawfully
called or convened. Such member shall be conclusively presumed to have assented
to any action taken unless his or her dissent shall be entered in the minutes of
the meeting or unless his or her written dissent to such action shall be filed
with the person acting as the secretary of the meeting before the adjournment
thereof or shall be forwarded by registered mail to the secretary of the
corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to any member who voted in favor of such action.
Section 12. Action by Written Consent. Unless otherwise restricted
by the certificate of incorporation, any action required or permitted to be
taken at any meeting of the board of directors, or of any committee thereof, may
be taken without a meeting if all members of the board or committee, as the case
may be, consent thereto in writing, and the writing or writings are filed with
the minutes of proceedings of the board or committee.
ARTICLE IV
OFFICERS
Section 1. Number. The officers of the corporation shall be elected
by the board of directors and may consist of a president, any number of vice
presidents, a secretary, a chief financial officer, any number of assistant
secretaries and such other officers and assistant officers as may be deemed
necessary or desirable by the board of directors. Any number of offices may be
held by the same person. In its discretion, the board of directors may choose
not to fill any office for any period as it may deem advisable, except that the
offices of president and secretary shall be filled as expeditiously as possible.
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Section 2. Election and Term of Office. The officers of the
corporation shall be elected annually by the board of directors at its first
meeting held after each annual meeting of stockholders or as soon thereafter as
conveniently may be. Vacancies may be filled or new offices created and filled
at any meeting of the board of directors. Each officer shall hold office until a
successor is duly elected and qualified or until his or her earlier death,
resignation or removal as hereinafter provided.
Section 3. Removal. Any officer or agent elected by the board of
directors may be removed by the board of directors whenever in its judgment the
best interests of the corporation would be served thereby, but such removal
shall be without prejudice to the contract rights, if any, of the person so
removed.
Section 4. Vacancies. Any vacancy occurring in any office because of
death, resignation, removal, disqualification or otherwise, may be filled by the
board of directors for the unexpired portion of the term by the board of
directors then in office.
Section 5. Compensation. Compensation of all officers shall be fixed
by the board of directors, and no officer shall be prevented from receiving such
compensation by virtue of his or her also being a director of the corporation.
Section 6. The Chairman of the Board. The chairman of the board, if
one shall have been elected, shall be a member of the board, an officer of the
corporation, and, if present, shall preside at each meeting of the board of
directors or shareholders. The chairman of the board shall, in the absence or
disability of the president, act with all of the powers and be subject to all
the restrictions of the president. He shall advise the president, and in his
absence, other officers of the corporation shall perform such other duties as
may from time to time be assigned to him by the board of directors.
Section 7. President. The president, subject to the powers of the
board of directors, shall have general charge of the business, affairs and
property of the corporation, and control over its officers, agents and
employees; and shall see that all orders and resolutions of the board of
directors are carried into effect. The president shall execute bonds, mortgages
and other contracts requiring a seal, under the seal of the corporation, except
where required or permitted by law to be otherwise signed and executed and
except where the signing and execution thereof shall be expressly delegated by
the board of directors to some other officer or agent of the corporation. The
president shall have such other powers and perform such other duties as may be
prescribed by the board of directors or as may be provided in these by-laws.
Section 8. Vice-presidents. The vice-president, or if there shall be
more than one, the vice-presidents in the order determined by the board of
directors shall, in the absence or disability of the president, act with all of
the powers and be subject to all the restrictions of the president. The
vice-presidents shall also perform such other duties and have such other powers
as the board of directors, the president or these by-laws may, from time to
time, prescribe.
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Section 9. The Secretary and Assistant Secretaries. The secretary
shall attend all meetings of the board of directors, all meetings of the
committees thereof and all meetings of the stockholders and record all the
proceedings of the meetings in a book or books to be kept for that purpose.
Under the president's supervision, the secretary shall give, or cause to be
given, all notices required to be given by these by-laws or by law; shall have
such powers and perform such duties as the board of directors, the president or
these by-laws may, from time to time, prescribe; and shall have custody of the
corporate seal of the corporation. The secretary, or an assistant secretary,
shall have authority to affix the corporate seal to any instrument requiring it
and when so affixed, it may be attested by his or her signature or by the
signature of such assistant secretary. The board of directors may give general
authority to any other officer to affix the seal of the corporation and to
attest the affixing by his or her signature. The assistant secretary, or if
there be more than one, the assistant secretaries in the order determined by the
board of directors, shall, in the absence or disability of the secretary,
perform the duties and exercise the powers of the secretary and shall perform
such other duties and have such other powers as the board of directors or
president may, from time to time, prescribe.
Section 10. The Chief Financial Officer and Assistant Treasurer. The
chief financial officer shall have the custody of the corporate funds and
securities; shall keep full and accurate accounts of receipts and disbursements
in books belonging to the corporation; shall deposit all monies and other
valuable effects in the name and to the credit of the corporation as may be
ordered by the board of directors; shall cause the funds of the corporation to
be disbursed when such disbursements have been duly authorized, taking proper
vouchers for such disbursements; and shall render to the president and the board
of directors, at its regular meeting or when the board of directors so requires,
an account of the corporation; shall have such powers and perform such duties as
the board of directors, the president or these by-laws may, from time to time,
prescribe. If required by the board of directors, the chief financial officer
shall give the corporation a bond (which shall be rendered every six years) in
such sums and with such surety or sureties as shall be satisfactory to the board
of directors for the faithful performance of the duties of the office of chief
financial officer and for the restoration to the corporation, in case of death,
resignation, retirement, or removal from office, of all books, papers, vouchers,
money, and other property of whatever kind in the possession or under the
control of the chief financial officer belonging to the corporation. The
assistant treasurer, or if there shall be more than one, the assistant
treasurers in the order determined by the board of directors, shall in the
absence or disability of the chief financial officer, perform the duties and
exercise the powers of the chief financial officer. The assistant treasurers
shall perform such other duties and have such other powers as the board of
directors or the president may, from time to time, prescribe.
Section 11. Other Officers, Assistant Officers and Agents. Officers,
assistant officers and agents, if any, other than those whose duties are
provided for in these by-laws, shall have such authority and perform such duties
as may from time to time be prescribed by resolution of the board of directors.
Section 12. Absence or Disability of Officers. In the case of the
absence or disability of any officer of the corporation and of any person hereby
authorized to act in such officer's place during such officer's absence or
disability, the board of directors may by resolution delegate the
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powers and duties of such officer to any other officer or to any director, or to
any other person whom it may select.
ARTICLE V
INDEMNIFICATION OF OFFICERS, DIRECTORS AND OTHERS
Section 1. Nature of Indemnity. Each person who was or is made a
party or is threatened to be made a party to or is involved in any action, suit
or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, is or was a
director or officer, of the corporation or is or was serving at the request of
the corporation as a director, officer, employee, fiduciary, or agent of another
corporation or of a partnership, joint venture, trust or other enterprise
including service with respect to employee benefit plans, whether the basis of
such proceeding is alleged action in an official capacity as a director,
officer, employee, fiduciary or agent or in any other capacity while serving as
a director, officer, employee, fiduciary or agent, shall be indemnified and held
harmless by the corporation to the fullest extent which it is empowered to do so
by the General Corporation Law of the State of Delaware, as the same exists or
may hereafter be amended against all expense, liability and loss (including
attorneys' fees actually and reasonably incurred by such person in connection
with such proceeding) and such indemnification shall inure to the benefit of his
or her heirs, executors and administrators; provided, however, that, except as
provided in Section 2 hereof, the corporation shall indemnify any such person
seeking indemnification in connection with a proceeding initiated by such person
only if such proceeding was authorized by the board of directors of the
corporation. The right to indemnification conferred in this Article V shall be a
contract right and, subject to Sections 2 and 5 hereof, shall include the right
to be paid by the corporation the expenses incurred in defending any such
proceeding in advance of its final disposition. The corporation may, by action
of its board of directors, provide indemnification to employees and agents of
the corporation with the same scope and effect as the foregoing indemnification
of directors and officers.
Section 2. Procedure for Indemnification of Directors and Officers.
Any indemnification of a director, officer, employee, fiduciary or agent of the
corporation under Section 1 of this Article V or advance of expenses under
Section 5 of this Article V shall be made promptly, and in any event within 30
days, upon the written request of the director, officer, employee, fiduciary or
agent. If a determination (as defined in the General Corporation Law of the
State of Delaware) by the corporation that the director, officer, employee,
fiduciary or agent is entitled to indemnification pursuant to this Article V is
required, and the corporation fails to respond within sixty days to a written
request for indemnity, the corporation shall be deemed to have approved the
request. If the corporation denies a written request for indemnification or
advancing of expenses, in whole or in part, or if payment in full pursuant to
such request is not made within 30 days, the right to indemnification or
advances as granted by this Article V shall be enforceable by the director,
officer, employee, fiduciary or agent in any court of competent jurisdiction.
Such person's costs and expenses incurred in connection with successfully
establishing his or her right to indemnification, in whole or in part, in any
such action shall also be indemnified by the corporation. It shall be a defense
to any such action (other than an action brought to enforce a claim for expenses
incurred in
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defending any proceeding in advance of its final disposition where the required
undertaking, if any, has been tendered to the corporation) that the claimant has
not met the standards of conduct which make it permissible under the General
Corporation Law of the State of Delaware for the corporation to indemnify the
claimant for the amount claimed, but the burden of such defense shall be on the
corporation. Neither the failure of the corporation (including its board of
directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in the General Corporation Law of the
State of Delaware, nor an actual determination by the corporation (including its
board of directors, independent legal counsel, or its stockholders) that the
claimant has not met such applicable standard of conduct, shall be a defense to
the action or create a presumption that the claimant has not met the applicable
standard of conduct.
Section 3. Article Not Exclusive. The rights to indemnification and
the payment of expenses incurred in defending a proceeding in advance of its
final disposition conferred in this Article V shall not be exclusive of any
other right which any person may have or hereafter acquire under any statute,
provision of the certificate of incorporation, by-law, agreement, vote of
stockholders or disinterested directors or otherwise.
Section 4. Insurance. The corporation may purchase and maintain
insurance on its own behalf and on behalf of any person who is or was a
director, officer, employee, fiduciary, or agent of the corporation or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him or her and incurred by him
or her in any such capacity, whether or not the corporation would have the power
to indemnify such person against such liability under this Article V.
Section 5. Expenses. Expenses incurred by any person described in
Section 1 of this Article V in defending a proceeding shall be paid by the
corporation in advance of such proceeding's final disposition upon receipt of an
undertaking by or on behalf of the director or officer to repay such amount if
it shall ultimately be determined that he or she is not entitled to be
indemnified by the corporation. Such expenses incurred by other employees and
agents may be so paid upon such terms and conditions, if any, as the board of
directors deems appropriate.
Section 6. Employees and Agents. Persons who are not covered by the
foregoing provisions of this Article V and who are or were employees or agents
of the corporation, or who are or were serving at the request of the corporation
as employees or agents of another corporation, partnership, joint venture, trust
or other enterprise, may be indemnified to the extent authorized at any time or
from time to time by the board of directors.
Section 7. Contract Rights. The provisions of this Article V shall
be deemed to be a contract right between the corporation and each director or
officer who serves in any such capacity at any time while this Article V and the
relevant provisions of the General Corporation Law of the State of Delaware or
other applicable law are in effect, and any repeal or modification of this
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Article V or any such law shall not affect any rights or obligations then
existing with respect to any state of facts or proceeding then existing.
Section 8. Merger or Consolidation. For purposes of this Article V,
references to "the corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, and employees or agents, so that any person who is or was a
director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, employee, fiduciary or agent of another corporation, partnership, joint
venture, trust or other enterprise, shall stand in the same position under this
Article V with respect to the resulting or surviving corporation as he or she
would have with respect to such constituent corporation if its separate
existence had continued.
ARTICLE VI
CERTIFICATES OF STOCK
Section 1. Form. Every holder of stock in the corporation shall be
entitled to have a certificate, signed by, or in the name of the corporation by
the president, or a vice-president and the secretary or any assistant secretary
of the corporation, certifying the number of shares owned by such holder in the
corporation. If such a certificate is countersigned (1) by a transfer agent or
an assistant transfer agent other than the corporation or its employee or (2) by
a registrar, other than the corporation or its employee, the signature of the
president, any vice-president, secretary, or any assistant secretary may be
facsimiles. In case any officer or officers who have signed, or whose facsimile
signature or signatures have been used on, any such certificate or certificates
shall cease to be such officer or officers of the corporation whether because of
death, resignation or otherwise before such certificate or certificates have
been delivered by the corporation, such certificate or certificates may
nevertheless be issued and delivered as though the person or persons who signed
such certificate or certificates or whose facsimile signature or signatures have
been used thereon had not ceased to be such officer or officers of the
corporation. All certificates for shares shall be consecutively numbered or
otherwise identified. The name of the person to whom the shares represented
thereby are issued, with the number of shares and date of issue, shall be
entered on the books of the corporation. Shares of stock of the corporation
shall only be transferred on the books of the corporation by the holder of
record thereof or by such holder's attorney duly authorized in writing, upon
surrender to the corporation of the certificate or certificates for such shares
endorsed by the appropriate person or persons, with such evidence of the
authenticity of such endorsement, transfer, authorization, and other matters as
the corporation may reasonably require, and accompanied by all necessary stock
transfer stamps. In that event, it shall be the duty of the corporation to issue
a new certificate to the person entitled thereto, cancel the old certificate or
certificates, and record the transaction on its books. The board of directors
may appoint a bank or trust company organized under the laws of the United
States or any state thereof to act as its transfer agent or registrar, or both
in connection with the transfer of any class or series of securities of the
corporation.
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Section 2. Lost Certificates. The board of directors may direct a
new certificate or certificates to be issued in place of any certificate or
certificates previously issued by the corporation alleged to have been lost,
stolen, or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen, or destroyed. When
authorizing such issue of a new certificate or certificates, the board of
directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen, or destroyed certificate or
certificates, or his or her legal representative, to give the corporation a bond
sufficient to indemnify the corporation against any claim that may be made
against the corporation on account of the loss, theft or destruction of any such
certificate or the issuance of such new certificate.
Section 3. Fixing a Record Date for Stockholder Meetings. In order
that the corporation may determine the stockholders entitled to notice of or to
vote at any meeting of stockholders or any adjournment thereof, the board of
directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the board of
directors, and which record date shall not be more than sixty nor less than ten
days before the date of such meeting. If no record date is fixed by the board of
directors, the record date for determining stockholders entitled to notice of or
to vote at a meeting of stockholders shall be the close of business on the next
day preceding the day on which notice is given, or if notice is waived, at the
close of business on the day next preceding the day on which the meeting is
held. A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the board of directors may fix a new record date for the
adjourned meeting.
Section 4. Fixing a Record Date for Action by Written Consent. In
order that the corporation may determine the stockholders entitled to consent to
corporate action in writing without a meeting, the board of directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the board of directors, and
which date shall not be more than ten days after the date upon which the
resolution fixing the record date is adopted by the board of directors. If no
record date has been fixed by the board of directors, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the board of directors is required by
statute, shall be the first date on which a signed written consent setting forth
the action taken or proposed to be taken is delivered to the corporation by
delivery to its registered office in the State of Delaware, its principal place
of business, or an officer or agent of the corporation having custody of the
book in which proceedings of meetings of stockholders are recorded. Delivery
made to the corporation's registered office shall be by hand or by certified or
registered mail, return receipt requested. If no record date has been fixed by
the board of directors and prior action by the board of directors is required by
statute, the record date for determining stockholders entitled to consent to
corporate action in writing without a meeting shall be at the close of business
on the day on which the board of directors adopts the resolution taking such
prior action.
Section 5. Fixing a Record Date for Other Purposes. In order that
the corporation may determine the stockholders entitled to receive payment of
any dividend or other distribution or allotment or any rights or the
stockholders entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purposes of any other lawful action,
the board of
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directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted, and which record
date shall be not more than sixty days prior to such action. If no record date
is fixed, the record date for determining stockholders for any such purpose
shall be at the close of business on the day on which the board of directors
adopts the resolution relating thereto.
Section 6. Registered Stockholders. Prior to the surrender to the
corporation of the certificate or certificates for a share or shares of stock
with a request to record the transfer of such share or shares, the corporation
may treat the registered owner as the person entitled to receive dividends, to
vote, to receive notifications, and otherwise to exercise all the rights and
powers of an owner.
Section 7. Subscriptions for Stock. Unless otherwise provided for in
the subscription agreement, subscriptions for shares shall be paid in full at
such time, or in such installments and at such times, as shall be determined by
the board of directors. Any call made by the board of directors for payment on
subscriptions shall be uniform as to all shares of the same class or as to all
shares of the same series. In case of default in the payment of any installment
or call when such payment is due, the corporation may proceed to collect the
amount due in the same manner as any debt due the corporation.
ARTICLE VII
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the
corporation, subject to the provisions of the certificate of incorporation, if
any, may be declared by the board of directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, or in
shares of the capital stock, subject to the provisions of the certificate of
incorporation. Before payment of any dividend, there may be set aside out of any
funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or any other purpose
and the directors may modify or abolish any such reserve in the manner in which
it was created.
Section 2. Checks, Drafts or Orders. All checks, drafts, or other
orders for the payment of money by or to the corporation and all notes and other
evidences of indebtedness issued in the name of the corporation shall be signed
by such officer or officers, agent or agents of the corporation, and in such
manner, as shall be determined by resolution of the board of directors or a duly
authorized committee thereof.
Section 3. Contracts. The board of directors may authorize any
officer or officers, or any agent or agents, of the corporation to enter into
any contract or to execute and deliver any instrument in the name of and on
behalf of the corporation, and such authority may be general or confined to
specific instances.
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Section 4. Loans. The corporation may lend money to, or guarantee
any obligation of, or otherwise assist any officer or other employee of the
corporation or of its subsidiary, including any officer or employee who is a
director of the corporation or its subsidiary, whenever, in the judgment of the
directors, such loan, guaranty or assistance may reasonably be expected to
benefit the corporation. The loan, guaranty or other assistance may be with or
without interest, and may be unsecured, or secured in such manner as the board
of directors shall approve, including, without limitation, a pledge of shares of
stock of the corporation. Nothing in this section contained shall be deemed to
deny, limit or restrict the powers of guaranty or warranty of the corporation at
common law or under any statute.
Section 5. Fiscal Year. The fiscal year of the corporation shall be
fixed by resolution of the board of directors.
Section 6. Corporate Seal. The board of directors may provide a
corporate seal which shall be in the form of a circle and shall have inscribed
thereon the name of the corporation and the words "Corporate Seal, Delaware".
The seal may be used by causing it or a facsimile thereof to be impressed or
affixed or reproduced or otherwise.
Section 7. Voting Securities Owned By Corporation. Voting securities
in any other corporation held by the corporation shall be voted by the
president, unless the board of directors specifically confers authority to vote
with respect thereto, which authority may be general or confined to specific
instances, upon some other person or officer. Any person authorized to vote
securities shall have the power to appoint proxies, with general power of
substitution.
Section 8. Inspection of Books and Records. Any stockholder of
record, in person or by attorney or other agent, shall, upon written demand
under oath stating the purpose thereof, have the right during the usual hours
for business to inspect for any proper purpose the corporation's stock ledger, a
list of its stockholders, and its other books and records, and to make copies or
extracts therefrom. A proper purpose shall mean any purpose reasonably related
to such person's interest as a stockholder. In every instance where an attorney
or other agent shall be the person who seeks the right to inspection, the demand
under oath shall be accompanied by a power of attorney or such other writing
which authorizes the attorney or other agent to so act on behalf of the
stockholder. The demand under oath shall be directed to the corporation at its
registered office in the State of Delaware or at its principal place of
business.
Section 9. Section Headings. Section headings in these by-laws are
for convenience of reference only and shall not be given any substantive effect
in limiting or otherwise construing any provision herein.
Section 10. Inconsistent Provisions. In the event that any provision
of these by-laws is or becomes inconsistent with any provision of the
certificate of incorporation, the General Corporation Law of the State of
Delaware or any other applicable law, the provision of these by-laws shall not
be given any effect to the extent of such inconsistency but shall otherwise be
given full force and effect.
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ARTICLE VIII
AMENDMENTS
These by-laws may be amended, altered, or repealed and new by-laws
adopted at any meeting of the board of directors by a majority vote. The fact
that the power to adopt, amend, alter, or repeal the by-laws has been conferred
upon the board of directors shall not divest the stockholders of the same
powers.
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EXECUTION COPY
ANVIL KNITWEAR, INC.
$130,000,000
10-7/8% Senior Notes due 2007
PURCHASE AGREEMENT
March 11, 1997
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
WASSERSTEIN PERELLA SECURITIES, INC.
NATIONSBANC CAPITAL MARKETS, INC.
c/o Donaldson, Lufkin & Jenrette
Securities Corporation
277 Park Avenue
New York, New York 10172
Ladies and Gentlemen:
Each of Anvil Knitwear, Inc., a Delaware corporation ("Anvil") and
Anvil Holdings, Inc., a Delaware corporation ("Holdings") (but for Holdings,
only wi h respect to Section 4, 5 and 6 herein) agrees with you as follows:
1. The Note Offering and Related Transactions. Anvil proposes to
offer and sell (the "Offering") to Donaldson, Lufkin & Jenrette Securities
Corporation, Wasserstein Perella Securities, Inc. and NationsBanc Capital
Markets, Inc. (each an "Initial Purchaser" and collectively, the "Initial
Purchasers"), in the respective amounts set forth on Schedule I hereto,
$130,000,000 aggregate principal amount of its 10-7/8% Senior Notes due 2007
(the "Series A Senior Notes"). The Series A Senior Notes and the Series B Senior
Notes (as defined herein) (collectively, the "Senior Notes") will be guaranteed
by Holdings (the "Holdings Guarantees") and by Cottontops, Inc. (the "Cottontops
Guarantees" and, together with the Holdings Guarantee, the "Note Guarantees")
and by any other Subsidiary Guarantors. The Senior Notes are to be issued
pursuant to the provisions of an Indenture to be dated as of March 14, 1997 (the
"Senior Indenture"), among Anvil, Holdings, Cottontops, Inc. ("Cottontops"), the
other Subsidiary Guarantors (as defined therein) and United States Trust Company
of New York, as Trustee (the "Trustee").
Capitalized terms used but not defined herein shall have the
meanings given to such terms in the Senior Indenture unless otherwise indicated.
Concurrently with the Offering, Holdings proposes to offer and sell
30,000 Units (the "Units"), consisting of $30,000,000 aggregate liquidation
preference of 13% Senior Exchangeable Preferred Stock due 2009 (the "Senior
Preferred Stock") of Holdings and 390,000
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shares of Class B Common Stock (the "Class B Common") of Holdings, (the "Units
Offering" and, together with the Offering, the "Offerings"). The Senior
Preferred Stock will be issued pursuant to the terms of the certificate of
designations therefor (the "Certificate of Designation") and will be
exchangeable pursuant to the terms thereof into 13% Subordinated Exchange
Debentures due 2009 (the "Exchange Debentures") of Holdings. Any Exchange
Debentures may be issued pursuant to the provisions of an Indenture to be dated
as of March 14, 1997 (the "Exchange Debenture Indenture"), between Holdings and
United States Trust Company of New York, as Trustee.
Concurrently with the Offerings, Anvil and Holdings intend to enter
into a $50.0 million amended and restated credit agreement among Anvil,
Holdings, as guarantor, the subsidiary guarantors named therein and NationsBank,
N.A., as agent, to be dated as of March 14, 1997 (the "New Credit Agreement")
and to make an initial borrowing thereunder in the amount of $32.7 million.
Borrowings under the New Credit Agreement will be guaranteed by Holdings (such
guarantee, together with the Holdings Guarantees, being hereafter referred to
herein as the "Guarantees"). The proceeds from the Offerings, together with
borrowings under the New Credit Agreement and the Equity Contribution (as
defined in the Offering Memorandum), will be used to: (i) repay all outstanding
borrowings under the Old Credit Agreement (as defined in the Offering
Memorandum); (ii) repay the Subordinated Note (as defined in the Offering
Memorandum); (iii) redeem substantially all of the outstanding shares of the Old
Preferred Stock (as defined in the Offering Memorandum) and pay all accrued
dividends thereon; (iv) repurchase all of Holdings' Common Stock (other than the
Retained Shares) (each 4as defined in the Offering Memorandum); (v) make
payments to Anvil's senior management team pursuant to Holdings' Phantom Equity
Plan (as defined in the Offering Memorandum); (vi) pay the Management Bonus (as
defined in the Offering Memorandum) and (vii) pay the fees and expenses of the
Recapitalization (as defined in the Offering Memorandum).
The Series A Senior Notes will be offered and sold to you pursuant
to an exemption from the registration requirements under the Securities Act of
1933, as amended (the "Securities Act"). Anvil has prepared a preliminary
offering memorandum, dated February 25, 1997 (the "Preliminary Offering
Memorandum"), and a final offering memorandum, dated March 11, 1997 (the
"Offering Memorandum"), relating to Holdings, Anvil and the Senior Notes.
Upon original issuance thereof, and until such time as the same is
no longer required under the applicable requirements of the Securities Act, the
Series A Senior Notes (and all securities issued in exchange therefor or in
substitution thereof) shall bear the following legend:
"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 (THE "SECURITIES ACT"), AND
THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH
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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 ANVIL THAT (A)
SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY
(1)(a) TO A PERSON WHO 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, IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144, OR IN ACCORDANCE
WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF ANVIL SO
REQUESTS), (b) TO ANVIL, (c) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR (d) OUTSIDE THE UNITED STATES
TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 904 UNDER THE SECURITIES ACT, AND (2) 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."
You have advised Anvil that you will make offers (the "Exempt
Resales") of the Series A Senior Notes purchased hereunder on the terms set
forth in the Offering Memorandum, as amended or supplemented, solely to persons
whom you reasonably believe to be "qualified institutional buyers," as defined
in Rule 144A under the Securities Act ("QIBs") and to a limited number of
institutional "accredited investors" referred to in Rule 501(a)(1), (2), (3) or
(7) under the Act (each, an "Accredited Investor"). The QIBs and the Accredited
Investors are sometimes referred to herein as the "Eligible Purchasers." You
will offer the Series A Senior Notes to such QIBs and Accredited Investors
initially at a price equal to 100% of the principal amount thereof. Such price
may be changed by you at any time without notice.
Holders (including subsequent transferees) of the Series A Senior
Notes will have the registration rights set forth in the registration rights
agreement relating thereto (the "Registration Rights Agreement"), to be dated
the Closing Date (as defined herein), in substantially the form of Exhibit A
hereto, for so long as such Senior Notes constitute "Transfer Restricted
Securities" (as defined in the Registration Rights Agreement). Pursuant to the
Registration Rights Agreement, Holdings, Anvil and Cottontops will agree to file
with the Securities and Exchange Commission (the "Commission"), under the
circumstances set forth
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therein, (i) a registration statement under the Securities Act (the "Exchange
Offer Registration Statement") relating to the 10-7/8% Series B Senior Notes due
2007 of Anvil (the "Series B Senior Notes") (and the related guarantee by
Holdings and Cottontops of Anvil's obligations under the Series B Senior Notes)
to be offered in exchange for the Series A Senior Notes (the "Exchange Offer"),
and (ii) a shelf registration statement pursuant to Rule 415 under the
Securities Act (the "Shelf Registration Statement") relating to the resale by
certain holders of the Series A Senior Notes, and to use their best efforts to
cause such Registration Statements to be declared effective. This Purchase
Agreement (this "Agreement"), the Senior Notes, the Note Guarantees, the Senior
Indenture, the Registration Rights Agreement, the Certificate of Designation,
the Exchange Debenture Indenture, the New Credit Agreement, the Securityholders
Agreement (as defined in the Offering Memorandum) and the Recapitalization
Agreement, as amended, (as defined in the Offering Memorandum) are hereinafter
sometimes referred to collectively as the "Operative Documents."
2. Agreements to Sell and Purchase. On the basis of the
representations and warranties contained in this Agreement, and subject to its
terms and conditions, Anvil agrees to issue and sell to each of you, and each of
you, severally but not jointly, agrees to purchase from Anvil, $130,000,000
aggregate principal amount of Series A Senior Notes in the respective principal
amount set forth opposite your name on Schedule I hereto. The purchase price for
the Series A Senior Notes shall be 97% of their principal amount.
3. Delivery and Payment. Delivery to the Initial Purchasers of, and
payment for, the Senior Notes shall be made at 10:00 a.m., New York City time,
on March 14, 1997 (the "Closing Date") at the offices of Simpson Thacher &
Bartlett, 425 Lexington Avenue, New York, New York 10017, or such other time or
place as you and Anvil shall designate.
One or more of the Series A Senior Notes in definitive form,
registered in the name of Cede & Co., as nominee of The Depository Trust Company
("DTC"), or such other names as the Initial Purchasers may request upon at least
two business days' notice to Anvil prior to the Closing Date, having an
aggregate principal amount designated by you (each, a "Global Note"), and one or
more of the Series A Senior Notes in definitive form, registered in such names
and denominations as you may request (each, a "Certificated Note"), shall be
delivered by Anvil to you (or as you direct), against payment by you of the
purchase price by wire transfer of immediately available funds to the order of
Anvil. The Global Note(s) and the Certificated Note(s) in definitive form shall
be made available to you for inspection no later than 9:30 a.m. on the business
day immediately preceding the Closing Date.
4. Agreements of Anvil and Holdings. Anvil and Holdings agree with
each of you as follows:
(a) Before completion of the distribution of the Series A Senior
Notes by you, to advise you promptly and, if requested by you, confirm
such advice in writing, (i) of the issuance by any state securities
commission of any stop order suspending the qualification or exemption
from qualification of any of the Series A Senior Notes for offering or
sale in any jurisdiction, or the initiation of any proceeding for such
purpose
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by any state securities commission or other regulatory authority, and (ii)
before the earlier to occur of the Exchange Offer and the effective date
of the Shelf Registration Statement, to advise you promptly, and if
requested by you, confirm such advice in writing, of (A) the happening of
any event that makes any statement of a material fact made in the Offering
Memorandum untrue or that requires the making of any additions to or
changes in the Offering Memorandum in order to make the statements
therein, in the light of the circumstances under which they are made, not
misleading and (B) the issuance of any quarterly or annual financial
statements by Anvil or Holdings (copies of which shall be delivered to you
within one business day after issuance). Anvil shall use its best efforts
to prevent the issuance of any stop order or order suspending the
qualification or exemption of any of the Series A Senior Notes under any
state securities or Blue Sky laws, and if at any time any state securities
commission or other regulatory authority shall issue an order suspending
the qualification or exemption of any of the Series A Senior Notes under
any state securities or Blue Sky laws, Anvil shall use their best efforts
to obtain the withdrawal or lifting of such order at the earliest possible
time.
(b) To furnish you, without charge, as many copies of the
Preliminary Offering Memorandum and the Offering Memorandum, and any
amendments or supplements thereto, as you may reasonably request. Anvil
and Holdings consent (on behalf of themselves and their subsidiaries) to
the use of the Preliminary Offering Memorandum and the Offering
Memorandum, and any amendments and supplements thereto, by you in
connection with Exempt Resales; provided, however, that the Initial
Purchasers shall discontinue using such Preliminary Offering Memorandum or
Offering Memorandum if advised by Anvil or Holdings that the Preliminary
Offering Memorandum or Offering Memorandum are to be amended or
supplemented until such document is so amended or supplemented.
(c) Not to amend or supplement the Preliminary Offering Memorandum
or the Offering Memorandum prior to the Closing Date unless you shall
previously have been advised thereof and shall not have objected thereto
in writing within five business days after being furnished a copy thereof.
Anvil and Holdings shall promptly prepare, upon your request, any
amendment or supplement to the Preliminary Offering Memorandum or the
Offering Memorandum that may be necessary or advisable in connection with
Exempt Resales.
(d) If, after the date hereof and prior to consummation of any
Exempt Resales, any event shall occur as a result of which, in the
judgment of Anvil and its counsel or in the reasonable opinion of your
counsel, it becomes necessary to amend or supplement the Offering
Memorandum in order to make the statements therein, in the light of the
circumstances when the Offering Memorandum is delivered to an Eligible
Purchaser which is a prospective purchaser, not misleading, or if it is
necessary to amend or supplement the Offering Memorandum to comply with
applicable law, promptly to prepare an appropriate amendment or supplement
to the Offering Memorandum so that the statements therein as so amended or
supplemented will not, in the light of the
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circumstances when the Offering Memorandum is so delivered, be misleading,
or so the Offering Memorandum will comply with applicable law.
(e) To cooperate with you and your counsel in connection with the
qualification of the Senior Notes under the state securities or Blue Sky
laws of such jurisdictions in the United States as you may request and to
continue such qualification in effect so long as required for the Exempt
Resales; provided, however that neither Anvil nor Holdings shall be
required in connection therewith to register or qualify as a foreign
corporation where it is not now so qualified or to take any action that
would subject it to the service of process in suits or taxation, other
than as to matters and transactions relating to the Exempt Resales, in any
jurisdiction where it is not now so subject. Anvil and Holdings will
continue such qualification in effect so long as required by law for
distribution of the Series A Senior Notes.
(f) Whether or not the transactions contemplated by this Agreement
are consummated or this Agreement is terminated, to pay all costs,
expenses, fees and taxes incident to and in connection with: (i) the
preparation, printing, processing, distribution and delivery of the
Preliminary Offering Memorandum and the Offering Memorandum (including,
without limitation, financial statements and exhibits) and all amendments
and supplements thereto (but not, however, legal fees and expenses of your
counsel incurred in connection with any of the foregoing), (ii) the
preparation (including, without limitation, word processing and
duplication costs) printing, processing, distribution and delivery of this
Agreement and the other Operative Documents (but not, however, legal fees
and expenses of your counsel incurred in connection with any of the
foregoing), and all preliminary and final Blue Sky memoranda and all other
agreements, memoranda, correspondence and other documents prepared and
delivered in connection herewith and with the Exempt Resales, (iii) the
issuance and delivery by Anvil of the Senior Notes and Holdings and
Cottontops of the Note Guarantees, (iv) the qualification of the Senior
Notes for offer and sale under the securities or Blue Sky laws of the
several states (including, without limitation, the reasonable fees and
disbursements of your counsel relating to such registration or
qualification not to exceed $7,500), (v) furnishing such copies of the
Preliminary Offering Memorandum and the Offering Memorandum, and all
amendments and supplements thereto, as may be reasonably requested for use
in connection with Exempt Resales, (vi) the preparation of certificates
for the Senior Notes (including, without limitation, printing and
engraving thereof), (vii) the fees, disbursements and expenses of Anvil's
and Holdings' counsel and accountants, (viii) the fees and expenses of the
Trustee and its counsel under the Senior Indenture, (ix) all expenses and
listing fees in connection with the application for designation of the
Series A Senior Notes in the National Association of Securities Dealers,
Inc. ("NASD") Private Offerings, Resales and Trading through Automated
Linkages ("PORTAL") market, (x) all fees and expenses (including fees and
expenses of counsel) of Anvil in connection with the approval of the
Senior Notes by DTC for "book-entry" transfer, (xi) any fees charged by
rating agencies for rating the Senior Notes, (xii) all "road show" and
other marketing expenses related to the preparation of slides, videotapes
and printed marketing materials, and travel, hotel, food and entertainment
expenses of affiliates of Anvil and
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Holdings and (xiii) the performance by each of Anvil and Holdings of its
other obligations under this Agreement and the other Operative Documents.
(g) To use the proceeds from the sale of the Series A Senior Notes
in the manner described in the Offering Memorandum under the caption "Use
of Proceeds."
(h) Not to voluntarily claim, and to resist actively any attempts to
claim, the benefit of any usury laws against the holders of any Senior
Notes.
(i) To do and perform all things required to be done and performed
under this Agreement by them prior to or after the Closing Date and to
satisfy all conditions precedent on their part to the delivery of the
Series A Senior Notes that are within their control.
(j) Not to sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the Securi
ties Act) that would be integrated with the sale of the Series A Senior
Notes in a manner that would require the registration under the Securities
Act of the sale to you or Eligible Purchasers of the Series A Senior
Notes.
(k) For so long as any of the Senior Notes remain outstanding and
during any period in which Anvil, Holdings and the Subsidiary Guarantors
are not subject to Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), to make available to any QIB or
beneficial owner of the Senior Notes in connection with any sale thereof
and any prospective purchaser of such Senior Notes from such QIB or
beneficial owner, the information required by Rule 144A(d)(4) under the
Securities Act.
(l) To cause the Exchange Offer to be made in the appropriate form
to permit registration of the Series B Senior Notes to be offered in
exchange for the Series A Senior Notes and to comply with all applicable
federal and state securities laws in connection with the Exchange Offer.
(m) To use their best efforts to effect the inclusion of the Series
A Senior Notes in PORTAL.
(n) During a period of five years following the date of this
Agreement, to deliver to each of you promptly upon their becoming
available, copies of all current, regular and periodic reports filed by
Anvil or Holdings with the Commission or any securities exchange or with
any governmental authority succeeding to any of the Commission's functions
and such other publicly available information concerning Anvil and
Holdings as the Initial Purchasers shall reasonably request.
(o) Not to, and to use its reasonable best efforts to cause its
affiliates not to, offer, sell, contract to sell or grant any option to
purchase or otherwise transfer or dispose of any preferred stock or debt
security issued or guaranteed by Anvil or Holdings
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(other than (i) the Series A Senior Notes, (ii) the Series B Senior Notes
issuable in the Exchange Offer, (iii) the Units, the Senior Preferred
Stock and the Class B Common comprising the Units in connection with the
Units Offering, (iv) New Senior Preferred Stock (as defined in the
Offering Memorandum) and (v) the Exchange Debentures issuable pursuant to
the terms of the Senior Preferred Stock or the New Preferred Stock), or
any security convertible into or exchangeable or exercisable for any such
preferred stock or debt security, for a period of 90 days after the
Closing Date, without your prior written consent.
(p) Prior to or concurrently with the Closing, to enter into the
Registration Rights Agreement in substantially the form attached hereto as
Exhibit A in order to permit registration of the Series B Senior Notes to
be offered in exchange for the Series A Senior Notes as contemplated
thereby and/or the shelf registration of the Series A Senior Notes.
(q) To comply with all agreements set forth in the representation
letter of Anvil to DTC relating to the approval of the Senior Notes by DTC
for "book-entry" transfer.
(r) During the two year period following the Closing Date, neither
Holdings nor Anvil will, nor will they permit any of their affiliates (as
defined for the purposes of Rule 144 under the Securities Act) to, resell
any of the Senior Notes that may be acquired by any of them.
5. Representations and Warranties. (a) Each of Anvil and Holdings
represents and warrants, jointly and severally, to each of you that:
(i) The Offering Memorandum does not, and any supplement or
amendment to it will not, contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, except that the representations and warranties
contained in this paragraph (i) shall not apply to statements in or
omissions from the Offering Memorandum (or any supplement or amendment
thereto) made in reliance upon and in conformity with information
furnished to Anvil in writing by you expressly for use therein, which
information is specified in the second paragraph of Section 6(c). No stop
order preventing the use of the Preliminary Offering Memorandum or the
Offering Memorandum, or any amendment or supplement thereto, or any order
asserting that any of the transactions contemplated by this Agreement are
subject to the registration requirements of the Securities Act, has been
issued.
(ii) When the Series A Senior Notes and Note Guarantees are issued
and delivered pursuant to this Agreement, none of the Series A Senior
Notes or the Note Guarantees will be of the same class (within the meaning
of Rule 144A under the Securities Act) as securities of Anvil or Holdings
that are listed on a national securities exchange registered under Section
6 of the Exchange Act or that are quoted in a United States automated
inter-dealer quotation system.
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(iii) Each of Anvil, Holdings and their respective subsidiaries has
been duly organized and is validly existing in good standing under the
laws of its respective jurisdiction of organization. Each of Anvil,
Holdings and their respective subsidiaries has all requisite corporate
power, as applicable, and authority to carry on its business as it is
currently being conducted and as described in the Offering Memorandum and
to own, lease and operate its properties. Each of Anvil, Holdings and
their respective subsidiaries is duly qualified and in good standing as a
foreign entity authorized to do business in each jurisdiction in which the
nature of its business or its ownership or leasing of property requires
such qualification, except where failure to have such qualification would
not have a Material Adverse Effect (as defined below).
(iv) The entities listed on Schedule II hereto are the only
subsidiaries, direct or indirect, of Holdings. Holdings owns, directly or
indirectly through other subsidiaries, the percentage listed in Schedule
II hereto of the outstanding capital stock or other securities evidencing
equity ownership of such subsidiaries, free and clear of any security
interest, claim, lien, limitation on voting rights or encumbrance (except
for those arising under the Credit Agreement or the New Credit Agreement
or pursuant to state and federal securities laws); and all of such
securities have been duly authorized, validly issued, are fully paid and
nonassessable and were not issued in violation of any preemptive or
similar rights. There are no outstanding subscriptions, rights, warrants,
calls, commitments of sale or options to acquire, or instruments
convertible into or exchangeable for, any such shares of capital stock or
other equity interest of such subsidiaries. Neither Holdings nor any of
its subsidiaries has any investments in the securities of other persons
and there are no outstanding subscriptions, rights, warrants, calls,
commitments of sale or options to acquire, or instruments convertible into
or exchangeable for, any such securities of such person.
(v) The shares of issued and outstanding common stock of Anvil and
Holdings have been duly authorized and validly issued and are fully paid
and non-assessable and were not issued in violation of or subject to any
preemptive or similar rights. All of the outstanding capital stock of
Anvil is owned by Holdings. Except as disclosed in the Offering
Memorandum, there are no outstanding subscriptions, rights, warrants,
calls, commitments of sale or options to acquire, or instruments
convertible into or exchangeable for, any such shares of capital stock or
other equity interest of Anvil or Holdings.
(vi) Each of Anvil, Holdings and Cottontops has all requisite
corporate power and authority to execute, deliver and perform its
obligations under the Operative Documents to which they are parties and to
consummate the transactions contemplated hereby and thereby, including,
without limitation, with respect to Anvil, the corporate power and
authority to issue, sell and deliver the Senior Notes as provided herein
and therein.
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<PAGE>
(vii) Holdings has all the requisite corporate power and authority
to execute, deliver and perform its obligations under the Guarantees and
to consummate the transactions contemplated thereby.
(viii) This Agreement has been duly and validly authorized, executed
and delivered by each of Anvil and Holdings and (assuming the due
execution and delivery thereof by you) is the legally valid and binding
agreement of each of Anvil and Holdings, enforceable against each of Anvil
and Holdings in accordance with its terms (except as such enforceability
may be limited by any exceptions to enforceability of the type set forth
in the legal opinions delivered to you pursuant to Section 7(g) hereof).
(ix) Each of the Guarantees has been duly and validly authorized
and, when duly executed and delivered by Holdings and endorsed upon a duly
issued and authenticated Senior Note in accordance with the terms of the
Senior Indenture, will be the legally valid and binding obligations of
Holdings, enforceable against Holdings in accordance with their terms
(except as such enforceability may be limited by any exceptions to
enforceability of the type set forth in the legal opinions delivered to
you pursuant to Section 7(g) hereof) and entitled to the benefits of the
Senior Indenture. The Guarantees, when executed and delivered, will
conform to the description thereof in the Offering Memorandum.
(x) The Cottontops Guarantees has been duly and validly authorized
and, when duly executed and delivered by Cottontops and endorsed upon a
duly issued and authenticated Senior Note in accordance with the terms of
the Senior Indenture, will be the legally valid and binding obligations of
Cottontops, enforceable against Cottontops in accordance with their terms
(except as such enforceability may be limited by any exceptions to
enforceability of the type set forth in the legal opinions delivered to
you pursuant to Section 7(g) hereof) and entitled to the benefits of the
Senior Indenture. The Cottontops Guarantees, when executed and delivered,
will conform to the description thereof in the Offering Memorandum.
(xi) The Senior Indenture has been duly and validly authorized by
each of Anvil, Holdings and Cottontops and, when duly executed and
delivered by each of Anvil, Holdings and Cottontops (assuming the due
execution and delivery thereof by the Trustee), will be the legally valid
and binding obligation of Anvil, Holdings and Cottontops, enforceable
against each of Anvil, Holdings and Cottontops in accordance with its
terms (except as such enforceability may be limited by any exceptions to
enforceability of the type set forth in the legal opinions delivered to
you pursuant to Section 7(g) hereof). The Senior Indenture, when executed
and delivered, will conform to the description thereof in the Offering
Memorandum. The Senior Indenture conforms to the requirements of the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act").
(xii) The Registration Rights Agreement has been duly and validly
authorized by each of Anvil, Holdings and Cottontops and, when duly
executed and delivered by
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each of Anvil, Holdings and Cottontops (assuming the due execution and
delivery thereof by you), will be the legally valid and binding obligation
of each of Anvil, Holdings and Cottontops, enforceable against each of
Anvil, Holdings and Cottontops in accordance with its terms (except as
such enforceability may be limited by any exceptions to enforceability of
the type set forth in the legal opinions delivered to you pursuant to
Section 7(g) hereof). The Registration Rights Agreement, when executed and
delivered, will conform to the description thereof in the Offering
Memorandum.
(xiii) The Series A Senior Notes have been duly and validly
authorized for issuance and sale to you by Anvil pursuant to this
Agreement and, when issued and authenticated in accordance with the terms
of the Senior Indenture and delivered against payment therefor in
accordance with the terms hereof, will be the legally valid and binding
obligations of Anvil, enforceable against Anvil in accordance with their
terms (except as such enforceability may be limited by any exceptions to
enforceability of the type set forth in the legal opinions delivered to
you pursuant to Section 7(g) hereof) and entitled to the benefits of the
Senior Indenture. The Series A Senior Notes when issued, authenticated and
delivered, will conform to the description thereof in the Offering
Memorandum.
(xiv) The Series B Notes have been duly and validly authorized for
issuance by Anvil, and when issued and authenticated in accordance with
the terms of the Senior Indenture and the Registration Rights Agreement,
will be the legally valid and binding obligations of Anvil, enforceable
against Anvil in accordance with their terms (except as such
enforceability may be limited by any exceptions to enforceability of the
type set forth in the legal opinions delivered to you pursuant to Section
7(g) hereof) and entitled to the benefits of the Senior Indenture. The
Series B Notes, when issued authenticated and delivered, will conform to
the description thereof in the Offering Memorandum.
(xv) None of Anvil or Holdings or any of their subsidiaries is (A)
in violation of its respective charter or bylaws or other organizational
documents, (B) in default in the performance of any bond, debenture, note,
indenture, mortgage, deed of trust or other agreement or instrument to
which it is a party or by which it is bound or to which any of its
properties is subject, or (C) is in violation of any law, statute, rule,
regulation, judgment or court decree applicable to Anvil or Holdings, any
of their subsidiaries or their assets or properties that in the case of
clauses (A), (B) and (C) above, (x) would reasonably be expected,
individually or in the aggregate, to result in a material adverse effect
on the assets, properties, business, results of operations, condition
(financial or otherwise) or business prospects of Anvil or Holdings and
their subsidiaries, taken as a whole, (y) would materially interfere with
or adversely affect the issuance of the Senior Notes and the Note
Guarantees or (z) in any manner draw into question the validity of this
Agreement or any other Operative Document or the Guarantees (any of the
events set forth in clauses (x), (y) or (z), a "Material Adverse Effect").
There exists no condition that, with notice, the passage of time or
otherwise, would constitute a default under any such document or
instrument.
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(xvi) The execution, delivery and performance by each of Anvil,
Holdings and Cottontops of this Agreement and/or the other Operative
Documents to which it is a party, the issuance and sale of the Senior
Notes, the execution, delivery and performance of the Note Guarantees, the
consummation of the transactions contemplated hereby and thereby, will not
violate, conflict with or constitute a breach of any of the terms or
provisions of, or a default under (or an event that with notice or the
lapse of time, or both, would constitute a default), or require consent
under, or result in the imposition of a lien or encumbrance on any
properties of Anvil or Holdings or any of their subsidiaries, or an
acceleration of indebtedness pursuant to, (i) the charter or bylaws of
Anvil or Holdings or any of their subsidiaries, (ii) any bond, debenture,
note, indenture, mortgage, deed of trust or other agreement or instrument
to which Anvil or Holdings or any of their subsidiaries is a party or by
which any of them or their property is or may be bound, (iii) any statute,
rule or regulation applicable to Anvil or Holdings, any of their
subsidiaries or any of their assets or properties, or (iv) any judgment,
order or decree of any court or governmental agency or authority having
jurisdiction over Anvil or Holdings, any of their subsidiaries or their
assets or properties, except insofar as any of (ii), (iii) or (iv) above
would not reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect. No consent, approval, authorization
or order of, or filing, registration, qualification, license or permit of
or with, any court or governmental agency, body or administrative agency
is required for the execution, delivery and performance of this Agreement
and the other Operative Documents, the issuance and sale of the Senior
Notes, the execution, delivery and performance of the Note Guarantees, the
consummation of the transactions contemplated hereby and thereby, except
such as have been obtained and made (or, in the case of the Registration
Rights Agreement, will be obtained and made) under the Securities Act, the
Trust Indenture Act and state securities or Blue Sky laws and regulations
or such as may be required by the NASD, except insofar as the failure to
obtain such consent, appraisal, authorization or order of, or filing,
registration, qualification, license or permit would not reasonably be
expected, individually or in the aggregate, to result in a Material
Adverse Effect.
(xvii) No consents or waivers from any other person are required for
the execution, delivery and performance of this Agreement and the other
Operative Documents, the issuance and sale of the Senior Notes, the
execution, delivery and performance of the Note Guarantees and the
consummation of the transactions contemplated hereby and thereby, other
than such consents and waivers as have been obtained (or, in the case of
the Registration Rights Agreement, will be obtained), except where the
failure to have obtained any of the foregoing would not reasonably be
expected to have a Material Adverse Effect.
(xviii) There is (i) no action, suit or proceeding before or by any
court, arbitrator or governmental agency, body or official, domestic or
foreign, now pending or, to the best knowledge of Anvil, Holdings and
their subsidiaries, threatened or contemplated to which Anvil, Holdings or
any of their subsidiaries or any benefit plan maintained thereby is or may
be a party or to which the business or property of Anvil, Holdings or any
of their subsidiaries is or may be subject, (ii) no statute, rule,
regulation or order that has
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<PAGE>
been enacted, adopted or issued by any governmental agency or that has
been proposed by any governmental body, (iii) no injunction, restraining
order or order of any nature by a federal or state court or foreign court
of competent jurisdiction to which Anvil, Holdings or any of their
subsidiaries is or may be subject or to which the business, assets or
property of Anvil, Holdings or their subsidiaries are or may be subject
issued that would, in the case of clauses (i), (ii) and (iii) above,
reasonably be expected to, individually or in the aggregate, result in a
Material Adverse Effect.
(xix) There is (i) no significant unfair labor practice complaint
pending against Holdings, Anvil or any of their subsidiaries nor, to the
best knowledge of Holdings, Anvil and their subsidiaries, threatened
against any of them, before the National Labor Relations Board, any state
or local labor relations board or any foreign labor relations board, and
no significant grievance or significant arbitration proceeding arising out
of or under any collective bargaining agreement is so pending against
Holdings, Anvil or any of their subsidiaries or, to the best knowledge of
Holdings, Anvil and their subsidiaries, threatened against any of them,
(ii) no significant strike, labor dispute, slowdown or stoppage pending
against Holdings, Anvil or any of their subsidiaries nor, to the best
knowledge of Holdings, Anvil and their subsidiaries, threatened against
Holdings, Anvil or any of their subsidiaries and (iii) to the best
knowledge of Holdings, Anvil and their subsidiaries, no union
representation question exists with respect to the employees of Holdings,
Anvil and their subsidiaries and, to the best knowledge of Holdings, Anvil
and their subsidiaries, no union organizing activities are taking place,
except insofar as any of the foregoing would not reasonably be expected,
either individually or in the aggregate, to have a Material Adverse
Effect. None of Holdings, Anvil or any of their subsidiaries has violated
any federal, state or local law or foreign law relating to discrimination
in hiring, promotion or pay of employees, nor any applicable wage or hour
laws, nor any provision of the Employee Retirement Income Security
Securities Act of 1974, as amended ("ERISA"), or the rules and regulations
thereunder, or analogous foreign laws and regulations, which would
reasonably be expected, either individually or in the aggregate, to have a
Material Adverse Effect.
(xx) Each of Holdings, Anvil and their subsidiaries is in compliance
with all applicable existing federal, state, local and foreign laws and
regulations relating to the protection of human health or the environment
or imposing liability or standards of conduct concerning any Hazardous
Material (as defined below) (collectively, "Environmental Laws"), except
for such instances of noncompliance that, either singly or in the
aggregate, would not reasonably be expected to have a Material Adverse
Effect. The term "Hazardous Material" means (i) any "hazardous substance"
as defined by the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, (ii) any "hazardous waste" as defined
by the Resource Conservation and Recovery Act of 1976, as amended, (iii)
any petroleum or petroleum product (iv) any polychlorinated biphenyl and
(v) any pollutant or contaminant or hazardous, dangerous or toxic
chemical, material, waste or substance regulated under or within the
meaning of any other Environmental Law. There is no alleged liability, or,
to the best knowledge of Holdings, Anvil and their subsidiaries, potential
liability (including, without limitation,
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alleged or potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resources damages, property damages,
personal injuries, or penalties) of Holdings, Anvil or any of their
subsidiaries arising out of, based on, or resulting from (A) the presence
or release into the environment of any Hazardous Material at any location
currently or previously owned by Holdings, Anvil or any of their
subsidiaries or at any location currently or previously used or leased by
Holdings, Anvil or any of their or (B) any violation or alleged violation
of any Environmental Law, except in each case with respect to clauses (A)
and (B), alleged or potential liabilities that, singly or in the
aggregate, would not reasonably be expected to have a Material Adverse
Effect.
(xxi) Each of Holdings, Anvil and their subsidiaries has (i) good
and marketable title to all of the properties and assets described in the
Offering Memorandum as owned by it, free and clear of all liens, charges,
encumbrances and restrictions, except such as are described in the
Offering Memorandum or for liens for taxes not yet due and payable or as
would not reasonably be expected, either individually or in the aggregate,
to have a Material Adverse Effect, (ii) peaceful and undisturbed
possession under all leases to which it is party as lessee, except where
the failure to have such possession would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect, (iii)
all licenses, certificates, permits, authorizations, approvals, franchises
and other rights from, and has made all declarations and filings with, all
federal, state, local and foreign authorities, all self-regulatory
authorities and all courts and other tribunals (each an "Authorization")
necessary to engage in the business currently conducted by it in the
manner described in the Offering Memorandum, except where failure to hold
such Authorizations would not reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect and (iv) no reason to
believe that any governmental body or agency is considering limiting,
suspending or revoking any such Authorization. All such Authorizations are
valid and in full force and effect and Holdings, Anvil and their
subsidiaries are in compliance in all material respects with the terms and
conditions of all such Authorizations and with the rules and regulations
of the regulatory authorities having jurisdiction with respect thereto,
except insofar as the failure to have any of the foregoing would not
reasonably be expected either individually or in the aggregate, to have a
Material Adverse Effect. All leases to which Holdings, Anvil or any of
their subsidiaries is a party are valid and binding and to the knowledge
of Holdings and Anvil no material defaults by the landlord are existing
under any such lease.
(xxii) Each of Holdings, Anvil and their subsidiaries owns or
possesses or has the right to use all patents, patent rights, licenses,
inventions, copyrights, know- how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information,
systems or procedures), trademarks, service marks and trade names
(collectively, the "Intellectual Property") presently employed by it in
connection with the businesses now operated by them as described in the
Offering Memorandum, except insofar as failure to have any of the
foregoing would not reasonably be expected to have a Material Adverse
Effect, and none of Holdings, Anvil or any of their subsidiaries has
received any notice of infringement of or conflict with asserted rights of
others with respect to any of the foregoing which would have a Material
Adverse Effect.
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The use of the Intellectual Property in connection with the business and
operations of Anvil and its subsidiaries does not infringe on the rights
of any person, except infringements which would not reasonably be
expected, either individually or in the aggregate, to have a Material
Adverse Effect.
(xxiii) All tax returns required to be filed by Holdings, Anvil or
any of their subsidiaries, in all jurisdictions, have been so filed. All
taxes, including withholding taxes, penalties and interest, assessments,
fees and other charges due or claimed to be due from such entities or that
are due and payable have been paid, other than those being contested in
good faith and for which adequate reserves have been provided or those
currently payable without penalty or interest. None of Holdings, Anvil or
any of their subsidiaries knows of any material proposed additional tax
assessments against it or any of its subsidiaries or the assets or
property of Anvil or any of its subsidiaries.
(xxiv) None of Holdings, Anvil or any of its subsidiaries is (i) an
"investment company" or a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940, as amended (the
"Investment Company Act"), or analogous foreign laws and regulations, or
(ii) a "holding company" or a "subsidiary company" or an "affiliate" of a
holding company within the meaning of the Public Utility Holding Company
Act of 1935, as amended (the "Public Utility Holding Company Act"), or
analogous foreign laws and regulations.
(xxv) There are no holders of securities of Holdings, Anvil or any
of their subsidiaries who, by reason of the execution by Anvil and
Holdings of this Agreement or any other Operative Document to which it is
a party or the consummation of the transactions contemplated hereby and
thereby, have the right to request or demand that Anvil or Holdings
register under the Securities Act or analogous foreign laws and
regulations securities held by them.
(xxvi) Each certificate signed by any officer of Anvil or Holdings
and delivered to the Initial Purchasers or counsel for the Initial
Purchasers shall be deemed to be a representation and warranty by Anvil
and Holdings to each Initial Purchaser as to the matters covered thereby.
(xxvii) Holdings and each of its subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable assurance
that: (i) transactions are executed in accordance with management's
general or specific authorizations; (ii) transactions are recorded as
necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain accountability
for assets; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect thereto.
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(xxviii) Holdings and each of its subsidiaries maintains insurance
covering their properties, operations, personnel and businesses. Such
insurance insures against such losses and risks as are believed by them to
be adequate in accordance with customary industry practice to protect
Anvil and its subsidiaries and their businesses. None of Holdings, Anvil
nor any of their subsidiaries has received notice from any insurer or
agent of such insurer that substantial capital improvements or other
expenditures will have to be made in order to continue such insurance. All
such insurance is outstanding and, to the best of the knowledge of
Holdings and Anvil, duly in force on the date hereof and will be
outstanding and duly in force on the Closing Date.
(xxix) Neither Anvil nor Holdings has (i) taken (or will take),
directly or indirectly, any action designed to, or that might reasonably
be expected to, cause or result in stabilization or manipulation of the
price of any security of Anvil or Holdings to facilitate the sale or
resale of the Senior Notes or (ii) since the date of the Preliminary
Offering Memorandum (A) sold, bid for, purchased or paid any person any
compensation for soliciting purchases of, the Senior Notes or (B) paid or
agreed to pay to any person any compensation for soliciting another to
purchase any other securities of Anvil or Holdings.
(xxx) No registration under the Securities Act of the Series A
Senior Notes is required for the sale of the Series A Senior Notes to the
Initial Purchasers as contemplated hereby or for the Exempt Resales
assuming (i) that the purchasers who buy the Series A Senior Notes in the
Exempt Resales are either QIBs or Accredited Investors and (ii) the
accuracy of the Initial Purchasers' representations in Section 5(b)
hereof. No form of general solicitation or general advertising was used by
Holdings, Anvil or any of their representatives in connection with the
offer and sale of any of the Series A Senior Notes or in connection with
Exempt Resales, including, but not limited to, articles, notices or other
communications published in any newspaper, magazine, or similar medium or
broadcast over television or radio, or any seminar or meeting whose
attendees have been invited by any general solicitation or general
advertising. No securities of the same class or series as the Series A
Senior Notes have been issued and sold by Anvil or Holdings within the
six-month period immediately prior to the date hereof. Neither Anvil nor
Holdings have entered into any contractual arrangement with respect to the
distribution of the Series A Senior Notes except for this Agreement.
(xxxi) The execution and delivery of this Agreement, the other
Operative Documents and the sale of the Series A Senior Notes to be
purchased by the Eligible Purchasers will not involve any prohibited
transaction within the meaning of Section 406 of ERISA or Section 4975 of
the Internal Revenue Code of 1986. The representation made by Anvil and
Holdings in the preceding sentence is made in reliance upon and subject to
the accuracy of, and compliance with, the representations and covenants
made or deemed made by the Eligible Purchasers as set forth in the
Offering Memorandum under the Section entitled "Notice to Investors."
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(xxxii) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its date, and each amendment or supplement thereto, as
of its date, contains all the information specified in, and meets the
requirements of, Rule 144A(d)(4) under the Securities Act.
(xxxiii) Subsequent to the respective dates as of which information
is given in the Offering Memorandum and up to the Closing Date, except as
set forth in the Offering Memorandum, none of Holdings, Anvil and their
subsidiaries has incurred any liabilities or obligations, direct or
contingent, which are material to Holdings and its subsidiaries taken as a
whole, nor entered into any transaction not in the ordinary course of
business, nor has there been, singly or in the aggregate, any material
adverse change, or any development which would reasonably be expected to
involve a material adverse change, in the assets, properties, business,
results of operations, condition (financial or otherwise), affairs or
prospects of Holdings and its subsidiaries, taken as a whole (a "Material
Adverse Change") and there have not been dividends or distributions (other
than to Anvil) of any kind declared, paid or made by Holdings or any of
its subsidiaries on any class of its capital stock.
(xxxiv) None of Anvil or Holdings or, to the best of their
knowledge, any agent thereof acting on behalf of Anvil or Holdings has
taken, and none of them will take, any action that would reasonably expect
to cause this Agreement or the issuance or sale of the Senior Notes to
violate Regulation G (12 C.F.R. Part 207), Regulation T (12 C.F.R. Part
220), Regulation U (12 C.F.R. Part 221) or Regulation X (12 C.F.R. Part
224) of the Board of Governors of the Federal Reserve System or analogous
foreign laws and regulations.
(xxxv) The accountants who have certified or shall certify the
financial statements and supporting schedules included or to be included
as part of the Offering Memorandum are independent accountants under Rule
101 of AICPA's Code of Professional Conduct and its interpretations and
rulings. The consolidated historical statements fairly present the
consolidated financial condition and results of operations of Holdings and
its subsidiaries at the respective dates and for the respective periods
indicated, in accordance with generally accepted accounting principles
consistently applied throughout such periods, except as stated therein.
The pro forma financial statements including in the Offering Memorandum
have been prepared on a basis consistent with such historical statements,
except for the pro forma adjustments specified therein, and give effect to
assumptions made on a reasonable basis and present fairly the historical
and proposed transactions contemplated by this Agreement and the other
Operative Documents and the Guarantees. Other financial and statistical
information and data included in the Offering Memorandum, historical and
pro forma, are accurately presented and prepared on a basis consistent
with such financial statements and the books and records of Holdings and
its subsidiaries.
(xxxvi) Neither Holdings nor Anvil intends to, nor does it believe
that it will, incur debts beyond its ability to pay such debts as they
mature. Upon the completion of
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the Recapitalization as described in "The Recapitalization" in the
Offering Memorandum, Holdings and Anvil believe that the present fair
saleable value of the assets of each of Holdings and Anvil will exceed the
amount that will be required to be paid on or in respect of the existing
debts and other liabilities (including contingent liabilities) of such
person as they become absolute and matured. The assets of each of Holdings
and Anvil, upon the completion of the Recapitalization, will not
constitute unreasonably small capital to carry out their respective
businesses as now conducted, including the capital needs of each of
Holdings and Anvil, taking into account their respective projected capital
requirements and capital availability. Each of Holdings and Anvil
currently believe it is, and immediately after the Closing Time (after
giving effect to the Recapitalization) will be, Solvent. As used herein,
the term "Solvent" means, with respect to a person on a particular date,
that on such date (A) the fair market value of the assets of such person
is greater than the total amount of liabilities (including contingent
liabilities) of such person, (B) the present fair saleable value of the
assets of such person is greater than the amount that will be required to
pay the probable liabilities of such person on its debts as they become
absolute and matured, (C) such person is able to realize upon its assets
and pay its debts and other liabilities, including contingent obligations,
as they mature and (D) such person does not have an unreasonably small
capital.
(xxxvii) There are no contracts, agreements or understandings
between Anvil or Holdings or any of their subsidiaries and any person that
would give rise to a valid claim against Anvil or Holdings, its
subsidiaries or any Initial Purchaser for a brokerage commission, finder's
fee or like payment in connection with the issuance, purchase and sale of
the Senior Notes.
(xxxviii) Prior to the Exchange Offer or the effectiveness of the
Shelf Registration Statement, the Senior Indenture is not required to be
qualified under the Trust Indenture Securities Act.
(xxxix) Holdings and Anvil have delivered to the Initial Purchasers
true and correct copies of the Credit Agreement and the New Credit
Agreement, as the case may be, and all amendments, alterations,
modifications, or waivers thereto or in the exhibits or schedules thereto
through the date hereof.
Holdings and Anvil acknowledge that the Initial Purchasers and, for
purposes of the opinions to be delivered to the Initial Purchasers pursuant to
Section 7 hereof, counsel to Holdings and Anvil and counsel to the Initial
Purchasers, will rely upon the accuracy and truth of the foregoing
representations and hereby consent to such reliance.
(b) Each Initial Purchaser represents and warrants to Anvil,
Holdings and to the other Initial Purchasers and, agrees that:
(i) Such Initial Purchaser is a QIB, with such knowledge and
experience in financial and business matters as are necessary in order to
evaluate the merits and risks of an investment in the Senior Notes and
acknowledges that neither the Series A Senior
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Notes nor Notes Guarantees have been registered under the Securities Act
and that such securities may not be offered or sold within the United
States or to, or for the account or benefit of, U.S. persons (as defined
in Regulation S under the Securities Act) except in pursuant to an
exemption from the registration requirements of the Securities Act.
(ii) Such Initial Purchaser (A) is not acquiring the Series A Senior
Notes with a view to any distribution thereof that would violate the
Securities Act or the securities laws of any state of the United States or
any other applicable jurisdiction and (B) will be reoffering and reselling
the Series A Senior Notes only to QIBs in reliance on the exemption from
the registration requirements of the Securities Act provided by Rule 144A
and to Accredited Investors that execute and deliver a letter containing
representations and agreements in the form attached as Annex A to the
Offering Memorandum in a private placement exempt from the registration
requirements of the Securities Act.
(iii) No form of general solicitation or general advertising has
been or will be used by such Initial Purchaser or any of its
representatives in connection with the offer and sale of any of the Series
A Senior Notes, including, but not limited to, articles, notices or other
communications published in any newspaper, magazine, or similar medium or
broadcast over television or radio, or any seminar or meeting whose
attendees have been invited by any general solicitation or general
advertising.
(iv) Such Initial Purchaser agrees that, in connection with the
Exempt Resales, it will solicit offers to buy the Series A Senior Notes
only from, and will offer to sell the Series A Senior Notes only to, QIBs
and Accredited Investors. Such Initial Purchaser further agrees (A) that
it will offer to sell the Series A Senior Notes only to, and will solicit
offers to buy the Series A Senior Notes only from (l) QIBs who in
purchasing such Series A Senior Notes will be deemed to have represented
and agreed that they are purchasing the Series A Senior Notes for their
own accounts or accounts with respect to which they exercise sole
investment discretion and that they or such accounts are QIBs and (2)
Accredited Investors who make the representations contained in, and
execute and return to the Initial Purchaser, a certificate in the form of
Annex A attached to the Offering Memorandum and (B) that, in the case of
such QIBs and Accredited Investors, acknowledges and agrees that such
Series A Senior Notes will not have been registered under the Securities
Act and may be resold, pledged or otherwise transferred only (x)(I) to a
person who the seller reasonably believes is a QIB in a transaction
meeting the requirements of Rule 144A, (II) in a transaction meeting the
requirements of Rule 144, (III) to a foreign person in a transaction
meeting the requirements of Rule 904 under the Securities Act or (IV) in
accordance with another exemption from the registration requirements of
the Securities Act (and based upon an opinion of counsel if Anvil so
requests), (y) to Anvil, or (z) pursuant to an effective registration
statement under the Securities Act and, in each case, in accordance with
any applicable securities laws of any state of the United States or any
other applicable jurisdiction and (C) that the holder will, and each
subsequent holder is required to, notify any purchaser from it of the
security evidenced thereby of the resale restrictions set forth in (B)
above.
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(v) Such Initial Purchaser will have provided each Eligible
Purchaser with a copy of the Offering Memorandum prior to or concurrent
with settlement of each initial resale pursuant to Rule 144A, either with
the confirmation of such initial resale or otherwise.
(vi) Such Initial Purchaser (A) has not solicited, and will not
solicit, offers to purchase any of the Series A Senior Notes from, (B) it
has not sold, and will not sell, any of the Series A Senior Notes to, and
(C) it has not distributed and will not distribute, the Offering
Memorandum to, any person or entity in any jurisdiction outside of the
United States except, in each case, in compliance in all material respect
with all applicable laws.
(vii) Such Initial Purchaser also understands that Anvil and
Holdings and, for purposes of the opinions to be delivered to you pursuant
to Section 7 hereof, counsel to Anvil and Holdings and counsel to the
Initial Purchasers, will rely upon the accuracy and truth of the foregoing
representations and hereby consents to such reliance.
6. Indemnification.
(a) Anvil and Holdings, jointly and severally, agree to indemnify
and hold harmless each of the Initial Purchasers and each person, if any, who
controls (within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act) any of the Initial Purchasers (any of such persons
hereinafter referred to as a "controlling person"), and the respective officers,
directors, partners, employees, representatives and agents of any of the Initial
Purchasers or any controlling person (each such entity or person an "Indemnified
Person") to the fullest extent lawful, from and against any and all losses,
claims, damages, assessments, judgments, actions and other liabilities
(collectively, "Liabilities"), and will reimburse each Indemnified Person for
all fees and expenses (including without limitation, the reasonable fees and
expenses of counsel to any Indemnified Person) (collectively, "Expenses") as
they are incurred in investigating, preparing, pursuing or defending any claim
or action, or any investigation or proceeding by any governmental agency or
body, whether or not in connection with pending or threatened litigation and
whether or not any Indemnified Person is a party (collectively, "Securities
Actions"), directly or indirectly caused by, related to, based upon, arising out
of or in connection with any untrue statement or alleged untrue statement of a
material fact contained in the Preliminary Offering Memorandum or the Offering
Memorandum (or any amendment or supplement thereto), or 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 the light of the circumstances
under which they were made, not misleading, except insofar as such Liabilities
or Expenses are caused by an untrue statement or omission or alleged untrue
statement or omission (i) that is made in reliance upon and in conformity with
information furnished in writing to Anvil and Holdings by such Initial Purchaser
expressly for use therein, which information is specified in the second
paragraph of Section 6(c) or (ii) that is made in any Preliminary Offering
Memorandum if a copy of the Offering Memorandum (as then amended or
supplemented) was not sent or given by or on behalf of such Initial Purchaser to
the person asserting any such loss, claim, damage, liability or expense at or
prior to the written
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<PAGE>
confirmation of the sale of the Series A Senior Notes and the Offering
Memorandum (as then amended or supplemented) would have corrected each untrue
statement or omission. Anvil and Holdings will also reimburse each Indemnified
Person for all Expenses as incurred in connection with enforcing such
Indemnified Person's rights under this Agreement; provided, that if either Anvil
or Holdings reimburse an Initial Purchaser hereunder for any Expenses, such
Initial Purchaser hereby agrees to refund such reimbursement of Expenses to the
extent that the Initial Purchasers are not entitled to be indemnified hereunder.
Anvil and Holdings shall notify each Initial Purchaser promptly of the
institution, threat or assertion of any Securities Action in connection with the
matters addressed by this Agreement which involves Anvil, Holdings or an
Indemnified Person.
(b) Upon receipt by an Indemnified Person of notice of an Securities
Action against such Indemnified Person with respect to which indemnity may be
sought under Section 6(a), such Indemnified Person shall promptly notify Anvil
and Holdings in writing, provided that the failure to so notify Anvil and
Holdings shall not relieve Anvil or Holdings from any liability which Anvil or
Holdings may have on account of this indemnity or otherwise, except to the
extent Anvil and Holdings shall have been materially prejudiced by such failure.
Anvil and Holdings shall, if requested by such Indemnified Person, assume the
defense of any such Securities Action including the employment of counsel
reasonably satisfactory to such Indemnified Person. Any Indemnified Person shall
have the right to employ separate counsel in any such action and participate in
the defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Person, unless: (i) Anvil and Holdings have failed
promptly to assume the defense and employ counsel reasonably satisfactory to
such indemnified party, (ii) the indemnifying party has authorized the
employment of counsel for the indemnified party at the expense of the
indemnifying party or (iii) the named parties to any such Securities Action
(including any impleaded parties) include such Indemnified Person and Anvil or
Holdings, and such Indemnified Person shall have been advised by counsel that
there may be one or more legal defenses available to it which are different from
or in addition to those available to Anvil or Holdings, provided that Anvil and
Holdings shall not in such event be responsible hereunder for the fees and
expenses of more than one firm of separate counsel in connection with any
Securities Action in the same jurisdiction, in addition to any local counsel.
Neither Anvil nor Holdings shall be liable for any settlement of any Securities
Action effected without written consent of Anvil and Holdings (which shall not
be unreasonably withheld) and Anvil and Holdings agree to indemnify and hold
harmless any Indemnified Person from and against any Liability or Expense by
reason of any settlement of any Securities Action effected with the written
consent of Anvil. Notwithstanding the immediately preceding sentence, if at any
time an Indemnified Person shall have requested Anvil or Holdings to reimburse
the Indemnified Person for fees and expenses of counsel as contemplated by the
third sentence of this paragraph, each of Anvil and Holdings 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 sixty (60)
business days after receipt by Anvil and Holdings of the aforesaid request and
(ii) Anvil and Holdings shall not have reimbursed the Indemnified Person in
accordance with such request prior to the date of such settlement. In addition,
Anvil and Holdings will not, without the prior written consent of each
Indemnified Person, settle any pending or threatened Securities Action in
respect of which indemnification or contribution may be sought hereunder
(whether
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or not any Indemnified Person is a party thereto), unless such settlement
includes an unconditional release of each Indemnified Person from all
Liabilities on claims that are the subject matter of such proceedings.
(c) Each of the Initial Purchasers agrees, severally and not
jointly, to indemnify and hold harmless each of Anvil and Holdings, and its
directors, officers and any person controlling (within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act) Anvil and Holdings, and
the officers, directors, partners, employees, representatives and agents of each
such person, to the same extent as the foregoing indemnity from Anvil and
Holdings to each of the Indemnified Persons, but only with respect to
Liabilities and Expenses incurred in investigating, preparing, pursuing or
defending Securities Actions directly or indirectly caused by, related to, based
upon, arising out of or in connection with any untrue statement or omission or
alleged untrue statement or omission of a material fact contained in the
Preliminary Offering Memorandum or the Offering Memorandum that was made in
reliance upon and in conformity with information relating to such Initial
Purchaser furnished in writing by or on behalf of such Initial Purchaser to
Anvil and Holdings expressly for use in the Preliminary Offering Memorandum, the
Offering Memorandum or any amendment or supplement thereto, which information is
specified in the second paragraph of this Section 6(c). In case any Securities
Action shall be brought against Anvil, Holdings or their directors or officers
or any such controlling person in respect of which indemnity may be sought
against a Initial Purchaser, such Initial Purchaser shall have the rights and
duties given Anvil and Holdings, and Anvil, Holdings or their directors or
officers or such controlling person shall have the rights and duties given to
each Initial Purchaser by the preceding paragraph. In no event shall the
liability of any Initial Purchaser hereunder be greater, in the aggregate, than
the amount by which the total discounts and commissions received by such Initial
Purchaser with respect to the Series A Senior Notes exceeds the amount of any
damages which such Initial Purchaser has otherwise been required to pay by
reason of a claim or action based on such information.
The statements in the Preliminary Offering Memorandum and the
Offering Memorandum set forth in the last paragraph on the cover page, the first
and second full paragraphs on page (iii), the first paragraph, the third
paragraph (other than the final sentence thereof) and the second and third
sentences of the fifth paragraph under "Plan of Distribution" constitute the
only information heretofore furnished to Anvil and Holdings in writing by any
Initial Purchaser expressly for use in the Preliminary Offering Memorandum or
the Offering Memorandum, or any amendment or supplement thereto.
(d) If the indemnification provided for in this Section 6 is
unavailable to an indemnified party under Section 6(a), (b) and (c) hereof
(other than by reason of exceptions provided in those Sections) in respect of
any Liabilities or Expenses referred to therein, then each indemnifying party,
in lieu of indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such Liabilities and
Expenses (i) in such proportion as is appropriate to reflect the relative
benefits received by the indemnifying party on the one hand and the indemnified
party on the other hand from the offering of the Series A Senior Notes or (ii)
if the allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
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benefits referred to in clause (i) above but also the relative fault of the
indemnifying party and the indemnified party, as well as any other relevant
equitable considerations. The relative benefits received by Anvil and Holdings
on the one hand and the Initial Purchasers on the other hand, shall be in the
same proportion as the total proceeds from the sale of the Series A Senior Notes
(net of discounts and commissions but before deducting expenses) received by
Anvil and Holdings on the one hand and the total discounts and commissions
received by the Initial Purchasers on the other hand, bear to the total price of
the Series A Senior Notes, in each case, as set forth in the table on the
covering page of the Offering Memorandum. The relative fault of the indemnifying
party on the one hand and of the indemnified party 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 indemnifying party or by
the indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
Anvil, Holdings and the Initial Purchasers agree that it would not
be just and equitable if contribution pursuant to this Section 6(d) were
determined by pro rata allocation (even if the Initial Purchasers were treated
as one entity for such purpose) or by any other method of allocation which does
not take account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an indemnified party as a
result of the Liabilities or Expenses referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other fees or expenses reasonably incurred by such
indemnified party in connection with investigating or defending any Securities
Action. Notwithstanding the provisions of this Section 6, none of the Initial
Purchasers (nor their related Indemnified Persons) shall be required to
contribute, in the aggregate, any amount in excess of the amount by which the
total discounts and commissions received by such Initial Purchaser with respect
to the Series A Senior Notes, exceeds the amount of any damages which such
Initial Purchaser 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 Initial Purchasers' obligations
to contribute pursuant to this Section 6(d) are several in proportion to the
respective number of Series A Senior Notes purchased by each of the Initial
Purchasers hereunder and not joint.
7. Conditions of Initial Purchasers' Obligations. The several
obligations of the Initial Purchasers under this Agreement are subject to the
satisfaction of each of the following conditions:
(a) All of the representations and warranties of Anvil and Holdings
contained in this Agreement shall be true and correct on the date hereof
and on the Closing Date with the same force and effect as if made on and
as of the date hereof and the Closing Date, respectively. Anvil and
Holdings shall have performed or complied with all of the agreements
herein contained and required to be performed or complied with by them at
or prior to the Closing Date.
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(b) The Offering Memorandum shall have been printed and copies
distributed to the Initial Purchasers not later than 10:00 a.m., New York
City time, on the date of this Agreement or at such later date and time as
to which you may agree.
(c) No stop order suspending the qualification or exemption from
qualification of any of the Series A Senior Notes in any jurisdiction
referred to in Section 4(e) shall have been issued and no proceeding for
that purpose shall have been commenced or shall be pending or threatened.
(d) No action shall have been taken and no statute, rule, regulation
or order shall have been enacted, adopted or issued by any governmental
agency which would, as of the Closing Date, prevent the issuance or sale
of any of the Series A Senior Notes; no action, suit or proceeding shall
be pending against or affecting or, to the knowledge of Anvil, threatened
against, Anvil, Holdings or any of their respective subsidiaries before
any court or arbitrator or any governmental body, agency or official that,
if adversely determined, would have a Material Adverse Effect; and no stop
order preventing the use of the Offering Memorandum, or any amendment or
supplement thereto, or any order asserting that any of the transactions
contemplated by this Agreement are subject to the registration
requirements of the Securities Act shall have been issued.
(e) Since the dates as of which information is given in the Offering
Memorandum, (i) there shall not have been any material change, or any
development that is reasonably likely to result in a material change, in
the capital stock, or material increase in the short-term debt or the
long-term debt, of Holdings, Anvil or any of their subsidiaries from that
set forth in the Offering Memorandum and (ii) no dividend or distribution
of any kind shall have been declared, paid or made by Holdings, Anvil or
any of their subsidiaries on any class of its capital stock. Since the
date hereof and since the dates as of which information is given in the
Offering Memorandum, there shall not have been any Material Adverse
Change.
(f) You shall have received certificates, dated the Closing Date,
signed by (i) the Chief Executive Officer and (ii) any Vice President or a
principal financial or accounting officer of Anvil, as of the Closing
Date, confirming the matters set forth in paragraphs (a), (c) (d) and (e)
of this Section 7.
(g) You shall have received on the Closing Date an opinion
(satisfactory to you and your counsel), dated the Closing Date, of
Kirkland & Ellis, counsel for Anvil and Holdings, to the effect set forth
in Exhibit B hereto.
(h) You shall have received on the Closing Date an opinion
(satisfactory to you and your counsel), dated the Closing Date, of Jacob
Hollander, Executive Vice President, Chief Administrative Officer,
Secretary and General Counsel of Anvil, to the effect set forth in Exhibit
C hereto.
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(i) Counsel for Anvil and Holdings shall have delivered to you
copies of all opinions issued by them in connection with the New Credit
Agreement and the transactions contemplated thereby.
(j) You shall have received an opinion, dated the Closing Date, of
Simpson Thacher & Bartlett, your counsel, in form and substance reasonably
satisfactory to you, covering such matters as are customarily covered in
such opinions.
(k) You shall have received a solvency opinion, dated the Closing
Date, of Murray Devine, addressed to the Initial Purchasers and otherwise
in form and substance reasonably satisfactory to you.
(l) At the time this Agreement is executed and delivered by Anvil
and on the Closing Date, you shall have received letters, substantially in
the form previously approved by you, from Deloitte & Touche LLP and KPMG
Peat Marwick LLP, independent public accountants, with respect to the
financial statements and certain financial information contained in the
Offering Memorandum.
(m) Subsequent to the execution and delivery of this Agreement,
there shall not have been any downgrading, nor shall have any notice have
been given of any intended or potential downgrading or of any review for a
possible change that does not indicate the direction of the possible
change, in the rating accorded to any securities of Holdings or Anvil by
any "nationally recognized statistical rating organization," as such term
is defined for the purposes of Rule 436(g)(2) under the Securities Act.
(n) Simpson Thacher & Bartlett shall have been furnished with such
documents and opinions, in addition to those set forth above, as they may
reasonably require for the purpose of enabling them to review or pass upon
the matters referred to in this Section 7 and in order to evidence the
accuracy, completeness or satisfaction in all material respects of any of
the representations, warranties or conditions herein contained.
(o) Prior to the Closing Date, Holdings and Anvil shall have
furnished to you such further information, certificates and documents as
you may reasonably request.
(p) Anvil, Holdings, Cottontops and the Trustee shall have entered
into the Senior Indenture and you shall have received counterparts,
conformed as executed, thereof.
(q) Anvil, Holdings, Cottontops and the Initial Purchasers shall
have entered into the Registration Rights Agreement and you shall have
received counterparts, conformed as executed, thereof.
(r) At or prior to the Closing Date, the Recapitalization shall have
been consummated on terms that conform in all material respects to the
Recapitalization Agreement, as amended, (in the form delivered to the
Initial Purchasers prior to the date
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<PAGE>
hereof) and the description thereof in the Offering Memorandum and you
shall have received true and correct copies of all documents pertaining
thereto and evidence satisfactory to you of the consummation thereof.
(s) At or prior to the Closing Date, the closing under the New
Credit Agreement shall have been consummated on terms that conform in all
material respects to the New Credit Agreement (in the form delivered to
the Initial Purchasers prior to the date hereof) and the description
thereof in the Offering Memorandum and you shall have received evidence
satisfactory to you of the consummation thereof.
(t) At or prior to the Closing Date, the Units Offering shall have
been consummated on terms that conform in all material respects to the
description thereof contained in the Offering Memorandum and you shall
have received evidence satisfactory to you of the consummation thereof.
(u) Prior to the Closing Date, Holdings, Anvil and their
subsidiaries shall have furnished to you such further information,
certificates and documents as you may reasonable request, including any
such information, certificates and documents required in connection with
the legal opinions to be furnished by your counsel as set forth above.
All opinions, certificates, letters and other documents required by
this Section 7 to be delivered by Holdings and Anvil will be in compliance with
the provisions hereof only if they are reasonably satisfactory in form and
substance to you. Holdings and Anvil will furnish the Initial Purchasers with
such conformed copies of such opinions, certificates, letters and other
documents as they shall reasonably request.
8. Conditions to the Obligations of Anvil and Holdings. All of the
representations and warranties of the Initial Purchasers contained in this
Agreement shall be true and correct as of the Closing Date with the same force
and effect as if made on and as of the Closing Date.
9. Defaults. If, on the Closing Date, any of the Initial Purchasers
shall fail or refuse to purchase the Series A Senior Notes that it has agreed to
purchase hereunder on such date, and the aggregate principal amount of such
Series A Senior Notes that such defaulting Initial Purchaser agreed but failed
or refused to purchase does not exceed 10% of the total principal amount of such
Series A Senior Notes that all of the Initial Purchasers are obligated to
purchase on such Closing Date, the non-defaulting Initial Purchasers shall be
obligated to purchase the amount of such Series A Senior Notes that such
defaulting Initial Purchaser agreed but failed or refused to purchase. If, on
the Closing Date, any of the Initial Purchasers shall fail or refuse to purchase
the Series A Senior Notes in an aggregate principal amount that exceeds 10% of
such total principal amount and arrangements satisfactory to the other Initial
Purchasers and Anvil for the purchase of such Series A Senior Notes are not made
within 48 hours after such default, this Agreement shall terminate without
liability on the part of the non-defaulting Initial Purchasers or Anvil, except
as otherwise provided in Section 10. In any such case that does not result in
termination of this Agreement, the Initial Purchasers or Anvil may postpone
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the Closing Date for not longer than seven (7) days, in order that the required
changes, if any, in the Offering Memorandum or any other documents or
arrangements may be effected. Any action taken under this paragraph shall not
relieve a defaulting Initial Purchaser from liability in respect of any default
by any such Initial Purchaser under this Agreement.
10. Effective Date of Agreement and Termination. This Agreement
shall become effective upon the execution hereof.
This Agreement may be terminated at any time on or prior to the
Closing Date by you by notice to Anvil if any of the following has occurred: (i)
subsequent to the date information is provided in the Offering Memorandum, any
Material Adverse Change which, in your judgment, materially impairs the
investment quality of any of the Senior Notes, (ii) any outbreak or escalation
of hostilities or other national or international calamity or crisis or material
adverse change in the financial markets of the United States or elsewhere, or
any other substantial national or international calamity or emergency if the
effect of such outbreak, escalation, calamity, crisis, material adverse change
or emergency would, in your judgment, make it impracticable or inadvisable to
market any of the Series A Senior Notes or to enforce contracts for the sale of
any of the Series A Senior Notes, (iii) any suspension or limitation of trading
generally in securities on the New York Stock Exchange or in the Nasdaq National
Market System or any setting of minimum prices for trading on such exchange or
markets, (iv) any declaration of a general banking moratorium by either federal
or New York authorities, (v) the taking of any action by any federal, state or
local government or agency in respect of its monetary or fiscal affairs that in
your judgment has a material adverse effect on the financial markets in the
United States, and would, in your judgment, make it impracticable or inadvisable
to market any of the Series A Senior Notes or to enforce contracts for the sale
of any of the Series A Senior Notes or (vi) the enactment, publication, decree,
or other promulgation of any federal or state statute, regulation, rule or order
of any court or other governmental authority which, in your judgment, would have
a Material Adverse Effect.
The indemnities and contribution provisions and the other
agreements, representations and warranties of Anvil, Holdings, their respective
officers and directors and of the Initial Purchasers set forth in or made
pursuant to this Agreement shall remain operative and in full force and effect,
and will survive delivery of and payment for the Series A Senior Notes
regardless, of (i) any investigation, or statement as to the results thereof,
made by or on behalf of either of the Initial Purchaser or by or on behalf of
Anvil and Holdings, the officers or directors of Anvil and Holdings or the
controlling person of Anvil and Holdings, (ii) acceptance of the Series A Senior
Notes and payment for them hereunder and (iii) termination of this Agreement.
If this Agreement shall be terminated by the Initial Purchasers
pursuant to clause (i) of the second paragraph of this Section 10 or because of
the failure or refusal on the part of Anvil or Holdings to comply with the terms
or to fulfill any of the conditions of this Agreement, Anvil agrees to reimburse
you for all out-of-pocket expenses (including the fees and disbursements of
counsel) incurred by you. Notwithstanding any termination of this Agreement,
Anvil shall be liable for all expenses which it has agreed to pay pursuant to
Section 4(f) hereof.
27
<PAGE>
If the transactions contemplated hereby are consummated, each of the parties
shall pay its own expenses in connection with the offering and sale of the
Series A Senior Notes, including the costs and expenses of its counsel, except
as otherwise provided in Section 4(f) hereof.
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon Anvil, Holdings, the Initial
Purchasers, any Indemnified Person referred to herein and their respective
successors and assigns, all as and to the extent provided in this Agreement, and
no other person shall acquire or have any right under or by virtue of this
Agreement. The terms "successors and assigns" shall not include a purchaser of
any of the Series A Senior Notes from any of the Initial Purchasers merely
because of such purchase.
11. Miscellaneous. Notices given pursuant to any provision of this
Agreement shall be addressed as follows:
(i) if to Anvil or Holdings:
Anvil Knitwear, Inc.
228 East 45th Street
New York, New York 10017
Attention: Jacob Hollander
Telecopier: 212-885-9411
with copies to:
399 Venture Partners, Inc.
399 Park Avenue, 14th Floor
New York, New York 10043
Attention: David F. Thomas
Telecopier: 212-888-2940
and
Bruckmann, Rosser, Sherrill & Co., Inc.
126 East 56th Street, 29th Floor
New York, New York 10022
Attention: Stephen F. Edwards
Telecopier: 212-521-3799
and copy to:
Kirkland & Ellis
Citicorp Center
153 East 53rd Street
New York, New York 10022
28
<PAGE>
Attention: Lance C. Balk
Telecopier: 212-446-4900
(ii) if to the Initial Purchasers:
c/o Donaldson, Lufkin & Jenrette
Securities Corporation
277 Park Avenue
New York, New York 10172
Attention: Tom McGonagle
Telecopier: 212-892-7509
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: John D. Lobrano
Telecopier: 212-455-2502
(iv) or in any case to such other address as the person to be
notified may have requested in writing.
This Agreement shall be governed and construed in accordance with
the internal laws of the State of New York as applied to contracts made and
performed entirely within the State of New York, without regard to the conflicts
of laws and principles thereof. This Agreement may be signed in various
counterparts which together shall constitute one and the same instrument.
29
<PAGE>
Please confirm that the foregoing correctly sets forth the Agreement
among Anvil, Holdings and the Initial Purchasers.
Very truly yours,
ANVIL KNITWEAR, INC.
By:-------------------------------------
Name:
Title:
ANVIL HOLDINGS, INC.
By:-------------------------------------
Name:
Title:
Accepted and agreed to as of
the date first above written:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: --------------------------
Name:
Title:
WASSERSTEIN PERELLA
SECURITIES, INC.
By: --------------------------
Name:
Title:
NATIONSBANC CAPITAL
MARKETS, INC.
By: --------------------------
Name:
Title:
<PAGE>
SCHEDULE I
Principal Amount
----------------
Donaldson, Lufkin & Jenrette
Securities Corporation..................................... $ 78,000,000
Wasserstein Perella Securities, Inc.......................... 32,500,000
NationsBanc Capital Markets, Inc. .......................... 19,500,000
============
Total............................................... $130,000,000
------------
<PAGE>
SCHEDULE II
DIRECT AND INDIRECT SUBSIDIARIES
OF ANVIL HOLDINGS, INC.
1. Anvil Knitwear, Inc., a Delaware corporation ("Anvil"). Anvil is
authorized to issue 1,000 shares of common stock, par value $.01 per share
of which all 1,000 shares are issued and outstanding. Holdings is the
record and beneficial owner of all 1,000 shares of the common stock of
Anvil.
2. Anvil (Czech), Inc., a Delaware corporation ("Czech"). Czech is authorized
to issue 1,000 shares of common stock, par value $.01 per share of which
all 1,000 shares are issued and outstanding. Anvil is the record and
beneficial owner of all 1,000 shares of the common stock of Czech.
3. Anvil SRO, a Czech Republic membership association ("SRO"). SRO is a
wholly owned subsidiary of Czech.
4 A.K.H., S.A., a Honduran limited liability company ("Honduras"). Honduras
is authorized to issue 250 membership interests of which 250 are issued
and outstanding. Anvil is the record and beneficial owner of 246
membership interests. The remaining 4 membership interests are held 1 each
by Mario Mejia Cobos, Jesse Ivy Beall Caballero, Jose Angel Mejia, and
Julio Herra Montes.
5. Cottontops, Inc., a Delaware corporation ("Cottontops DE"). Cottontops DE
is authorized to issue 100 shares of common stock, par value $.01 of which
all 100 shares are issued and outstanding. Anvil is the record and
beneficial owner of all 100 shares of the common stock of Cottontops DE.
<PAGE>
EXHIBIT A
[FORM OF REGISTRATION RIGHTS AGREEMENT]
<PAGE>
EXHIBIT B
[FORM OF OPINION OF KIRKLAND & ELLIS]
<PAGE>
EXHIBIT C
[FORM OF OPINION OF THE GENERAL COUNSEL]
<PAGE>
INDENTURE, dated as of March 14, 1997, among Anvil Knitwear, Inc., a
Delaware corporation ("Anvil"), Anvil Holdings, Inc., a Delaware corporation
("Holdings"), Cottontops, Inc., a Delaware corporation and the other Subsidiary
Guarantors (as defined herein) and United States Trust Company of New York, as
trustee (the "Trustee").
Each party agrees as follows for the benefit of each other and for
the equal and ratable benefit of the Holders of the 10-7/8% Series A Senior
Notes due 2007 (the "Series A Senior Notes") and the 10-7/8% Series B Senior
Notes due 2007 (the "Series B Senior Notes" and, together with the Series A
Senior Notes, the "Senior Notes"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.1 DEFINITIONS
"Acquired Indebtedness" means, with respect to any specified Person,
(i) Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary or is designated a Restricted
Subsidiary of such specified Person, including, without limitation, Indebtedness
incurred in connection with, or in contemplation of, such other Person merging
with or into or becoming a Subsidiary or Restricted Subsidiary of such specified
Person, and (ii) Indebtedness secured by a Lien encumbering any asset acquired
by such specified Person.
"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 purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Asset Sale" means (i) the sale, lease, conveyance or other
disposition of any assets (including, without limitation, by way of a sale and
leaseback, including any disposition by means of a merger, consolidation or
similar transaction and including the issuance, sale or other transfer of any of
the capital stock of any Restricted Subsidiary of such Person) other than to
Anvil or to any of its Wholly Owned Subsidiaries (including the receipt of
proceeds of insurance paid on account of the loss of or damage to any asset and
awards of compensation for any asset taken by condemnation, eminent domain or
similar proceeding, and including the receipt of proceeds of business
interruption insurance); and (ii) the issuance of Equity Interests in any
Restricted Subsidiaries or the sale of any Equity Interests in any Restricted
Subsidiaries, in each case, in one or a series of related
<PAGE>
2
transactions, provided, that notwithstanding the foregoing, the term "Asset
Sale" shall not include: (a) the sale, lease, conveyance, disposition or other
transfer of all or substantially all of the assets of Anvil, as permitted
pursuant to Section 5.1, (b) the sale or lease of equipment, inventory, accounts
receivable or other assets in the ordinary course of business consistent with
past practice, (c) a transfer of assets by Anvil to a Wholly Owned Subsidiary
that is a Subsidiary Guarantor or by a Wholly Owned Subsidiary that is a
Subsidiary Guarantor to Anvil or to another Wholly Owned Subsidiary that is a
Subsidiary Guarantor, or by a Wholly Owned Subsidiary that is not a Subsidiary
Guarantor to another Wholly Owned Subsidiary that is not a Subsidiary Guarantor,
(d) an issuance of Equity Interests by a Wholly Owned Subsidiary to Anvil or to
another Wholly Owned Subsidiary that is a Subsidiary Guarantor, or by a Wholly
Owned Subsidiary that is not a Subsidiary Guarantor to another Wholly Owned
Subsidiary that is not a Subsidiary Guarantor, (e) the surrender or waiver of
contract rights or the settlement, release or surrender of contract, tort or
other claims of any kind, (f) the grant in the ordinary course of business of
any non-exclusive license of patents, trademarks, registrations therefor and
other similar intellectual property, (g) Permitted Investments or (h) any cash
dividend, distribution, Investment or payment made pursuant to the first or
second paragraph of Section 4.9.
"Attributable Debt" in respect of a sale and leaseback transaction
means, at the time of determination, the present value (discounted at the rate
of interest implicit in such transaction, determined in accordance with GAAP) of
the obligation of the lessee for net rental payments during the remaining term
of the lease included in such sale and leaseback transaction (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended).
"Board of Directors" means the Board of Directors of Anvil, or any
authorized committee of the Board of Directors.
"Borrowing Base" means, as of any date, an amount equal to the sum
of (i) 85% of all Eligible Receivables, (ii) 60% of all Eligible Raw Materials
Inventory, (iii) 50% of Eligible Finished Goods Inventory and (iv) 50% of the
fair market value or, if acquired after the date of this Indenture, the
acquisition cost, of appraised equipment and real property owned by Anvil and
its Restricted Subsidiaries, or such lesser amount as may then constitute the
"Borrowing Base" under the New Credit Agreement.
"BRS" means Bruckmann, Rosser, Sherrill & Co., L.P., a Delaware
limited partnership, and its successors.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital lease
that would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations,
<PAGE>
3
rights or other equivalents (however designated) of corporate stock, (iii) in
the case of a partnership, partnership interests (whether general or limited)
and (iv) any other interest or participation that confers on a Person the right
to receive a share of the profits and losses of, or distributions of assets of,
the issuing Person.
"Cash Equivalents" means (a) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States is pledged in support thereof) having maturities no more than twelve
months from the date of acquisition, (b) U.S. dollar denominated (or foreign
currency fully hedged) time deposits, certificates of deposit, Eurodollar time
deposits or Eurodollar certificates of deposit of (i) any domestic commercial
bank of recognized standing having capital and surplus in excess of $100.0
million or (ii) any bank whose short-term commercial paper rating from S&P is at
least A-1 or the equivalent thereof or from Moody's is at least P-1 or the
equivalent thereof (any such bank being an "Approved Lender"), in each case with
maturities of not more than twelve months from the date of acquisition, (c)
commercial paper and variable or fixed rate notes issued by any Approved Lender
(or by the parent company thereof) or any variable rate notes issued by, or
guaranteed by, any domestic corporation rated A-2 (or the equivalent thereof) or
better by S&P or P-2 (or the equivalent thereof) or better by Moody's and
maturing within twelve months of the date of acquisition, (d) repurchase
agreements with a bank or trust company or recognized securities dealer having
capital and surplus in excess of $100.0 million for direct obligations issued by
or fully guaranteed by the United States of America in which Anvil shall have a
perfected first priority security interest (subject to no other Liens) and
having, on the date of purchase thereof, a fair market value of at least 100% of
the amount of repurchase obligations, and (e) interests in money market mutual
funds which invest solely in assets or securities of the type described in
subparagraphs (a), (b), (c) or (d) hereof.
"Certificate of Designations" means the certificate of designations
of Holdings dated March 13, 1997 relating to the Senior Preferred Stock.
"Change of Control" means such time as (i) prior to the initial
public offering by Anvil or any direct or indirect parent of Anvil of its common
stock (other than a public offering pursuant to a registration statement on Form
S-8), Permitted Holders cease to have, directly or indirectly, in the aggregate
at least 51% of the voting power of the voting stock of Anvil or Holdings or any
other direct or indirect parent of Holdings ceases to own, directly or
indirectly, 100% of the voting power of the voting stock of Anvil (other than by
reason of a merger of Holdings and Anvil) or (ii) after the initial public
offering by Anvil or any direct or indirect parent of Anvil of its common stock
(other than a public offering pursuant to a registration statement on Form S-8),
(A) any Schedule 13D, Form 13F or Schedule 13G under the Exchange Act, or any
amendment to such Schedule or Form, is received by Anvil or Holdings which
indicates that, or Anvil or Holdings otherwise becomes aware that, a "person" or
"group" (within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act)
has become, directly or indirectly, the "beneficial owner," by way of merger,
consolidation or otherwise, of 40% or more of the voting power of the voting
stock of Anvil or Holdings on a fully-diluted basis after giving effect to the
conversion and exercise of all outstanding warrants, options and other
securities of Anvil or Holdings, as the case may be
<PAGE>
4
(whether or not such securities are then currently convertible or exercisable)
and (B) such person or group has become, directly or indirectly, the beneficial
owner of a greater percentage of the voting capital stock of Anvil, calculated
on such fully diluted basis, than beneficially owned by the Permitted Holders,
or (iii) the sale, lease or transfer of all or substantially all of the assets
of Anvil to any person or group (other than the Permitted Holders or a
Subsidiary Guarantor), or (iv) during any period of two consecutive calendar
years, individuals who at the beginning of such period constituted the Board of
Directors of Anvil or Holdings (together with any new directors whose election
by the Board of Directors of Anvil or Holdings or whose nomination for election
by the shareholders of Anvil or Holdings, as the case may be, was approved by a
vote of a majority of the directors then still in office who either were
directors at the beginning of such period or whose election or nomination for
election was previously so approved or was approved by the Permitted Holders)
cease for any reason to constitute a majority of the directors of Anvil or
Holdings, as the case may be, then in office.
"Commission" means the Securities and Exchange Commission.
"Company Order" means a written order or request signed in the name
of an Officer and delivered to the Trustee.
"Consolidated EBITDA" means, with respect to Anvil and its
Restricted Subsidiaries for any period, the sum of, without duplication, (i) the
Consolidated Net Income for such period, plus (ii) to the extent deducted from
Consolidated Net Income for such period, (x) the Fixed Charges for such period,
plus (y) non-cash dividends on Anvil's preferred stock, plus (iii) provision for
taxes based on income or profits for such period (to the extent such income or
profits were included in computing Consolidated Net Income for such period),
plus (iv) consolidated depreciation, amortization and other non-cash charges of
Anvil and its Restricted Subsidiaries required to be reflected as expenses on
the books and records of Anvil, minus (v) cash payments with respect to any
nonrecurring, non-cash charges previously added back pursuant to clause (iv),
and (vi) excluding the impact of foreign currency translations. Notwithstanding
the foregoing, the provision for taxes based on the income or profits of, and
the depreciation and amortization and other non-cash charges of, a Restricted
Subsidiary of a Person shall be added to Consolidated Net Income to compute
Consolidated EBITDA only to the extent that the Net Income of such Restricted
Subsidiary was included in calculating the Consolidated Net Income of such
Person and only if a corresponding amount would be permitted at the date of
determination to be dividended to Anvil by such Restricted Subsidiary without
prior approval (that has not been obtained), pursuant to the terms of its
charter and all agreements, instruments, judgments, decrees, orders, statutes,
rules and governmental regulations applicable to that Restricted Subsidiary or
its stockholders.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that (i) the Net Income (but not loss) of any Person that is
not a Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the
<PAGE>
5
amount of dividends or distributions paid in cash to the referent Person or a
Wholly Owned Subsidiary thereof that is a Subsidiary Guarantor, (ii) the Net
Income of, or any dividends or other distributions from, any Unrestricted
Subsidiary, to the extent otherwise included, shall be excluded, whether or not
distributed to Anvil or one of its Restricted Subsidiaries, (iii) the Net Income
of any Restricted Subsidiary shall be excluded to the extent that the
declaration or payment of dividends or similar distributions by that Restricted
Subsidiary of that Net Income is not at the date of determination permitted
without any prior governmental approval (which has not been obtained) or,
directly or indirectly, by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Restricted Subsidiary or its stockholders, (iv)
the Net Income of any Person acquired in a pooling of interests transaction for
any period prior to the date of such acquisition shall be excluded, (v) the
cumulative effect of a change in accounting principles shall be excluded, (vi)
income or loss attributable to discontinued operations shall be excluded; (vii)
any increase in cost of sales or other write-offs resulting from the purchase
accounting treatment of any acquisitions shall be excluded; and (viii) all other
extraordinary, unusual or nonrecurring gains or losses shall be excluded.
"Consolidated Net Worth" of a Person at any date means the amount by
which the assets of such Person and its consolidated Restricted Subsidiaries
(less any revaluation or other write-up subsequent to the date of this Indenture
in any such assets (other than write-ups resulting from foreign currency
translations and write-ups of tangible assets of a going concern business made
within twelve months after the acquisition of such business)) exceed the sum of
(a) the total liabilities of such Person and its consolidated Restricted
Subsidiaries, plus (b) any Disqualified Stock of such Person or any consolidated
Restricted Subsidiaries of such Person issued to any Person other than such
Person or a Wholly Owned Subsidiary of such Person, in each case determined in
accordance with GAAP.
"Corporate Trust Office of the Trustee" shall be at the address of
the Trustee specified in Section 12.2 hereof or such other address as to which
the Trustee may give notice to Anvil.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Definitive Senior Notes" means Senior Notes that are in the form of
the Senior Note attached hereto as Exhibit A, that do not include the
information called for by footnote 1 thereof.
"Depositary" means, with respect to the Senior Notes issuable or
issued in whole or in part in global form, the Person specified in Section 2.3
hereof as the Depositary with respect to the Senior Notes, until a successor
shall have been appointed and become such Depositary pursuant to the applicable
provision of this Indenture, and, thereafter, "Depositary" shall mean or include
such successor.
<PAGE>
6
"Disqualified Stock" means any Capital Stock that, 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 redeemable at
the option of the Holder thereof, in whole or in part, on or prior to the date
which is 91 days after the date that the Senior Notes mature.
"Eligible Finished Goods Inventory" means, as of any date of
determination, the gross dollar value (valued at the lower of cost or fair
market value (on a first-in, first-out basis)) of all finished goods inventory
(including for purposes hereof, finished goods inventory which is in transit
back to Anvil or any Subsidiary Guarantor) of Anvil or any Subsidiary Guarantor
less appropriate reserves determined in accordance with GAAP applied on a
consistent basis but excluding in any event and without duplication, to the
extent not treated accordingly by GAAP, (i) inventory subject to any Lien (other
than a Permitted Lien), (ii) inventory which fails to meet standards for sale or
use imposed by governmental agencies, departments or divisions having regulatory
authority over such goods, (iii) inventory which is not useable or saleable at
prices approximating their cost (after taking into account, without duplication,
the amount of any reserves for obsolescence, unsaleability or decline in value),
(iv) inventory located outside of the United States (unless in transit back to
Anvil or any Subsidiary Guarantor), (v) inventory in the possession of domestic
contractors (other than Anvil or any Subsidiary Guarantor) or other third
parties, and (vi) all work in process.
"Eligible Raw Materials Inventory" means, as of any date of
determination, the gross dollar value (valued at the lower of cost or fair
market value (on a first-in, first-out basis)) of all raw materials (including
for purposes hereof, uncut dyed or greige cloth) of Anvil or any Subsidiary
Guarantor less appropriate reserves determined in accordance with GAAP applied
on a consistent basis but excluding in any event, to the extent not treated
accordingly by GAAP and without duplication, (i) inventory subject to any Lien
(other than a Permitted Lien), (ii) inventory which fails to meet standards for
sale or use imposed by governmental agencies, departments or divisions having
regulatory authority over such goods, (iii) inventory which is not useable or
saleable at prices approximating their cost (after taking into account, without
duplication, the amount of any reserves for obsolescence, unsaleability or
decline in value), (iv) inventory located outside of the United States (unless
in transit back to Anvil or any Subsidiary Guarantor), (v) inventory in the
possession of domestic contractors (other than Anvil or any Subsidiary
Guarantor) or other third parties, and (vi) all work in process (except uncut
dyed or greige cloth).
"Eligible Receivables" means, as of any date of determination, the
aggregate gross amount of all accounts receivable, receivables and obligations
for payment created or arising from the sale of inventory or the rendering of
services in the ordinary course of business, owned by or owing to Anvil or any
Subsidiary Guarantor, net of allowances and reserves for doubtful or
uncollectible accounts and sales adjustments consistent with Anvil's internal
policies and in any event in accordance with GAAP applied on a consistent basis,
(hereinafter sometimes referred to collectively as "Receivables"), but
excluding, without duplications in any event (i) Receivables subject to a Lien
(other than a Permitted Lien), (ii) Receivables which are outstanding more than
90 days from the due date of the original
<PAGE>
7
invoice or more than 180 days from the date of shipment, (iii) Receivables
evidenced by notes, chattel paper or other instruments, unless such notes,
chattel paper or instruments have been delivered to and are in the possession of
such parties as may be specified in the New Credit Agreement, (iv) Receivables
with respect to which the account debtor is not solvent or is the subject of a
bankruptcy or insolvency proceedings of any kind, (v) Receivables owing by an
account debtor located outside of the United States (unless payment for the
goods shipped is secured by an irrevocable letter of credit in a form and from
an institution acceptable to such parties as may be specified in the New Credit
Agreement), (vi) Receivables which are contingent or subject to offset,
deduction, counterclaim, dispute or other defense to payment, in each case to
the extent of such offset, deduction, counterclaim dispute or other defense, and
(vii) Receivables arising out of transactions with Subsidiaries or Affiliates of
Anvil.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Debentures" means Holdings' 13% Subordinated Exchange
Debentures due 2009 issued under the Exchange Debenture Indenture.
"Exchange Debenture Indenture" means the indenture dated March 14,
1997 between Holdings and United States Trust Company of New York, as trustee,
as such indenture may be amended or supplemented from time to time.
"Exchange Offer" means the offer that may be made by Anvil pursuant
to the Registration Rights Agreement to exchange Series B Senior Notes for
Series A Senior Notes.
"Existing Indebtedness" means the Indebtedness of Anvil and its
Restricted Subsidiaries (other than Indebtedness under the New Credit Agreement)
in existence on the date of this Indenture, until such amounts are repaid.
"Fixed Charges" means, with respect to any Person for any period,
the sum, without duplication, of (i) the consolidated interest expense of such
Person and its Restricted Subsidiaries for such period, whether paid or accrued
(including, without limitation, amortization of original issue discount,
non-cash interest payments, the interest component of any deferred payment
obligations, the interest component of all payments associated with Capital
Lease Obligations, commissions, discounts and other fees and charges incurred in
respect of letter of credit or bankers' acceptance financings, and net payments
(if any) pursuant to Hedging Obligations), and (ii) the consolidated interest
expense of such Person and its Restricted Subsidiaries that was capitalized
during such period, and (iii) any interest expense on Indebtedness of another
Person that is guaranteed by such Person or one of its Restricted Subsidiaries
or secured by a Lien on assets of such Person or one of its Restricted
Subsidiaries (whether or not such guarantee or Lien is called upon), and (iv)
the product of (a) all cash dividend payments (and non-cash dividend payments in
the case of a Person that
<PAGE>
8
is a Restricted Subsidiary) on any series of preferred stock of such Person
payable to a party other than Anvil or a Wholly Owned Subsidiary, times (b) a
fraction, the numerator of which is one and the denominator of which is one
minus the then current combined federal, state and local statutory tax rate of
such Person, expressed as a decimal, on a consolidated basis and in accordance
with GAAP, but excluding from the calculation of fixed charges amortization of
financing costs (except to the extent referred to in the parenthetical in clause
(i) of this definition).
"Fixed Charge Coverage Ratio" means with respect to any Person for
any period, the ratio of the Consolidated EBITDA of such Person and its
Restricted Subsidiaries for such period to the Fixed Charges of such Person and
its Restricted Subsidiaries for such period. In the event that Anvil or any of
its Restricted Subsidiaries incurs, assumes, guarantees or repays any
Indebtedness (other than the incurrence or repayment of revolving credit
borrowings used for working capital, except to the extent that a repayment is
accompanied by a permanent reduction in revolving credit commitments) or issues
preferred stock subsequent to the commencement of the four-quarter reference
period for which the Fixed Charge Coverage Ratio is being calculated but prior
to the date on which the event for which the calculation of the Fixed Charge
Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge Coverage
Ratio shall be calculated giving pro forma effect to such incurrence,
assumption, guarantee or redemption of Indebtedness, or such issuance or
redemption of preferred stock, as if the same had occurred at the beginning of
the applicable four-quarter reference period. For purposes of making the
computation referred to above, (i) acquisitions that have been made by Anvil or
any of its Restricted Subsidiaries, including through mergers or consolidations
and including any related financing transactions, during the four-quarter
reference period or subsequent to such reference period and on or prior to the
Calculation Date shall be deemed to have occurred on the first day of the
four-quarter reference period and shall give pro forma effect to the
Consolidated EBITDA and Indebtedness of the Person which is the subject of any
such acquisition, and (ii) the Consolidated EBITDA attributable to discontinued
operations, as determined in accordance with GAAP, and operations or businesses
disposed of prior to the Calculation Date, shall be excluded, and (iii) the
Fixed Charges attributable to discontinued operations, as determined in
accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded, but only to the extent that the obligations
giving rise to such Fixed Charges will not be obligations of the referent Person
or any of its Restricted Subsidiaries following the Calculation Date.
"GAAP" means generally accepted accounting principles 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 have been approved by a significant segment
of the accounting profession, which are in effect on the date of this Indenture.
"Global Senior Note" means a Senior Note that contains the paragraph
referred to in footnote 1 to the form of the Senior Note attached hereto as
Exhibit A.
<PAGE>
9
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States is pledged.
"guarantee" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, letters of
credit and reimbursement agreements in respect thereof), of all or any part of
any Indebtedness.
"Guarantee" means the guarantee of Holdings provided for in Section
10.1 hereof.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates.
"Holder" means a Person in whose name a Senior Note is registered on
the Registrar's books.
"Indebtedness" means, with respect to any Person, any indebtedness
of such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or banker's acceptances
or representing Capital Lease Obligations or the balance deferred and unpaid of
the purchase price of any property or representing any Hedging Obligations,
except any such balance that constitutes an accrued expense or trade payable, if
and to the extent any of the foregoing indebtedness (other than letters of
credit and Hedging Obligations) would appear as a liability upon a balance sheet
of such Person prepared in accordance with GAAP, as well as all indebtedness of
others secured by a Lien on any asset of such Person (whether or not such
indebtedness is assumed by such Person), the maximum fixed repurchase price of
Disqualified Stock issued by such Person in each case, if held by any Person
other than Anvil or a Wholly Owned Subsidiary of Anvil, and, to the extent not
otherwise included, the guarantee by such Person of any indebtedness of any
other Person.
"Indenture" means this Indenture, as amended or supplemented from
time to time.
"Investments" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances (other than advances to customers in the ordinary course of business
that are recorded as accounts receivable on the books of such Person) or capital
contributions (excluding commission, travel, relocation and similar advances to
officers and employees made in the ordinary course of business), purchases or
other acquisitions for consideration of Indebtedness, Equity Interests or other
securities and all other items that are or would be classified as investments on
a balance sheet
<PAGE>
10
prepared in accordance with GAAP; provided that an acquisition of assets, Equity
Interests or other securities by Anvil for consideration consisting of common
equity securities of Anvil or of any direct or indirect parent of Anvil shall
not be deemed to be an Investment.
"Legal Holiday" means a Saturday, a Sunday or a day on which federal
offices or banking institutions in the City of New York, in the city of the
Corporate Trust Office of the Trustee, or at a place of payment are authorized
by law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday, payment may be made on the next succeeding day that is not a
Legal Holiday, and no interest shall accrue for the intervening period.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Liquidated Damages" means all liquidated damages owing pursuant to
the Registration Rights Agreement.
"Maturity Date" means March 15, 2007.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Income" means, with respect to any Person, the net income
(loss) of such Person, determined in accordance with GAAP, and before reduction
for non-cash preferred stock dividends, excluding, however, (i) any gain (but
not loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (b) the
disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries, and (ii) any extraordinary or nonrecurring gain
(but not loss), together with any related provision for taxes on such
extraordinary or nonrecurring gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received by Anvil
or any of its Restricted Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of the direct costs
relating to such Asset Sale (including, without limitation, legal, accounting
and investment banking fees, and sales commissions) and any relocation expenses
incurred as a result thereof, taxes paid or payable as a result thereof (after
taking into account any available tax credits or deductions and any tax sharing
arrangements), and any reserve for adjustment in respect of the sale price of
such asset or assets established in accordance with GAAP and net of any Purchase
Money Obligations relating to the assets comprising such Asset Sale.
<PAGE>
11
"New Credit Agreement" means, collectively, (i) that certain Amended
and Restated Credit Agreement, as in effect on the date of this Indenture, by
and among Anvil, Holdings, the lenders that may be from time to time parties
thereto and NationsBank, N.A., as administrative agent, as the foregoing may
from time to time be amended, renewed, supplemented or otherwise modified at the
option of the parties thereto, including increases in the principal amount
thereof (subject to such increases otherwise being in conformity with the terms
of this Indenture); and (ii) after NationsBank, N.A., as administrative agent,
has acknowledged in writing that the Credit Agreement described in clause (i)
above has been terminated and all then outstanding Indebtedness thereunder or
with respect thereto have been repaid in full in cash and discharged, any
successors to or replacements of (as designated by the Board of Directors of
Anvil in its sole judgment, and evidenced by a resolution) such Credit
Agreement, as such successors or replacements may from time to time be amended,
renewed, supplemented, modified or replaced, including increases in the
principal amount thereof (subject to such increases otherwise being in
conformity with the terms of this Indenture).
"Non-Recourse Debt" means Indebtedness (i) as to which neither Anvil
nor any of its Restricted Subsidiaries (a) provides credit support of any kind
(including any undertaking, agreement or instrument that would constitute
Indebtedness), (b) is directly or indirectly liable (as a guarantor or
otherwise), or (c) constitutes the lender; and (ii) no default with respect to
which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of Anvil or
any of its Restricted Subsidiaries to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its stated maturity; and (iii) as to which the lenders have been notified in
writing that they will not have any recourse to the stock or assets of Anvil or
any of its Restricted Subsidiaries.
"Note Custodian" means the Trustee, as custodian with respect to
Global Notes, or any successor entity thereto.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Offering" means the Offering of the Senior Notes by Anvil.
"Officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating Officer,
the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, the Secretary or any Vice President of such Person.
"Officers' Certificate" means a certificate signed on behalf of
Anvil by two Officers of Anvil, one of whom must be the principal executive
officer, the principal financial officer, the treasurer or the principal
accounting officer of Anvil, that meets the requirements of Section 12.5 hereof.
<PAGE>
12
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
12.5 hereof. The counsel may be an employee of or counsel to Anvil, any
Subsidiary of Anvil or the Trustee.
"Permitted Holders" means, collectively, (i) BRS and its Affiliates,
and their respective employees and directors, (ii) 399 Venture and its
Affiliates, and their respective employees and directors, (iii) all full-time
executive officers of Holdings and its Subsidiaries who acquire Capital Stock of
Holdings on or after the issue date of the Senior Notes, and (iv) with respect
to any natural persons described in the foregoing clauses (i) through (iii), (A)
any spouse, lineal descendant (including by adoption and stepchildren), or
sibling of such natural persons and (B) any trust, corporation, limited
liability company or partnership, the beneficiaries, members, stockholders or
partners of which consist entirely of such natural persons or the individuals
described in clause (A) above.
"Permitted Investments" means (a) any Investments in Anvil or in a
Wholly Owned Subsidiary of Anvil that is a Subsidiary Guarantor and that is
engaged in the same or a similar line of business as Anvil and its Restricted
Subsidiaries were engaged in on the date of this Indenture and reasonable
extensions or expansions thereof; (b) any Investments in Cash Equivalents; (c)
Investments by Anvil or any Restricted Subsidiary of Anvil in a Person if as a
result of such Investment (i) such Person becomes a Wholly Owned Subsidiary of
Anvil that is a Subsidiary Guarantor and that is engaged in the same or a
similar line of business as Anvil and its Restricted Subsidiaries were engaged
in on the date of this Indenture and reasonable extensions or expansions thereof
or (ii) such Person is merged, consolidated or amalgamated with or into, or
transfers or conveys substantially all of its assets to, or is liquidated into,
Anvil or a Wholly Owned Subsidiary of Anvil that is a Subsidiary Guarantor and
that is engaged in the same or a similar line of business as Anvil and its
Restricted Subsidiaries were engaged in on the date of this Indenture and
reasonable extensions or expansions thereof; (d) Investments made as a result of
the receipt of non-cash consideration from an Asset Sale that was made pursuant
to and in compliance with Section 4.8 hereof; (e) Investments by Anvil or any
Restricted Subsidiary in cash in an aggregate amount not to exceed $5.0 million
outstanding at any one time; (f) stock, obligations or securities received in
settlement of debts created in the ordinary course of business and owing to
Anvil or any Subsidiary or in satisfaction of judgments or pursuant to any plan
of reorganization or similar arrangement upon the bankruptcy or insolvency of
Anvil's trade creditors or customers; (g) the contribution of shares of stock or
other equity securities of an Unrestricted Subsidiary to another Subsidiary; (h)
loans and advances to employees and officers of Anvil and its Restricted
Subsidiaries in the ordinary course of business not to exceed an aggregate of
$1.0 million at any one time outstanding; (i) accounts receivable created or
acquired in the ordinary course of business; (j) currency agreements and
interest swap obligations entered into in the ordinary course of Anvil's or its
Restricted Subsidiaries' businesses and otherwise in compliance with this
Indenture; and (k) any Investment by Anvil or a Wholly Owned Subsidiary of Anvil
in a Securitization Entity or any Investment by a Securitization Entity in any
other Person in connection with a Qualified Securitization Transaction; provided
that any Investment in a Securitization Entity is in the form of a Purchase
Money Note or an Equity Interest.
<PAGE>
13
"Permitted Liens" means (i) Liens securing (a) Indebtedness
permitted by clause (i), (ii), (iv) or clause (viii) under Section 4.10 hereof
and (b) related Hedging Obligations; (ii) Liens in favor of Anvil or any Wholly
Owned Subsidiary that is a Subsidiary Guarantor; (iii) Liens on property of a
Person existing at the time such Person is merged into or consolidated with
Anvil or any Restricted Subsidiary of Anvil; provided that such Liens were in
existence prior to the contemplation of such merger or consolidation and do not
extend to any assets other than those of the Person merged into or consolidated
with Anvil; (iv) Liens on property of a Person existing at the time such Person
becomes a Restricted Subsidiary of Anvil; (v) Liens on property existing at the
time of acquisition thereof by Anvil or any Restricted Subsidiary of Anvil,
provided that such Liens were in existence prior to the contemplation of such
acquisition; (vi) Liens to secure the performance of statutory obligations,
surety or appeal bonds, performance bonds or other obligations of a like nature
incurred in the ordinary course of business; (vii) Liens existing on the date of
this Indenture; (viii) Liens for taxes, assessments or governmental charges or
claims that are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded, provided
that any reserve or other appropriate provision as shall be required in
conformity with GAAP shall have been made therefor; (ix) carriers',
warehousemen's, mechanics', materialmen's, repairmen's, or other similar Liens
arising in the ordinary course of business which are not overdue for a period of
more than 60 days or which are being contested in good faith by appropriate
proceedings diligently conducted; (x) statutory Liens of landlords or of
mortgagees of landlords arising by operation of law, provided that the rental
payments secured thereby are not yet due and payable; (xi) Liens incurred in the
ordinary course of business of Anvil or any Restricted Subsidiary of Anvil with
respect to obligations that do not exceed $1.5 million at any one time
outstanding and that (a) are not incurred in connection with the borrowing of
money or the obtaining of advances or credit (other than trade credit in the
ordinary course of business) and (b) do not in the aggregate materially detract
from the value of the property or materially impair the use thereof in the
operation of business by Anvil or such Restricted Subsidiary; (xii)
nonconsensual Liens incurred in the ordinary course of business of any foreign
subsidiary that is a Restricted Subsidiary that (a) are not incurred in
connection with the borrowing of money or the obtaining of advances of credit
(other than trade credit in the ordinary course of business) and (b) do not in
the aggregate materially detract from the value of the property or materially
impair the use thereof in the operation of business by such Restricted
Subsidiary; (xiii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance and
other types of social security; (xiv) easements, rights-of-way, restrictions,
minor defects or irregularities in title and other similar charges or
encumbrances not interfering in any material respect with the business of Anvil
or any of its Restricted Subsidiaries; (xv) Purchase Money Liens (including
extensions and renewals thereof); (xvi) judgment and attachment Liens not giving
rise to an Event of Default; (xvii) Liens arising out of consignment or similar
arrangements for the sale of goods; (xviii) any interest or title of a lessor in
property subject to any capital lease obligation or operating lease; (xix) Liens
arising from filing Uniform Commercial Code financing statements regarding
leases; (xx) Liens encumbering deposits made to secure obligations arising from
statutory or regulatory requirements of Anvil or any of its Restricted
Subsidiaries, including rights of offset and set-off, arising in the ordinary
course of business; (xxi) Liens on assets transferred to a Securitization Entity
or on assets of a Securitization
<PAGE>
14
Entity, in either case incurred in connection with a Qualified Securitization
Transaction; and (xxii) Liens in favor of customs and revenue authorities
arising as a matter of law to secure payment of custom duties in connection with
the importation of goods.
"Permitted Refinancing Indebtedness" means any Indebtedness of Anvil
or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of Anvil or any of its Restricted Subsidiaries;
provided that: (i) the principal amount of such Permitted Refinancing
Indebtedness does not exceed the principal amount of the Indebtedness so
extended, refinanced, renewed, replaced, defeased or refunded (plus the amount
of reasonable expenses incurred in connection therewith); (ii) such Permitted
Refinancing Indebtedness has a final maturity date at least as late as the final
maturity date of, and has a Weighted Average Life to Maturity equal to or
greater than the Weighted Average Life to Maturity of, the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded; (iii) if the
Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded
is subordinated in right of payment to the Senior Notes, such Permitted
Refinancing Indebtedness has a final maturity date later than the final maturity
date of, and is subordinated in right of payment to, the Senior Notes on terms
at least as favorable to the Holders of Senior Notes as those contained in the
documentation governing the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; and (iv) such Indebtedness is incurred either by
Anvil or by the Restricted Subsidiary who is the obligor on the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
limited liability company or other business entity or government or agency or
political subdivision thereof (including any subdivision or ongoing business of
any such entity or substantially all of the assets of any such entity,
subdivision or business).
"Private Placement Legend" means the legend initially set forth on
the Senior Notes in the form set forth on Exhibit A.
"Public Equity Offering" means an underwritten public offering
pursuant to a registration statement filed with the Commission in accordance
with the Securities Act of (i) Equity Interests other than Disqualified Stock of
Anvil or any successor by merger to Anvil or (ii) of Equity Interests other than
Disqualified Stock of Anvil's parent or indirect parent corporation to the
extent that the cash proceeds therefrom are contributed to the equity capital of
Anvil or are used to purchase Equity Interests (other than Disqualified Stock)
of Anvil.
"Purchase Money Lien" means a Lien granted on an asset or property
to secure a Purchase Money Obligation permitted to be incurred under this
Indenture and incurred solely to finance the purchase, or the cost of
construction or improvement, of such asset or property; provided however, that
such Lien encumbers only such asset or property and is granted within 180 days
of such acquisition.
<PAGE>
15
"Purchase Money Note" means a promissory note of a Securitization
Entity evidencing a line of credit, which may be irrevocable, from Anvil or any
Subsidiary of Anvil in connection with a Qualified Securitization Transaction to
a Securitization Entity, which note shall be repaid from cash available to the
Securitization Entity, other than amounts required to be established as reserves
pursuant to agreements, amounts paid to investors in respect of interest,
principal and other amounts owing to such investors and amounts owing to such
investors and amounts paid in connection with the purchase of newly generated
receivables.
"Purchase Money Obligations" of any Person means any obligations of
such Person to any seller or any other Person incurred or assumed to finance the
purchase, or the cost of construction or improvement, of real or personal
property to be used in the business of such Person or any of its Restricted
Subsidiaries in an amount that is not more than 100% of the cost, or fair market
value, as appropriate, of such property, and incurred within 180 days after the
date of such acquisition (excluding accounts payable to trade creditors incurred
in the ordinary course of business).
"Qualified Institutional Buyer" or "QIB" shall have the meaning
specified in Rule 144A.
"Qualified Securitization Transaction" means any transaction or
series of transactions that may be entered into by Anvil or any of its
Subsidiaries pursuant to which Anvil or any or its Subsidiaries may sell, convey
or otherwise transfer to (a) a Securitization Entity (in the case of a transfer
by Anvil or any of its Subsidiaries) and (b) any other Person (in the case of a
transfer by a Securitization Entity), or may grant a security interest in, any
accounts receivable or equipment (whether now existing or arising or acquired in
the future) of Anvil or any of its Subsidiaries, and any assets related thereto
including, without limitation, all collateral securing such accounts receivable
and equipment, all contracts and contract rights and all guarantees or other
obligations in respect of such accounts receivable and equipment, proceeds of
such accounts receivable and equipment and other assets (including contract
rights) which are customarily transferred or in respect of which security
interests are customarily granted in connection with asset securitization
transactions involving accounts receivable and equipment; provided that such
transaction or transactions are otherwise permitted by the terms of this
Indenture including the provisions set forth in Section 4.8 hereof.
"Recapitalization" means the series of transactions set forth under
"The Recapitalization" in the Offering Memorandum.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the date of this Indenture, by and among Anvil and the
other parties named on the signature pages thereof, as such agreement may be
amended, modified or supplemented from time to time.
"Responsible Officer," when used with respect to the Trustee, means
any officer within the Corporate Trust Administration of the Trustee (or any
successor group of
<PAGE>
16
the Trustee) 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 of his knowledge of and
familiarity with the particular subject.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of the
referent Person that is not an Unrestricted Subsidiary.
"Rule 144A" means Rule 144A under the Securities Act.
"S&P" means Standard & Poor's Ratings Service, a division of The
McGraw- Hill Companies, Inc., and its successors.
"Securities Act" means the Securities Act of 1933, as amended.
"Securitization Entity" means a Wholly Owned Subsidiary of Anvil (or
another Person in which Anvil or any Subsidiary of Anvil makes an Investment and
to which Anvil or any Subsidiary of Anvil transfers accounts receivable or
equipment and related assets) which engages in no activities other than in
connection with the financing of accounts receivable or equipment and which is
designated by the Board of Directors of Anvil (as provided below) as a
Securitization Entity (a) no portion of the Indebtedness or any other
obligations (contingent or otherwise) of which (i) is guaranteed by Anvil or any
Subsidiary of Anvil (excluding guarantees of obligations (other than the
principal of, and interest on, Indebtedness) pursuant to Standard Securitization
Undertakings), (ii) is recourse to or obligates Anvil or any Subsidiary of Anvil
in any way other than pursuant to Standard Securitization Undertakings, or (iii)
subjects any property or asset of Anvil or any Subsidiary of Anvil, directly or
indirectly, contingently or otherwise, to the satisfaction thereof other than
pursuant to Standard Securitization Undertakings, (b) with which neither Anvil
nor any Subsidiary of Anvil has any material contract, agreement, arrangement or
understanding other than on terms no less favorable to Anvil or such Subsidiary
than those that might be obtained at the time from Persons that are not
Affiliates of Anvil, other than fees payable in the ordinary course of business
in connection with servicing receivables of such entity, and (c) to which
neither Anvil nor any Subsidiary of Anvil has any obligation to maintain or
preserve such entity's financial condition or cause such entity to achieve
certain levels of operating results. Any such designation by the Board of
Directors of Anvil shall be evidenced to the Trustee by filing with the Trustee
a certified copy of the resolution of the Board of Directors of Anvil giving
effect to such designation and an officers' certificate certifying that such
designation complied with the foregoing conditions.
"Senior Preferred Stock" means Holdings' 13% Senior Exchangeable
Preferred Stock due 2009 issued pursuant to the Certificate of Designations.
<PAGE>
17
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Exchange Act, as such Regulation is in effect on the
date hereof.
"Standard Securitization Undertakings" means representations,
warranties, covenants and indemnities entered into by Anvil or any Subsidiary of
Anvil which are reasonably customary in an accounts receivable or equipment
transaction.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or one or more Subsidiaries
of such Person (or any combination thereof).
"Subsidiary Guarantee" means the guarantee of any Restricted
Subsidiary as provided for in Section 11.1 hereof.
"Subsidiary Guarantors" means Cottontops, Inc., a Delaware
corporation and any other Restricted Subsidiary that executes a Subsidiary
Guarantee in accordance with the provisions of this Indenture, and their
respective successors and assigns.
"399 Venture" means 399 Venture Partners, Inc., a Delaware
corporation, and its successors.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939
(15 U.S.C. ss.ss. 77aaa-77bbbb) as in effect on the date on which this Indenture
is qualified under the Trust Indenture Act.
"Transfer Restricted Senior Notes" means securities that bear or are
required to bear the Private Placement Legend.
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"Unrestricted Subsidiary" means (i) any Subsidiary that is
designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a
Board Resolution; but only to the extent that such Subsidiary: (a) has no
Indebtedness other than Non-Recourse Debt; (b) is not party to any agreement,
contract, arrangement or understanding with Anvil or any Restricted Subsidiary
of Anvil unless the terms of any such agreement, contract, arrangement or
understanding are no less favorable to Anvil or such Restricted Subsidiary than
those that might be obtained at the time from Persons who are not Affiliates of
Anvil; (c) is a Person
<PAGE>
18
with respect to which neither Anvil nor any of its Restricted Subsidiaries has
any direct or indirect obligation (x) to subscribe for additional Equity
Interests or (y) to maintain or preserve such Person's financial condition or to
cause such Person to achieve any specified levels of operating results; and (d)
has not guaranteed or otherwise directly or indirectly provided credit support
for any Indebtedness of Anvil or any of its Restricted Subsidiaries. Any such
designation by the Board of Directors shall be evidenced to the Trustee by
filing with the Trustee a certified copy of the Board Resolution giving effect
to such designation and an Officers' Certificate certifying that such
designation complied with the foregoing conditions and was permitted by Section
4.9. If, at any time, any Unrestricted Subsidiary would fail to meet the
foregoing requirements as an Unrestricted Subsidiary, it shall thereafter cease
to be an Unrestricted Subsidiary for purposes of this Indenture and any
Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted
Subsidiary of Anvil as of such date (and, if such Indebtedness is not permitted
to be incurred as of such date under Section 4.10, Anvil shall be in default of
such covenant). The Board of Directors of Anvil may at any time designate any
Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such
designation shall be deemed to be an incurrence of Indebtedness by a Restricted
Subsidiary of Anvil of any outstanding Indebtedness of such Unrestricted
Subsidiary and such designation shall only be permitted if (i) such Indebtedness
is permitted under Section 4.10 and (ii) no Default or Event of Default would be
in existence following such designation.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that shall elapse
between such date and the making of such payment, by (ii) the then outstanding
principal amount of such Indebtedness.
"Wholly Owned Subsidiary" of any Person means a Restricted
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. Unrestricted Subsidiaries shall not be included in the definition
of Wholly Owned Subsidiary for any purposes of this Indenture.
SECTION 1.2 OTHER DEFINITIONS
Defined
Term in Section
---- ----------
"Affiliate Transaction" 4.14
"Agent Members" 2.13
"Asset Sale Offer" 4.8
"Asset Sale Offer Period" 4.8
"Asset Sale Offer Amount" 4.8
"Asset Sale Purchase Date" 4.8
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19
"Bankruptcy Law" 6.1
"Benefitted Party" 10.1
"Change of Control Offer" 4.7
"Change of Control Offer Period" 4.7
"Change of Control Payment" 4.7
"Change of Control Purchase Date" 4.7
"Covenant Defeasance" 8.3
"Custodian" 6.1
"Event of Default" 6.1
"Excess Proceeds" 4.8
"incur" 4.10
"Interest" 2.13
"Legal Defeasance" 8.2
"Notice of Default" 6.1
"Paying Agent" 2.3
"Payment Default" 6.1
"Registrar" 2.3
"Restricted Payments" 4.9
SECTION 1.3 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT
Whenever this Indenture refers to a provision of the Trust Indenture
Act, the provision is incorporated by reference in and made a part of this
Indenture.
The following Trust Indenture Act terms used in this Indenture have
the following meanings:
"indenture securities" means the Senior Notes;
"indenture security Holder" means a Holder of a Senior Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
"obligor" on the Senior Notes means Anvil, Holdings and any
successor thereto.
All other terms used in this Indenture that are defined by the Trust
Indenture Act, defined by the Trust Indenture Act reference to another statute
or defined by Commission rule under the Trust Indenture Act have the meanings so
assigned to them.
SECTION 1.4 RULES OF CONSTRUCTION
Unless the context otherwise requires:
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20
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural
include the singular;
(5) provisions apply to successive events and transactions; and
(6) references to sections of or rules under the Securities Act
shall be deemed to include substitute, replacement of successor sections
or rules adopted by the Commission from time to time.
ARTICLE 2
THE SENIOR NOTES
SECTION 2.1 FORM AND DATING
The Senior Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto. The Senior Notes may
have notations, legends or endorsements required by law, stock exchange rule or
usage. Each Senior Note shall be dated the date of its authentication. The
Senior Notes shall be in denominations of $1,000 and integral multiples thereof.
The Series A Senior Notes and the Series B Senior Notes will be the same except
that the Private Placement Legend will be omitted from the Series B Senior
Notes.
The terms and provisions contained in the Senior Notes shall
constitute, and are hereby expressly made, a part of this Indenture and Anvil,
Holdings and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby.
Senior Notes offered and sold in reliance on Rule 144A shall be
issued initially in the form of one or more permanent Global Senior Notes in
registered form, substantially in the form set forth in Exhibit A (including the
text referred to in footnote 1 thereto) (the "Rule 144A Global Senior Note"),
deposited with, or on behalf of, The Depositary Trust Company (the "Depositary")
and registered in the name of Cede & Co. or such other nominee, as nominee of
the Depositary. Senior Notes offered and sold in reliance on any exemption from
registration under the Securities Act other than Rule 144A shall be issued
initially in the form of one or more permanent Global Senior Notes in registered
form, substantially in the form set forth in Exhibit A (including the text
referred to in footnotes 1 and 2 thereto) (the "AI Global Senior Note"),
deposited with, or on behalf of, the Depositary and registered in the name of
Cede & Co. or such other nominee, as nominee of the
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21
Depositary. The aggregate principal amount of any Global Senior Note may from
time to time be increased or decreased in accordance with the terms of this
Indenture by adjustments made on the records of the Registrar and the
Depositary.
Senior Notes may be issued, in certain circumstances provided for in
this Indenture, in the form of Definitive Senior Notes in registered form in
substantially the form set forth in Exhibit A (but without including the text
referred to in footnote 1 thereto).
SECTION 2.2 EXECUTION AND AUTHENTICATION
Two Officers shall sign the Senior Notes for Anvil by manual or
facsimile signature. Anvil's seal shall be reproduced on the Senior Notes and
may be in facsimile form.
If an Officer whose signature is on a Senior Note no longer holds
that office at the time a Senior Note is authenticated, the Senior Note shall
nevertheless be valid.
A Senior Note shall not be valid until authenticated by the manual
signature of the Trustee. The signature shall be conclusive evidence that the
Senior Note has been authenticated under this Indenture.
The Trustee shall, upon a written order of Anvil signed by two
Officers, authenticate Senior Notes for original issue up to the aggregate
principal amount stated in paragraph 4 of the Senior Notes. The aggregate
principal amount of Senior Notes outstanding at any time may not exceed such
amount except as provided in Section 2.7 hereof. The authentication order shall
specify which series of Senior Notes shall be authenticated and issued.
The Trustee may appoint an authenticating agent acceptable to Anvil
to authenticate Senior Notes. An authenticating agent may authenticate Senior
Notes whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with Anvil or an
Affiliate of Anvil.
SECTION 2.3 REGISTRAR AND PAYING AGENT
Anvil shall maintain an office or agency where Senior Notes may be
presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Senior Notes may be presented for payment ("Paying
Agent"). The Registrar shall keep a register of the Senior Notes and of their
transfer and exchange. Anvil may appoint one or more co-registrars and one or
more additional paying agents. The term "Registrar" includes any co-registrar
and the term "Paying Agent" includes any additional paying agent. Anvil may
change any Paying Agent or Registrar without notice to any Holder. Anvil shall
notify the Trustee in writing of the name and address of any Agent not a party
to this Indenture. If Anvil fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee
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22
shall act as such. Anvil, Holdings or any of their respective Subsidiaries may
act as Paying Agent or Registrar.
Anvil initially appoints the Trustee to act as the Registrar and
Paying Agent and to act as Note Custodian with respect to the Global Senior
Notes.
SECTION 2.4 PAYING AGENT TO HOLD MONEY IN TRUST
Anvil shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium or Liquidated Damages, if any, or interest on the Senior
Notes, and shall notify the Trustee of any default by Anvil in making any such
payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. Anvil at any time may require
a Paying Agent to pay all money held by it to the Trustee. Upon payment over to
the Trustee, the Paying Agent (if other than Anvil or a Subsidiary) shall have
no further liability for the money. If Anvil or a Subsidiary acts as Paying
Agent, it shall segregate and hold in a separate trust fund for the benefit of
the Holders all money held by it as Paying Agent. Upon any bankruptcy or
reorganization proceedings relating to Anvil, the Trustee shall serve as Paying
Agent for the Senior Notes.
SECTION 2.5 HOLDER 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
all Holders and shall otherwise comply with TIA ss. 312(a). If the Trustee is
not the Registrar, Anvil shall furnish to the Trustee at least seven 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 the Holders of Senior
Notes, and Anvil shall otherwise comply with TIA ss. 312(a).
SECTION 2.6 TRANSFER AND EXCHANGE
(a) Subject to the provisions of Sections 2.13 and 2.14, when Senior
Notes are presented to the Registrar with a request to register the transfer of
such Senior Notes or to exchange such Senior Notes for an equal principal amount
of Senior Notes of other authorized denominations, the Registrar shall register
the transfer or make the exchange as requested if the requirements for such
transaction are met; provided, however, that the Senior Notes surrendered for
transfer or exchange shall be duly endorsed or accompanied by a written
instrument of transfer in form satisfactory to Anvil and the Registrar, duly
executed by the Holder thereof or his attorney duly authorized in writing. To
permit registrations of transfers and exchanges, Anvil shall execute and the
Trustee shall authenticate Senior Notes at the Registrar's written request. No
service charge shall be made for any registration of transfer or exchange, but
Anvil may require payment of a sum sufficient to cover any transfer tax or
similar governmental charge payable in connection therewith (other than any
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23
such transfer taxes or other governmental charge payable upon exchanges or
transfers pursuant to Section 2.10 or 9.5).
Any Holder of the Global Senior Note shall, by acceptance of such
Global Senior Note, agree that transfers of beneficial interests in such Global
Senior Note may be effected only through a book-entry system maintained by the
Holder of such Global Senior Note (or its agent), and that ownership of a
beneficial interest in the Global Senior Note shall be required to be reflected
in a book-entry system.
SECTION 2.7 REPLACEMENT SENIOR NOTES
If any mutilated Senior Note is surrendered to the Trustee, or Anvil
and the Trustee receives evidence to its satisfaction of the destruction, loss
or theft of any Senior Note, Anvil shall issue and the Trustee, upon the written
order of Anvil signed by two Officers of Anvil, shall authenticate a replacement
Senior Note if the Trustee's requirements are met. If required by the Trustee or
Anvil, an indemnity bond must be supplied by the Holder that is sufficient in
the judgment of the Trustee and Anvil to protect Anvil, the Trustee, any Agent
and any authenticating agent from any loss that any of them may suffer if a
Senior Note is replaced. Anvil may charge for its expenses in replacing a Senior
Note.
Every replacement Senior Note is an additional obligation of Anvil
and shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Senior Notes duly issued hereunder.
SECTION 2.8 OUTSTANDING SENIOR NOTES
The Senior Notes outstanding at any time are all the Senior Notes
authenticated by the Trustee except for those cancelled by it, those delivered
to it for cancellation, those reductions in the interest in a Global Senior Note
effected by the Trustee in accordance with the provisions hereof, and those
described in this Section as not outstanding. Except as set forth in Section 2.9
hereof, a Senior Note does not cease to be outstanding because Anvil or an
Affiliate of Anvil holds the Senior Note.
If a Senior Note is replaced pursuant to Section 2.7 hereof, it
ceases to be outstanding unless the Trustee receives proof satisfactory to it
that the replaced Senior Note is held by a bona fide purchaser.
If the principal amount of any Senior Note is considered paid under
Section 4.1 hereof, it ceases to be outstanding and interest on it ceases to
accrue.
If the Paying Agent (other than Anvil, a Subsidiary or an Affiliate
of any thereof) holds, on a redemption date or maturity date, money sufficient
to pay Senior Notes payable on that date, then on and after that date such
Senior Notes shall be deemed to be no longer outstanding and shall cease to
accrue interest.
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24
SECTION 2.9 TREASURY SENIOR NOTES
In determining whether the Holders of the required principal amount
of Senior Notes have concurred in any direction, waiver or consent, Senior Notes
owned by Anvil, or by any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with Anvil, shall be
considered as though not outstanding, except that for the purposes of
determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Senior Notes that a Trustee knows are so
owned shall be so disregarded.
SECTION 2.10 TEMPORARY SENIOR NOTES
Until definitive Senior Notes are ready for delivery, Anvil may
prepare and the Trustee shall authenticate temporary Senior Notes upon a written
order of Anvil signed by two Officers of Anvil. Temporary Senior Notes shall be
substantially in the form of definitive Senior Notes but may have variations
that Anvil considers appropriate for temporary Senior Notes and as shall be
reasonably acceptable to the Trustee. Without unreasonable delay, Anvil shall
prepare and the Trustee shall authenticate definitive Senior Notes in exchange
for temporary Senior Notes.
Holders of temporary Senior Notes shall be entitled to all of the
benefits of this Indenture.
SECTION 2.11 CANCELLATION
Anvil at any time may deliver Senior Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Senior Notes surrendered to them for registration of transfer, exchange or
payment. The Trustee and no one else shall cancel all Senior Notes surrendered
for registration of transfer, exchange, payment, replacement or cancellation and
shall destroy cancelled Senior Notes (subject to the record retention
requirement of the Exchange Act). Certification of the destruction of all
cancelled Senior Notes shall be delivered to Anvil. Anvil may not issue new
Senior Notes to replace Senior Notes that it has paid or that have been
delivered to the Trustee for cancellation.
SECTION 2.12 DEFAULTED INTEREST
If Anvil defaults in a payment of interest on the Senior Notes, it
shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, in each case at the rate provided
in the Senior Notes and in Section 4.1 hereof. Anvil shall notify the Trustee in
writing of the amount of defaulted interest proposed to be paid on each Senior
Note and the date of the proposed payment. Anvil shall fix or cause to be fixed
each such special record date and payment date, provided that no such special
record date shall be less than 10 days prior to the related payment date for
such defaulted interest. At least 15 days before the special record date, Anvil
(or, upon the written request of Anvil, the Trustee in the name and at the
expense of Anvil) shall mail or cause to be mailed to Holders a notice
<PAGE>
25
that states the special record date, the related payment date and the amount of
such interest to be paid.
SECTION 2.13 BOOK-ENTRY PROVISIONS FOR GLOBAL SENIOR NOTES
(a) The Global Senior Notes initially shall (i) be registered in the
name of Cede & Co., as the nominee of the Depositary.
Members of, or participants in, the Depositary ("Agent Members")
shall have no rights under this Indenture with respect to any Global Senior Note
held on their behalf by the Depositary, or the Trustee as the Note Custodian, or
under the Global Senior Note, and the Depositary may be treated by Anvil, the
Trustee and any agent of Anvil or the Trustee as the absolute owner of the
Global Senior Note for all purposes whatsoever. Notwithstanding the foregoing,
nothing herein shall prevent Anvil, the Trustee or any agent of Anvil or the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depositary or impair, as between the Depositary
and its Agent Members, the operation of customary practices governing the
exercise of the rights of a Holder of any Senior Note.
(b) Transfers of Global Senior Notes shall be limited to transfers
in whole, but not in part, to the Depositary, its successors or their respective
nominees. Interests of beneficial owners in the Global Senior Notes (each an
"Interest") may be transferred to one beneficial owner to another Agent Member
or exchanged for Definitive Senior Notes in accordance with the rules and
procedures of the Depositary and the provisions of this Indenture (including the
restrictions on transfer contained in Section 2.14 which shall fully apply in
all respects to transfer of such Interests as if such Interests are evidenced by
a Definitive Senior Note ). In addition, Definitive Senior Notes shall be
transferred to all beneficial owners in exchange for their beneficial interests
in Global Senior Notes if (i) the Depositary for the Senior Notes notifies Anvil
that the Depositary is unwilling or unable to continue as Depositary for the
Global Senior Notes and a successor Depositary for the Global Senior Notes is
not appointed by Anvil within 90 days after delivery of such notice; or (ii)
Anvil, at its sole discretion, notifies the Trustee in writing that it elects to
cause the issuance of Definitive Senior Notes under this Indenture, then Anvil
shall execute, and the Trustee shall, upon receipt of an authentication order in
accordance with Section 2.2 hereof, authenticate and deliver, Definitive Senior
Notes in an aggregate principal amount equal to the principal amount of the
Global Senior Notes in exchange for such Global Senior Notes.
(c) In connection with any transfer or exchange of a portion of the
beneficial interest in any Global Senior Note to beneficial owners taking a
Definitive Senior Note pursuant to paragraph (b), the Registrar shall reflect on
its books and records the date and a decrease in the principal amount of the
Global Senior Note in an amount equal to the principal amount of the beneficial
interest in the Global Senior Note to be transferred, and Anvil shall execute,
and the Trustee shall authenticate and deliver, one or more Definitive Senior
Notes of like tenor and amount.
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26
(d) In connection with the transfer of any Interest from one
beneficial owner to another Agent Member not taking a Definitive Senior Note,
but an Interest, pursuant to paragraph (b), the Depositary shall reflect on its
books and records the date, the name of the transferor and transferee, and the
amount of the Interest transferred.
(e) In connection with the transfer of Global Senior Notes as an
entirety to beneficial owners pursuant to the second sentence of paragraph (b),
the Global Senior Notes shall be deemed to be surrendered to the Trustee for
cancellation, and Anvil shall execute, and the Trustee shall authenticate and
deliver, to each beneficial owner identified by the Depositary in exchange for
its beneficial interest in the Global Senior Notes, an equal aggregate principal
amount of Definitive Senior Notes of authorized denominations.
(f) Any Definitive Senior Note constituting a Transfer Restricted
Senior Note delivered in exchange for an interest in a Global Senior Note
pursuant to paragraph (b) shall, except as otherwise provided by paragraphs
(a)(i)(x) and (y) of Section 2.14, bear the Private Placement Legend.
(g) The Holder of any Global Senior Note may grant proxies and
otherwise authorize any person, including Agent Members and persons that may
hold interests through Agent Members, to take any action which a Holder is
entitled to take under this Indenture or the Senior Notes.
SECTION 2.14 SPECIAL TRANSFER PROVISIONS
(a) Transfers to Non-QIB Institutional Accredited Investors. The
following provisions shall apply with respect to the registration of any
proposed transfer of a Senior Note constituting a Transfer Restricted Senior
Note, or an Interest in a Global Senior Note constituting a Transfer Restricted
Senior Note to any institutional "Accredited Investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act or an entity in which all of
the equity owners are accredited investors within the meaning of Rule 501(a)(1),
(2), (3) or (7) under the Securities Act (an "Institutional Accredited
Investor")) which is not a QIB:
(i) The Registrar shall register the transfer of any Senior Note
constituting a Transfer Restricted Senior Note, whether or not such Senior
Note bears the Private Placement Legend, if (x) the requested transfer is
after March 14, 1999, or (y) in the case of a transfer to an Institutional
Accredited Investor which is not a QIB, the proposed transferee has
delivered to the Registrar a certificate substantially in the form of
Exhibit B hereto and the Trustee and Registrar have received both an
Opinion of Counsel and an Officers' Certificate directing transfer; and
(ii) If the proposed transferor is an Agent Member holding a
beneficial interest in a Global Senior Note, upon receipt by the Registrar
of (x) the certificate and opinions, if any, required by paragraph (i)
above and (y) instructions given in accordance with the Depositary's and
the Registrar's procedures,
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whereupon (a) the Registrar shall reflect on its books and records the date and
(if the transfer does not involve a transfer of outstanding Definitive Senior
Notes) a decrease in the principal amount of the Rule 144A Global Senior Note in
an amount equal to the principal amount of the beneficial interest in such
Global Note to be transferred if the transfer is being made by a QIB from the
Rule 144A Global Senior Note or if Definitive Senior Notes are to be issued, and
(b) if the transfer is not being made by an Institutional Accredited Investor of
a beneficial interest in the AI Global Senior Note to another Institutional
Accredited Investor wishing to take a beneficial interest in the AI Global
Senior Note, Anvil shall execute and the Trustee shall authenticate upon receipt
of a Company Order, and deliver one or more Definitive Senior Notes of like
tenor and amount or, if the transferee is to take an interest in the AI Global
Senior Note, the Registrar shall reflect on its books and records the date and
an increase in the principal amount of the AI Global Senior Note in an amount
equal to the amount of the transfer.
(b) Transfers to QIBs. The following provisions shall apply with
respect to the registration of any proposed transfer of a Senior Note
constituting a Transfer Restricted Senior Note, or an Interest in a Global
Senior Note constituting a Transfer Restricted Senior Note to a QIB:
(i) The Registrar shall register the transfer if such transfer
is being made by a proposed transferor who has checked the box provided
for on the form of Senior Note (or a similar certificate) stating, or has
otherwise advised Anvil and the Registrar in writing, that the sale has
been made in compliance with the provisions of Rule 144A to a transferee
who has signed the certification provided for on the form of Senior Note
(or a similar certificate) stating, or has otherwise advised Anvil and the
Registrar in writing, that it is purchasing the Senior Note for its own
account or an account with respect to which it exercises sole investment
discretion and that it and any such account is a QIB within the meaning of
Rule 144A, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding
Anvil as it has requested pursuant to Rule 144A or has determined not to
request such information and that it is aware that the transferor is
relying upon its foregoing representations in order to claim the exemption
from registration provided by Rule 144A and covering the other matters
covered in the form of Senior Note; and
(ii) If the proposed transferee is an Agent Member, and the
Senior Notes to be transferred consist of Definitive Senior Notes which
after transfer are to be evidenced by an interest in the Rule 144A Global
Senior Note, upon receipt by the Registrar of instructions given in
accordance with the Depositary's and the Registrar's procedures and the
proposed transferee has advised Anvil and the Registrar in writing that
the transferee is a QIB and that the sale has been made in compliance with
the provisions of Rule 144A, the Registrar and the Depositary shall
reflect on its books and records the date and an increase in the principal
amount of the Rule 144A Global Senior Note in an amount equal to the
principal amount of the Definitive Senior Notes to be transferred, and the
Trustee shall cancel the Definitive Senior Notes so transferred.
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(c) Private Placement Legend. All Senior Notes originally issued
shall bear the Private Placement Legend. Upon the transfer, exchange or
replacement of Senior Notes (or Interest in a Global Senior Note) not bearing,
and not required to bear, the Private Placement Legend, the Registrar shall
deliver Senior Notes that do not bear the Private Placement Legend and, in the
case of an Interest, remove any corresponding indication on its books and
records. Upon the transfer, exchange or replacement of Senior Notes bearing the
Private Placement Legend, the Registrar shall deliver only Senior Notes that
bear the Private Placement Legend (and in the case of an Interest, continue to
denote corresponding indications on its books and records) unless (i) the
circumstances contemplated by paragraph (a)(i)(x) of this Section 2.14 exist,
(ii) there is delivered to the Registrar and the Trustee an Opinion of Counsel
reasonably satisfactory to Anvil and the Trustee to the effect that neither such
legend nor the related restrictions on transfer are required in order to
maintain compliance with the provisions of the Securities Act or (iii) such
Senior Note has been sold pursuant to an effective registration statement under
the Securities Act.
(d) General. By its acceptance of any Senior Note, each Holder of
such a Senior Note acknowledges the restrictions on transfer of such Senior Note
set forth in this Indenture and in the Private Placement Legend and agrees that
it will transfer such Senior Note only as provided in this Indenture.
The Registrar shall retain copies of all letters, notices and other
written communications received pursuant to Section 2.13 or this Section 2.14
until at least 6 years after the Maturity Date. Anvil shall have the right to
inspect and make copies of all such letters, notices or other written
communications at any reasonable time upon the giving of reasonable written
notice to the Registrar.
ARTICLE 3
REDEMPTION AND PREPAYMENT
SECTION 3.1 NOTICES TO TRUSTEE
If Anvil elects to redeem Senior Notes pursuant to the optional
redemption provisions of Section 3.7 hereof, it shall furnish to the Trustee, at
least 45 days (unless a shorter period is acceptable to the Trustee) but not
more than 60 days before a redemption date, an Officers' Certificate setting
forth (i) the clause of this Indenture pursuant to which the redemption shall
occur, (ii) the redemption date, (iii) the principal amount of Senior Notes to
be redeemed and (iv) the redemption price.
SECTION 3.2 SELECTION OF SENIOR NOTES TO BE REDEEMED
If less than all of the Senior Notes are to be redeemed at any time,
selection of the Senior Notes for redemption will be made by the Trustee in
compliance with the requirements of the principal national securities exchange,
if any, on which the Senior Notes are listed or, if the Senior Notes are not so
listed, on a pro rata basis, by lot or by such method as the Trustee considers
fair and appropriate. In the event of partial redemption by
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lot, the particular Senior Notes to be redeemed shall be selected, unless
otherwise provided herein, not less than 30 nor more than 60 days prior to the
redemption date by the Trustee from the outstanding Senior Notes not previously
called for redemption.
The Trustee shall promptly notify Anvil in writing of the Senior
Notes selected for redemption and, in the case of any Senior Note selected for
partial redemption, the portion of the principal amount thereof to be redeemed.
Senior Notes and portions of Senior Notes selected shall be in amounts of $1,000
or integral multiples of $1,000; except that if all of the Senior Notes of a
Holder are to be redeemed, the entire outstanding amount of Senior Notes held by
such Holder, even if not an integral multiple of $1,000, shall be redeemed.
Except as provided in the preceding sentence, provisions of this Indenture that
apply to Senior Notes called for redemption also apply to portions of Senior
Notes called for redemption.
SECTION 3.3 NOTICE OF REDEMPTION
At least 30 days but not more than 60 days before a redemption date,
Anvil shall mail or cause to be mailed, by first class mail, a notice of
redemption to each Holder whose Senior Notes are to be redeemed at its
registered address.
The notice shall identify the Senior Notes to be redeemed and shall
state:
(a) the redemption date;
(b) the redemption price;
(c) if any Senior Note is being redeemed in part, the portion of the
principal amount of such Senior Note to be redeemed and that, after the
redemption date upon surrender of such Senior Note, a new Senior Note or Senior
Notes in principal amount equal to the unredeemed portion shall be issued upon
cancellation of the original Senior Note;
(d) the name and address of the Paying Agent;
(e) that Senior Notes called for redemption (other than a Global
Senior Note) must be surrendered to the Paying Agent to collect the redemption
price;
(f) that, unless Anvil defaults in making such redemption payment,
interest on Senior Notes called for redemption ceases to accrue on and after the
redemption date;
(g) the paragraph of the Senior Notes and/or Section of this
Indenture pursuant to which the Senior Notes called for redemption are being
redeemed; and
(h) that no representation is made as to the correctness or accuracy
of the CUSIP number, if any, listed in such notice or printed on the Senior
Notes.
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At Anvil's request, the Trustee shall give the notice of redemption
in Anvil's name and at its expense; provided, however, that Anvil shall have
delivered to the Trustee, at least 45 days prior to the redemption date (unless
a shorter time is acceptable to the Trustee), an Officers' Certificate
requesting that the Trustee give such notice and setting forth the information
to be stated in such notice as provided in the preceding paragraph.
SECTION 3.4 EFFECT OF NOTICE OF REDEMPTION
Once notice of redemption is mailed in accordance with Section 3.3
hereof, Senior Notes called for redemption become irrevocably due and payable on
the redemption date at the redemption price. A notice of redemption may not be
conditional.
SECTION 3.5 DEPOSIT OF REDEMPTION PRICE
One Business Day prior to the redemption date, Anvil shall deposit
with the Trustee or with the Paying Agent immediately available funds sufficient
to pay the redemption price of and accrued and unpaid interest, if any, on and
Liquidated Damages, if any, on all Senior Notes to be redeemed on that date. The
Trustee or the Paying Agent shall promptly return to Anvil any money deposited
with the Trustee or the Paying Agent by Anvil in excess of the amounts necessary
to pay the redemption price of, and accrued interest on, all Senior Notes to be
redeemed.
If Anvil complies with the provisions of the preceding paragraph, on
and after the redemption date, interest shall cease to accrue on the Senior
Notes or the portions of Senior Notes called for redemption. If a Senior Note is
redeemed on or after an interest record date but on or prior to the related
interest payment date, then any accrued and unpaid interest shall be paid to the
Person in whose name such Senior Note was registered at the close of business on
such record date. If any Senior Note called for redemption shall not be so paid
upon surrender for redemption because of the failure of Anvil to comply with the
preceding paragraph, interest shall be paid on the unpaid principal, from the
redemption date until such principal is paid, and to the extent lawful on any
interest not paid on such unpaid principal, in each case at the rate provided in
the Senior Notes and in Section 4.1 hereof.
SECTION 3.6 SENIOR NOTES REDEEMED IN PART
Upon surrender of a Senior Note that is redeemed in part, Anvil
shall issue and, upon Anvil's written request, the Trustee shall authenticate
for the Holder at the expense of Anvil a new Senior Note equal in principal
amount to the unredeemed portion of the Senior Note surrendered. The records of
the Registrar and the Depositary shall reflect any partial redemption of any
Global Senior Note.
SECTION 3.7 OPTIONAL REDEMPTION
(a) Except as set forth in clause (b) of this Section 3.7, the
Senior Notes shall not be redeemable at Anvil's option prior to March 15, 2002.
Thereafter, the Senior Notes shall be subject to redemption for cash at the
option of Anvil, in whole or in part, upon not
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less than 30 nor more than 60 days' notice to each holder of Senior Notes to be
redeemed at the following redemption prices (expressed as percentages of
principal amount thereof) if redeemed during the twelve-month period beginning
on March 15 of each of the years indicated below, in each case together with any
accrued and unpaid interest and Liquidated Damages thereon to the applicable
redemption date:
Year Percentage
- ---- ----------
2002......................................... 105.438%
2003......................................... 103.625%
2004......................................... 101.813%
2005 and thereafter.......................... 100.000%
(b) Notwithstanding the provisions of clause (a) of this Section
3.7, at any time on or before March 15, 2000, Anvil may (but shall not have the
obligation to) redeem for cash up to 40% of the original aggregate principal
amount of the Senior Notes at a redemption price of 110% of the principal amount
thereof, in each case plus any accrued and unpaid interest and Liquidated
Damages thereon to the redemption date, with the net proceeds of a Public Equity
Offering; provided that at least 60% of the original aggregate principal amount
of the Senior Notes remains outstanding immediately after the occurrence of such
redemption; and provided, further, that such redemption shall occur within 60
days of the date of the closing of such Public Equity Offering.
(c) Any redemption pursuant to this Section 3.7 shall be made
pursuant to the provisions of Section 3.1 through 3.6 hereof.
SECTION 3.8 NO MANDATORY REDEMPTION
Except as set forth in Section 4.7, Anvil shall not be required to
make any mandatory redemption, purchase or sinking fund payments with respect to
the Senior Notes prior to the Maturity Date.
ARTICLE 4
COVENANTS
SECTION 4.1 PAYMENT OF SENIOR NOTES
Anvil shall pay or cause to be paid the principal of, premium, if
any, and interest on the Senior Notes on the dates and in the manner provided in
the Senior Notes. Principal, premium, if any, and interest shall be considered
paid on the date due if the Paying Agent, if other than Anvil or a Subsidiary
thereof, holds as of 10:00 a.m. Eastern Time on the
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32
due date money deposited by Anvil in immediately available funds and designated
for and sufficient to pay all principal, premium, if any, and interest then due.
Anvil shall pay all Liquidated Damages, if any, in the same manner on the dates
and in the amounts set forth in the Registration Rights Agreement. Anvil will
promptly notify the Trustee of a Registration Default under the Registration
Rights Agreement and any cure thereof.
Anvil shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at the rate equal to
1% per annum in excess of the then applicable interest rate on the Senior Notes
to the extent lawful; it shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace period) at the same
rate to the extent lawful.
SECTION 4.2 MAINTENANCE OF OFFICE OR AGENCY
Anvil shall maintain in the Borough of Manhattan, the City of New
York, an office or agency (which may be an office of the Trustee or an affiliate
of the Trustee, Registrar or co-registrar) where Senior Notes may be surrendered
for registration of transfer or for exchange and where notices and demands to or
upon Anvil in respect of the Senior Notes and this Indenture may be served.
Anvil shall 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 Anvil 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 Corporate Trust Office of the Trustee.
Anvil may also from time to time designate one or more other offices
or agencies where the Senior Notes 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
Anvil of its obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York for such purposes. Anvil shall 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.
Anvil hereby designates the Corporate Trust Office of the Trustee as
one such office or agency of Anvil in accordance with Section 2.3 hereof.
SECTION 4.3 REPORTS
(a) Whether or not required by the rules and regulations of the
Commission, so long as any Senior Notes are outstanding, Holdings shall furnish
to all Holders of Senior Notes within 15 days after it is or would have been
required to file such with the Commission, (i) all quarterly and annual
financial information that would be required to be contained in a filing with
the Commission on Forms 10-Q and 10-K if Holdings was required to file such
Forms, including a "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and, with respect to the annual information only, a
report thereon by the certified independent accountants of Holdings and (ii) all
current reports that would be
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required to be filed with the Commission on Form 8-K if Holdings was required to
file such reports. In addition, whether or not required by the rules and
regulations of the Commission, Holdings shall file a copy of all such
information and reports with the Commission for public availability (unless the
Commission will not accept such a filing) and shall promptly make such
information available to securities analysts and prospective investors upon
request.
(b) For so long as any Senior Notes remain outstanding, Holdings,
Anvil and the Subsidiary Guarantors, if any, shall furnish to all Holders and to
securities analysts and prospective investors, upon their request, the
information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act.
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34
SECTION 4.4 COMPLIANCE CERTIFICATE
(a) Anvil and Holdings shall deliver to the Trustee, within 90 days
after the end of each fiscal year, an Officers' Certificate stating that a
review of the activities of Anvil and Holdings and their Subsidiaries during the
preceding fiscal year has been made under the supervision of the signing
Officers with a view to determining whether Anvil and Holdings have kept,
observed, performed and fulfilled their obligations under this Indenture, and
further stating, as to each such Officer signing such certificate, that to the
best of his or her knowledge Anvil and Holdings have kept, observed, performed
and fulfilled each and every covenant contained in this Indenture and is not in
default in the performance or observance of any of the terms, provisions and
conditions of this Indenture (or, if a Default or Event of Default shall have
occurred, describing all such Defaults or Events of Default of which he or she
may have knowledge and what action Anvil and Holdings are taking or proposes to
take with respect thereto) and that to the best of his or her knowledge no event
has occurred and remains in existence by reason of which payments on account of
the principal of or interest, if any, on the Senior Notes is prohibited or if
such event has occurred, a description of the event and what action Anvil and
Holdings are taking or proposes to take with respect thereto.
(b) So long as not contrary to the then current recommendations of
the American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.3(a) hereof shall be accompanied by a
written statement of the independent public accountants of Holdings (who shall
be a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that Holdings have violated any
provisions of Article Four or Article Five hereof or, if any such violation has
occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
(c) Anvil and Holdings shall, so long as any of the Senior Notes are
outstanding, deliver to the Trustee, forthwith upon any Officer becoming aware
of any Default or Event of Default, an Officers' Certificate specifying such
Default or Event of Default and what action Anvil and Holdings are taking or
proposes to take with respect thereto.
SECTION 4.5 TAXES
Anvil shall pay, and shall cause each of its Restricted Subsidiaries
to pay, prior to delinquency, all material taxes, assessments, and governmental
levies except such as are contested in good faith and by appropriate proceedings
or where the failure to effect such payment is not adverse in any material
respect to the Holders of the Senior Notes.
SECTION 4.6 STAY, EXTENSION AND USURY LAWS
Anvil covenants (to the extent that it may lawfully do so) that it
shall not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force,
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35
that may affect the covenants or the performance of this Indenture; and Anvil
(to the extent that it may lawfully do so) hereby expressly waives all benefit
or advantage of any such law, and covenants that it shall not, by resort to any
such law, hinder, delay or impede the execution of any power herein granted to
the Trustee, but shall suffer and permit the execution of every such power as
though no such law has been enacted.
SECTION 4.7 CHANGE OF CONTROL
Upon the occurrence of a Change of Control, each Holder of Senior
Notes shall have the right to require Anvil to repurchase all or any part (equal
to $1,000 or an integral multiple thereof) of such Holder's Senior Notes
pursuant to the offer described below (the "Change of Control Offer") at an
offer price in cash equal to 101% of the aggregate principal amount thereof plus
accrued and unpaid interest and Liquidated Damages thereon to the date of
purchase (the "Change of Control Payment"). Within 30 days following any Change
of Control, Anvil shall mail a notice to each Holder describing the transaction
or transactions that constitute the Change of Control and offering to repurchase
Senior Notes pursuant to the procedures required by this Indenture and described
in such notice. Anvil shall comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of the Senior Notes as a result of a Change of Control.
The Change of Control Offer shall remain open for a period of 20
Business Days following its commencement and no longer, except to the extent
that a longer period is required by applicable law (the "Change of Control Offer
Period"). No later than five Business Days after the termination of the Offer
Period (the "Change of Control Purchase Date"), Anvil shall purchase all Senior
Notes validly tendered and not properly withdrawn pursuant to the Change of
Control Offer. Payment for any Senior Notes so purchased shall be made in the
same manner as interest payments are made on the Senior Notes.
If the Change of Control Purchase Date is on or after an interest
record date and on or before the related interest payment date, any accrued and
unpaid interest and Liquidated Damages shall be paid to the Person in whose name
a Senior Note is registered at the close of business on such record date, and no
additional interest shall be payable to Holders who tender Senior Notes pursuant
to the Change of Control Offer.
Upon the commencement of a Change of Control Offer, Anvil shall
send, by first class mail, a notice to each of the Holders, with a copy of each
such notice to the Trustee. The notice shall contain all instructions and
materials necessary to enable such Holders to tender Senior Notes pursuant to
the Change of Control Offer. The Change of Control Offer shall be made to all
Holders. The notice, which shall govern the terms of the Change of Control
Offer, shall state:
(a) that the Change of Control Offer is being made pursuant to
this covenant and the length of time the Change of Control Offer shall
remain open;
(b) the purchase price and the Change of Control Purchase
Date;
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(c) that any Senior Note not tendered or accepted for payment
shall continue to accrete or accrue interest;
(d) that, unless Anvil defaults in making such payment, any
Senior Note accepted for payment pursuant to the Change of Control Offer
shall cease to accrete or accrue interest after the Change of Control
Purchase Date;
(e) that Holders electing to have a Senior Note purchased
pursuant to any Change of Control Offer shall be required to surrender the
Senior Note, with the form entitled "Option of Holder to Elect Purchase"
on the reverse of the Senior Note completed, or transfer by book-entry
transfer, to Anvil, a depositary, if appointed by Anvil, or a Paying Agent
at the address specified in the notice at least three days before the
Change of Control Purchase Date; and
(f) that Holders shall be entitled to withdraw their election
if Anvil, the depositary or the Paying Agent, as the case may be,
receives, not later than the expiration of the Change of Control Offer
Period, a telegram, facsimile transmission or letter setting forth the
name of the Holder, the principal amount of the Senior Note the Holder
delivered for purchase and a statement that such Holder is withdrawing his
election to have such Senior Note purchased.
On the Change of Control Purchase Date, Anvil shall, to the extent
lawful, (1) accept for payment all Senior Notes or portions thereof properly
tendered pursuant to the Change of Control Offer, (2) deposit with the Paying
Agent an amount equal to the Change of Control Payment in respect of all Senior
Notes or portions thereof so tendered and (3) deliver or cause to be delivered
to the Trustee the Senior Notes so accepted together with an Officers'
Certificate stating the aggregate principal amount of Senior Notes or portions
thereof being purchased by Anvil. The Paying Agent shall promptly mail to each
Holder of Senior Notes so tendered the Change of Control Payment for such Senior
Notes, and the Trustee shall promptly authenticate and mail (or cause to be
transferred by book entry) to each Holder a new Senior Note equal in principal
amount to any unpurchased portion of the Senior Notes surrendered, if any;
provided that each such new Senior Note shall be in a principal amount of $1,000
or an integral multiple thereof. Anvil will publicly announce the results of the
Change of Control Offer on the Change of Control Purchase Date.
SECTION 4.8 ASSET SALES
Anvil shall not, and shall not permit any of its Restricted
Subsidiaries to, engage in an Asset Sale in excess of $1.0 million unless (i)
Anvil (or the Restricted Subsidiary, as the case may be) receives consideration
at the time of such Asset Sale at least equal to the fair market value, and in
the case of a lease of assets, a lease providing for rent and other conditions
which are no less favorable to Anvil (or the Restricted Subsidiary, as the case
may be) in any material respect than the then prevailing market conditions
(evidenced in each case by a resolution of the Board of Directors of such entity
set forth in an Officers' Certificate delivered to the Trustee) of the assets or
Equity Interests sold or otherwise disposed of, and (ii) at least 75% (100% in
the case of lease payments) of the consideration therefor
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37
received by Anvil or such Restricted Subsidiary is in the form of cash or Cash
Equivalents; provided that the amount of (x) any liabilities (as shown on
Anvil's or such Restricted Subsidiary's most recent balance sheet or in the
notes thereto, excluding contingent liabilities and trade payables), of Anvil or
any Restricted Subsidiary (other than liabilities that are by their terms
subordinated to the Senior Notes, or any guarantee thereof) that are assumed by
the transferee of any such assets and (y) any notes or other obligations
received by Anvil or any such Restricted Subsidiary from such transferee that
are promptly, but in no event more than 30 days after receipt, converted by
Anvil or such Subsidiary into cash (to the extent of the cash received), shall
be deemed to be cash for purposes of this provision.
Within 365 days after the receipt of any Net Proceeds from an Asset
Sale, Anvil may apply such Net Proceeds (a) to reduce permanently long-term
Indebtedness of a Restricted Subsidiary, (b) to reduce permanently Indebtedness
(and, in the case of revolving Indebtedness, to reduce permanently the
commitments) under the New Credit Agreement, or (c) to an investment in another
business, the making of a capital expenditure or the acquisition of other
tangible assets, in each case, in the same or a similar line of business as
Anvil was engaged in on the date of this Indenture. Any Net Proceeds from Asset
Sales that are not applied or invested as provided in the preceding sentence of
this paragraph shall be deemed to constitute "Excess Proceeds." On the earlier
of (i) the 366th day after an Asset Sale or (ii) such date as the Board of Anvil
or the Restricted Subsidiary determines not to apply the Net Proceeds relating
to such Asset Sale in the manner set forth in (a), (b) or (c), if the aggregate
amount of Excess Proceeds exceeds $5.0 million, Anvil will be required to make
an offer to all Holders of Senior Notes (an "Asset Sale Offer") to purchase the
maximum principal amount of Senior Notes that may be purchased out of the Excess
Proceeds, at an offer price in cash in an amount equal to 100% of the principal
amount thereof plus accrued and unpaid interest and Liquidated Damages thereon
to the date of purchase, in accordance with the procedures set forth in this
Indenture. To the extent that the aggregate amount of Senior Notes tendered
pursuant to an Asset Sale Offer is less than the Excess Proceeds, Anvil may use
any remaining Excess Proceeds for general corporate purposes. If the aggregate
principal amount of Senior Notes surrendered by Holders thereof exceeds the
amount of Excess Proceeds, the Trustee shall select the Senior Notes to be
purchased on a pro rata basis. Upon completion of such Asset Sale Offer, the
amount of Excess Proceeds shall be reset at zero.
The Asset Sale Offer shall remain open for a period of 20 Business
Days following its commencement and no longer, except to the extent that a
longer period is required by applicable law (the "Asset Sale Offer Period"). No
later than five Business Days after the termination of the Asset Sale Offer
Period (the "Asset Sale Purchase Date"), Anvil shall purchase the principal
amount of Senior Notes required to be purchased pursuant to this covenant (the
"Asset Sale Offer Amount") or, if less than the Asset Sale Offer Amount has been
tendered, all Senior Notes tendered in response to the Asset Sale Offer. Payment
for any Senior Notes so purchased shall be made in the same manner as interest
payments are made on the Senior Notes.
If the Asset Sale Purchase Date is on or after an interest record
date and on or before the related interest payment date, any accrued and unpaid
interest and Liquidated Damages shall be paid to the Person in whose name a Note
is registered at the close of
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business on such record date, and no additional interest shall be payable to
Holders who tender Senior Notes pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, Anvil shall send, by
first class mail, a notice to the Trustee and each of the Holders, with a copy
to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Senior Notes pursuant to the Asset
Sale Offer. The Asset Sale Offer shall be made to all Holders. The notice, which
shall govern the terms of the Asset Sale Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this
covenant and the length of time the Asset Sale Offer shall remain open;
(b) the Asset Sale Offer Amount, the purchase price and the Asset
Sale Purchase Date;
(c) that any Senior Note not tendered or accepted for payment shall
continue to accrete or accrue interest;
(d) that, unless Anvil defaults in making such payment, any Senior
Note accepted for payment pursuant to the Asset Sale Offer shall cease to
accrete or accrue interest after the Asset Sale Purchase Date;
(e) that Holders electing to have a Senior Note purchased pursuant
to any Asset Sale Offer shall be required to surrender the Senior Note,
with the form entitled "Option of Holder to Elect Purchase" on the reverse
of the Senior Note completed, or transfer by book-entry transfer, to
Anvil, a depositary, if appointed by Anvil, or a Paying Agent at the
address specified in the notice at least three days before the Asset Sale
Purchase Date;
(f) that Holders shall be entitled to withdraw their election if
Anvil, the Depositary or the Paying Agent, as the case may be, receives,
not later than the expiration of the Offer Period, a telegram, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Senior Note the Holder delivered for purchase and a
statement that such Holder is withdrawing his election to have such Senior
Note purchased;
(g) that, if the aggregate principal amount of Senior Notes
surrendered by Holders exceeds the Asset Sale Offer Amount, Anvil shall
select the Senior Notes to be purchased on a pro rata basis (with such
adjustments as may be deemed appropriate by Anvil so that only Senior
Notes in denominations of $1,000, or integral multiples thereof, shall be
purchased); and
(h) that Holders whose Senior Notes were purchased only in part
shall be issued new Senior Notes equal in principal amount to the
unpurchased portion of the Senior Notes surrendered (or transferred by
book-entry transfer).
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On or before the Asset Sale Purchase Date, Anvil shall, to the
extent lawful, accept for payment, on a pro rata basis to the extent necessary,
the Asset Sale Offer Amount of Senior Notes or portions thereof tendered
pursuant to the Asset Sale Offer, or if less than the Asset Sale Offer Amount
has been tendered, all Notes tendered, and shall deliver to the Trustee an
Officers' Certificate stating that such Senior Notes or portions thereof were
accepted for payment by Anvil in accordance with the terms of this covenant.
Anvil, the Depositary or the Paying Agent, as the case may be, shall promptly
(but in any case not later than five days after the Asset Sale Purchase Date)
mail or deliver to each tendering Holder an amount equal to the purchase price
of the Senior Notes tendered by such Holder and accepted by Anvil for purchase,
and Anvil shall promptly issue a new Senior Note, and the Trustee, upon delivery
of an Officers' Certificate from Anvil, shall authenticate and mail or deliver
such new Senior Note to such Holder, in a principal amount equal to any
unpurchased portion of the Senior Note surrendered. Any Senior Note not so
accepted shall be promptly mailed or delivered by Anvil to the Holder thereof.
Anvil shall publicly announce the results of the Asset Sale Offer on the Asset
Sale Purchase Date. Anvil will comply with the requirements of Rule 14e-1 under
the Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Senior Notes pursuant to any Asset Sale Offer.
SECTION 4.9 RESTRICTED PAYMENTS
Anvil shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make
any distribution on account of Anvil's or any of its Restricted Subsidiaries'
Equity Interests (including, without limitation, any payment in connection with
any merger or consolidation involving Anvil) (other than dividends or
distributions payable in Equity Interests (other than Disqualified Stock) of
Anvil or dividends or distributions payable to Anvil or any Wholly Owned
Subsidiary of Anvil); (ii) purchase, redeem or otherwise acquire or retire for
value any Equity Interests of Anvil or any direct or indirect parent of Anvil or
other Affiliate or Restricted Subsidiary of Anvil; (iii) make any principal
payment on, or purchase, redeem, defease or otherwise acquire or retire for
value any Indebtedness that is subordinated to the Senior Notes, except in
accordance with the scheduled mandatory redemption or repayment provisions set
forth in the original documentation governing such Indebtedness (but not
pursuant to any mandatory offer to repurchase upon the occurrence of any event);
or (iv) make any Restricted Investment (all such payments and other actions set
forth in clauses (i) through (iv) above being collectively referred to as
"Restricted Payments"), unless, at the time of and after giving effect to such
Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof;
(b) Anvil would, at the time of such Restricted Payment and after
giving pro forma effect thereto as if such Restricted Payment had been
made at the beginning of the applicable four-quarter period, have been
permitted to incur at least $1.00 of additional Indebtedness pursuant to
the Fixed Charge Coverage Ratio test set forth in the first paragraph of
Section 4.10; and
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(c) such Restricted Payment, together with the aggregate of all
other Restricted Payments made by Anvil and its Restricted Subsidiaries
after the date of this Indenture, is less than the sum of, without
duplication, (i) 50% of the Consolidated Net Income of Anvil for the
period (taken as one accounting period) from the beginning of the first
fiscal quarter commencing after the date of this Indenture to the end of
Anvil's most recently ended fiscal quarter for which internal financial
statements are available at the time of such Restricted Payment (or, if
such Consolidated Net Income for such period is a deficit, less 100% of
such deficit), plus (ii) to the extent not included in the amount
described in clause (i) above, 100% of the aggregate net cash proceeds
received after the date of this Indenture by Anvil from the issue or sale
of, or from additional capital contributions in respect of, Equity
Interests of Anvil or of debt securities of Anvil or any Subsidiary
Guarantor that have been converted into, or cancelled in exchange for,
Equity Interests of Anvil (other than Equity Interests (or convertible
debt securities) sold to a Restricted Subsidiary or an Unrestricted
Subsidiary of Anvil and other than Disqualified Stock or debt securities
that have been converted into Disqualified Stock and less the amount of
any loans made pursuant to clause (vi) of the next succeeding paragraph),
plus (iii) 100% of any cash dividends received by Anvil or a Wholly Owned
Subsidiary that is a Subsidiary Guarantor after the date of the Indenture
from an Unrestricted Subsidiary of Anvil, plus (iv) 100% of the cash
proceeds realized upon the sale of any Unrestricted Subsidiary (less the
amount of any reserve established for purchase price adjustments and less
the maximum amount of any indemnification or similar contingent obligation
for the benefit of the purchaser, any of its Affiliates or any other third
party in such sale, in each case as adjusted for any permanent reduction
in any such amount on or after the date of such sale, other than by virtue
of a payment made to such Person) following the date of this Indenture,
plus (v) to the extent that any Restricted Investment that was made after
the date of this Indenture is sold to an unaffiliated purchaser for cash
or otherwise liquidated or repaid for cash, the cash proceeds realized
with respect to such Restricted Investment (less the cost of disposition,
if any).
The foregoing provisions shall not prohibit (i) the payment of any
dividend within 60 days after the date of declaration thereof, if at said date
of declaration such payment would have complied with the provisions of this
Indenture; (ii) the making of any Restricted Investment in exchange for, or out
of the proceeds of, the substantially concurrent sale (other than to a
Subsidiary of Anvil) of, or from substantially concurrent additional capital
contributions in respect of, Equity Interests of Anvil (other than Disqualified
Stock); (iii) the redemption, repurchase, retirement or other acquisition of any
Equity Interests of Anvil or any direct or indirect parent of Anvil in exchange
for, or out of the proceeds of, the substantially concurrent sale (other than to
a Subsidiary of Anvil) of, or from substantially concurrent additional capital
contributions in respect of, other Equity Interests of Anvil (other than any
Disqualified Stock); (iv) the defeasance, redemption or repurchase of
subordinated Indebtedness with the net cash proceeds from (X) an incurrence of
Permitted Refinancing Indebtedness or (Y) the substantially concurrent sale
(other than to a Subsidiary of Anvil) of, or from substantially concurrent
additional capital contributions in respect of, Equity Interests of Anvil (other
than Disqualified Stock); (v) the declaration or payment of any dividend to
Holdings for, or the direct repurchase, redemption or other acquisition or
retirement for value
<PAGE>
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of any Equity Interests of Anvil or any Restricted Subsidiary of Anvil or
Holdings held by any member of Anvil's (or any of its Restricted Subsidiaries'
or Holdings') management pursuant to any management agreement, stock option
agreement or plan or stockholders agreement; provided that (X) the aggregate
price paid for all such repurchased, redeemed, acquired or retired Equity
Interests shall not exceed $1.0 million in any fiscal year (plus any amount
available for such payments hereunder since the date of this Indenture which
have not been used for such purpose) or (Y) $5.0 million in the aggregate (in
each case, net of the cash proceeds received by Anvil from subsequent
reissuances of such Equity Interests to new members of management); (vi) loans
to members of management of Anvil or any Restricted Subsidiary the proceeds of
which are used for a concurrent purchase of Equity Interests of Holdings and a
capital contribution in an amount equal to such proceeds to Anvil; (vii)
payments in connection with the application of the net proceeds of the
Recapitalization as set forth under "Use of Proceeds" in the Offering
Memorandum; (viii) payments to Holdings in respect of accounting, legal or other
administrative expenses incurred by Holdings relating to the operations of Anvil
in the ordinary course of business and in respect of fees and related expenses
associated with registration statements filed with the Commission and subsequent
ongoing public reporting requirements arising from the issuance of the
Guarantee, the Senior Preferred Stock and the Exchange Debentures; provided that
the aggregate amount of such payments does not exceed $500,000 in any fiscal
year; (ix) so long as Holdings files consolidated income tax returns which
include Anvil, payments to Holdings in an amount equal to the amount of income
tax that Anvil would have paid if it had filed consolidated tax returns on a
separate-company basis; (x) payments to Holdings in an amount sufficient to pay
director's fees and the reasonable expenses of its directors in an aggregate
amount not to exceed $125,000 per year (including indemnification obligations
and professional fees and expenses) and to pay salaries and other compensation
of employees who perform services for both Anvil and Holdings; (xi) payments to
Holdings in an amount not to exceed $200,000 in aggregate to enable Holdings to
make payments to holders of its Capital Stock in lieu of issuing fractional
shares thereof; (xii) in the event Holdings elects to issue the Exchange
Debentures in exchange for the Senior Preferred Stock, cash payments to Holdings
in an amount necessary to enable Holdings to make payments to the holders of the
Senior Preferred Stock (A) in lieu of issuing an Exchange Debenture in a
principal amount less than $1,000 and (B) any accrued and unpaid dividends in
respect of the period from the dividend payment date immediately preceding the
exchange date to the exchange date; (xiii) the making of any principal payment
on, or purchase, redeem, defease or otherwise acquire or retire for value any
Indebtedness that is subordinated to the Senior Notes out of Excess Proceeds
available for general corporate purposes after consummation of purchases of
Senior Notes pursuant to an Asset Sale Offer; and (xiv) the repurchase of the
Senior Preferred Stock or the Exchange Debentures in connection with an offer
required to be made therefor in connection with a Change of Control provided
that Anvil has previously paid all amounts required to be paid in connection
with any Change of Control Offer for the Senior Notes; provided however that in
the case of any transaction described in clauses (i), (ii), (iii), (iv) and (v)
no Default or Event of Default will have occurred and be continuing immediately
after such transaction. In determining the aggregate amount of Restricted
Payments made after the date of hereof, 100% of the amounts expended pursuant to
the foregoing clauses (ii), (iii), (iv)(Y), (v) and (vi) shall be included in
such calculation and none of the amounts expended pursuant to the foregoing
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42
clauses (i), (iv)(X), (vii), (viii), (ix), (x), (xi), (xii), (xiii) and (xiv)
shall be included in such calculation.
As of the date of this Indenture, all of Anvil's Subsidiaries were
Restricted Subsidiaries. The Board of Directors may designate any Subsidiary to
be an Unrestricted Subsidiary if such designation would not cause a Default. For
purposes of making such determination, all outstanding Investments by Anvil and
its Restricted Subsidiaries (except to the extent repaid in cash) in the
Subsidiary so designated shall be deemed to be Restricted Payments at the time
of such designation and shall reduce the amount available for Restricted
Payments under the first paragraph of this covenant. Such designation shall only
be permitted if such Restricted Payment would be permitted at such time and if
such Subsidiary otherwise meets the definition of an Unrestricted Subsidiary.
The amount of all Restricted Payments (other than cash) shall be the
greater of (i) book value and (ii) fair market value (evidenced by a resolution
of the Board of Directors set forth in an Officers' Certificate delivered to the
Trustee) on the date of the Restricted Payment of the asset(s) proposed to be
transferred by Anvil or such Restricted Subsidiary, as the case may be, pursuant
to the Restricted Payment. Not later than the date of making any Restricted
Payment, Anvil shall deliver to the Trustee an Officers' Certificate stating
that such Restricted Payment is permitted and setting forth the basis upon which
the calculation required by this covenant were computed, which calculations may
be based upon Anvil's latest available financial statements.
SECTION 4.10 INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK
Anvil shall not, and shall not permit any of its Restricted
Subsidiaries and Unrestricted Subsidiaries to, directly or indirectly, create,
incur, issue, assume, guarantee or otherwise become directly or indirectly
liable, contingently or otherwise, with respect to (collectively, "incur") any
Indebtedness (including Acquired Indebtedness) and that Anvil shall not issue
any Disqualified Stock and shall not permit any of its Restricted Subsidiaries
to issue any shares of preferred stock; provided, however, that Anvil and its
Restricted Subsidiaries may incur Indebtedness (including Acquired Indebtedness)
or issue shares of Disqualified Stock if: (i) the Fixed Charge Coverage Ratio
for Anvil's most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date on which such
additional Indebtedness is incurred or such Disqualified Stock is issued would
have been (A) at any time prior to March 15, 1999, at least 2.00 to 1 and (B) at
any time thereafter, at least 2.25 to 1, in each case determined on a pro forma
basis (including a pro forma application of the net proceeds therefrom), as if
the additional Indebtedness had been incurred, or the Disqualified Stock had
been issued, as the case may be, at the beginning of such four-quarter period;
and (ii) no Default or Event of Default shall have occurred and be continuing or
would occur as a consequence thereof; provided, that no guarantee may be
incurred pursuant to this paragraph unless the guaranteed Indebtedness is
incurred by Anvil or a Restricted Subsidiary pursuant to this paragraph.
The foregoing provisions shall not apply to:
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(i) the incurrence by Anvil and its Restricted Subsidiaries of
Indebtedness and letters of credit pursuant to the New Credit Agreement
(with letters of credit being deemed to have a principal amount equal to
the maximum potential liability of Anvil or the relevant Restricted
Subsidiary thereunder) in a maximum principal amount outstanding at any
one time not to exceed $55.0 million (or in the event of any refinancing
of the Indebtedness under the New Credit Agreement, the greater of $55.0
million or the Borrowing Base) (1) less the amount of all mandatory
principal payments actually made by Anvil in respect of term loans
thereunder (excluding any such payments to the extent refinanced at the
time of payment under a replaced credit agreement) and (2) in the case of
the revolving credit facility, reduced by any required permanent
repayments (which are accompanied by a corresponding permanent commitment
reduction) thereunder;
(ii) the incurrence by Anvil and its Restricted Subsidiaries of the
Existing Indebtedness;
(iii) the incurrence by Anvil of Indebtedness represented by the
Senior Notes and by the Restricted Subsidiaries of Indebtedness
represented by the Subsidiary Guarantees;
(iv) the incurrence by Anvil or any of its Restricted Subsidiaries
of Indebtedness represented by Capital Lease Obligations, mortgage
financings or Purchase Money Obligations, in each case incurred for the
purpose of financing all or any part of the purchase price or cost of
construction or improvement of property used in the business of Anvil or
such Restricted Subsidiary, in an aggregate principal amount not to exceed
$5.0 million at any time outstanding;
(v) the incurrence by Anvil or any of its Restricted Subsidiaries of
Permitted Refinancing Indebtedness in exchange for, or the net proceeds of
which are used to extend, refinance, renew, replace, defease or refund,
Indebtedness that was permitted by this Indenture to be incurred;
(vi) the incurrence by Anvil or any of its Restricted Subsidiaries
of intercompany Indebtedness between or among Anvil and any of its Wholly
Owned Subsidiaries or between or among any Wholly Owned Subsidiaries;
provided, however, that (i) any subsequent issuance or transfer of Equity
Interests that results in any such Indebtedness being held by a Person
other than a Wholly Owned Subsidiary and (ii) any sale or other transfer
of any such Indebtedness to a Person that is not either Anvil or a Wholly
Owned Subsidiary shall be deemed, in each case, to constitute an
incurrence of such Indebtedness by Anvil or such Subsidiary, as the case
may be;
(vii) the incurrence by Anvil or any of its Restricted Subsidiaries
that are Subsidiary Guarantors of Hedging Obligations that are incurred
for the purpose of fixing or hedging interest rate risk with respect to
any floating rate Indebtedness that is permitted by this Indenture to be
incurred;
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44
(viii) the incurrence by Anvil, and its Restricted Subsidiaries that
are Subsidiary Guarantors and its foreign subsidiaries that are Restricted
Subsidiaries of Indebtedness (in addition to Indebtedness permitted by any
other clause of this paragraph) in an aggregate principal amount at any
time outstanding not to exceed $15.0 million; provided that such
Indebtedness incurred by foreign subsidiaries that are Restricted
Subsidiaries shall not exceed an aggregate principal amount at any time
outstanding of $5.0 million.
(ix) the incurrence by Anvil's Unrestricted Subsidiaries of
Non-Recourse Debt, provided, however, that if any such Indebtedness ceases
to be Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be
deemed to constitute an incurrence of Indebtedness by a Restricted
Subsidiary of Anvil;
(x) Indebtedness incurred by Anvil or any of its Restricted
Subsidiaries that are Subsidiary Guarantors arising from agreements
providing for indemnification, adjustment of purchase price or similar
obligations, or from guarantees or letters of credit, surety bonds or
performance bonds securing the performance of Anvil or any of its
Restricted Subsidiaries pursuant to such agreements, in connection with
the disposition of any business, assets or Restricted Subsidiary of Anvil
(other than guarantees or similar credit support by Anvil or any of its
Restricted Subsidiaries of Indebtedness incurred by any Person acquiring
all or any portion of such business, assets or Restricted Subsidiary for
the purpose of financing such acquisition), in a principal amount not to
exceed 25% of the gross proceeds (with proceeds other than cash or Cash
Equivalents being valued at the fair market value thereof as determined by
the Board of Directors of Anvil in good faith) actually received by Anvil
or any of its Restricted Subsidiaries in connection with such disposition;
and
(xi) the incurrence by a Securitization Entity of Indebtedness in a
Qualified Securitization Transaction that is non-recourse to Anvil or any
Subsidiary of Anvil (except Standard Securitization Undertakings);
provided, however, that the amount of Indebtedness outstanding under
clause (i) above and this clause (xi) shall not in the aggregate exceed
$55.0 million at any time outstanding (or in the event of a refinancing of
the Indebtedness under the New Credit Agreement, the greater of $55.0
million or the Borrowing Base).
Notwithstanding any other provision of this covenant, a guarantee
of Indebtedness permitted by the terms of this Indenture at the time such
Indebtedness was incurred shall not constitute a separate incurrence of
Indebtedness.
SECTION 4.11 SALE AND LEASEBACK TRANSACTIONS
Anvil shall not, and shall not permit any of its Restricted
Subsidiaries to, enter into any sale and leaseback transaction; provided that
Anvil or any Subsidiary Guarantor may enter into a sale and leaseback
transaction if (i) Anvil or such Subsidiary Guarantor could have (a) incurred
Indebtedness in an amount equal to the Attributable Debt relating to such sale
and leaseback transaction pursuant to the Fixed Charge Coverage Ratio test set
forth in the first
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45
paragraph of Section 4.10 hereof and (b) incurred a Lien to secure such
Indebtedness pursuant to Section 4.12 hereof, (ii) the net cash proceeds of such
sale and leaseback transaction are at least equal to the fair market value (as
determined in good faith by the Board of Directors and set forth in an Officers'
Certificate delivered to the Trustee) of the property that is the subject of
such sale and leaseback transaction and (iii) the transfer of assets in such
sale and leaseback transaction is permitted by, and the proceeds of such
transaction are applied in compliance with, Section 4.8 hereof.
SECTION 4.12 LIENS
Anvil shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien on any asset now owned or hereafter acquired, or any income or
profits therefrom or assign or convey any right to receive income therefrom,
except Permitted Liens.
SECTION 4.13 DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED
SUBSIDIARIES
Anvil shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to (i) (a) pay dividends or make any other distributions
to Anvil or any of its Restricted Subsidiaries (1) on its Capital Stock or (2)
with respect to any other interest or participation in, or measured by, its
profits, or (b) pay any Indebtedness owed to Anvil or any of its Restricted
Subsidiaries, (ii) make loans or advances to Anvil or any of its Restricted
Subsidiaries or (iii) transfer any of its properties or assets to Anvil or any
of its Restricted Subsidiaries, except for such encumbrances or restrictions
existing under or by reason of (a) Existing Indebtedness as in effect on the
date of this Indenture, (b) the New Credit Agreement as in effect as of the date
of this Indenture, and any amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings thereof;
provided, that such amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings are no more
restrictive with respect to such dividend and other payment restrictions than
those contained in the New Credit Agreement as in effect on the date of this
Indenture, (c) this Indenture and the Senior Notes, (d) the Senior Preferred
Stock, the Certificate of Designations, the Exchange Debentures and the Exchange
Debenture Indenture, (e) applicable law, (f) any instrument governing Acquired
Indebtedness or Capital Stock of a Person acquired by Anvil or any of its
Restricted Subsidiaries as in effect at the time of such acquisition (except to
the extent such Acquired Indebtedness was incurred in connection with or in
contemplation of such acquisition), which encumbrance or restriction is not
applicable to any Person, or the properties or assets of any Person, other than
the Person, or the property or assets of the Person, so acquired; provided, that
the Consolidated EBITDA of such Person is not taken into account in determining
whether such acquisition was permitted by the terms of this Indenture, (g) by
reason of customary non-assignment provisions in leases and licenses entered
into in the ordinary course of business and consistent with past practices, (h)
purchase money obligations for property acquired in the ordinary course of
business that impose restrictions of the nature described in clause (iii) above
on the property so acquired, (i)
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46
agreements relating to the financing of the acquisition of real or tangible
personal property acquired after the date of this Indenture; provided, that such
encumbrance or restriction relates only to the property which is acquired and in
the case of any encumbrance or restriction that constitutes a Lien, such Lien
constitutes a Purchase Money Lien, (j) any restriction or encumbrance contained
in contracts for sale of assets permitted by this Indenture in respect of the
assets being sold pursuant to such contract or (k) Indebtedness or other
contractual requirements of a Securitization Entity in connection with a
Qualified Securitization Transaction; provided that such restrictions apply only
to such Securitization Entity.
SECTION 4.14 TRANSACTIONS WITH AFFILIATES
Anvil shall not, and shall not permit any of its Restricted
Subsidiaries to, sell, lease, transfer or otherwise dispose of any of its
properties or assets to, or purchase any property or assets from, or enter into
or make any contract, agreement, understanding, loan, advance or guarantee with,
or for the benefit of, any Affiliate (each of the foregoing, an "Affiliate
Transaction"), unless (i) such Affiliate Transaction is on terms that are no
less favorable to Anvil or the relevant Restricted Subsidiary than those that
would have been obtained in a comparable transaction by Anvil or such Restricted
Subsidiary with an unrelated Person and (ii) Anvil delivers to the Trustee (a)
with respect to any Affiliate Transaction entered into after the date of this
Indenture involving aggregate consideration in excess of $1.0 million, a
resolution of the Board of Directors set forth in an Officers' Certificate
certifying that such Affiliate Transaction complies with clause (i) above and
that such Affiliate Transaction has been approved by a majority of the
disinterested members of the Board of Directors and (b) with respect to any
Affiliate Transaction involving aggregate consideration in excess of $5.0
million, an opinion as to the fairness to Anvil or such Restricted Subsidiary of
such Affiliate Transaction from a financial point of view issued by an
investment banking firm of national standing; provided that the following shall
not be deemed to be Affiliate Transactions: (p) reasonable fees and compensation
paid to, and indemnity provided on behalf of, officers and directors of
Holdings, Anvil or any Restricted Subsidiary as determined in good faith by the
appropriate Board of Directors or senior management; (q) the provision of
administrative or management services by Anvil or any of its officers to
Holdings or any of its Restricted Subsidiaries in the ordinary course of
business consistent with past practice; (r) transactions between Anvil or one or
more of its Restricted Subsidiaries and the relevant Securitization Entity
effected as part of a Qualified Securitization Transaction; (s) any agreement as
in effect as of the date of this Indenture (including, without limitation, the
New Credit Agreement) or any amendment thereto or any transactions contemplated
thereby (including pursuant to any amendment thereto) and any replacement
agreement thereto so long as any such amendment or replacement agreement is not
more disadvantageous to the Holders of Senior Notes in any material respect than
the original agreement as in effect on the date of this Indenture; (t) payments
or loans to employees or consultants which are approved by the Board of
Directors of Anvil in good faith; (u) the existence of, or the performance by
Anvil or any of its Restricted Subsidiaries of its obligations under the terms
of, any stockholders agreement (including any registration rights agreement or
purchase agreement related thereto) to which it is a party as of the date of
this Indenture and any similar agreement which it may enter into thereafter;
provided, however, that the existence of, or the performance by Anvil or any of
its Restricted Subsidiaries of obligations under any similar agreement entered
into after
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47
the date of this Indenture shall only be permitted by this clause (u) to the
extent that the terms of any such new agreement are not otherwise
disadvantageous to the Holders of the Senior Notes in any material respect; (v)
transactions with customers, clients, suppliers, joint venture partners or
purchasers or sellers of goods or services, in each case in the ordinary course
of business (including, without limitation, pursuant to joint venture
agreements) and otherwise in compliance with the terms of this Indenture which
are at least as favorable as might reasonably have been obtained at such time
from an unaffiliated party; (w) any employment agreement entered into by Anvil
or any of its Restricted Subsidiaries in the ordinary course of business and
consistent with the past practice of Anvil or such Restricted Subsidiary
(including, without limitation, any such employment agreements entered into
prior to the date of this Indenture), (x) transactions between or among Anvil
and/or its Wholly Owned Subsidiaries, (y) (i) the payment of customary
management, consulting and advisory fees and related expenses to 399 Venture and
BRS and their Affiliates not to exceed an aggregate of $750,000 per year and
(ii) payments by Anvil or any of its Restricted Subsidiaries to 399 Venture and
BRS and their Affiliates made pursuant to any financial advisory, financing,
underwriting or placement agreement or in respect of other investment banking
activities, including, without limitation, in connection with acquisitions or
divestitures which are approved by the Board of Directors of Anvil, Holdings or
such Restricted Subsidiary in good faith not to exceed an aggregate of $750,000
per year; and (z) transactions permitted by Section 4.9.
SECTION 4.15 LINE OF BUSINESS
Anvil shall not, and shall not permit any Restricted Subsidiary to,
engage in any line of business which is not the same, similar, ancillary,
complementary or related to the businesses in which Anvil is engaged on the date
of this Indenture.
SECTION 4.16 ADDITIONAL SUBSIDIARY GUARANTEES
All Restricted Subsidiaries of Anvil substantially all of whose
assets are located in the United States or that conduct substantially all of
their business in the United States shall be Subsidiary Guarantors. In addition,
Anvil shall not, and shall not permit any of the Subsidiary Guarantors to, make
any Investment in any Subsidiary that is not a Subsidiary Guarantor unless
either (i) such Investment is permitted by Section 4.9 or (ii) such Restricted
Subsidiary executes a Subsidiary Guarantee and delivers an Opinion of Counsel in
accordance with the provisions of this Indenture.
SECTION 4.17 CORPORATE EXISTENCE
Subject to Article 5 hereof, each of Holdings and Anvil shall do or
cause to be done all things necessary to preserve and keep in full force and
effect (i) its corporate existence, and the corporate, partnership or other
existence of each of its Subsidiaries, in accordance with the respective
organizational documents (as the same may be amended from time to time) of each
of Holdings and Anvil or any such Subsidiary and (ii) the rights (charter and
statutory), licenses and franchises of each of Holdings and Anvil and its
Subsidiaries; provided, however, that Holdings and Anvil shall not be required
to preserve any such right, license or franchise, or the corporate, partnership
or other existence of any of their
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48
Subsidiaries, if the Board of Directors shall determine that the preservation
thereof is no longer desirable in the conduct of the business of Holdings and
Anvil and its Subsidiaries, taken as a whole, and that the loss thereof is not
adverse in any material respect to the Holders of the Senior Notes.
ARTICLE 5
SUCCESSORS
SECTION 5.1 MERGER, CONSOLIDATION OR SALE OF ASSETS
Anvil shall not, in a single transaction or series of related
transactions, consolidate or merge with or into (whether or not Anvil is the
surviving corporation), or directly and/or indirectly through its Restricted
Subsidiaries sell, assign, transfer, lease, convey or otherwise dispose of all
or substantially all of its properties or assets determined on a consolidated
basis for Anvil and its Restricted Subsidiaries taken as a whole in one or more
related transactions, to another corporation, Person or entity unless (i) Anvil
is the surviving corporation or the entity or the Person formed by or surviving
any such consolidation or merger (if other than Anvil) or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made is a corporation organized or existing under the laws of the United States,
any state thereof or the District of Columbia; (ii) the entity or Person formed
by or surviving any such consolidation or merger (if other than Anvil) or the
entity or Person to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made assumes all the obligations of Anvil,
under the Senior Notes and this Indenture pursuant to a supplemental indenture
in a form reasonably satisfactory to the Trustee; (iii) immediately after such
transaction no Default or Event of Default exists; (iv) Anvil or the entity or
Person formed by or surviving any such consolidation or merger (if other than
Anvil), or to which such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made (A) shall have Consolidated Net Worth
immediately after the transaction equal to or greater than the Consolidated Net
Worth of Anvil immediately preceding the transaction and (B) shall, at the time
of such transaction and after giving pro forma effect thereto as if such
transaction had occurred at the beginning of the applicable four-quarter period,
be permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test set forth in the first paragraph of Section
4.10; and (v) Anvil shall have delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel addressed to the Trustee with respect to the foregoing
matters; provided, however, that the requirement set forth in clause (iv) above
shall not apply to a merger between Anvil and any Wholly Owned Subsidiary or to
any merger between Wholly Owned Subsidiaries.
SECTION 5.2 SUCCESSOR CORPORATION SUBSTITUTED
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of Anvil in accordance with Section 5.1 hereof, the successor corporation formed
by such consolidation or into or with which Anvil is merged or to which such
sale, assignment, transfer, lease, conveyance or other disposition is made shall
succeed to, and be substituted for (so that from and after the
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49
date of such consolidation, merger, sale, lease, conveyance or other
disposition, the provisions of this Indenture referring to "Anvil" shall refer
instead to the successor corporation and not to Anvil), and may exercise every
right and power of Anvil under this Indenture with the same effect as if such
successor Person had been named as Anvil herein; provided, however, that the
predecessor of Anvil shall not be relieved from the obligation to pay the
principal of and interest and Liquidated Damages on the Senior Notes except in
the case of a sale of all of Anvil's assets that meets the requirements of
Section 5.1 hereof.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.1 EVENTS OF DEFAULT
An "Event of Default" occurs if:
(1) Anvil defaults in the payment of interest on, or Liquidated
Damages with respect to, any Senior Note when the same becomes due and
payable and the Default continues for a period of 30 days;
(2) Anvil defaults in the payment of the principal of or premium, if
any, on any Senior Note when the same becomes due and payable at maturity,
upon redemption or otherwise;
(3) Anvil fails to observe or perform any covenant, condition or
agreement on the part of Anvil to be observed or performed pursuant to
Sections 4.7, 4.8, 4.9, 4.10, 4.11 or 5.1 hereof;
(4) Anvil fails to comply with any of its other agreements or
covenants in, or provisions of, the Senior Notes or this Indenture and the
Default continues for the period and after the notice specified below;
(5) a default occurs under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by Anvil or any of its
Restricted Subsidiaries or Holdings (or the payment of which is guaranteed
by Anvil or any of its Restricted Subsidiaries or Holdings), whether such
Indebtedness or guarantee now exists or shall be created hereafter, which
default (a) is caused by a failure to pay principal of or premium, if any,
or interest on such Indebtedness prior to the expiration of the grace
period provided in such Indebtedness on the date of such default (a
"Payment Default") or (b) results in the acceleration of any other such
Indebtedness prior to its express maturity and, in each case, the
principal amount of any other such Indebtedness, together with the
principal amount of any other Indebtedness as to which there has been a
Payment Default or the maturity of which has been so accelerated,
aggregates $5.0 million or more;
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(6) a final judgment or final judgments for the payment of money
(not fully covered by insurance) are entered by a court or courts of
competent jurisdiction against Anvil or any of its Restricted Subsidiaries
or Holdings and such judgment or judgments remain undischarged and unpaid
for a period (during which execution shall not be effectively stayed) of
60 days, provided that the aggregate of all such undischarged and unpaid
judgments exceeds $3.0 million;
(7) except as permitted by this Indenture, any Subsidiary Guarantee
shall be held in any judicial proceeding to be unenforceable or invalid or
shall cease for any reason to be in full force and effect or any
Subsidiary Guarantor, or any Person acting on behalf of any Subsidiary
Guarantor, will deny or disaffirm its obligations under its Subsidiary
Guarantee;
(8) except as permitted by this Indenture, the Guarantee shall be
held in any judicial proceeding to be unenforceable or invalid or shall
cease for any reason to be in full force and effect or Holdings, or any
Person acting on behalf of Holdings, will deny or disaffirm its
obligations under the Guarantee;
(9) Holdings, Anvil or any of its Significant Subsidiaries pursuant
to or within the meaning of any Bankruptcy Law:
(a) commences a voluntary case,
(b) consents to the entry of an order for relief against it in
an involuntary case,
(c) consents to the appointment of a Custodian of it or for
all or substantially all of its property,
(d) makes a general assignment for the benefit of its
creditors, or
(e) generally is not paying its debts as they become due; or
(10) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(a) is for relief against Holdings, Anvil or any Subsidiary in
an involuntary case, or
(b) appoints a Custodian of Holdings, Anvil or any Subsidiary
or for all or substantially all of the property of Anvil or any
Subsidiary, or
(c) orders the liquidation of Holdings, Anvil or any
Subsidiary,
(d) and in each case the order or decree remains unstayed and
in effect for 60 consecutive days.
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The term "Bankruptcy Law" means Title 11, U.S. Code or any similar
federal or state law for the relief of debtors. The term "Custodian" means any
receiver, trustee, assignee, liquidator or similar official under any Bankruptcy
Law.
An Event of Default shall not be deemed to have occurred under
clause (3), (5), (6), (7) or (8) until the Trustee shall have received written
notice from Anvil or any of the Holders or unless a Responsible Officer shall
have obtained actual knowledge of such Event of Default. A Default under clause
(4) is not an Event of Default until the Trustee notifies Anvil, or the Holders
of at least 25% in principal amount of the then outstanding Senior Notes notify
Anvil and the Trustee, of the Default and Anvil does not cure the Default within
60 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."
SECTION 6.2 ACCELERATION
If an Event of Default (other than an Event of Default specified in
clauses (9) and (10) of Section 6.1 relating to Holdings, Anvil, any Significant
Subsidiary or any group of Subsidiaries that, taken together, would constitute a
Significant Subsidiary) occurs and is continuing, the Trustee by notice to
Anvil, or the Holders of at least 25% in principal amount of the then
outstanding Senior Notes by written notice to Anvil and the Trustee may declare
the unpaid principal of and any accrued interest on all the Senior Notes to be
due and payable. Upon such declaration the principal and interest shall be due
and payable immediately (together with the premium referred to in Section 6.1,
if applicable). If an Event of Default specified in clause (9) or (10) of
Section 6.1 relating to Holdings, Anvil, any Significant Subsidiary or any group
of Subsidiaries that, taken together, would constitute a Significant Subsidiary
occurs, such an amount shall ipso facto become and be immediately due and
payable without any declaration or other act on the part of the Trustee or any
Holder. The Holders of a majority in principal amount of the then outstanding
Senior Notes by written notice to the Trustee may rescind an acceleration and
its consequences if the rescission would not conflict with any judgment or
decree and if all existing Events of Default (except nonpayment of principal or
interest that has become due solely because of the acceleration) have been cured
or waived. The Trustee may withhold from Holders of the Senior Notes notice of
any continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal or interest) if it determines that
withholding notice is in their interest.
SECTION 6.3 OTHER REMEDIES
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal, premium, if
any, and interest on the Senior Notes or to enforce the performance of any
provision of the Senior Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess
any of the Senior Notes or does not produce any of them in the proceeding. A
delay or omission by the
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Trustee or any Holder of a Senior Note in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
SECTION 6.4 WAIVER OF PAST DEFAULTS
Holders of not less than a majority in aggregate principal amount of
the then outstanding Senior Notes by notice to the Trustee may on behalf of the
Holders of all of the Senior Notes waive an existing Default or Event of Default
and its consequences hereunder, except a continuing Default or Event of Default
in the payment of the principal of, premium and Liquidated Damages, if any, or
interest on, the Senior Notes (including in connection with an offer to
purchase)(provided, however, that the Holders of a majority in aggregate
principal amount of the then outstanding Senior Notes may rescind an
acceleration and its consequences, including any related payment default that
resulted from such acceleration). 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 6.5 CONTROL BY MAJORITY
Holders of a majority in principal amount of the then outstanding
Senior Notes may direct the time, method and place of conducting any proceeding
for exercising any remedy available to the Trustee or exercising any trust or
power conferred on it. However, the Trustee may refuse to follow any direction
that conflicts with law or this Indenture or that the Trustee determines may be
unduly prejudicial to the rights of other Holders of Senior Notes or that may
involve the Trustee in personal liability.
SECTION 6.6 LIMITATION ON SUITS
A Holder of a Senior Note may pursue a remedy with respect to this
Indenture or the Senior Notes only if:
(a) the Holder of a Senior Note gives to the Trustee written notice
of a continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the then
outstanding Senior Notes make a written request to the Trustee to pursue
the remedy;
(c) such Holder of a Senior Note or Holders of Senior Notes offer
and, if requested, provide to the Trustee indemnity satisfactory to the
Trustee against any loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer and, if requested, the
provision of indemnity; and
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(e) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Senior Notes do not give the Trustee a
direction inconsistent with the request.
A Holder of a Senior Note may not use this Indenture to prejudice the rights of
another Holder of a Senior Note or to obtain a preference or priority over
another Holder of a Senior Note.
SECTION 6.7 RIGHTS OF HOLDERS OF SENIOR NOTES TO RECEIVE PAYMENT
Notwithstanding any other provision of this Indenture, the right of
any Holder of a Senior Note to receive payment of principal, premium and
Liquidated Damages, if any, and interest on the Senior Note, on or after the
respective due dates expressed in the Senior Note (including in connection with
an offer to purchase), or to bring suit for the enforcement of any such payment
on or after such respective dates, shall not be impaired or affected without the
consent of such Holder.
SECTION 6.8 COLLECTION SUIT BY TRUSTEE
If an Event of Default specified in Section 6.1(1) or (2) occurs and
is continuing, the Trustee is authorized to recover judgment in its own name and
as trustee of an express trust against Anvil for the whole amount of principal
of, premium and Liquidated Damages, if any, and interest remaining unpaid on the
Senior Notes and interest on overdue principal and, to the extent lawful,
interest and 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.
SECTION 6.9 TRUSTEE MAY FILE PROOFS OF CLAIM
The Trustee is authorized to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the claims
of the Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Senior Notes allowed in any judicial proceedings relative to
Anvil (or any other obligor upon the Senior Notes), its creditors or its
property and shall be entitled and empowered to collect, receive and distribute
any money or other property payable or deliverable on any such claims and any
custodian 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 to 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 7.7 hereof. To the extent that the payment
of any such compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, and any other amounts due the Trustee under Section 7.7
hereof out of the estate in any such proceeding, shall be denied for any reason,
payment of the same shall be secured by a Lien on, and shall be paid out of, any
and all distributions, dividends, money, securities and other properties that
the Holders may be entitled to receive in such proceeding whether in liquidation
or under any plan of reorganization or arrangement or otherwise.
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Nothing herein contained 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 Senior
Notes or the rights of any Holder, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
SECTION 6.10 PRIORITIES
If the Trustee collects any money pursuant to this Article, it shall
pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due
under Section 7.7 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
Second: to Holders of Senior Notes for amounts due and unpaid on the
Senior Notes for principal and Liquidated Damages, if any, and interest,
ratably, without preference or priority of any kind, according to the amounts
due and payable on the Senior Notes for principal, premium and Liquidated
Damages, if any and interest, respectively; and
Third: to Anvil or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment
to Holders of Senior Notes pursuant to this Section 6.10.
SECTION 6.11 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 or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder of a
Senior Note pursuant to Section 6.7 hereof, or a suit by Holders of more than
10% in principal amount of the then outstanding Senior Notes.
ARTICLE 7
TRUSTEE
SECTION 7.1 DUTIES OF TRUSTEE
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in its exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
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(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by
the express provisions of this Indenture and the Trustee need
perform only those duties that are specifically set forth in this
Indenture and no others, and no implied covenants or obligations
shall be read into this Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements
of this Indenture. However, the Trustee shall examine the
certificates and opinions to determine whether or not they conform
to the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b)
of this Section;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it is proved
that the Trustee was negligent in ascertaining the pertinent facts;
and
(iii) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.5 hereof.
(d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or incur any liability. The Trustee shall be under
no obligation to exercise any of its rights and powers under this Indenture at
the request of any Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with Anvil. Money held
in trust by the Trustee need not be segregated from other funds except to the
extent required by law.
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SECTION 7.2 RIGHTS OF TRUSTEE
(a) The Trustee may conclusively rely upon any document believed by
it to be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. 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 from liability in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent appointed with
due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture and
subject to Section 7.2(b), any demand, request, direction or notice from Anvil
shall be sufficient if signed by an Officer of Anvil.
(f) 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 unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
that might be incurred by it in compliance with such request or direction.
(g) Except with respect to Section 4.1 hereof, the Trustee shall
have no duty to inquire as to the performance of Anvil's covenants in Article 4
hereof. In addition, the Trustee shall not be deemed to have knowledge of any
Default or Event of Default except (i) any Event of Default occurring pursuant
to Sections 6.1(1), 6.1(2) and 4.1 or (ii) any Default or Event of Default of
which a Responsible Officer of the Trustee shall have received written
notification or obtained actual knowledge.
(h) 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 may, in its discretion, 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 Anvil personally or by agent or attorney.
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SECTION 7.3 INDIVIDUAL RIGHTS OF TRUSTEE
The Trustee in its individual or any other capacity may become the
owner or pledgee of Senior Notes and may otherwise deal with Anvil or any
Affiliate of Anvil with the same rights it would have if it were not Trustee.
However, in the event that the Trustee acquires any conflicting interest (as
defined in the Trust Indenture Act) it must eliminate such conflict within 90
days, apply to the Commission for permission to continue as trustee or resign.
Any Agent may do the same with like rights and duties. The Trustee is also
subject to Sections 7.10 and 7.11 hereof.
SECTION 7.4 TRUSTEE'S DISCLAIMER
The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture or the Senior Notes, it shall
not be accountable for Anvil's use of the proceeds from the Senior Notes or any
money paid to Anvil or upon Anvil's direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Senior
Notes or any other document in connection with the sale of the Senior Notes or
pursuant to this Indenture other than its certificate of authentication.
SECTION 7.5 NOTICE OF DEFAULTS
If a Default or Event of Default occurs and is continuing and if it
is known to the Trustee, the Trustee shall mail to Holders of Senior Notes a
notice of the Default or Event of Default within 90 days after it occurs. Except
in the case of a Default or Event of Default in payment of principal of,
premium, if any, or interest on any Senior Note, 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 interests of the Holders of the
Senior Notes.
SECTION 7.6 REPORTS BY TRUSTEE TO HOLDERS OF THE SENIOR NOTES
Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, and for so long as Senior Notes remain outstanding,
the Trustee shall mail to the Holders of the Senior Notes a brief report dated
as of such reporting date that complies with TIA ss. 313(a) (but if no event
described in TIA ss. 313(a) has occurred within the twelve months preceding the
reporting date, no report need be transmitted). The Trustee also shall comply
with TIA ss. 313(b)(2). The Trustee shall also transmit by mail all reports as
required by TIA ss. 313(c).
A copy of each report at the time of its mailing to the Holders of
Senior Notes shall be mailed to Anvil and filed with the Commission and each
stock exchange on which the Senior Notes are listed in accordance with TIA ss.
313(d). Anvil shall promptly notify the Trustee when the Senior Notes are listed
on any stock exchange.
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SECTION 7.7 COMPENSATION AND INDEMNITY
Anvil shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. Anvil shall reimburse the Trustee promptly upon
request for all reasonable disbursements, advances and expenses incurred or made
by it in addition to the compensation for its services. Such expenses shall
include the reasonable compensation, disbursements and expenses of the Trustee's
agents and counsel.
Anvil shall indemnify the Trustee against any and all losses,
liabilities or expenses (including reasonable attorneys' fees) incurred by it
arising out of or in connection with the acceptance or administration of its
duties under this Indenture, including the costs and expenses of enforcing this
Indenture against Anvil (including this Section 7.7) and defending itself
against any claim (whether asserted by Anvil or any Holder or any other Person)
or liability in connection with the exercise or performance of any of its powers
or duties hereunder, except to the extent any such loss, liability or expense
may be attributable to its negligence or bad faith. The Trustee shall notify
Anvil promptly of any claim for which it may seek indemnity. Failure by the
Trustee to so notify Anvil shall not relieve Anvil of its obligations hereunder.
Anvil shall defend the claim and the Trustee shall cooperate in the defense. The
Trustee may have separate counsel and Anvil shall pay the reasonable fees and
expenses of such counsel. Anvil need not pay for any settlement made without its
consent, which consent shall not be unreasonably withheld.
The obligations of Anvil under this Section 7.7 shall survive the
satisfaction and discharge of this Indenture.
To secure Anvil's payment obligations in this Section, the Trustee
shall have a Lien prior to the Senior Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal and
interest on particular Senior Notes. Such Lien shall survive the satisfaction
and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event
of Default specified in Sections 6.1(9) or 6.1(10) hereof occurs, the expenses
and the compensation for the services (including the fees and expenses of its
agents and counsel) are intended to constitute expenses of administration under
any Bankruptcy Law.
The Trustee shall comply with the provisions of TIA ss. 313(b)(2) to
the extent applicable.
SECTION 7.8 REPLACEMENT OF TRUSTEE
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section.
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The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying Anvil. The Holders of Senior Notes of a
majority in principal amount of the then outstanding Senior Notes may remove the
Trustee by so notifying the Trustee and Anvil in writing. Anvil may remove the
Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order
for relief is entered with respect to the Trustee under any Bankruptcy
Law;
(c) a Custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, Anvil shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Senior Notes may
appoint a successor Trustee to replace the successor Trustee appointed by Anvil.
If a successor Trustee does not take office within 60 days after the
retiring Trustee notifies Anvil of its resignation is removed, the retiring
Trustee, Anvil, or the Holders of Senior Notes of at least 10% in principal
amount of the then outstanding Senior Notes may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
If the Trustee, after written request by any Holder of a Senior Note
who has been a Holder of a Senior Note for at least six months, fails to comply
with Section 7.10, such Holder of a Senior Note may petition any court of
competent jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to Anvil. Thereupon, the resignation or
removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. The successor Trustee shall mail a notice of its succession to
Holders of the Senior Notes. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, provided all sums owing
to the Trustee hereunder have been paid and subject to the Lien provided for in
Section 7.7 hereof. Notwithstanding replacement of the Trustee pursuant to this
Section 7.8, Anvil's obligations under Section 7.7 hereof shall continue for the
benefit of the retiring Trustee.
SECTION 7.9 SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or transfers
all or substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall be the
successor Trustee.
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SECTION 7.10 ELIGIBILITY; DISQUALIFICATION
There shall at all times be a Trustee hereunder that is a
corporation organized and doing business under the laws of the United States of
America or of any state thereof that is authorized under such laws to exercise
corporate trustee power, that is subject to supervision or examination by
federal or state authorities and that has a combined capital and surplus of at
least $50.0 million as set forth in its most recent published annual report of
condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss. 310(a)(1), (2) and (5). The Trustee is subject to TIA
ss. 310(b).
SECTION 7.11 PREFERENTIAL COLLECTION OF CLAIMS AGAINST ANVIL
The Trustee is subject to TIA ss.311(a), excluding any creditor
relationship listed in TIA ss.311(b). A Trustee who has resigned or been removed
shall be subject to TIA ss.311(a) to the extent indicated therein.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.1 OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE
Anvil may, at the option of its Board of Directors evidenced by a
resolution set forth in an Officers' Certificate, at any time, elect to have
either Section 8.2 or 8.3 hereof be applied to all outstanding Senior Notes upon
compliance with the conditions set forth below in this Article Eight.
SECTION 8.2 LEGAL DEFEASANCE AND DISCHARGE
Upon Anvil's exercise under Section 8.1 hereof of the option
applicable to this Section 8.2, Anvil shall, subject to the satisfaction of the
conditions set forth in Section 8.4 hereof, be deemed to have been discharged
from its obligations with respect to all outstanding Senior Notes on the date
the conditions set forth below are satisfied (hereinafter, "Legal Defeasance").
For this purpose, Legal Defeasance means that Anvil shall be deemed to have paid
and discharged the entire Indebtedness represented by the outstanding Senior
Notes, which shall thereafter be deemed to be "outstanding" only for the
purposes of Section 8.5 hereof and the other Sections of this Indenture referred
to in (a) and (b) below, and to have satisfied all its other obligations under
such Senior Notes and this Indenture (and the Trustee, on demand of and at the
expense of Anvil, shall execute proper instruments acknowledging the same),
except for the following provisions which shall survive until otherwise
terminated or discharged hereunder: (a) the rights of Holders of outstanding
Senior Notes to receive solely from the trust fund described in Section 8.4
hereof, and as more fully set forth in such
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Section, payments in respect of the principal of, premium, if any, and interest
and Liquidated Damages on such Senior Notes when such payments are due, (b)
Anvil's obligations with respect to such Senior Notes under Article 2 and
Section 4.2 hereof, (c) the rights, powers, trusts, duties and immunities of the
Trustee hereunder and Anvil's obligations in connection therewith and (d) this
Article Eight. Subject to compliance with this Article Eight, Anvil may exercise
its option under this Section 8.2 notwithstanding the prior exercise of its
option under Section 8.3 hereof.
SECTION 8.3 COVENANT DEFEASANCE
Upon Anvil's exercise under Section 8.1 hereof of the option
applicable to this Section 8.3, Anvil shall, subject to the satisfaction of the
conditions set forth in Section 8.4 hereof, be released from its obligations
under the covenants contained in Sections 4.7, 4.8, 4.9, 4.10, 4.11, 4.12, 4.13,
4.14 and 4.15 hereof with respect to the outstanding Senior Notes on and after
the date the conditions set forth below are satisfied (hereinafter, "Covenant
Defeasance"), and the Senior Notes shall thereafter be deemed not "outstanding"
for the purposes of any direction, waiver, consent or declaration or act of
Holders (and the consequences of any thereof) in connection with such covenants,
but shall continue to be deemed "outstanding" for all other purposes hereunder
(it being understood that such Senior Notes shall not be deemed outstanding for
accounting purposes). For this purpose, Covenant Defeasance means that, with
respect to the outstanding Senior Notes, Anvil may omit to comply with and shall
have no liability in respect of any term, condition or limitation set forth in
any such covenant, whether directly or indirectly, by reason of any reference
elsewhere herein to any such covenant or by reason of any reference in any such
covenant to any other provision herein or in any other document and such
omission to comply shall not constitute a Default or an Event of Default under
Section 6.1 hereof, but, except as specified above, the remainder of this
Indenture and such Senior Notes shall be unaffected thereby. In addition, upon
Anvil's exercise under Section 8.1 hereof of the option applicable to this
Section 8.3 hereof, subject to the satisfaction of the conditions set forth in
Section 8.4 hereof, Sections 6.1(5) through 6.1(8) hereof shall not constitute
Events of Default.
SECTION 8.4 CONDITIONS TO LEGAL OR COVENANT DEFEASANCE
The following shall be the conditions to the application of either
Section 8.2 or 8.3 hereof to the outstanding Senior Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) Anvil must irrevocably deposit with the Trustee, in trust, for
the benefit of the Holders, cash in United States dollars, non-callable
Government Securities, or a combination thereof, in such amounts as will
be sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of, premium, if any,
and interest and Liquidated Damages on the outstanding Senior Notes on the
stated maturity date for payment thereof or on the applicable redemption
date, as the case may be, and Anvil must specify whether the Senior Notes
are being defeased to maturity or to a particular redemption date;
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(b) in the case of an election under Section 8.2 hereof, Anvil shall
have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that (A) Anvil 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 tax law, in either case to the
effect that, and based thereon such Opinion of Counsel shall confirm that,
the Holders of the outstanding Senior Notes will not recognize income,
gain or loss for federal income tax purposes as a result of such Legal
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 Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.3 hereof, Anvil shall
have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that the Holders of the
outstanding Senior 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;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of
Default resulting from the incurrence of Indebtedness all or a portion of
the proceeds of which will be used to defease the Senior Notes pursuant to
this Article Eight concurrently with such incurrence) or insofar as
Sections 6.1(9) or 6.1(10) hereof is concerned, at any time in the period
ending on the 91st day after the date of deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not result in
a breach or violation of, or constitute a default under, any material
agreement or instrument (other than this Indenture) to which Anvil or any
of its Subsidiaries is a party or by which Anvil or any of its
Subsidiaries is bound, including, without limitation, the New Credit
Agreement;
(f) Anvil shall have delivered to the Trustee an Opinion of Counsel
to the effect that on the 91st day following the deposit, the trust funds
will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally;
(g) Anvil shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by Anvil with the intent
of preferring the Holders over any other creditors of Anvil or with the
intent of defeating, hindering, delaying or defrauding any other creditors
of Anvil; and
(h) Anvil shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.
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SECTION 8.5 DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS
Subject to Section 8.6 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.5, the
"Trustee") pursuant to Section 8.4 hereof in respect of the outstanding Senior
Notes shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Senior Notes and this Indenture, to the payment, either
directly or through any Paying Agent (including Anvil acting as Paying Agent) as
the Trustee may determine, to the Holders of such Senior Notes of all sums due
and to become due thereon in respect of principal, premium, if any, and
interest, but such money need not be segregated from other funds except to the
extent required by law.
Anvil shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the cash or non-callable Government
Securities deposited pursuant to Section 8.4 hereof or the principal and
interest received in respect thereof.
Anything in this Article Eight to the contrary notwithstanding, the
Trustee shall deliver or pay to Anvil from time to time upon the request of
Anvil any money or non-callable Government Securities held by it as provided in
Section 8.4 hereof which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee (which may be the opinion delivered under Section
8.4(a) hereof), are in excess of the amount thereof that would then be required
to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.
SECTION 8.6 REPAYMENT TO ANVIL
Any money deposited with the Trustee or any Paying Agent, or then
held by Anvil, in trust for the payment of the principal of, premium, if any,
Liquidated Damages or interest on any Senior Note and remaining unclaimed for
two years after such principal, and premium, if any, Liquidated Damages, if any,
or interest has become due and payable shall be paid to Anvil on its request or
(if then held by Anvil) shall be discharged from such trust; and the Holder of
such Senior Note shall thereafter, as a creditor, look only to Anvil for payment
thereof, and all liability of the Trustee or such Paying Agent with respect to
such trust money, and all liability of Anvil as trustee thereof, shall thereupon
cease; provided, however, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of Anvil cause to be
published once, in the New York Times and The Wall Street Journal (national
edition), 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
notification or publication, any unclaimed balance of such money then remaining
will be repaid to Anvil.
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SECTION 8.7 REINSTATEMENT
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.2 or
8.3 hereof, as the case may be, by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then Anvil's obligations under this Indenture and the Senior Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.2 or 8.3 hereof until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 8.2 or 8.3 hereof,
as the case may be; provided, however, that, if Anvil makes any payment of
principal of, premium, if any, or interest on any Senior Note following the
reinstatement of its obligations, Anvil shall be subrogated to the rights of the
Holders of such Senior Notes to receive such payment from the money held by the
Trustee or Paying Agent.
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.1 WITHOUT CONSENT OF HOLDERS OF SENIOR NOTES
Notwithstanding Section 9.2 of this Indenture, Anvil and the Trustee
may amend or supplement this Indenture or the Senior Notes without the consent
of any Holder of a Senior Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Senior Notes in addition to or in
place of certificated Senior Notes;
(c) to provide for the assumption of Anvil's obligations to the
Holders of the Senior Notes in the case of a merger or consolidation
pursuant to Article Five hereof;
(d) to provide for additional Subsidiary Guarantors as set forth in
Section 4.15;
(e) to make any change that would provide any additional rights or
benefits to the Holders of the Senior Notes or that does not adversely
affect the legal rights hereunder of any Holder of the Senior Notes; or
(e) to comply with requirements of the Commission in order to effect
or maintain the qualification of this Indenture under the Trust Indenture
Act.
Upon the request of Anvil accompanied by a resolution of its Board
of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of the documents described in Section
7.2 hereof, the Trustee shall join with Anvil in the execution of any amended or
supplemental Indenture authorized or permitted by the terms of this Indenture
and to make any further appropriate agreements and stipulations that
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may be therein contained, but the Trustee shall not be obligated to enter into
such amended or supplemental Indenture that affects its own rights, duties or
immunities under this Indenture or otherwise.
SECTION 9.2 WITH CONSENT OF HOLDERS OF SENIOR NOTES
Except as provided below in this Section 9.2, Anvil and the Trustee
may amend or supplement this Indenture (including Sections 4.7 and 4.8 hereof)
and the Senior Notes may be amended or supplemented with the consent of the
Holders of at least a majority in principal amount of the Senior Notes then
outstanding (including consents obtained in connection with a tender offer or
exchange offer for the Senior Notes), and, subject to Sections 6.4 and 6.7
hereof, any existing Default or Event of Default (other than a Default or Event
of Default in the payment of the principal of, premium, if any, or interest on
the Senior Notes, except a payment default resulting from an acceleration that
has been rescinded) or compliance with any provision of this Indenture or the
Senior Notes may be waived with the consent of the Holders of a majority in
principal amount of the then outstanding Senior Notes (including consents
obtained in connection with a tender offer or exchange offer for the Senior
Notes).
Upon the request of Anvil accompanied by a resolution of its Board
of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Senior Notes as aforesaid, and upon
receipt by the Trustee of the documents described in Section 7.2 hereof, the
Trustee shall join with Anvil in the execution of such amended or supplemental
Indenture unless such amended or supplemental Indenture affects the Trustee's
own rights, duties or immunities under this Indenture or otherwise, in which
case the Trustee may in its discretion, but shall not be obligated to, enter
into such amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders of Senior
Notes under this Section 9.2 to approve the particular form of any proposed
amendment or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section becomes
effective, Anvil shall mail to the Holders of Senior Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
Anvil to mail such notice, or any defect therein, shall not, however, in any way
impair or affect the validity of any such amended or supplemental Indenture or
waiver. Subject to Sections 6.4 and 6.7 hereof, the Holders of a majority in
aggregate principal amount of the Senior Notes then outstanding may waive
compliance in a particular instance by Anvil with any provision of this
Indenture or the Senior Notes. However, without the consent of each Holder
affected, an amendment or waiver may not (with respect to any Senior Notes held
by a non-consenting Holder):
(a) reduce the principal amount of Senior Notes whose Holders must
consent to an amendment, supplement or waiver;
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(b) reduce the principal of or change the fixed maturity of any
Senior Note or alter or waive any of the provisions with respect to the
redemption of the Senior Notes, except as provided above with respect to
Sections 4.7 and 4.8 hereof;
(c) reduce the rate of or change the time for payment of interest,
including default interest, on any Senior Note;
(d) waive a Default or Event of Default in the payment of principal
of or premium, if any, or interest on the Senior Notes (except a
rescission of acceleration of the Senior Notes by the Holders of at least
a majority in aggregate principal amount of the then outstanding Senior
Notes and a waiver of the payment default that resulted from such
acceleration);
(e) make any Senior Note payable in money other than that stated in
the Senior Notes;
(f) make any change in the provisions of this Indenture relating to
waivers of past Defaults or the rights of Holders of Senior Notes to
receive payments of principal of, premium or Liquidated Damages, if any,
or interest on the Senior Notes;
(g) waive a redemption payment with respect to any Senior Note; or
(h) make any change in Section 6.4 or 6.7 hereof or in the foregoing
amendment and waiver provisions.
SECTION 9.3 COMPLIANCE WITH TRUST INDENTURE ACT
Every amendment or supplement to this Indenture or the Senior Notes
shall be set forth in an amended or supplemental Indenture that complies with
the Trust Indenture Act as then in effect.
SECTION 9.4 REVOCATION AND EFFECT OF CONSENTS
Until an amendment, supplement or waiver becomes effective, a
consent to it by a Holder of a Senior Note is a continuing consent by the Holder
of a Senior Note and every subsequent Holder of a Senior Note or portion of a
Senior Note that evidences the same debt as the consenting Holder's Senior Note,
even if notation of the consent is not made on any Senior Note. However, any
such Holder of a Senior Note or subsequent Holder of a Senior Note may revoke
the consent as to its Senior Note if the Trustee receives written notice of
revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
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SECTION 9.5 NOTATION ON OR EXCHANGE OF SENIOR NOTES
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Senior Note thereafter authenticated. Anvil in
exchange for all Senior Notes may issue and the Trustee shall authenticate new
Senior Notes that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Senior Note
shall not affect the validity and effect of such amendment, supplement or
waiver.
SECTION 9.6 TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental Indenture
authorized pursuant to this Article Nine if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
Anvil may not sign an amendment or supplemental Indenture until the Board of
Directors approves it. In executing any amended or supplemental indenture, the
Trustee shall be entitled to receive indemnity reasonably satisfactory to it and
to receive and (subject to Section 7.1) shall be fully protected in relying
upon, an Officer's Certificate and an Opinion of Counsel stating that the
execution of such amended or supplemental indenture is authorized or permitted
by this Indenture.
ARTICLE 10
HOLDINGS GUARANTEE
SECTION 10.1 HOLDINGS GUARANTEE
Subject to the provisions of this Article 10, Holdings hereby
unconditionally guarantees on a senior unsecured basis to each Holder of a
Senior Note authenticated and delivered by the Trustee and to the Trustee and
its successors and assigns, that: (a) the principal of, and premium, if any, and
interest and Liquidated Damages on the Senior Notes shall be duly and punctually
paid in full when due, whether at maturity, by acceleration or otherwise, and
interest on overdue principal, and premium, if any, and (to the extent permitted
by law) interest on any interest, if any, on the Senior Notes and all other
obligations of Anvil to the Holders or the Trustee hereunder or under the Senior
Notes (including fees, expenses or other) shall be promptly paid in full or
performed, all in accordance with the terms hereof; and (b) in case of any
extension of time of payment or renewal of any Senior Notes or any of such other
obligations, the same shall be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal, whether at stated
maturity, by acceleration or otherwise. Failing payment when due of any amount
so guaranteed or failing performance of any other obligation of Anvil to the
Holders, for whatever reason, Holdings shall be obligated to pay, or to perform
or to cause the performance of, the same immediately. An Event of Default under
this Indenture or the Senior Notes shall constitute an event of default under
this Guarantee, and shall entitle the Trustee or the Holders of Senior Notes to
accelerate the obligations of Holdings hereunder in the same manner and to the
same extent as the obligations of Anvil. Holdings hereby agrees that its
obligations hereunder shall be
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unconditional, irrespective of the validity, regularity or enforceability of the
Senior Notes or this Indenture, the absence of any action to enforce the same,
any waiver or consent by any Holder of the Senior Notes with respect to any
thereof, the entry of any judgment against Anvil, any action to enforce the same
or any other circumstance which might otherwise constitute a legal or equitable
discharge or defense of Holdings. Holdings hereby waives and relinquishes: (a)
any right to require the Trustee, the Holders or Anvil (each, a "Benefitted
Party") to proceed against Anvil, the Subsidiaries or any other Person or to
proceed against or exhaust any security held by a Benefitted Party at any time
or to pursue any other remedy in any secured party's power before proceeding
against Holdings; (b) any defense that may arise by reason of the incapacity,
lack of authority, death or disability of any other Person or Persons or the
failure of a Benefitted Party to file or enforce a claim against the estate (in
administration, bankruptcy or any other proceeding) of any other Person or
Persons; (c) demand, protest and notice of any kind (except as expressly
required by this Indenture), including but not limited to notice of the
existence, creation or incurring of any new or additional Indebtedness or
obligation or of any action or non-action on the part of Holdings, Anvil, the
Subsidiaries, any Benefitted Party, any creditor of Holdings, Anvil or the
Subsidiaries or on the part of any other Person whomsoever in connection with
any obligations the performance of which are hereby guaranteed; (d) any defense
based upon an election of remedies by a Benefitted Party, including but not
limited to an election to proceed against Holdings for reimbursement; (e) any
defense based upon any statute or rule of law which provides that the obligation
of a surety must be neither larger in amount nor in other respects more
burdensome than that of the principal; (f) any defense arising because of a
Benefitted Party's election, in any proceeding instituted under the Bankruptcy
Law, of the application of Section 1111(b)(2) of the Bankruptcy Code; and (g)
any defense based on any borrowing or grant of a security interest under Section
364 of the Bankruptcy Code. Holdings hereby covenants that the Guarantee shall
not be discharged except by payment in full of all principal, premium, if any,
and interest on the Senior Notes and all other costs provided for under this
Indenture, or as provided in Section 8.1.
If any Holder or the Trustee is required by any court or otherwise
to return to either Anvil or Holdings or any Subsidiary Guarantor, or any
trustee or similar official acting in relation to any of Anvil or Holdings or
any Subsidiary Guarantor, any amount paid by Anvil or Holdings or any Subsidiary
Guarantor to the Trustee or such Holder, the Guarantee, to the extent
theretofore discharged, shall be reinstated in full force and effect. Holdings
agrees that it shall not be entitled to any right of subrogation in relation to
the Holders in respect of any obligations guaranteed hereby until payment in
full of all obligations guaranteed hereby. Holdings agrees that, as between it,
on the one hand, and the Holders of Senior Notes and the Trustee, on the other
hand, (x) the maturity of the obligations guaranteed hereby may be accelerated
as provided in Article 6 hereof for the purposes hereof, 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 6 hereof, such obligations (whether or
not due and payable) shall forthwith become due and payable by Holdings for the
purpose of the Guarantee.
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SECTION 10.2 EXECUTION AND DELIVERY OF HOLDINGS GUARANTEE
To evidence the Guarantee set forth in Section 10.1 hereof, Holdings
agrees that a notation of the Guarantee in substantially the form included as
Exhibit C hereto shall be endorsed on each Senior Note authenticated and
delivered by the Trustee and that this Indenture shall be executed on behalf of
Holdings by the Chairman of the Board, any Vice Chairman, the President or one
of the Vice Presidents of Holdings, under a facsimile of its seal reproduced on
this Indenture and attested to by an Officer other than the Officer executing
this Indenture.
Holdings agrees that the Guarantee set forth in this Article 10 will
remain in full force and effect and apply to all the Senior Notes
notwithstanding any failure to endorse on each Senior Note a notation of the
Guarantee.
If an Officer whose facsimile signature is on a Senior Note no
longer holds that office at the time the Trustee authenticates the Senior Note
on which the Guarantee is endorsed, the Guarantee shall be valid nevertheless.
The delivery of any Senior Note by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the Guarantee
set forth in this Indenture on behalf of Holdings.
SECTION 10.3 LIMITATION ON GUARANTOR'S ACTIVITY
Holdings will engage in no businesses other than holding the capital
stock of Anvil and other Persons engaged in the same, similar, ancillary,
complementary or related business to the business in which Anvil is engaged and
other activities incidental thereto, including financing activities for the
benefit of Anvil and such Persons.
ARTICLE 11
SUBSIDIARY GUARANTEES
SECTION 11.1 SUBSIDIARY GUARANTEES
Subject to the provisions of this Article 11, each Subsidiary
Guarantor, jointly and severally, hereby unconditionally guarantees to each
Holder of a Senior Note authenticated and delivered by the Trustee and to the
Trustee and its successors and assigns, that: (a) the principal of, and premium,
if any, and interest and Liquidated Damages on the Senior Notes shall be duly
and punctually paid in full when due, whether at maturity, by acceleration or
otherwise, and interest on overdue principal, and premium, if any, and (to the
extent permitted by law) interest on any interest, if any, on the Senior Notes
and all other obligations of Anvil to the Holders or the Trustee hereunder or
under the Senior Notes (including fees, expenses or other) shall be promptly
paid in full or performed, all in accordance with the terms hereof; and (b) in
case of any extension of time of payment or renewal of any Senior Notes or any
of
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such other obligations, the same shall be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, whether at
stated maturity, by acceleration or otherwise. Failing payment when due of any
amount so guaranteed or failing performance of any other obligation of Anvil to
the Holders, for whatever reason, each Subsidiary Guarantor shall be obligated
to pay, or to perform or to cause the performance of, the same immediately. An
Event of Default under this Indenture or the Senior Notes shall constitute an
event of default under this Subsidiary Guarantee, and shall entitle the Trustee
or the Holders of Senior Notes to accelerate the obligations of each Subsidiary
Guarantor hereunder in the same manner and to the same extent as the obligations
of Anvil. Each Subsidiary Guarantor hereby agrees that its obligations hereunder
shall be unconditional, irrespective of the validity, regularity or
enforceability of the Senior Notes or this Indenture, the absence of any action
to enforce the same, any waiver or consent by any Holder of the Senior Notes
with respect to any thereof, the entry of any judgment against Anvil, 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 Subsidiary
Guarantor hereby waives and relinquishes: (a) any right to require the Trustee,
the Holders or Anvil (each, a "Benefitted Party") to proceed against Anvil, the
Subsidiaries or any other Person or to proceed against or exhaust any security
held by a Benefitted Party at any time or to pursue any other remedy in any
secured party's power before proceeding against the Subsidiary Guarantors; (b)
any defense that may arise by reason of the incapacity, lack of authority, death
or disability of any other Person or Persons or the failure of a Benefitted
Party to file or enforce a claim against the estate (in administration,
bankruptcy or any other proceeding) of any other Person or Persons; (c) demand,
protest and notice of any kind (except as expressly required by this Indenture),
including but not limited to notice of the existence, creation or incurring of
any new or additional Indebtedness or obligation or of any action or non-action
on the part of the Subsidiary Guarantors, Anvil, the Subsidiaries, any
Benefitted Party, any creditor of the Subsidiary Guarantors, Anvil or the
Subsidiaries or on the part of any other Person whomsoever in connection with
any obligations the performance of which are hereby guaranteed; (d) any defense
based upon an election of remedies by a Benefitted Party, including but not
limited to an election to proceed against the Subsidiary Guarantors for
reimbursement; (e) any defense based upon any statute or rule of law which
provides that the obligation of a surety must be neither larger in amount nor in
other respects more burdensome than that of the principal; (f) any defense
arising because of a Benefitted Party's election, in any proceeding instituted
under the Bankruptcy Law, of the application of Section 1111(b)(2) of the
Bankruptcy Code; and (g) any defense based on any borrowing or grant of a
security interest under Section 364 of the Bankruptcy Code. The Subsidiary
Guarantors hereby covenant that the Subsidiary Guarantees shall not be
discharged except by payment in full of all principal, premium, if any, and
interest on the Senior Notes and all other costs provided for under this
Indenture, or as provided in Section 8.1.
If any Holder or the Trustee is required by any court or otherwise
to return to either Anvil, Holdings or the Subsidiary Guarantors, or any trustee
or similar official acting in relation to either Anvil, Holdings or the
Subsidiary Guarantors, any amount paid by Anvil, Holdings or the Subsidiary
Guarantors to the Trustee or such Holder, the Subsidiary Guarantees, to the
extent theretofore discharged, shall be reinstated in full force and effect.
Each of the Subsidiary Guarantors agrees that it shall not be entitled to any
right of
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subrogation in relation to the Holders in respect of any obligations guaranteed
hereby until payment in full of all obligations guaranteed hereby. Each
Subsidiary Guarantor agrees that, as between it, on the one hand, and the
Holders of Senior Notes and the Trustee, on the other hand, (x) the maturity of
the obligations guaranteed hereby may be accelerated as provided in Article 6
hereof for the purposes hereof, 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 6 hereof, such obligations (whether or not due and
payable) shall forthwith become due and payable by such Subsidiary Guarantor for
the purpose of the Subsidiary Guarantee.
SECTION 11.2 EXECUTION AND DELIVERY OF SUBSIDIARY GUARANTEES
To evidence the Subsidiary Guarantees set forth in Section 11.1
hereof, each of the Subsidiary Guarantors agrees that a notation of the
Subsidiary Guarantees substantially in the form included as Exhibit D hereto
shall be endorsed on each Senior Note authenticated and delivered by the Trustee
and that this Indenture shall be executed on behalf of the Subsidiary Guarantors
by the Chairman of the Board, any Vice Chairman, the President or one of the
Vice Presidents of the Subsidiary Guarantors, under a facsimile of its seal
reproduced on this Indenture and attested to by an Officer other than the
Officer executing this Indenture.
Each of the Subsidiary Guarantors agree that the Subsidiary
Guarantees set forth in this Article 11 will remain in full force and effect and
apply to all the Senior Notes notwithstanding any failure to endorse on each
Senior Note a notation of the Subsidiary Guarantees.
If an Officer whose facsimile signature is on a Senior Note no
longer holds that office at the time the Trustee authenticates the Senior Note
on which the Subsidiary Guarantees are endorsed, the Subsidiary Guarantees shall
be valid nevertheless.
The delivery of any Senior Note by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the
Subsidiary Guarantees set forth in this Indenture on behalf of the Subsidiary
Guarantors.
SECTION 11.3 SUBSIDIARY GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS
(a) Nothing contained in this Indenture or in the Senior Notes shall
prevent any consolidation or merger of a Subsidiary Guarantor with or into Anvil
or another Subsidiary Guarantor, or shall prevent the transfer of all or
substantially all of the assets of a Subsidiary Guarantor to Anvil or another
Subsidiary Guarantor. Upon any such consolidation, merger, transfer or sale, the
Subsidiary Guarantee of such Subsidiary Guarantor shall no longer have any force
or effect.
(b) Each Subsidiary Guarantor shall not, in a single transaction or
series of related transactions, consolidate or merge with or into (whether or
not such Subsidiary
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Guarantor is the surviving corporation), or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions, to another corporation, Person or
entity other than Anvil or another Subsidiary Guarantor unless (i) subject to
the provisions of Section 11.4 hereof, the entity or Person formed by or
surviving any such consolidation or merger (if other than such Subsidiary
Guarantor) or the entity or Person to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made assumes all the
obligations of such Subsidiary Guarantor under its Subsidiary Guarantee and this
Indenture pursuant to a supplemental indenture in form and substance reasonably
satisfactory to the Trustee; (ii) immediately after such transaction no Default
or Event of Default exists; (iii) such Subsidiary Guarantor or the entity or
Person formed by or surviving any such consolidation or merger (if other than
Subsidiary Guarantor), or to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made (A) shall have Consolidated
Net Worth immediately after the transaction equal to or greater than the
Consolidated Net Worth of such Subsidiary Guarantor immediately preceding the
transaction and (B) shall, at the time of such transaction and after giving pro
forma effect thereto as if such transaction had occurred at the beginning of the
applicable four-quarter period, be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set
forth in the first paragraph of Section 4.10; and (iv) such Subsidiary Guarantor
shall have delivered to the Trustee an Officers' Certificate and an Opinion of
Counsel addressed to the Trustee, each stating that such consolidation, merger,
sale, assignment, transfer, lease, conveyance or disposition and such
supplemental indenture, if any, comply with this Indenture and that such
supplemental indenture is enforceable. In case of any such consolidation, merger
or transfer of assets and upon the assumption by the successor corporation, by
supplemental indenture, executed and delivered to the Trustee and satisfactory
in form to the Trustee, of the Subsidiary Guarantees endorsed upon the Senior
Notes and the due and punctual performance of all of the covenants and
conditions of this Indenture to be performed by such Guarantor, such successor
corporation shall succeed to and be substituted for such Subsidiary Guarantor
with the same effect as if it had been named herein as a Subsidiary Guarantor.
Such successor corporation thereupon may cause to be signed any or all of the
Subsidiary Guarantees to be endorsed upon all of the Senior Notes issuable
hereunder which theretofore shall not have been signed by Anvil and delivered to
the Trustee. All the Subsidiary Guarantees so issued shall in all respects have
the same legal rank and benefit under this Indenture as the Subsidiary
Guarantees theretofore and thereafter issued in accordance with the terms of
this Indenture as though all of such Subsidiary Guarantees had been issued at
the date of the execution hereof.
(c) The Trustee, subject to the provisions of Section 11.4 hereof,
shall be entitled to receive an Officers' Certificate and an Opinion of Counsel
as conclusive evidence that any such consolidation, merger, sale or conveyance,
and any such assumption of Obligations, comply with the provisions of this
Section 11.3. Such Officers' Certificate and Opinion of Counsel shall comply
with the provisions of Section 12.5 hereof.
SECTION 11.4 RELEASES FOLLOWING SALE OF ASSETS
In the event of a sale or other disposition of all or substantially
all of the assets of any Subsidiary Guarantor, by way of merger, consolidation
or otherwise, or a sale or other
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disposition of all (or substantially all) of the Capital Stock of any Subsidiary
Guarantor, which sale or other disposition otherwise complies with the terms of
this Indenture, then such Subsidiary Guarantor (in the event of a sale or other
disposition, by way of such a merger, consolidation or otherwise, of all or
substantially all of the Capital Stock of such Subsidiary Guarantor) or the
corporation acquiring the property (in the event of a sale or other disposition
of all or substantially all of the assets of such Subsidiary Guarantor) shall be
released from and relieved of any obligations under its Subsidiary Guarantee;
provided that the Net Proceeds from such sale or other disposition are treated
in accordance with the provisions of Section 4.8 hereof. Upon delivery by Anvil
to the Trustee of an Officer's Certificate and Opinion of Counsel, to the effect
that such sale or other disposition was made by Anvil in accordance with the
provisions of this Indenture, including without limitation Section 4.8 hereof,
the Trustee shall execute any documents reasonably required in order to evidence
the release of any such Subsidiary Guarantor from its obligations under its
Subsidiary Guarantee. Any Subsidiary Guarantor not released from its obligations
under its Subsidiary Guarantee shall remain liable for the full amount of
principal of and interest on the Senior Notes and for the other obligations of
any Subsidiary Guarantor under this Indenture as provided in this Article 11.
SECTION 11.5 LIMITATION OF SUBSIDIARY GUARANTOR'S LIABILITY
Each Subsidiary Guarantor, and by its acceptance hereof each Holder,
hereby confirms that it is the intention of all such parties that the guarantee
by such Subsidiary Guarantor pursuant to its Subsidiary Guarantee not constitute
a fraudulent transfer or conveyance for purposes of the Bankruptcy Law, the
Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any
similar federal or state law. To effectuate the foregoing intention, the Holders
and such Subsidiary Guarantor hereby irrevocably agree that the obligations of
such Subsidiary Guarantor under this Article 11 shall be limited to the maximum
amount as will, after giving effect to all other contingent and fixed
liabilities of such Subsidiary Guarantor and after giving effect to any
collections from or payments made by or on behalf of any other Subsidiary
Guarantor in respect of the obligations of such other Subsidiary Guarantor under
this Article 11, result in the obligations of such Subsidiary Guarantor under
the Subsidiary Guarantee of such Subsidiary Guarantor not constituting a
fraudulent transfer or conveyance.
SECTION 11.6 APPLICATION OF CERTAIN TERMS AND PROVISIONS TO THE SUBSIDIARY
GUARANTORS
(a) For purposes of any provision of this Indenture which provides
for the delivery by any Subsidiary Guarantor of an Officers' Certificate and/or
an Opinion of Counsel, the definitions of such terms in Section 1.1 shall apply
to such Subsidiary Guarantor as if references therein to Anvil were references
to such Subsidiary Guarantor.
(b) Any request, direction, order or demand which by any provision
of this Indenture is to be made by any Guarantor, shall be sufficient if
evidenced as described in Section 12.2 as if references therein to Anvil were
references to such Subsidiary Guarantor.
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74
(c) Any notice or demand which by any provision of this Indenture is
required or permitted to be given or served by the Trustee or by the holders of
Senior Notes to or on any Subsidiary Guarantor may be given or served as
described in Section 12.2 as if references therein to Anvil were references to
such Subsidiary Guarantor.
(d) Upon any demand, request or application by any Subsidiary
Guarantor to the Trustee to take any action under this Indenture, such
Subsidiary Guarantor shall furnish to the Trustee such certificates and opinions
as are required in Section 12.4 hereof as if all references therein to Anvil
were references to such Subsidiary Guarantor.
ARTICLE 12
MISCELLANEOUS
SECTION 12.1 TRUST INDENTURE ACT CONTROLS
If any provision of this Indenture limits, qualifies or conflicts
with the duties imposed by TIA ss. 318(c), the imposed duties shall control.
SECTION 12.2 NOTICES
Any notice or communication by Anvil or the Trustee to the others is
duly given if in writing and delivered in Person or mailed by first class mail
(registered or certified, return receipt requested), telecopier or overnight air
courier guaranteeing next day delivery, to the others' address:
If to Anvil, Holdings or the Subsidiary Guarantors:
Anvil Knitwear, Inc.
228 East 45th Street
New York, New York 10017
Attention: Jacob Hollander
Telephone No.: (212) 476-0352
Telecopier No.: (212) 885-9411
If to the Trustee:
United States Trust Company of New York
114 West 47th Street, 25th Floor
New York, New York 10036
Attention: Corporate Trust Administration
Telephone No.: (212) 852-1676
Telecopier No.: (212) 852-1626
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75
Anvil or the Trustee, by notice to the others may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; when receipt acknowledged, if telecopied; and the next
Business Day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first
class mail, certified or registered, return receipt requested, or by overnight
air courier guaranteeing next day delivery to its address shown on the register
kept by the Registrar. Any notice or communication shall also be so mailed to
any Person described in TIA ss. 313(c), to the extent required by the Trust
Indenture Act. Failure to mail a notice or communication to a Holder or any
defect in it shall not affect its sufficiency with respect to other Holders.
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.
If Anvil mails a notice or communication to Holders, it shall mail a
copy to the Trustee and each Agent at the same time.
SECTION 12.3 COMMUNICATION BY HOLDERS OF SENIOR NOTES WITH OTHER HOLDERS OF
SENIOR NOTES
Holders may communicate pursuant to TIA ss. 312(b) with other
Holders with respect to their rights under this Indenture or the Senior Notes.
Anvil, the Trustee, the Registrar and anyone else shall have the protection of
TIA ss. 312(c).
SECTION 12.4 CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT
Upon any request or application by Anvil to the Trustee to take any
action under this Indenture, Anvil, upon request, shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth
in Section 12.5 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth
in Section 12.5 hereof) stating that, in the opinion of such counsel, all
such conditions precedent and covenants have been satisfied.
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76
SECTION 12.5 STATEMENTS REQUIRED IN CERTIFICATE OR OPINION
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA ss. 314(a)(4)) shall comply with the provisions of TIA
ss. 314(e) and shall include:
(a) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(b) 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;
(c) a statement that, in the opinion of such Person, he or she 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 satisfied; and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been satisfied.
SECTION 12.6 RULES BY TRUSTEE AND AGENTS
The Trustee may make reasonable rules for action by or at a meeting
of Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
SECTION 12.7 NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS,
EMPLOYEES AND STOCKHOLDERS
No past, present or future director, officer, employee, incorporator
or stockholder of Anvil, as such, shall have any liability for any obligations
of Anvil under the Senior Notes, this Indenture or for any claim based on, in
respect of, or by reason of, such obligations or their creation. Each Holder by
accepting a Senior Note waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the Senior Notes.
SECTION 12.8 GOVERNING LAW
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED
TO CONSTRUE THIS INDENTURE, THE SENIOR NOTES, THE GUARANTEE AND THE SUBSIDIARY
GUARANTEES, WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF.
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77
SECTION 12.9 NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS
This Indenture may not be used to interpret any other indenture,
loan or debt agreement of Anvil or its Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.
SECTION 12.10 SUCCESSORS
All agreements of Anvil in this Indenture and the Senior Notes shall
bind its successors. All agreements of the Trustee in this Indenture shall bind
its successors.
SECTION 12.11 SEVERABILITY
In case any provision in this Indenture or in the Senior Notes 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 12.12 COUNTERPART ORIGINALS
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
SECTION 12.13 TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
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78
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, and their respective corporate seals to be hereunto affixed,
as of the date first written above.
ANVIL KNITWEAR, INC.
By:
--------------------------------------
Name:
Title:
ANVIL HOLDINGS, INC.
By:
--------------------------------------
Name:
Title:
COTTONTOPS, INC.
By:
--------------------------------------
Name:
Title:
UNITED STATES TRUST COMPANY
OF NEW YORK
By:
--------------------------------------
Name:
Title:
<PAGE>
Exhibit A
(Face of Senior Note)
[Unless and until it is exchanged in whole or in part for Senior Notes in
definitive form, this Senior Note may not be transferred except as a whole by
the Depositary to a nominee of the Depositary or by a nominee of the Depositary
to the Depositary or another nominee of the Depositary or by the Depositary or
any such nominee to a successor Depositary or a nominee of such successor
Depositary. Unless this certificate is presented by an authorized representative
of [The Depository Trust Company (55 Water Street, New York, New York) ("DTC")],
to the issuer 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 may be requested by an authorized representative of DTC (and any
payment is made to [Cede & Co.] or such other entity as may be 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.(1/)
THE SENIOR NOTE (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 SENIOR
NOTE 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 SENIOR NOTE EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER
MAY BE RELYING ON THE EXEMPTION PROVIDED BY RULE 144A UNDER THE SECURITIES ACT.
THE HOLDER OF THE SENIOR NOTE EVIDENCED HEREBY AGREES FOR THE BENEFIT OF ANVIL
THAT (A) SUCH SENIOR NOTE MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY
(1) (a) TO A PERSON WHO 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, (c) OUTSIDE THE UNITED
STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904
UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF
COUNSEL IF ANVIL SO REQUESTS), (2) TO ANVIL OR (3) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE 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
- ----------------
1. This paragraph should be included only if the Senior Note is issued in
global form.
A-1
<PAGE>
PURCHASER OF THE SENIOR NOTE EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET
FORTH IN (1) ABOVE.
10-7/8% [Series A] [Series B] Senior
Notes due 2007
ANVIL KNITWEAR, INC.
CUSIP No. [AI GLOBAL SENIOR NOTE](2)
No. $___________
ANVIL KNITWEAR, INC. promises to pay to ____________________________
_____________________________ or registered assigns, the principal sum of
___________________________ Dollars on March 15, 2007.
Interest Payment Dates: March 15 and September 15
Record Dates: March 1 and September 1
Reference is hereby made to the further provisions of this Senior
Note set forth on the reverse hereof, which further provisons shall for all
purposes have the same effect as if set forth at this place.
Dated:
ANVIL KNITWEAR, INC.
By:
--------------------------------------
Name:
Title:
By:
--------------------------------------
Name:
Title:
Certificate of Authentication:
This is one of the Senior Notes
referred to in the within-mentioned Indenture:
UNITED STATES TRUST COMPANY
- ----------
2. This should be included only if the Global Senior Note is the AI Global
Senior Note.
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<PAGE>
OF NEW YORK, as Trustee
By:
--------------------------------
Authorized Signatory
Dated:
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<PAGE>
(Back of Senior Note)
10-7/8% [Series A] [Series B] Senior
Notes due 2007
Capitalized terms used herein shall have the meanings assigned to
them in the Indenture referred to below unless otherwise indicated.
1. Interest. Anvil Knitwear, Inc., a Delaware corporation ("Anvil")
promises to pay interest on the principal amount of this Senior Note at 10-7/8%
per annum from March 14, 1997 until maturity and shall pay the Liquidated
Damages payable pursuant to Section 5 of the Registration Rights Agreement
referred to below. Anvil will pay interest and Liquidated Damages semi-annually
in arrears on March 15 and September 15 of each year, or if any such day is not
a Business Day, on the next succeeding Business Day (each an "Interest Payment
Date"). Interest on the Senior Notes will accrue from the most recent date to
which interest has been paid or, if no interest has been paid, from the date of
issuance; provided that if there is no existing Default in the payment of
interest, and if this Senior Note is authenticated between a record date
referred to on the face hereof and the next succeeding Interest Payment Date,
interest shall accrue from such next succeeding Interest Payment Date; provided,
further, that the first Interest Payment Date shall be September 15, 1997. Anvil
shall pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal and premium, if any, from time to time on
demand at a rate that is 1% per annum in excess of the rate then in effect; it
shall pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest and Liquidated Damages
(without regard to any applicable grace periods) from time to time on demand at
the same rate to the extent lawful. Interest will be computed on the basis of a
360-day year of twelve 30-day months.
2. Method of Payment. Anvil will pay interest on the Senior Notes
(except defaulted interest) and Liquidated Damages, if any, to the Persons who
are registered Holders of Senior Notes at the close of business on the March 1
or September 1 next preceding the Interest Payment Date, even if such Senior
Notes are cancelled after such record date and on or before such Interest
Payment Date, except as provided in Section 2.12 of the Indenture with respect
to defaulted interest. The Senior Notes will be payable as to principal,
premium, interest and Liquidated Damages at the office or agency of Anvil
maintained for such purpose within the City and State of New York, or, at the
option of Anvil, payment of interest and Liquidated Damages may be made by check
mailed to the Holders at their addresses set forth in the register of Holders,
provided that payment by wire transfer of immediately available funds will be
required with respect to principal of and interest, premium, if any, and
Liquidated Damages on, all Global Senior Notes and all other Senior Notes the
Holders of which shall have provided wire transfer instructions to Anvil or the
Paying Agent. Such payment shall be 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.
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<PAGE>
3. Paying Agent and Registrar. Initially, the Trustee under the
Indenture, will act as Paying Agent and Registrar. Anvil may change any Paying
Agent or Registrar without notice to any Holder. Anvil or any of its
Subsidiaries may act in any such capacity.
4. Indenture. Anvil issued the Senior Notes under an Indenture dated
as of March 14, 1997 ("Indenture") among Anvil, Anvil Holdings, Inc.,
Cottontops, Inc. and the other Subsidiary Guarantors (as defined therein) and
the Trustee. The terms of the Senior 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 (15 U.S. Code ss.ss. 77aaa-77bbbb). The Senior Notes are
subject to all such terms, and Holders are referred to the Indenture and such
Act for a statement of such terms. The Senior Notes are unsecured obligations of
Anvil limited to $130.0 million in aggregate principal amount.
5. Optional Redemption.
(a) Except as set forth in clause 5(b) of this Senior Note, the
Senior Notes will not be redeemable at Anvil's option prior to March 15, 2002.
Thereafter, the Senior Notes will be subject to redemption for cash at the
option of Anvil, in whole or in part, upon not less than 30 nor more than 60
days' notice, to each holder of Senior Notes to be redeemed at the following
redemption prices (expressed as percentages of principal amount thereof), if
redeemed during the twelve-month period beginning on March 15 of each of the
years indicated below, in each case together with any accrued and unpaid
interest and Liquidated Damages thereon to the applicable redemption date:
Year Percentage
- ---- ----------
2002.......................................... 105.438%
2003.......................................... 103.625%
2004 ......................................... 101.813%
2005 and thereafter........................... 100.000%
(b) Notwithstanding the provisions of clause 5(a) of this Senior
Note, at any time on or before March 15, 2000, Anvil may (but will not have the
obligation to) redeem for cash up to 40% of the original aggregate principal
amount of the Senior Notes at a redemption price of 110% of the principal amount
thereof, in each case plus any accrued and unpaid interest and Liquidated
Damages thereon to the redemption date, with the net proceeds of a Public Equity
Offering; provided that at least 60% of the original aggregate principal amount
of the Senior Notes remains outstanding immediately after the occurrence of such
redemption; and provided, further, that such redemption will occur within 60
days of the date of the closing of such Public Equity Offering.
(c) Notices of redemption will be mailed by first class mail at
least 30 days but not more than 60 days before the redemption date to each
Holder whose Senior Notes are to
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<PAGE>
be redeemed at its registered address. Senior Notes in denominations larger than
$1,000 may be redeemed in part but only in integral multiples of $1,000, unless
all of the Senior Notes held by a Holder are to be redeemed. Unless Anvil
defaults in making such redemption payment, on and after the redemption date
interest ceases to accrue on Senior Notes or portions thereof called for
redemption.
6. Mandatory Redemption.
Anvil shall not be required to make any mandatory redemption,
purchase or sinking fund payments with respect to the Senior Notes prior to the
maturity date.
7. Repurchase at Option of Holder.
(a) Upon the occurrence of a Change of Control, each Holder of
Senior Notes will have the right to require Anvil to repurchase all or any part
(equal to $1,000 or an integral multiple thereof) of such Holder's Senior Notes
pursuant to the offer described below (the "Change of Control Offer") at an
offer price in cash equal to 101% of the aggregate principal amount thereof plus
accrued and unpaid interest and Liquidated Damages thereon to the date of
purchase (the "Change of Control Payment"). Within 30 days following any Change
of Control, Anvil will mail a notice to each Holder describing the transaction
or transactions that constitute the Change of Control and offering to repurchase
Senior Notes pursuant to the procedures required by the Indenture and described
in such notice. Anvil will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of the Senior Notes as a result of a Change of Control.
On the Change of Control Purchase Date, Anvil will, to the extent
lawful, (1) accept for payment all Senior Notes or portions thereof properly
tendered pursuant to the Change of Control Offer, (2) deposit with the Paying
Agent an amount equal to the Change of Control Payment in respect of all Senior
Notes or portions thereof so tendered and (3) deliver or cause to be delivered
to the Trustee the Senior Notes so accepted together with an Officers'
Certificate stating the aggregate principal amount of Senior Notes or portions
thereof being purchased by Anvil. The Paying Agent will promptly mail to each
Holder of Senior Notes so tendered the Change of Control Payment for such Senior
Notes, and the Trustee will promptly authenticate and mail (or cause to be
transferred by book entry) to each Holder a new Senior Note equal in principal
amount to any unpurchased portion of the Senior Notes surrendered, if any;
provided that each such new Senior Note will be in a principal amount of $1,000
or an integral multiple thereof. Anvil will publicly announce the results of the
Change of Control Offer on the Change of Control Purchase Date.
(b) Anvil will not, and will not permit any of its Restricted
Subsidiaries to, engage in an Asset Sale in excess of $1.0 million unless (i)
Anvil (or the Restricted Subsidiary, as the case may be) receives consideration
at the time of such Asset Sale at least equal to the fair market value, and in
the case of a lease of assets, a lease providing for rent
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<PAGE>
and other conditions which are no less favorable to Anvil (or the Restricted
Subsidiary, as the case may be) in any material respect than the then prevailing
market conditions (evidenced in each case by a resolution of the Board of
Directors of such entity set forth in an Officers' Certificate delivered to the
Trustee) of the assets or Equity Interests sold or otherwise disposed of, and
(ii) at least 80% (100% in the case of lease payments) of the consideration
therefor received by Anvil or such Restricted Subsidiary is in the form of cash
or Cash Equivalents; provided that the amount of (x) any liabilities (as shown
on Anvil's or such Restricted Subsidiary's most recent balance sheet or in the
notes thereto, excluding contingent liabilities and trade payables), of Anvil or
any Restricted Subsidiary (other than liabilities that are by their terms
subordinated to the Senior Notes, or any guarantee thereof) that are assumed by
the transferee of any such assets and (y) any notes or other obligations
received by Anvil or any such Restricted Subsidiary from such transferee that
are promptly, but in no event more than 30 days after receipt, converted by
Anvil or such Subsidiary into cash (to the extent of the cash received), shall
be deemed to be cash for purposes of this provision.
Within 365 days after the receipt of any Net Proceeds from an Asset
Sale, Anvil may apply such Net Proceeds (a) to reduce permanently long-term
Indebtedness of a Restricted Subsidiary, (b) to reduce permanently Indebtedness
(and, in the case of revolving Indebtedness, to reduce permanently the
commitments) under the New Credit Agreement, or (c) to an investment in another
business, the making of a capital expenditure or the acquisition of other
tangible assets, in each case, in the same or a similar line of business as
Anvil was engaged in on the date of the Indenture. Any Net Proceeds from Asset
Sales that are not applied or invested as provided in the preceding sentence of
this paragraph will be deemed to constitute "Excess Proceeds." On the earlier of
(i) the 366th day after an Asset Sale or (ii) such date as the Board of Anvil or
the Restricted Subsidiary determines not to apply the Net Proceeds relating to
such Asset Sale in the manner set forth in (a), (b) or (c), if the aggregate
amount of Excess Proceeds exceeds $5.0 million, Anvil will be required to make
an offer to all Holders of Senior Notes (an "Asset Sale Offer") to purchase the
maximum principal amount of Senior Notes that may be purchased out of the Excess
Proceeds, at an offer price in cash in an amount equal to 100% of the principal
amount thereof plus accrued and unpaid interest and Liquidated Damages thereon
to the date of purchase, in accordance with the procedures set forth in the
Indenture. To the extent that the aggregate amount of Senior Notes tendered
pursuant to an Asset Sale Offer is less than the Excess Proceeds, Anvil may use
any remaining Excess Proceeds for general corporate purposes. If the aggregate
principal amount of Senior Notes surrendered by Holders thereof exceeds the
amount of Excess Proceeds, the Trustee shall select the Senior Notes to be
purchased on a pro rata basis. Upon completion of such Asset Sale Offer, the
amount of Excess Proceeds shall be reset at zero.
8. Denominations, Transfer, Exchange. The Senior Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Senior Notes may be registered and Senior
Notes may be exchanged as provided in the Indenture. The Registrar and the
Trustee may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and Anvil may require a Holder to pay any
taxes and fees required by law or permitted by the Indenture. Anvil need not
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<PAGE>
exchange or register the transfer of any Senior Note or portion of a Senior Note
selected for redemption, except for the unredeemed portion of any Senior Note
being redeemed in part. Also, it need not exchange or register the transfer of
any Senior Notes for a period of 15 days before a selection of Senior Notes to
be redeemed or during the period between a record date and the corresponding
Interest Payment Date.
9. Persons Deemed Owners. The registered Holder of a Senior Note may
be treated as its owner for all purposes.
10. Amendment, Supplement and Waiver. Subject to certain exceptions,
the Indenture or the Senior Notes may be amended or supplemented with the
consent of the Holders of at least a majority in principal amount of the Senior
Notes then outstanding (including consents obtained in connection with a tender
offer or exchange offer for Senior Notes), and any existing default or
compliance with any provision of the Indenture or the Senior Notes may be waived
with the consent of the Holders of a majority in principal amount of the then
outstanding Senior Notes. Without the consent of any Holder of a Senior Note,
the Indenture or the Senior Notes may be amended or supplemented to cure any
ambiguity, defect or inconsistency, to provide for uncertificated Senior Notes
in addition to or in place of certificated Senior Notes, to provide for the
assumption of Anvil's obligations to Holders of the Senior Notes in case of a
merger or consolidation, to make any change that would provide any additional
rights or benefits to the Holders of the Senior Notes or that does not adversely
affect the legal rights under the Indenture of any such Holder, or to comply
with the requirements of the Commission in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act.
11. Defaults and Remedies. Events of Default include: (i) default
for 30 days in the payment when due of interest on, or Liquidated Damages with
respect to, the Senior Notes; (ii) default in payment when due of the principal
of or premium, if any, on the Senior Notes; (iii) failure by Anvil to comply
with Section 4.7, 4.8, 4.9, 4.10, 4.11 or 5.1 of the Indenture; (iv) failure by
Anvil for 60 days after notice to comply with any of its other agreements in the
Indenture or the Senior Notes; (v) default under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by Anvil or any of its Restricted
Subsidiaries or Holdings (or the payment of which is guaranteed by Anvil or any
of its Restricted Subsidiaries or Holdings) whether such Indebtedness or
guarantee now exists, or is created after the date of the Indenture, which
default (a) is caused by a failure to pay principal of or premium, if any, or
interest on such Indebtedness prior to the expiration of the grace period
provided in such Indebtedness on the date of such default (a "Payment Default")
or (b) results in the acceleration of such Indebtedness prior to its express
maturity and, in each case, the principal amount of any such Indebtedness,
together with the principal amount of any other such Indebtedness under which
there has been a Payment Default or the maturity of which has been so
accelerated, aggregates $5.0 million or more; (vi) failure by Anvil or any of
its Restricted Subsidiaries or Holdings to pay final judgments aggregating in
excess of $3.0 million, which judgments are not paid, discharged or stayed for a
period of 60 days; (vii) except as permitted
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by the Indenture, any Subsidiary Guarantee will be held in any judicial
proceeding to be unenforceable or invalid or will cease for any reason to be in
full force and effect or any Subsidiary Guarantor, or any Person acting on
behalf of any Subsidiary Guarantor, will deny or disaffirm its obligations under
the Subsidiary Guarantee; (viii) the Guarantee will be held in any judicial
proceeding to be unenforceable or invalid or will cease for any reason to be in
full force and effect or Holdings, or any Person acting on behalf of Holdings,
will deny or disaffirm its obligations under the Guarantee and (ix) certain
events of bankruptcy or insolvency with respect to Holdings, Anvil or any of its
Significant Subsidiaries or group of Restricted Subsidiaries that, together,
would constitute a Significant Subsidiary. If any Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in principal amount of
the then outstanding Senior Notes may declare all the Senior Notes to be due and
payable immediately. Notwithstanding the foregoing, in the case of an Event of
Default arising from certain events of bankruptcy or insolvency with respect to
Holdings, Anvil, any Significant Subsidiary or any group of Subsidiaries that,
taken together, would constitute a Significant Subsidiary, all outstanding
Senior Notes will become due and payable without further action or notice.
Holders of the Senior Notes may not enforce the Indenture or the Senior Notes
except as provided in the Indenture. Subject to certain limitations, Holders of
a majority in principal amount of the then outstanding Senior Notes may direct
the Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of the Senior Notes notice of any continuing Default or Event of Default
(except a Default or Event of Default relating to the payment of principal or
interest) if it determines that withholding notice is in their interest. The
Holders of a majority in aggregate principal amount of the Senior Notes then
outstanding by notice to the Trustee may on behalf of the Holders of all of the
Senior Notes waive any existing Default or Event of Default and its consequences
under the Indenture except a continuing Default or Event of Default in the
payment of interest on, or the principal of, premium and Liquidated Damages, if
any, on the Senior Notes. Anvil is required to deliver to the Trustee annually a
statement regarding compliance with the Indenture, and Anvil is required upon
becoming aware of any Default or Event of Default, to deliver to the Trustee a
statement specifying such Default or Event of Default.
12. Trustee Dealings with Anvil. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for Anvil or its Affiliates, and may otherwise deal with Anvil or its
Affiliates, as if it were not the Trustee.
13. No Recourse Against Others. A director, officer, employee,
incorporator or stockholder, of Anvil, as such, shall not have any liability for
any obligations of Anvil under the Senior Notes or the Indenture or for any
claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder by accepting a Senior Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Senior Notes.
A-9
<PAGE>
14. GOVERNING LAW. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL
GOVERN AND BE USED TO CONSTRUE THIS EXCHANGE DEBENTURE, WITHOUT REGARD TO THE
CONFLICTS OF LAWS PRINCIPLES THEREOF.
15. Authentication. This Senior Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.
16. Abbreviations. 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).
17. Additional Rights of Holders of Transfer Restricted Senior
Notes. In addition to the rights provided to Holders of Senior Notes under the
Indenture, Holders of Transferred Restricted Senior Notes shall have all the
rights set forth in the Registration Rights Agreement dated as of the date of
the Indenture, between Anvil, Holdings, Cottontops, Inc. and the parties named
on the signature pages thereof (the "Registration Rights Agreement").
18. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, Anvil has caused CUSIP
numbers to be printed on the Senior Notes and the Trustee may 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 Senior Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
Anvil will furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Anvil Knitwear, Inc.
228 East 45th Street
New York, New York 10017
Attention: Jacob Hollander
Telephone No.: (212) 476-0352
Telecopier No.: (212) 885-9411
A-10
<PAGE>
SCHEDULE OF CHANGES IN PRINCIPAL AMOUNT OF NOTE
The following changes in the principal amount of this Global Senior
Note have been recorded:
<TABLE>
<CAPTION>
Principal Amount of this
Amount of decrease in Amount of increase in Global Senior Note Signature of
Principal Amopunt of Principal Amopunt of following such decrease authorized officer of
Date of Transaction this Global Senior Note this Global Senior Note (or increase) Trustee
- ------------------- ----------------------- ----------------------- ------------------------- ---------------------
<S> <C> <C> <C> <C>
</TABLE>
A-11
<PAGE>
ASSIGNMENT FORM
For value received, I or we assign and transfer this Senior Note to
_______________________________________________________________
_______________________________________________________________
(Print or type name, address and zip code of assignee)
_______________________________________________________________
(Insert Social Security or other identifying number of assignee)
and irrevocably appoint ________________________ agent to transfer this Senior
Note on the books of Anvil. The agent may substitute another to act for him.
In connection with any transfer of this Senior Note occurring prior to
March 14, 1999, the undersigned confirms that it has not utilized any general
solicitation or general advertising in connection with the transfer and that:
[Check One]
|_|(a) this Senior Note is being transferred to a "qualified institutional
buyer" (as defined in Rule 144A under the Securities Act of 1933) in
compliance with the exemption from registration under the Securities Act
of 1933 provided by Rule 144A thereunder.
or
|_|(b) this Senior Note is being transferred other than in accordance with (a)
above and documents and, if required by the Trustee or Anvil, legal
opinions are being furnished which comply with the conditions of transfer
set forth in this Note and the Indenture.
If none of the foregoing boxes is checked, the Trustee or Registrar shall not be
obligated to register this Note in the name of any person other than the Holder
hereof unless and until the conditions to any such transfer of registration set
forth herein and in Section 2.14 of the Indenture shall have been satisfied.
Date: __________________________
Your Signature:
---------------------
(Sign exactly as your name appears on the face
of this Senior Note)
Signature Guarantee
A-12
<PAGE>
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this Senior
Note for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933 and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding Anvil as the
undersigned has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
Dated: _______________________
-----------------------------
NOTICE: To be executed by
an executive officer
A-13
<PAGE>
Option of Holder to Elect Purchase
If you want to elect to have this Senior Note purchased by Anvil pursuant
to Section 4.7 or 4.8 of the Indenture, check the box below:
Section 4.7 Section 4.8
If you want to elect to have only part of the Senior Note purchased by
Anvil pursuant to Section 4.7 or Section 4.8 of the Indenture, state the amount
you elect to have purchased: $__________________
Date:____________________ Your Signature:
-------------------------------------
(Sign exactly as your name appears on the Senior Note)
Tax Identification No.:___________________________________
Signature Guarantee.
A-14
<PAGE>
Exhibit B
FORM OF LETTER TO BE DELIVERED BY ACCREDITED INSTITUTIONS
We are delivering this letter in connection with an offering of 10-7/8%
Senior Notes due 2007 (the "Senior Notes") of Anvil Knitwear, Inc., a Delaware
corporation ("Anvil"), all as described in the Offering Memorandum (the
"Offering Memorandum") relating to such offering. Anvil is a wholly owned
subsidiary of Anvil Holdings, Inc, a Delaware corporation ("Holdings").
We hereby confirm that:
(i) we are an "accredited investor" within the meaning of Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended
(the "Securities Act"), or an entity in which all of the equity owners are
accredited investors within the meaning of Rule 501(a)(1), (2), (3) or (7)
under the Securities Act (an "Institutional Accredited Investor");
(ii) any purchase of Senior Notes by us will be for our own account
or for the account of one or more other Institutional Accredited
Investors;
(iii) n the event that we purchase any Senior Notes, we will acquire
Senior Notes having a minimum purchase price of at least $100,000 for our
own account and for each separate account for which we are acting;
(iv) we have such knowledge and experience in financial and business
matters that we are capable of evaluating the merits and risks of
purchasing Senior Notes;
(v) we are not acquiring Senior Notes with a view to any
distribution thereof in a transaction that would violate the Securities
Act or the securities laws of any State of the United States or any other
applicable jurisdiction; provided that the disposition of our property and
the property of any accounts for which we are acting as fiduciary shall
remain at all times within our control; and
(vi) we have received a copy of the Offering Memorandum and
acknowledge that we have had access to such financial and other
information, and have been afforded the opportunity to ask such questions
of representatives of Anvil and Anvil Holdings, Inc. and receive answers
thereto, as we deem necessary in connection with our decision to purchase
Senior Notes.
We understand that the Senior Notes are being offered in a transaction not
involving any public offering within the meaning of the Securities Act and that
the Senior Notes have not been registered under the Securities Act, and we
agree, on our own behalf and on behalf of each account for which we acquire any
notes, that such Senior Notes may be offered, resold, pledged or otherwise
transferred only (i) to a person whom we reasonably believe to be a "qualified
institutional buyer" (as defined in Rule 144A under the Securities Act) in a
transaction meeting the requirements of Rule 144A, in a transaction meeting the
requirements
B-1
<PAGE>
of Rule 144 under the Securities Act, outside the United States in a transaction
meeting the requirements of Rule 904 under the Securities Act (and based upon an
opinion of counsel if Anvil so requests), (ii) to Anvil 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. We understand that the registrar and transfer agent
will not be required to accept for registration of transfer any Senior Notes,
except upon presentation of evidence satisfactory to Anvil that the foregoing
restrictions on transfer have been complied with. We further understand that the
Senior Notes purchased by us will be in the form of definitive physical
certificates and that such certificates will bear a legend reflecting the
substance of this paragraph.
We acknowledge that you, Anvil, Holdings and others will rely upon our
confirmations, acknowledgements and agreements set forth herein, and we agree to
notify you promptly in writing if any of our representations or warranties
herein ceases to be accurate and complete.
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICTS OF LAWS
PRINCIPLES THEREOF.
-------------------------------------
(Name of Purchaser)
By:
----------------------------------
Name:
Title:
Address:
B-2
<PAGE>
Exhibit C
GUARANTEE
Anvil Holdings, Inc., a Delaware corporation ("Holdings"), which term
includes any successors or assigns under the Indenture (the "Indenture") hereby
irrevocably and unconditionally guarantees (i) the due and punctual payment of
the principal of, premium, if any, and interest and Liquidated Damages on the
10-7/8% Senior Notes due 2007 (the "Senior Notes") of Anvil Knitwear, Inc., a
Delaware corporation ("Anvil"), whether at stated maturity, by acceleration or
otherwise, the due and punctual payment of interest on the overdue principal,
and premium if any, and (to the extent permitted by law) interest on any
interest, if any, on the Senior Notes, and the due and punctual performance of
all other obligations of Anvil, to the Holders or the Trustee all in accordance
with the terms set forth in Article 10 of the Indenture, (ii) in case of any
extension of time of payment or renewal of any Senior Notes or any such other
obligations, that the same will be promptly paid in full when due or performed
in accordance with the terms of the extension or renewal, whether at stated
maturity, by acceleration or otherwise, and (iii) the payment of any and all
costs and expenses (including reasonable attorneys' fees) incurred by the
Trustee or any Holder in enforcing any rights under this Guarantee.
The obligations of Holdings to the Holders and to the Trustee pursuant to
this Guarantee and the Indenture are expressly set forth in Article 10 of the
Indenture and reference is hereby made to such Indenture for the precise terms
of this Guarantee.
No stockholder, officer, director or incorporator, as such, past, present
or future of Holdings shall have any liability under this Guarantee by reason of
his or its status as such stockholder, officer, director or incorporator.
This is a continuing Guarantee and shall remain in full force and effect
and shall be binding upon Holdings and its successors and assigns until full and
final payment of all of Anvil's obligations under the Senior Notes and Indenture
and shall inure to the benefit of the successors and assigns of the Trustee and
the Holders, and, in the event of any transfer or assignment of rights by any
Holder or the Trustee, the rights and privileges herein conferred upon that
party shall automatically extend to and be vested in such transferee or
assignee, all subject to the terms and conditions hereof. This is a Guarantee of
payment and not of collectibility.
This Guarantee shall not be valid or obligatory for any purpose until the
certificate of authentication on the Senior Note upon which this Guarantee is
noted shall have been executed by the Trustee under the Indenture by the manual
signature of one of its authorized officers.
THE TERMS OF ARTICLE 10 OF THE INDENTURE ARE INCORPORATED HEREIN BY
REFERENCE.
C-1
<PAGE>
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS GUARANTEE, WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES
THEREOF.
Capitalized terms used herein have the same meanings given in the
Indenture unless otherwise indicated.
Dated as of _________________ ANVIL HOLDINGS, INC.
By:
--------------------------------------
Name:
Title:
ATTEST:
-------------------------
C-2
<PAGE>
Exhibit D
SUBSIDIARY GUARANTEE
The Subsidiary Guarantor(s) listed below (hereinafter referred to as the
"Subsidiary Guarantors," which term includes any successors or assigns under the
Indenture (the "Indenture") and any additional Subsidiary Guarantors), hereby
irrevocably and unconditionally guarantee (i) the due and punctual payment of
the principal of, premium, if any, and interest and Liquidated Damages on the
10-7/8% Senior Notes due 2007 (the "Senior Notes") of Anvil Knitwear, Inc., a
Delaware corporation, whether at stated maturity, by acceleration or otherwise,
the due and punctual payment of interest on the overdue principal, and premium
if any, and (to the extent permitted by law) interest on any interest, if any,
on the Senior Notes, 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 11 of the Indenture, (ii) in case of any
extension of time of payment or renewal of any Senior Notes or any such other
obligations, that the same will be promptly paid in full when due or performed
in accordance with the terms of the extension or renewal, whether at stated
maturity, by acceleration or otherwise, and (iii) the payment of any and all
costs and expenses (including reasonable attorneys' fees) incurred by the
Trustee or any Holder in enforcing any rights under this Subsidiary Guarantee.
The obligations of each Subsidiary Guarantor to the Holders and to the
Trustee pursuant to this Subsidiary Guarantee and the Indenture are expressly
set forth in Article 11 of the Indenture and reference is hereby made to such
Indenture for the precise terms of this Guarantee.
No stockholder, officer, director or incorporator, as such, past, present
or future of each Subsidiary Guarantor shall have any liability under this
Subsidiary Guarantee by reason of his or its status as such stockholder,
officer, director or incorporator.
This is a continuing Guarantee and shall remain in full force and effect
and shall be binding upon each Subsidiary Guarantor and its successors and
assigns until full and final payment of all of the Company's obligations under
the Senior Notes and Indenture and shall inure to the benefit of the successors
and assigns of the Trustee and the Holders, and, in the event of any transfer or
assignment of rights by any Holder or the Trustee, the rights and privileges
herein conferred upon that party shall automatically extend to and be vested in
such transferee or assignee, all subject to the terms and conditions hereof.
This is a Guarantee of payment and not of collectibility.
This Subsidiary Guarantee shall not be valid or obligatory for any purpose
until the certificate of authentication on the Senior Note upon which this
Subsidiary Guarantee is noted shall have been executed by the Trustee under the
Indenture by the manual signature of one of its authorized officers.
The Obligations of each Subsidiary Guarantor under its Subsidiary
Guarantee shall be limited to the extent necessary to insure that it does not
constitute a fraudulent conveyance under applicable law.
D-1
<PAGE>
THE TERMS OF ARTICLE 11 OF THE INDENTURE ARE INCORPORATED HEREIN BY
REFERENCE.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS GUARANTEE, WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES
THEREOF.
Capitalized terms used herein have the same meanings given in the
Indenture unless otherwise indicated.
Dated as of _______________________
[Subsidiary Guarantor]
By:
--------------------------------------
Name:
Title:
ATTEST:
----------------------------
D-2
<PAGE>
CROSS-REFERENCE TABLE*
Trust Indenture
Act Section Indenture Section
- --------------- -----------------
310(a)(1) ................................................ 7.10
(a)(2) ................................................ 7.10
(a)(3) ................................................ N.A.
(a)(4) ................................................ N.A.
(b) ................................................ 7.8; 7.10; 12.2
(c) ................................................ N.A.
311(a) ................................................ 7.11
(b) ................................................ 7.11
(c) ................................................ N.A.
312(a) ................................................ 2.5
(b) ................................................ 12.3
(c) ................................................ 12.3
313(a) ................................................ 7.6
(b)(1) ................................................ N.A.
(b)(2) ......................................... 7.6
(c) ......................................... 7.6; 12.2
(d) ......................................... 7.6
314(a) ......................................... 4.9; 12.2
(b) ......................................... N.A.
(c)(1) ......................................... 12.4
(c)(2) ......................................... 7.2; 12.4
(c)(3) ......................................... N.A.
(d) ......................................... N.A.
(e) ......................................... 12.5
(f) ......................................... N.A.
315(a) ......................................... 7.1(2)
(b) ......................................... 7.5; 12.2
(c) ......................................... 7.1(1)
(d) ......................................... 7.1(3)
(e) ......................................... 6.11
316(a)(last sentence) ...................................... 2.9
(a)(1)(A) ............................................... 6.5
(a)(1)(B) ............................................... 6.4
(a)(2) ............................................... N.A.
(b) ............................................... 6.7
317(a)(1) ............................................... 6.8
(a)(2) ............................................... 6.9
(b) ............................................... 2.4
318(a) ............................................... 12.1
- ----------
N.A. means not applicable.
* This Cross-Reference is not part of the Indenture.
<PAGE>
EXECUTION COPY
================================================================================
ANVIL KNITWEAR, INC.,
as Issuer
and
ANVIL HOLDINGS, INC.,
as Guarantor
and
COTTONTOPS, INC.,
as a Subsidiary Guarantor
and
The Other Subsidiary Guarantors
$130,000,000
10-7/8% Senior Notes due 2007
---------------
INDENTURE
Dated as of March 14, 1997
---------------
UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE.............................. 1
SECTION 1.1 DEFINITIONS............................................. 1
SECTION 1.2 OTHER DEFINITIONS....................................... 18
SECTION 1.3 INCORPORATION BY REFERENCE OF TRUST
INDENTURE ACT........................................ 19
SECTION 1.4 RULES OF CONSTRUCTION................................... 19
ARTICLE 2
THE SENIOR NOTES............................ 20
SECTION 2.1 FORM AND DATING......................................... 21
SECTION 2.2 EXECUTION AND AUTHENTICATION............................ 21
SECTION 2.3 REGISTRAR AND PAYING AGENT.............................. 21
SECTION 2.4 PAYING AGENT TO HOLD MONEY IN TRUST..................... 22
SECTION 2.5 HOLDER LISTS............................................ 22
SECTION 2.6 TRANSFER AND EXCHANGE................................... 22
SECTION 2.7 REPLACEMENT SENIOR NOTES................................ 23
SECTION 2.8 OUTSTANDING SENIOR NOTES................................ 23
SECTION 2.9 TREASURY SENIOR NOTES................................... 24
SECTION 2.10 TEMPORARY SENIOR NOTES.................................. 24
SECTION 2.11 CANCELLATION............................................ 24
SECTION 2.12 DEFAULTED INTEREST...................................... 24
SECTION 2.13 BOOK-ENTRY PROVISIONS FOR GLOBAL SENIOR
NOTES................................................. 25
SECTION 2.14 SPECIAL TRANSFER PROVISIONS............................. 26
ARTICLE 3
REDEMPTION AND PREPAYMENT....................... 28
SECTION 3.1 NOTICES TO TRUSTEE...................................... 28
SECTION 3.2 SELECTION OF SENIOR NOTES TO BE REDEEMED................ 28
SECTION 3.3 NOTICE OF REDEMPTION.................................... 29
SECTION 3.4 EFFECT OF NOTICE OF REDEMPTION.......................... 30
SECTION 3.5 DEPOSIT OF REDEMPTION PRICE............................. 30
SECTION 3.6 SENIOR NOTES REDEEMED IN PART........................... 30
SECTION 3.7 OPTIONAL REDEMPTION..................................... 30
SECTION 3.8 NO MANDATORY REDEMPTION................................. 31
ARTICLE 4
COVENANTS............................... 31
SECTION 4.1 PAYMENT OF SENIOR NOTES................................. 31
SECTION 4.2 MAINTENANCE OF OFFICE OR AGENCY......................... 32
- i -
<PAGE>
Page
----
SECTION 4.3 REPORTS ............................................... 32
SECTION 4.4 COMPLIANCE CERTIFICATE.................................. 34
SECTION 4.5 TAXES................................................... 34
SECTION 4.6 STAY, EXTENSION AND USURY LAWS.......................... 34
SECTION 4.7 CHANGE OF CONTROL....................................... 35
SECTION 4.8 ASSET SALES............................................. 36
SECTION 4.9 RESTRICTED PAYMENTS..................................... 39
SECTION 4.10 INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF
PREFERRED STOCK...................................... 42
SECTION 4.11 SALE AND LEASEBACK TRANSACTIONS......................... 44
SECTION 4.12 LIENS................................................... 45
SECTION 4.13 DIVIDEND AND OTHER PAYMENT RESTRICTIONS
AFFECTING RESTRICTED SUBSIDIARIES..................... 45
SECTION 4.14 TRANSACTIONS WITH AFFILIATES............................ 46
SECTION 4.15 LINE OF BUSINESS........................................ 47
SECTION 4.16 ADDITIONAL SUBSIDIARY GUARANTEES........................ 47
SECTION 4.17 CORPORATE EXISTENCE .................................... 47
ARTICLE 5
SUCCESSORS............................... 48
SECTION 5.1 MERGER, CONSOLIDATION OR SALE OF ASSETS................. 48
SECTION 5.2 SUCCESSOR CORPORATION SUBSTITUTED....................... 48
ARTICLE 6
DEFAULTS AND REMEDIES......................... 49
SECTION 6.1 EVENTS OF DEFAULT....................................... 49
SECTION 6.2 ACCELERATION............................................ 51
SECTION 6.3 OTHER REMEDIES.......................................... 51
SECTION 6.4 WAIVER OF PAST DEFAULTS................................. 52
SECTION 6.5 CONTROL BY MAJORITY..................................... 52
SECTION 6.6 LIMITATION ON SUITS..................................... 52
SECTION 6.7 RIGHTS OF HOLDERS OF SENIOR NOTES TO RECEIVE
PAYMENT............................................... 53
SECTION 6.8 COLLECTION SUIT BY TRUSTEE.............................. 53
SECTION 6.9 TRUSTEE MAY FILE PROOFS OF CLAIM........................ 53
SECTION 6.10 PRIORITIES.............................................. 54
SECTION 6.11 UNDERTAKING FOR COSTS................................... 54
ARTICLE 7
TRUSTEE................................ 54
SECTION 7.1 DUTIES OF TRUSTEE....................................... 54
SECTION 7.2 RIGHTS OF TRUSTEE....................................... 56
SECTION 7.3 INDIVIDUAL RIGHTS OF TRUSTEE............................ 57
SECTION 7.4 TRUSTEE'S DISCLAIMER.................................... 57
- ii -
<PAGE>
Page
----
SECTION 7.5 NOTICE OF DEFAULTS...................................... 57
SECTION 7.6 REPORTS BY TRUSTEE TO HOLDERS OF THE SENIOR
NOTES................................................. 57
SECTION 7.7 COMPENSATION AND INDEMNITY.............................. 58
SECTION 7.8 REPLACEMENT OF TRUSTEE.................................. 58
SECTION 7.9 SUCCESSOR TRUSTEE BY MERGER, ETC........................ 59
SECTION 7.10 ELIGIBILITY; DISQUALIFICATION........................... 60
SECTION 7.11 PREFERENTIAL COLLECTION OF CLAIMS
AGAINST ANVIL......................................... 60
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE................ 60
SECTION 8.1 OPTION TO EFFECT LEGAL DEFEASANCE
OR COVENANT DEFEASANCE................................ 60
SECTION 8.2 LEGAL DEFEASANCE AND DISCHARGE.......................... 60
SECTION 8.3 COVENANT DEFEASANCE..................................... 61
SECTION 8.4 CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.............. 61
SECTION 8.5 DEPOSITED MONEY AND GOVERNMENT SECURITIES
TO BE HELD IN TRUST; OTHER MISCELLANEOUS
PROVISIONS............................................ 63
SECTION 8.6 REPAYMENT TO ANVIL...................................... 63
SECTION 8.7 REINSTATEMENT........................................... 64
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER.................... 64
SECTION 9.1 WITHOUT CONSENT OF HOLDERS OF SENIOR NOTES.............. 64
SECTION 9.2 WITH CONSENT OF HOLDERS OF SENIOR NOTES................. 65
SECTION 9.3 COMPLIANCE WITH TRUST INDENTURE ACT..................... 66
SECTION 9.4 REVOCATION AND EFFECT OF CONSENTS....................... 66
SECTION 9.5 NOTATION ON OR EXCHANGE OF SENIOR NOTES................. 67
SECTION 9.6 TRUSTEE TO SIGN AMENDMENTS, ETC......................... 67
ARTICLE 10
HOLDINGS GUARANTEE........................... 67
SECTION 10.1 HOLDINGS GUARANTEE..................................... 67
SECTION 10.2 EXECUTION AND DELIVERY OF HOLDINGS
GUARANTEE............................................ 69
SECTION 10.3 LIMITATION ON GUARANTOR'S ACTIVITY..................... 69
ARTICLE 11
SUBSIDIARY GUARANTEES......................... 69
SECTION 11.1 SUBSIDIARY GUARANTEE................................... 69
SECTION 11.2 EXECUTION AND DELIVERY OF SUBSIDIARY
GUARANTEES........................................... 71
- iii -
<PAGE>
Page
----
SECTION 11.3 SUBSIDIARY GUARANTORS MAY CONSOLIDATE,
ETC., ON CERTAIN TERMS............................... 71
SECTION 11.4 RELEASES FOLLOWING SALE OF ASSETS...................... 72
SECTION 11.5 LIMITATION OF SUBSIDIARY GUARANTOR'S
LIABILITY............................................ 73
SECTION 11.6 APPLICATION OF CERTAIN TERMS AND PROVISIONS
TO THE SUBSIDIARY GUARANTORS......................... 73
ARTICLE 12
MISCELLANEOUS............................. 74
SECTION 12.1 TRUST INDENTURE ACT CONTROLS........................... 74
SECTION 12.2 NOTICES................................................ 74
SECTION 12.3 COMMUNICATION BY HOLDERS OF SENIOR NOTES
WITH OTHER HOLDERS OF................................ 75
SECTION 12.4 CERTIFICATE AND OPINION AS TO CONDITIONS
PRECEDENT............................................ 75
SECTION 12.5 STATEMENTS REQUIRED IN CERTIFICATE OR
OPINION.............................................. 76
SECTION 12.6 RULES BY TRUSTEE AND AGENTS............................ 76
SECTION 12.7 NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS,
EMPLOYEES AND STOCKHOLDERS........................... 76
SECTION 12.8 GOVERNING LAW.......................................... 76
SECTION 12.9 NO ADVERSE INTERPRETATION OF OTHER
AGREEMENTS........................................... 77
SECTION 12.10 SUCCESSORS............................................ 77
SECTION 12.11 SEVERABILITY.......................................... 77
SECTION 12.12 COUNTERPART ORIGINALS................................. 77
SECTION 12.13 TABLE OF CONTENTS, HEADINGS, ETC...................... 77
EXHIBITS
--------
EXHIBIT A FORM OF SENIOR NOTE
EXHIBIT B FORM OF LETTER TO BE DELIVERED BY ACCREDITED INSTITUTIONS
EXHIBIT C FORM OF GUARANTEE
EXHIBIT D FORM OF SUBSIDIARY GUARANTEE
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<PAGE>
AMENDED AND RESTATED
CREDIT AGREEMENT
Dated as of March 14, 1997
among
ANVIL KNITWEAR, INC.,
as Borrower,
ANVIL HOLDINGS, INC.,
and certain Subsidiaries,
as Guarantors,
THE BANKS IDENTIFIED HEREIN,
AND
NATIONSBANK, N.A.,
as Agent,
AND
BANK OF AMERICA ILLINOIS,
BANQUE NATIONALE DE PARIS and
HELLER FINANCIAL, INC.,
as Co-Agents
<PAGE>
TABLE OF CONTENTS
Page
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SECTION 1 DEFINITIONS AND ACCOUNTING TERMS....................................1
1.1 Definitions.......................................................1
1.2 Computation of Time Periods, etc.................................24
1.3 Accounting Terms.................................................24
SECTION 2 CREDIT FACILITIES..................................................25
2.1 Revolving Loans..................................................25
2.2 Interest.........................................................27
2.3 Conversion.......................................................27
2.4 Letter of Credit Subfacility.....................................28
2.5 Conditions of Lending............................................33
2.6 Termination of Commitments.......................................34
2.7 Fees.............................................................34
2.8 Prepayments......................................................35
2.9 Increased Costs, Illegality, etc.................................36
2.10 Capital Adequacy................................................37
2.11 Compensation....................................................38
2.12 Taxes...........................................................39
2.13 Indemnification; Nature of Issuing Bank's Duties................41
2.14 Change of Lending Office........................................43
2.15 Payments and Computations.......................................43
2.16 Pro Rata Treatment..............................................44
2.17 Sharing of Payments.............................................44
SECTION 3 GUARANTEE..........................................................45
3.1 The Guarantee....................................................45
3.2 Obligations Unconditional........................................45
3.3 Reinstatement....................................................47
3.4 Certain Additional Waivers.......................................47
3.5 Remedies.........................................................47
3.6 Continuing Guarantee.............................................48
3.7 Rights of Contribution...........................................48
SECTION 4 CONDITIONS PRECEDENT TO INITIAL LOANS AND INITIAL
LETTERS OF CREDIT....................................................49
4.1 Executed Credit Documents........................................49
4.2 No Default; Representations and Warranties.......................49
4.3 Opinion of Counsel...............................................49
4.4 Solvency.........................................................49
4.5 Liability and Casualty Insurance.................................50
4.6 Corporate Documents..............................................50
4.7 Recapitalization.................................................51
4.8 Availability.....................................................51
4.9 Payment of Fees..................................................52
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SECTION 5 REPRESENTATIONS AND WARRANTIES.....................................52
5.1 Organization and Good Standing...................................52
5.2 Due Authorization................................................52
5.3 No Conflicts.....................................................52
5.4 Consents.........................................................53
5.5 Enforceable Obligations..........................................53
5.6 Financial Condition..............................................53
5.7 No Default.......................................................53
5.8 Liens............................................................53
5.9 Indebtedness.....................................................54
5.10 Litigation......................................................54
5.11 Material Agreements.............................................54
5.12 Taxes...........................................................54
5.13 Compliance with Law.............................................55
5.14 ERISA...........................................................55
5.15 Subsidiaries....................................................55
5.16 Use of Proceeds; Margin Stock...................................55
5.17 Government Regulation...........................................56
5.18 Hazardous Substances............................................56
5.19 Patents, Franchises, etc........................................56
5.20 Solvency........................................................57
5.21 No Material Misstatements.......................................57
SECTION 6 AFFIRMATIVE COVENANTS..............................................57
6.1 Information Covenants............................................57
6.2 Preservation of Existence and Franchises.........................60
6.3 Books, Records and Inspections...................................60
6.4 Compliance with Law..............................................60
6.5 Payment of Taxes and Other Indebtedness..........................60
6.6 Insurance........................................................61
6.7 Maintenance of Property..........................................61
6.8 Performance of Obligations.......................................61
6.9 ERISA............................................................61
6.10 Use of Proceeds.................................................62
6.11 Financial Covenants.............................................62
6.12 Additional Subsidiary Guarantors................................63
6.13 Pledged Assets..................................................64
6.14 Title Commitment, Survey and Flood Hazard Certification.........65
6.15 Equity Transactions.............................................65
6.16 Anvil (Czech), Inc..............................................65
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SECTION 7 NEGATIVE COVENANTS.................................................66
7.1 Indebtedness.....................................................66
7.2 Liens............................................................67
7.3 Nature of Business...............................................67
7.4 Consolidation, Merger, Sale of Assets, etc.......................67
7.5 Investments......................................................69
7.6 Prepayments of Indebtedness, etc.................................69
7.7 Restricted Payments..............................................70
7.8 Transactions with Affiliates.....................................71
7.9 Ownership of Subsidiaries........................................71
7.10 Fiscal Year.....................................................71
7.11 Exchange Debentures.............................................72
SECTION 8 EVENTS OF DEFAULT..................................................72
8.1 Events of Default................................................72
8.2 Acceleration; Remedies...........................................75
SECTION 9 AGENCY PROVISIONS..................................................76
9.1 Appointment......................................................76
9.2 Delegation of Duties.............................................76
9.3 Exculpatory Provisions...........................................76
9.4 Reliance on Communications.......................................77
9.5 Notice of Default................................................77
9.6 Non-Reliance on Agent and Other Banks............................78
9.7 Indemnification..................................................78
9.8 Agent in Its Individual Capacity.................................79
9.9 Successor Agent..................................................79
9.10 Co-Agents.......................................................79
SECTION 10 MISCELLANEOUS.....................................................80
10.1 Notices.........................................................80
10.2 Right of Set-Off................................................81
10.3 Benefit of Agreement............................................81
10.4 No Waiver; Remedies Cumulative..................................83
10.5 Payment of Expenses, etc........................................84
10.6 Amendments, Waivers and Consents................................84
10.7 Counterparts....................................................85
10.8 Headings........................................................85
10.9 Survival of Indemnification.....................................85
10.10 Governing Law; Submission to Jurisdiction; Venue...............85
10.11 Severability...................................................86
10.12 Entirety.......................................................86
10.13 Survival of Representations and Warranties.....................86
10.14 Confidentiality................................................87
10.15 Waiver of Jury Trial...........................................87
10.16 Binding Effect; Termination of Existing Credit Agreement.......87
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Schedules
---------
Schedule 1.1A Existing Letters of Credit
Schedule 2.1(a) Lenders
Schedule 2.1(b) Form of Notice of Borrowing
Schedule 2.1(e) Form of Revolving Note
Schedule 2.3 Form of Notice of Conversion
Schedule 5.9 Indebtedness
Schedule 5.10 Litigation
Schedule 5.13 Compliance with Laws
Schedule 5.15 Subsidiaries
Schedule 5.18 Environmental Disclosures
Schedule 5.19 Intellectual Property
Schedule 6.1(d) Form of Borrowing Base Certificate
Schedule 6.1(e) Form of Officer's Certificate
Schedule 6.6 Insurance
Schedule 6.12 Form of Joinder Agreement
Schedule 7.2 Existing Liens
Schedule 10.3(b) Form of Assignment and Acceptance
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<PAGE>
AMENDED AND RESTATED
CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT, dated as of March 14, 1997
(the "Credit Agreement"), is by and among ANVIL KNITWEAR, INC., a Delaware
corporation (the "Borrower"), ANVIL HOLDINGS, INC., a Delaware corporation (the
"Parent Company"), the Subsidiaries of the Borrower identified on the signature
pages hereto and such other Subsidiaries of the Borrower which may hereafter
become a Guarantor in accordance with the terms hereof (hereinafter together
with the Parent Company sometimes referred to individually as a "Guarantor" and
collectively as the "Guarantors"), the various banks and lending institutions
identified on the signature pages hereto (each a "Bank" and collectively, the
"Banks"), NATIONSBANK, N.A. (successor in interest to NationsBank, N.A.
(Carolinas)), as agent for the Banks (in such capacity, the "Agent") and BANK OF
AMERICA ILLINOIS, BANQUE NATIONALE DE PARIS and HELLER FINANCIAL, INC., as
co-agents for the Banks (in such capacities, the "Co-Agents").
W I T N E S S E T H
WHEREAS, the Borrower and the Guarantors have requested that the Banks
provide an $55,000,000 credit facility for the purposes hereinafter set forth;
WHEREAS, the Banks have agreed to make the requested credit facility
available to the Borrower, and the Agent has accepted its duties hereunder, all
on the terms and conditions hereinafter set forth;
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1
DEFINITIONS AND ACCOUNTING TERMS
1.1 Definitions.
As used herein, the following terms shall have the meanings herein
specified unless the context otherwise requires. Defined terms herein shall
include in the singular number the plural and in the plural the singular:
"Acquisition" means the purchase (whether for cash, property,
services, assumption of Indebtedness, securities or otherwise) of (i) all
or substantially all of the assets of another
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Person or (ii) shares of capital stock, bonds, notes, debentures,
partnership, joint ventures or other ownership interests or other
securities of another Person.
"Additional Credit Party" means each Person that becomes a Guarantor
after the Closing Date, as provided in Section 6.12.
"Adjusted Eurodollar Rate" means, for the Interest Period for each
Eurodollar Loan comprising part of the same borrowing (including
conversions, extensions and renewals), a per annum interest rate equal to
the rate obtained by dividing (a) the offered quotation to first-class
banks by NationsBank for deposits in U.S. dollars in the London interbank
Eurodollar market at 11:00 A.M. (London time) (or as soon thereafter as is
practicable), in each case two Business Days before the first day of such
Interest Period, in an amount substantially equal to such Eurodollar Loan
comprising part of such borrowing (including conversions, extensions and
renewals) and for a period equal to such Interest Period (rounded to the
nearest 1/16th of 1%) by (b) a percentage equal to 100% minus the Adjusted
Eurodollar Rate Reserve Percentage for such Interest Period. As used
herein, "Adjusted Eurodollar Rate Reserve Percentage" for the Interest
Period for each Eurodollar Loan comprising part of the same borrowing
(including conversions, extensions and renewals), means the percentage
applicable two Business Days before the first day of such Interest Period
under regulations issued from time to time by the Board of Governors of
the Federal Reserve System (or any successor) for determining the maximum
reserve requirement (including, without limitation, any emergency,
supplemental or other marginal reserve requirement) for a member bank of
the Federal Reserve System in New York City with respect to liabilities or
assets consisting of or including eurocurrency liabilities, as such term
is defined in Regulation D (or with respect to any other category of
liabilities which includes deposits by reference to which the interest
rate on Eurodollar Loans is determined) having a term equal to the
Interest Period for which such Adjusted Eurodollar Reserve Percentage is
determined.
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling (including but not limited to all
directors and officers of such Person), controlled by or under direct or
indirect common control with such Person. A Person shall be deemed to
control a corporation if such Person possesses, directly or indirectly,
the power (i) to vote 10% or more of the securities having ordinary voting
power for the election of directors of such corporation or (ii) to direct
or cause direction of the management and policies of such corporation,
whether through the ownership of voting securities, by contract or
otherwise.
"Agent" means the agent for the Banks under this Credit Agreement as
identified in the recital of parties hereinabove, and any successors and
assigns in such capacity pursuant to Section 9.9.
"Agent's Fee Letter" means the letter agreement, dated as of
February 12, 1997, between the Agent and the Borrower, as amended,
modified, supplemented or replaced from time to time.
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"Agent's Fees" shall have such meaning as provided in Section
2.7(a).
"Applicable Margin" means, for purposes of calculating the
applicable interest rate for any day for any Revolving Loan, the
applicable rate of the Commitment Fee for any day for purposes of Section
2.7(b) or the applicable rate of the Standby Letter of Credit Fee for any
day for purposes of Section 2.7(c)(i), the appropriate applicable
percentage corresponding to the Ave. Funded Debt to Consolidated EBITDA
Ratio in effect as of the most recent Calculation Date:
Applicable Margin
<TABLE>
<CAPTION>
Ave. Funded Debt
Pricing to Consolidated Eurodollar Base Rate Standby Commitment
Level EBITDA Ratio Revolving Loans Revolving Loans Letters of Credit Fee
<S> <C> <C> <C> <C> <C>
I > 4.75 2.50% 1.50% 2.75% 0.50 %
II > 4.25 but < = 4.75 2.25% 1.25% 2.50% 0.50 %
III > 3.75 but < = 4.25 2.00% 1.00% 2.25% 0.50 %
IV > 3.25 but < = 3.75 1.75% 0.75% 2.00% 0.375 %
V > 2.75 but < = 3.25 1.50% 0.50% 1.75% 0.375 %
VI < = 2.75 1.25% 0.25% 1.50% 0.3125 %
</TABLE>
The Applicable Margins shall be determined and adjusted quarterly on the
date (each a "Calculation Date") five Business Days after the date by
which the Borrower is required to provide the officer's certificate in
accordance with the provisions of Section 6.1(e); provided, however that
the initial Applicable Margins shall be based on Pricing Level I (as shown
above) and shall remain at Pricing Level I until the first Calculation
Date subsequent to the Closing Date and, thereafter, the Pricing Level
shall be determined by the then current Ave. Funded Debt to Consolidated
EBITDA Ratio. Each Applicable Margin shall be effective from one
Calculation Date until the next Calculation Date.
"Asheville Property" means the property owned by the Borrower in
Swannanoa, Buncombe County, North Carolina.
"Asset Sale" means the sale, lease, conveyance or other disposition
of any assets, including, without limitation, (i) by way of a sale and
leaseback, (ii) any disposition by means of a merger, consolidation or
similar transaction, (iii) the sale or other transfer of any of the
capital stock of any Subsidiary and (iv) any "Asset Sale" as defined in
any Recapitalization Document; provided that Asset Sales shall not include
any Specified Sale, any Recovery Event or any Equity Transaction.
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"Ave. Funded Debt" means, as of the date of determination, the
arithmetic average of Consolidated Funded Debt (except with respect to the
fiscal quarter ended February 1, 1997, which for purposes of the
calculation of Ave. Funded Debt hereunder, Consolidated Funded Debt for
the fiscal quarter ended February 1, 1997, shall be deemed to be the
aggregate amount of Consolidated Funded Debt on the Closing Date
immediately after giving effect to the initial Extensions of Credit
hereunder, the Recapitalization and the issuance of the Senior Notes) as
of (i) the end of the fiscal quarter most recently ended, commencing with
the fiscal quarter ended February 1, 1997, and (ii) the end of each of the
three fiscal quarters immediately preceding such fiscal quarter, except
that prior to January 31, 1998, as of the end of the fiscal quarters
occurring after February 1, 1997.
"Ave. Funded Debt to Consolidated EBITDA Ratio" means, at the end of
each fiscal quarter, the ratio of (i) Ave. Funded Debt as of such date to
(ii) Consolidated EBITDA for the period of four consecutive quarters then
ended.
"Bankruptcy Code" means the Bankruptcy Code in Title 11 of the
United States Code, as amended, modified, succeeded or replaced from time
to time.
"Base Rate" means, for any day, a rate per annum (rounded if
necessary, to the nearest whole multiple of 1/100 of 1%) equal to the
greater of (a) the Federal Funds Effective Rate in effect on such day plus
1/2 of 1% or (b) the Prime Rate in effect on such day. If for any reason
the Agent shall have determined (which determination shall be conclusive
absent manifest error) that it is unable to ascertain the Federal Funds
Effective Rate for any reason, including the inability or failure of the
Agent to obtain sufficient quotations in accordance with the terms hereof,
the Base Rate shall be determined without regard to clause (a) of the
first sentence of this definition until the circumstances giving rise to
such inability no longer exist. Any change in the Base Rate due to a
change in the Prime Rate or the Federal Funds Effective Rate shall be
effective on the effective date of such change in the Prime Rate or the
Federal Funds Effective Rate, respectively.
"Base Rate Loan" means a Revolving Loan which bears interest based
on the Base Rate.
"Borrower" means Anvil Knitwear, Inc., a Delaware corporation as
identified and defined in the opening paragraph hereof.
"Borrower Obligations" means, without duplication, (i) all of the
obligations of the Borrower to the Banks, the Agent and the Issuing Bank
(including the obligations to pay principal of and interest on the
Revolving Loans, to pay LOC Obligations, to pay all Fees, to provide cash
collateral in respect of Letters of Credit, to pay certain expenses and
the obligations arising in connection with various indemnities in respect
thereof) whenever arising, under this Credit Agreement, the Revolving
Notes or any of the other Credit Documents to which the Borrower is a
party and (ii) all liabilities and obligations, whenever
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arising, owing from the Borrower to any Bank, or any Affiliate of a Bank,
arising under any Hedging Agreement.
"Borrowing Base" means, as of any day, the sum of (i) 85% of
Eligible Receivables, plus (ii) 60% of Eligible Raw Materials Inventory,
plus (iii) 50% of Eligible Finished Goods Inventory plus (iv) 50% of
Eligible Equipment plus (v) 50% of Eligible Real Estate, in each case as
set forth in the most recent Borrowing Base Certificate delivered to the
Agent and the Banks in accordance with the terms of Section 6.1(d).
"BRS" means Bruckmann, Rosser & Sherrill & Co., L.P., a Delaware
limited partnership, and its Affiliates (including for this purpose, all
of their respective employees, partners, officers and directors and family
members and relatives of such Persons).
"Business Day" means any day other than a Saturday, a Sunday, a
legal holiday or a day on which banking institutions are authorized or
required by law or other governmental action to close in Charlotte, North
Carolina or New York, New York; except that in the case of Eurodollar
Loans, such day is also a day on which dealings between banks are carried
on in U.S. dollar deposits in the London interbank market.
"Capital Expenditures" means all expenditures which in accordance
with generally accepted accounting principles would be classified as
capital expenditures, including without limitation, Capital Lease
Obligations.
"Capital Lease Obligations" means, as of any date, any lease of
property, real or personal, which should be capitalized as indebtedness on
a balance sheet of the lessee prepared as of such date, in accordance with
generally accepted accounting principles.
"Cash Equivalents" means (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the
United States of America is pledged in support thereof) having maturities
of not more than twelve months from the date of acquisition, (ii) U.S.
dollar denominated (or foreign currency fully hedged) time deposits,
certificates of deposit, Eurodollar time deposits and Eurodollar
certificates of deposit of (y) any domestic commercial bank of recognized
standing having capital and surplus in excess of $100,000,000 or (z) any
bank whose short-term commercial paper rating from S&P is at least A-1 or
the equivalent thereof or from Moody's is at least P-1 or the equivalent
thereof (any such bank being an "Approved Bank"), in each case with
maturities of not more than 270 days from the date of acquisition, (iii)
commercial paper and variable or fixed rate notes issued by any Approved
Bank (or by the parent company thereof) or any variable rate notes issued
by, or guaranteed by any domestic corporation rated A-2 (or the equivalent
thereof) or better by S&P or P-2 (or the equivalent thereof) or better by
Moody's and maturing within six months of the date of acquisition, (iv)
repurchase agreements with a bank or trust company (including any of the
Banks) or recognized securities dealer having capital and surplus in
excess of $100,000,000 for direct obligations issued by or fully
guaranteed by the United States of America in which the Borrower shall
have a perfected first priority security
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interest (subject to no other liens or encumbrances) and having, on the
date of purchase thereof, a fair market value of at least 100% of the
amount of the repurchase obligations and (v) investments in money market
funds substantially all of whose assets are comprised of securities of the
types described in clauses (i) -(iv) above.
"Certificate of Designation" means that certain Certificate of
Designation of the Powers, Preferences and Relative, Participating,
Optional and Other Special Rights of 13.00% Senior Exchangeable Preferred
Stock and Qualifications, Limitations and Restrictions Thereof, dated as
of the Closing Date and executed by the Parent Company, as amended,
modified, extended or replaced from time to time.
"Change of Control" means any of the following events:
(i) prior to a Qualifying Public Equity Offering, (a) the
failure of the Investors to beneficially own, directly or
indirectly, at least 51%, in the aggregate, of the Voting Stock of
the Parent Company (or in the case of a merger or consolidation
between the Parent Company and the Borrower, then of the survivor of
such merger or consolidation) or (b) the failure of the Investors,
collectively, to retain and exercise the unconditional right to
elect a majority of the Board of Directors of the Parent Company (or
in the case of a merger or consolidation between the Parent Company
and the Borrower, then of the survivor of such merger or
consolidation), or
(ii) after a Qualifying Public Equity Offering, (a) the
failure of the Investors to beneficially own, directly or
indirectly, at least 33 1/3%, in the aggregate, of the Voting Stock
of the Parent Company (or in the case of a merger or consolidation
between the Parent Company and the Borrower, then of the survivor of
such merger or consolidation) or (b) a Person or group (as such term
is defined in Section 13(d)(3) of the Securities Exchange Act of
1934, as amended) other than the Investors shall beneficially own,
directly or indirectly, in the aggregate, a greater percentage of
the Voting Stock of the Parent Company (or in the case of a merger
or consolidation between the Parent Company and the Borrower, then
of the survivor of such merger or consolidation) than the percentage
of such Voting Stock owned by the Investors;
(iii) at any time, a "Change of Control" shall occur under and
as defined in any Recapitalization Document.
"Closing Date" means the date hereof.
"Co-Agents" means the co-agents for the Banks under this Credit
Agreement as identified in the recital of parties hereinabove.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
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"Commitment" means the commitments of the Banks to make Revolving
Loans, of the Issuing Bank to issue Letters of Credit and of the Banks to
purchase participation interests in such Letters of Credit.
"Commitment Fee" shall have such meaning as provided in Section
2.7(b).
"Commitment Percentage" means, for any Bank, the percentage
identified as its Commitment Percentage on Schedule 2.1(a), as such
percentage may be modified in connection with any assignment made in
accordance with the provisions of Section 10.3.
"Consistent Basis" or "consistent basis" means, with regard to the
application of generally accepted accounting principles, accounting
principles consistent with those used and applied in preparation of the
audited consolidated financial statements of the Parent Company referred
to in Section 5.6(i).
"Consolidated Borrower Group" means the Parent Company, the Borrower
and the Guarantors.
"Consolidated EBIT" means, for a period of four consecutive quarters
ending as of the date of determination, Consolidated Net Income plus the
sum of (i) Consolidated Interest Expense, and (ii) provisions for Federal,
state, local and other taxes, in each case for the Consolidated Borrower
Group on a consolidated basis determined in accordance with generally
accepted accounting principles applied on a consistent basis.
"Consolidated EBITDA" means, for a period of four consecutive
quarters ending as of the date of determination, the sum of Consolidated
EBIT plus depreciation, amortization and all other non-cash expenses or
charges, including without limitation, any accrual necessary for purposes
of conforming with Financial Accounting Standards Board Statement Number
106 and 112 (as defined by generally accepted accounting principles) to
the extent that the accrued portion thereof constitutes a non-cash expense
or charge, any cost of sales arising from a step-up of inventory values as
a result of applying purchase accounting and any non-cash compensation
expense or charge for the Consolidated Borrower Group on a consolidated
basis as determined in accordance with generally accepted accounting
principles applied on a consistent basis; provided that each of the
foregoing items shall be added to Consolidated EBITDA only if, and to the
extent, such items were deducted in arriving at Consolidated EBIT for such
period.
"Consolidated Fixed Charge Coverage Ratio" means, at the end of each
fiscal quarter, the ratio of (i) Consolidated Net Income Available for
Fixed Charges for the period of four consecutive quarters then ended to
(ii) Consolidated Fixed Charges for the period of four consecutive
quarters then ended.
"Consolidated Fixed Charges" means, for a period of four consecutive
quarters ending as of the date of determination, the sum of (i)
Consolidated Interest Expense and (ii) scheduled principal payments of
Funded Debt and, without duplication, scheduled
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principal payments under Capital Lease Obligations, in each case for the
Consolidated Borrower Group on a consolidated basis as determined in
accordance with generally accepted accounting principles applied on a
consistent basis.
"Consolidated Funded Debt" means, at the end of each fiscal quarter,
Funded Debt then outstanding for the Consolidated Borrower Group on a
consolidated basis.
"Consolidated Interest Coverage Ratio" means, at the end of each
fiscal quarter, the ratio of (i) Consolidated EBITDA for the period of
four consecutive quarters then ended to (ii) Consolidated Interest Expense
for the period of four consecutive quarters then ended.
"Consolidated Interest Expense" means, for a period of four
consecutive quarters ending as of the date of determination, all cash
interest expense, including the cash interest component under Capital
Lease Obligations (but excluding, in any event, interest which is paid in
kind rather than in cash, amortization of debt discount, deferred
financing costs and fees and stock dividends on preferred stock and any
and all fees and expenses paid in connection with the incurrence and
maintenance of interest rate protection agreements), for the Consolidated
Borrower Group on a consolidated basis determined in accordance with
generally accepted accounting principles applied on a consistent basis.
"Consolidated Net Income" means, for a period of four consecutive
quarters ending as of the date of determination, the net income (or loss,
as the case may be) for such period for the Consolidated Borrower Group on
a consolidated basis determined in accordance with generally accepted
accounting principles applied on a consistent basis, but for purposes of
determining compliance with or the calculation of, as the case may be, the
Ave. Funded Debt to Consolidated EBITDA Ratio, the Consolidated Fixed
Charge Coverage Ratio and the Consolidated Interest Coverage Ratio
(including the determination of amounts calculated from the financial
definitions included therein), excluding:
(a) any extraordinary gains or losses on the sale or other
disposition of assets, and any taxes on such excluded gains and any
tax deductions or credits on account of any such excluded losses;
(b) the proceeds of any life insurance policy;
(c) the expense or charge resulting from interest rate
protection agreements; and
(d) any income or expense of foreign operations.
"Consolidated Net Income Available for Fixed Charges" means, for a
period of four consecutive quarters ending as of the date of
determination, Consolidated EBITDA minus (x) cash taxes actually paid and
minus (y) the amount of Capital Expenditures actually paid in cash during
such period, in each case for the Consolidated Borrower Group on a
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consolidated basis as determined in accordance with generally accepted
accounting principles applied on a consistent basis.
"Controlled Group" means (i) the controlled group of corporations as
defined in Section 414(b) of the Code and the applicable regulations
thereunder, or (ii) the group of trades or businesses under common control
as defined in Section 414(c) of the Code and the applicable regulations
thereunder, of which the Borrower is a part or becomes a part.
"Credit Documents" means this Credit Agreement, the Revolving Notes,
the LOC Documents, any Joinder Agreement, the Security Agreement, the
Mortgages and all other related agreements and documents issued or
delivered hereunder or thereunder or pursuant hereto or thereto.
"Credit Party" means each of the Borrower and each of the
Guarantors.
"Default" means any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
"Documentary Letter of Credit Fee" shall have such meaning as
provided in Section 2.7(c)(ii).
"Domestic Credit Party" means a Credit Party formed and existing
under the laws of the United States or any state or commonwealth thereof
or under the laws of the District of Columbia.
"Domestic Subsidiary" means a Subsidiary of the Borrower, whether
direct or indirect, which is organized and existing under the laws of the
United States or any state or commonwealth thereof or under the laws of
the District of Columbia.
"Eligible Assignee" means any Bank or Affiliate or Subsidiary of a
Bank, and any other commercial bank, financial institution or "accredited
investor" (as defined in Regulation D of the Securities and Exchange
Commission) reasonably acceptable to the Agent and the Borrower.
"Eligible Equipment" means, as of any date of determination, (i) the
sum of (A) $30,079,700 plus (B) the aggregate cumulative gross dollar
value (valued at total purchase price (including cash and noncash
consideration)) paid for all equipment, furniture and fixtures acquired by
any Credit Party after the Closing Date minus (ii) the aggregate
cumulative gross cash purchase price (including cash and noncash
consideration) received for any all equipment, furniture and fixtures
sold, transferred or otherwise disposed of by any Credit Party; provided
that, in no event, shall Eligible Equipment include any equipment,
furniture or fixture (x) subject to any Lien (other than a Permitted
Lien), (y) not useable or saleable at prices approximating their cost
(after taking into account, without duplication, the amount of any
reserves for obsolescence, unsaleability or decline in value) or (z)
located outside of the United States.
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<PAGE>
"Eligible Finished Goods Inventory" means, as of any date of
determination, the gross dollar value (valued at the lower of cost or fair
market value (on a FIFO basis) of all finished goods inventory (including
for purposes hereof, finished goods inventory which is in transit back to
a Credit Party) of the Borrower or other Credit Party less appropriate
reserves determined in accordance with generally accepted accounting
principles applied on a Consistent Basis but excluding in any event and
without duplication, to the extent not treated accordingly by such
generally accepted accounting principles, (i) inventory subject to any
Lien (other than a Permitted Lien), (ii) inventory which fails to meet
standards for sale or use imposed by governmental agencies, departments or
divisions having regulatory authority over such goods, (iii) inventory
which is not useable or saleable at prices approximating their cost (after
taking into account, without duplication, the amount of any reserves for
obsolescence, unsaleability or decline in value), (iv) inventory located
outside of the United States (unless in transit back to a Credit Party),
(v) inventory in the possession of domestic contractors (other than a
Credit Party) or other third parties, and (vi) all work in process.
"Eligible Raw Materials Inventory" means, as of any date of
determination, the gross dollar value (valued at the lower of cost or fair
market value (on a FIFO basis) of all raw materials (including for
purposes hereof, uncut dyed or greige cloth) of the Borrower or other
Credit Party less appropriate reserves determined in accordance with
generally accepted accounting principles applied on a Consistent Basis but
excluding in any event, to the extent not treated accordingly by such
generally accepted accounting principles and without duplication, (i)
inventory subject to any Lien (other than a Permitted Lien), (ii)
inventory which fails to meet standards for sale or use imposed by
governmental agencies, departments or divisions having regulatory
authority over such goods, (iii) inventory which is not useable or
saleable at prices approximating their cost (after taking into account,
without duplication, the amount of any reserves for obsolescence,
unsaleability or decline in value), (iv) inventory located outside of the
United States (unless in transit back to a Credit Party), (v) inventory in
the possession of domestic contractors (other than a Credit Party) or
other third parties, and (vi) all work in process (except uncut dyed or
greige cloth).
"Eligible Real Estate" means, as of any date of determination, (i)
the sum of (A) $13,625,000 plus (B) the aggregate cumulative gross dollar
value (valued at total purchase price (including cash and noncash
consideration)) of all real property acquired by any Credit Party after
the Closing Date, minus (ii) the aggregate cumulative gross cash purchase
price (including cash and noncash consideration) of any Eligible Real
Estate sold, transferred or otherwise disposed of by any Credit Party;
provided that, in no event, shall Eligible Real Estate include (i) real
property subject to any Lien (other than a Permitted Lien), (ii) real
property located outside of the United States, (iii) real property the
value of which is materially and adversely impaired by (A) any "release"
of any "hazardous substances" (as such terms are defined in the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, 42 U.S.C. ss.ss. 9601 et seq., as amended, and the regulations
promulgated thereunder) or (B) any federal, state or local regulation with
respect to the presence of stored, leaked or spilled petroleum products,
waste materials or debris,
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<PAGE>
"PCB's" or PCB items (as such term is defined in 40 C.F.R. ss.763.3),
underground storage tanks, "asbestos" (as such term is defined in 40
C.F.R. ss.763.63) or the past or present accumulation, spillage or leakage
of any such substance, or (iv) real property with respect to which the
Agent and the Banks shall not have received all items required to be
delivered pursuant to Sections 6.14; provided, however, that the
provisions of the foregoing clause (iii) shall not be deemed to exclude
the Asheville Property (on the basis of, and only so long as the Borrower
is to be indemnified for, information relating to such property disclosed
in the Phase I Environmental Report previously delivered to the Agent and
the Banks).
"Eligible Receivables" means, as of any date of determination, the
aggregate gross amount of all accounts receivable, receivables and
obligations for payment created or arising from the sale of inventory or
the rendering of services in the ordinary course of business, owned by or
owing to the Borrower or other Credit Party, net of allowances and
reserves for doubtful or uncollectible accounts and sales adjustments
consistent with the Borrower's internal policies and in any event in
accordance with generally accepted accounting principles applied on a
Consistent Basis (hereinafter sometimes referred to collectively as
"Receivables"), but excluding, without duplications in any event (i)
Receivables (a) not subject to a perfected, first priority Lien in favor
of the Agent or (b) subject to any other Lien that is not a Permitted
Lien, (ii) Receivables which are outstanding more than 90 days from the
due date of the original invoice or more than 180 days from the date of
shipment, (iii) Receivables evidenced by notes, chattel paper or other
instruments, unless such notes, chattel paper or instruments have been
delivered to and are in the possession of the Agent or collateral agent
designated by the Banks, (iv) Receivables with respect to which the
account debtor is not solvent or is the subject of any bankruptcy or
insolvency proceedings of any kind, (v) Receivables owing by an account
debtor located outside of the United States (unless payment for the goods
shipped is secured by an irrevocable letter of credit in a form and from
an institution acceptable to the Agent), (vi) Receivables which are
contingent or subject to offset, deduction, counterclaim, dispute or other
defense to payment, in each case to the extent of such offset, deduction,
counterclaim dispute or other defense, and (vii) Receivables arising out
of transactions with Subsidiaries or Affiliates of the Borrower.
"Equity Transaction" means (i) the issuance by the Parent Company,
the Borrower or any of its Subsidiaries of new shares of its capital
stock, unless such new shares are being issued as a dividend or in
exchange for an ownership interest in another Person or in exchange for
substantially all of the assets of another Person in connection with an
acquisition not prohibited by Section 7.4, (ii) an issuance by the Parent
Company, the Borrower or any of its Subsidiaries of any shares of its
capital stock pursuant to the exercise of options or warrants and (iii) an
issuance by the Parent Company, the Borrower or any of its Subsidiaries of
any shares of its capital stock pursuant to the conversion of any debt
securities (including without limitation any Subordinated Debt) to equity,
provided, however, Equity Transactions shall not include, (A) the issuance
and sale by the Parent Company of common capital stock pursuant to, and to
the extent permitted by, Section 2.2(d) of the Recapitalization Agreement,
(B) the Units Offering (and the payment of dividends-in-kind on the
securities issued thereunder), (C) the issuance of shares of capital stock
or options or warrants or similar rights in respect thereof to any
Investors, (D) the
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issuance of shares of capital stock of a Credit Party other than the
Parent Company to another Credit Party and (E) the issuance of shares of
capital stock (other than pursuant to a public offering of such capital
stock registered under the Securities Act of 1933, as amended), to the
extent the Net Proceeds therefrom are used to purchase or otherwise
acquire new assets or property, provided that such purchase or acquisition
is committed to within 180 days of receipt of such Net Proceeds and such
purchase or acquisition is consummated within 270 days of such receipt.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations promulgated and the
rulings issued thereunder.
"ERISA Affiliate" means each person (as defined in Section 3(9) of
ERISA) which together with the Borrower or any Subsidiary of the Borrower
would be deemed to be a member of the same "controlled group" within the
meaning of Section 414(b), (c), (m) and (o) of the Code.
"Eurodollar Loan" means a Revolving Loan which bears interest based
on the Adjusted Eurodollar Rate.
"Event of Default" has the meaning specified in Section 8.
"Exchange Debenture" means any one of the 13.00% Subordinated
Exchange Debentures due 2009, issued by the Parent Company at its option,
if ever, in exchange for Senior Preferred Stock as contemplated by, and to
the extent permitted by, Section "g" of the Certificate of Designation, in
each case as amended, modified, extended or replaced from time to time.
"Exchange Debenture Indenture" means that certain Indenture, dated
as of the Closing Date, by and among the Parent Company and United States
Trust Company of New York, as trustee for the Exchange Debentureholders,
as amended, modified, extended or replaced from time to time.
"Exchange Debentureholder" means, in the event that the Senior
Preferred Stock is exchanged for the Exchange Debentures, any one of the
holders from time to time of the Exchange Debentures.
"Excluded Taxes" shall have such meaning as provided in Section
2.12(a).
"Existing Credit Agreement" means that certain Credit Agreement,
dated as of January 30, 1995, by and among Anvil Knitwear, Inc., Anvil
Holdings, Inc., Anvil (Czech), Inc., certain subsidiaries of Anvil
Knitwear, Inc. as guarantors thereunder, the various banks and lending
institutions party thereto, NationsBank, N.A. (as successor in interest to
NationsBank, N.A. (Carolinas)), as Agent, and The Chase Manhattan Bank,
N.A., as Documentation Agent, as amended from time to time.
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<PAGE>
"Existing Letters of Credit" means any one of the letters of credit
described by date of issuance, letter of credit number, undrawn amount,
name of beneficiary and date of expiry on Schedule 1.1A.
"Extension of Credit" means any Revolving Loan advance, any issuance
or extension of any Letter of Credit or any purchase of a participation in
any Letter of Credit.
"Federal Funds Effective Rate" means, for any day, the weighted
average of the rates on overnight Federal funds transactions with members
of the Federal Reserve System arranged by Federal Funds brokers as
published for such day by the Federal Reserve Bank of New York, or, if
such rate is not so released for any day which is a Business Day, the
arithmetic average (rounded upwards to the nearest 1/100th of 1%) of the
quotations for such day on such transactions received by the Agent from
three Federal Funds brokers of recognized standing selected by the Agent.
"Fees" means all fees payable pursuant to Section 2.7.
"Funded Debt" means, without duplication, as of the date of
determination, (i) the principal amount of all indebtedness for borrowed
money, or indebtedness which has been assumed in connection with the
acquisition of assets, in each case having a final maturity of one or more
years from the date of the obligation with respect to such indebtedness is
created (or which is renewable or extendible at the option of the obligor
for a period or periods more than one year from the date the obligation
with respect to such indebtedness is created), (ii) the present value of
all obligations in respect of Capital Lease Obligations, (iii) all
guaranty and contingent obligations, including letter of credit and
purchase obligations and (iv) outstanding withdrawal liability or
insufficiency under ERISA or under any qualified plan or related trust;
provided, however, that for purposes of determining the appropriate
Applicable Margin, amounts outstanding under this Credit Agreement shall
be calculated as the arithmetic average of the principal amount of
Revolving Loans outstanding as of the date of computation and as of the
end of each of the three immediately preceding fiscal quarters. Funded
Debt shall include, without duplication, payments in respect of Funded
Debt which constitute current liabilities of the obligor under generally
accepted accounting principles. Notwithstanding the foregoing, Funded Debt
shall not include (i) any and all subordinated indebtedness permitted by
Section 7.1(j) and any and all pay-in-kind notes issued in respect
thereof, unless and until such time as the Borrower may be merged with the
Parent Company, at which time such indebtedness shall be included as
Funded Debt hereunder, and (ii) any indebtedness evidenced by interest
rate protection agreements.
"Generally Accepted Accounting Principles" or "generally accepted
accounting principles" means generally accepted accounting principles in
effect in the United States on the Closing Date unless otherwise specified
herein. In the event there shall be a change in such generally accepted
accounting principles or a change in the way they are to be applied, the
Borrower may request, and upon any such request, the Agent and the Banks
will
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consider and negotiate in good faith, a modification of the financial
covenants to take into account the effect of any such changes.
"Governmental Authority" means any Federal, state, local or foreign
court or governmental agency, authority, instrumentality or regulatory
body.
"Government Acts" shall have such meaning as provided in Section
2.13.
"Guarantor" means the Parent Company, each of the parties identified
as "Guarantors" on the signature pages hereto and each Additional Credit
Party which has executed a Joinder Agreement pursuant to Section 6.12.
"Guaranty Obligations" means any obligations (other than
endorsements in the ordinary course of business of negotiable instruments
for deposit or collection) guaranteeing or intended to guarantee any
Indebtedness, leases, dividends or other monetary obligations of any other
Person in any manner, whether direct or indirect, and including without
limitation any obligation, whether or not contingent, (i) to purchase any
such Indebtedness or other monetary obligation or any property
constituting security therefor, (ii) to advance or provide funds or other
support for the payment or purchase of such Indebtedness or monetary
obligation or to maintain working capital, solvency or other balance sheet
condition of such other Person (including without limitation keep well
agreements, maintenance agreements, comfort letters or similar agreements
or arrangements), (iii) to lease or purchase property, securities or
services primarily for the purpose of assuring the owner of such
Indebtedness or monetary obligation, or (iv) to otherwise assure or hold
harmless the owner of such Indebtedness or monetary obligation against
loss in respect thereof. The amount of Guaranty Obligations hereunder
shall be deemed to be an amount equal to the stated or determinable amount
of the Indebtedness or monetary obligation in respect of which such
Guaranty Obligation is made or, if not stated or determinable, the maximum
reasonably anticipated amount in respect thereof (assuming such other
Person is required to perform thereunder) as determined in good faith.
"Hedging Agreements" means any interest rate protection agreement or
foreign currency exchange agreement between the Borrower and any Bank, or
any Affiliate of a Bank.
"Indebtedness", of any Person, means without duplication, (i) all
indebtedness for borrowed money, (ii) the deferred purchase price of
assets or services which in accordance with generally accepted accounting
principles would be shown to be a liability (or on the liability side of a
balance sheet), (iii) all Guaranty Obligations, (iv) the maximum amount of
all letters of credit issued or acceptance facilities established for the
account of such Person and, without duplication, all drafts drawn
thereunder (other than letters of credit (x) supporting other Indebtedness
of the Borrower or a Credit Party or (y) offset by a like amount of cash
or government securities held in escrow to secure such letter of credit
and draws thereunder), (v) all Capital Lease Obligations, (vi) all
Indebtedness of another Person secured by any Lien on any property of the
Borrower or a Credit Party, whether or not such
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<PAGE>
Indebtedness has been assumed, (vii) all obligations under take-or-pay or
similar arrangements or (viii) all obligations under interest rate,
currency, or commodities agreements; but specifically excluding from the
foregoing trade payables and accrued expenses arising or incurred in the
ordinary course of business.
"Interest Payment Date" means (i) as to Base Rate Loans, the last
day of each month and on the Termination Date, and (ii) as to Eurodollar
Loans, on the last day of each Interest Period for such Eurodollar Loan
and on the Termination Date, and in addition where the applicable Interest
Period is more than 3 months, then also on the date 3 months from the
beginning of the Interest Period and each 3 months thereafter. If an
Interest Payment Date falls on a date which is not a Business Day, such
Interest Payment Date shall be deemed to be the next succeeding Business
Day, except that in the case of Eurodollar Loans where the next succeeding
Business Day falls in the next succeeding calendar month, then on the next
preceding day.
"Interest Period" means, as to Eurodollar Loans, a period of one,
two, three, six or, if available, twelve months' duration, as the Borrower
may elect, commencing in each case, on the date of the borrowing
(including conversions, extensions and renewals); provided, however, (A)
if any Interest Period would end on a day which is not a Business Day,
such Interest Period shall be extended to the next succeeding Business Day
(except that in the case of Eurodollar Loans where the next succeeding
Business Day falls in the next succeeding calendar month, then on the next
preceding Business Day), (B) no Interest Period shall extend beyond the
Termination Date, and (C) in the case of Eurodollar Loans, where an
Interest Period begins on a day for which there is no numerically
corresponding day in the calendar month in which the Interest Period is to
end, such Interest Period shall end on the last day of such calendar
month.
"Investments" in any Person means (a) any Acquisition or (b) any
deposit with, or advance, loan or other extension of credit to, such
Person (other than deposits made in connection with the purchase of
equipment or other assets in the ordinary course of business) or (c) any
other capital contribution to or investment in such Person, including,
without limitation, any Guaranty Obligation (including any support for a
Letter of Credit issued on behalf of such Person) incurred for the benefit
of such Person.
"Investors" means, collectively, (i) BRS, (ii) Venture Partners,
(iii) all of the members of the Management Group and (iv) in the case of
any individual included in clauses (i)-(iii) above, any family member or
relative of such individual.
"Issuing Bank" means NationsBank or such other Bank as to which the
Borrower has requested and the Required Banks may agree, which consent
shall not be unreasonably withheld. There shall be no more than one
Issuing Bank at any time; provided, however, that should there be a change
in the Issuing Bank any Letters of Credit then issued and outstanding need
not be replaced, but may remain outstanding.
"Issuing Bank Fees" shall have such meaning as provided in Section
2.7(c).
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<PAGE>
"Joinder Agreement" means a Joinder Agreement substantially in the
form of Schedule 6.12 hereto executed and delivered by an Additional
Credit Party in accordance with the provisions of Section 6.12.
"Letter of Credit" means (i) each standby letter of credit or
documentary letter of credit issued for the account of the Borrower by an
Issuing Bank pursuant to the letter of credit subfacility provided in
Section 2.4, as such letter of credit may be amended, modified, extended,
renewed or replaced from time to time and (ii) each Existing Letter of
Credit.
"Letter of Credit Fees" means, collectively, the Standby Letter of
Credit Fee and the Documentary Letter of Credit Fee.
"Lien" means any mortgage, pledge, hypothecation, assignment,
deposit arrangement, security interest, encumbrance, lien (statutory or
otherwise), preference, priority or charge of any kind (including any
agreement to give any of the foregoing, any conditional sale or other
title retention agreement, any financing or similar statement or notice
filed under the Uniform Commercial Code as adopted and in effect in the
relevant jurisdiction or other similar recording or notice statute, and
any lease in the nature thereof); provided, that any financing statement
or similar statement filed without the consent of a Credit Party shall not
constitute a Lien if such statement does not secure an obligation due and
owing by a Credit Party and such Credit Party shall take prompt action to
have the statements terminated or otherwise removed.
"LOC Committed Amount" shall have such meaning as provided in
Section 2.4(a).
"LOC Documents" means, with respect to any Letter of Credit, such
Letter of Credit, any amendments thereto, any documents delivered in
connection therewith, any application therefor, and any agreements,
instruments, guarantees or other documents (whether general in application
or applicable only to such Letter of Credit) governing or providing for
(i) the rights and obligations of the parties concerned or at risk or (ii)
any collateral security for such obligations.
"LOC Obligations" means, at any time, the sum of (i) the maximum
amount which is, or at any time thereafter may become, available to be
drawn under Letters of Credit then outstanding, assuming compliance with
all requirements for drawings referred to in such Letters of Credit plus
(ii) the aggregate amount of all drawings under Letters of Credit honored
by the Issuing Bank but not theretofore reimbursed.
"Management Group" means any bona fide director, officer or employee
of any Credit Party.
"Mandatory Borrowing" shall have such meaning as provided in Section
2.4(e).
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<PAGE>
"Material Adverse Effect" means a material adverse effect, after
taking into account applicable insurance and/or indemnities, if any, on
(i) the operations, financial condition or business of the Borrower and
its Subsidiaries taken as a whole, (ii) the ability of the Borrower and
the Guarantors, taken as a whole, to perform their respective obligations
to the Banks under this Credit Agreement, or (iii) the validity or
enforceability of this Credit Agreement, any of the other Credit
Documents, or the rights and remedies of the Banks hereunder or
thereunder.
"Moody's" means Moody's Investors Service, Inc., and any successor
thereof.
"Mortgages" means those Mortgages, Deeds of Trust, Leasehold
Mortgages, Collateral Assignments of Leases (and related Subordination,
Attornment and Non-Disturbance Agreements from the Landlords thereof, if
any) or other similar instruments encumbering real property pledged to
secure the Borrower Obligations, as amended, modified, extended, renewed
or replaced from time to time in connection with the Credit Agreement or
otherwise.
"Multiemployer Plan" means at any time an employee pension benefit
plan within the meaning of Section 4001(a)(3) of ERISA to which any member
of the Controlled Group is then making or accruing an obligation to make
contributions or has within the preceding five plan years made
contributions, including for these purposes any Person which ceased to be
a member of the Controlled Group during such five year period but only
with respect to the period during which such Person was a member of the
Controlled Group.
"NationsBank" means NationsBank, N.A. (successor in interest to
NationsBank, N.A. (Carolinas)) or its successors.
"Net Proceeds" means, the aggregate cash proceeds (including,
without limitation, any cash received upon the sale or other disposition
of any non-cash consideration) received by any Credit Party in respect of
any Asset Sale, any Recovery Event or any Equity Transaction, net of (i)
direct costs relating thereto (including, without limitation, legal,
accounting and investment banking fees, and sales commissions) and any
relocation expenses incurred as a result thereof, (ii) taxes paid or
payable as a result thereof (after taking into account any available tax
credits or deductions and any tax sharing arrangements), (iii)
Indebtedness (other than Indebtedness of the Banks pursuant to the Credit
Documents) which is secured by the assets which are the subject of such
event to the extent such Indebtedness is paid with a portion of the
proceed therefrom and (iv) with respect to any Asset Sale, any reserve for
adjustment in respect of the sale price of such asset or assets
established in accordance with generally accepted accounting principles.
"Notice of Borrowing" shall have such meaning as provided in
Sections 2.1(b)(i).
"Notice of Conversion" shall have such meaning as provided in
Section 2.3.
"Other Taxes" shall have such meaning as provided in Section
2.12(c).
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<PAGE>
"PBGC" means the Pension Benefit Guaranty Corporation established
under ERISA, and any successor thereto.
"Parent Company" means Anvil Holdings, Inc., a Delaware corporation.
"Participation Interest" means the purchase of a participation
hereunder in Letters of Credit or LOC Obligations as provided in Section
2.4(c) or in Revolving Loans as provided in Section 2.17.
"Permitted Acquisition" means an Acquisition by any Credit Party
(other than the Parent Company), provided that (i) the assets, shares of
capital stock or other ownership interests acquired in such Acquisition
relate to a line of business similar to or are logical extensions of the
business of the Borrower and its Subsidiaries engaged in on the Closing
Date, (ii) in the case of an Acquisition of the capital stock or other
ownership interests of another Person, the board of directors (or other
comparable governing body) of such other Person shall have duly approved
such Acquisition, (iii) a knowledgeable financial officer of the Borrower
shall have delivered to the Agent a certificate demonstrating that, upon
giving effect to such Acquisition on a Pro Forma Basis, the Credit Parties
shall be in compliance with all of the covenants set forth in Section
6.11, (iv) the representations and warranties made by the Credit Parties
in any Credit Document shall be true and correct in all material respects
at and as if made as of the date of such Acquisition (after giving effect
thereto) except to the extent such representations and warranties
expressly relate to an earlier date and (v) the aggregate cumulative cash
paid (including cash payments on non-cash consideration or assumed
indebtedness when and as paid) for all such Acquisitions occurring after
the Closing Date shall not exceed $20,000,000.
"Permitted Investments" means (i) cash and Cash Equivalents, (ii)
receivables owing to any Credit Party or any of its receivables and
advances to suppliers, in each case if created, acquired or made in the
ordinary course of business and payable or dischargeable in accordance
with customary trade terms, (iii) subject to the limitations set forth in
Section 7.4, if any, Investments in a Domestic Credit Party (other than
the Parent Company except as permitted by Section 7.7), including any
Investment in a corporation which, after giving effect to such Investment,
will become an Additional Credit Party (provided such Additional Credit
Party shall execute a Joinder Agreement), (iv) Investments in the usual
and ordinary course of business to officers, directors and employees of
any Credit Party for expenses (including moving expenses related to a
transfer) incidental to carrying on the business of such Credit Party in
an aggregate amount not to exceed $500,000 at any time outstanding for all
of the Credit Parties, (v) Investments (including debt obligations)
received in connection with the bankruptcy or reorganization of suppliers
and customers and in settlement of delinquent obligations of, and other
disputes with, customers and suppliers arising in the ordinary course of
business, (vi) Permitted Acquisitions, (vii) additional Investments of a
nature not contemplated by the foregoing clauses (i)-(vi) hereof, provided
that such Investments made pursuant to this clause (vii) shall not exceed
an aggregate amount at any time outstanding equal to $7,750,000, (viii)
non-cash proceeds
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<PAGE>
from asset sales not prohibited by the terms of this Credit Agreement,
(ix) any Investment occurring as a result of any and all Hedging
Agreements, (x) any pledges or deposits permitted by Section 7.2, to the
extent considered an Investment, (xi) Guaranty Obligations permitted by
Section 7.1, and (xii) purchase money loans to any member of the
Management Group to the extent that, in the case of any such loan, such
loan evidences payment for capital stock issued by any Credit Party and
only if, and to the extent, such loan merely evidences a purchase money
obligation therefor and not cash advanced.
"Permitted Liens" means (i) Liens created by, under or in connection
with this Credit Agreement or the other Credit Documents; (ii) Liens
described on Schedule 7.2 attached hereto and Liens created in connection
with the refinancing, renewal, refunding or replacement of the
Indebtedness which is secured by such Liens described on Schedule 7.2 to
the extent permitted hereunder; (iii) Liens for taxes not yet delinquent
or Liens for taxes being contested in good faith by appropriate
proceedings for which adequate reserves determined in accordance with
generally accepted accounting principles have been established; (iv) Liens
in respect of property imposed by law arising in the ordinary course of
business such as materialmen's, mechanics', warehousemen's and other like
Liens provided that such Liens secure only amounts not yet due and
payable; (v) pledges or deposits made to secure payment of worker's
compensation insurance, unemployment insurance, pensions or social
security programs; (vi) Liens arising from good faith deposits in
connection with or to secure performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, government contracts,
performance and return-of-money bonds, and securing liabilities to
insurance carriers under insurance or self-insurance arrangements and
other similar obligations incurred in the ordinary course of business
(other than obligations in respect of the payment of borrowed money);
(vii) easements, rights-of-way, restrictions (including zoning
restrictions), minor defects or irregularities in title and other similar
charges or encumbrances not, in any material respect, impairing the use of
such property for its intended purposes or interfering with the ordinary
conduct of business of the Borrower and its Subsidiaries and such other
restrictions or exceptions set forth in the title insurance policies or
title commitments delivered to the Agent on the Closing Date; (viii) Liens
arising from UCC financing statements regarding leases permitted by this
Credit Agreement; (ix) leases or subleases granted to others in the
ordinary course of business not interfering in any material respect with
the business or operations of the Borrower and its Subsidiaries; (x)
purchase money Liens securing purchase money Indebtedness to the extent
permitted under Section 7.1; (xi) any Lien existing on any property or
asset prior to the acquisition thereof by the Borrower and its
Subsidiaries to the extent such Liens and the Indebtedness relating
thereto are permitted by Section 7.1; (xii) Liens arising from and out of
judgments or decrees in existence at such time not constituting an Event
of Default, (xiii) other Liens securing Indebtedness which does not exceed
$100,000 in the aggregate at any time outstanding and (xiv) other Liens
arising in the ordinary course of business of any of the Credit Parties
which are not incurred in connection with the borrowing of money or the
obtaining of advances or credit and which do not materially detract from
the value of its property or assets or materially impair the use thereof
in the operation of its business.
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"Person" means any individual, partnership, joint venture, firm,
limited liability company, corporation, association, trust or other
enterprise (whether or not incorporated), or any government or political
subdivision or any agency, department or instrumentality thereof.
"Plan" means any single-employer plan as defined in Section 4001(15)
of ERISA, which is maintained, or at any time during the five calendar
years preceding the date of this Credit Agreement was maintained, for
employees of the Borrower or any Subsidiary.
"Plan Year" means, with respect to each Plan, such term as defined
in such Plan.
"Prime Rate" means the rate of interest per annum publicly announced
from time to time by NationsBank as its prime rate in effect at its
principal office in Charlotte, North Carolina; each change in the Prime
Rate shall be effective on the date such change is publicly announced as
effective.
"Pro Forma Basis" means, with respect to any Acquisition, that such
Acquisition shall be deemed to have occurred as of the first day of the
four fiscal quarter period ended as of the most recent date of
determination preceding the date of such Acquisition with respect to which
the Agent and the Banks have received the most recent financial
information required by the terms of Section 6.1(a) and (b), together with
the related officer's certificate required to be delivered by the terms of
Section 6.1(f). For purposes of any such calculation, the principles set
forth in Section 1.3 shall be applicable.
"pro rata" or "pro rata share" or "ratable" means, at any time, (i)
as to the Total Revolving Obligations, with respect to each of the
respective Total Revolving Obligations (i.e. Revolving Loans, LOC
Obligations and Participation Interests), the proportion that such
respective Total Revolving Obligations bear to all Total Revolving
Obligations then outstanding, and (ii) as to each Bank, with respect to
each of the respective Total Revolving Obligations, the proportion that
the Total Revolving Obligations of such Bank bear to all such Total
Revolving Obligations then outstanding; provided that with respect to LOC
Obligations, as to Banks other than the Issuing Bank, each such Bank's
respective Participation Interest therein shall be treated as a direct
interest, and as to the Issuing Bank, only the portion of the LOC
Obligations which is not subject to Participation Interests of the other
Banks shall be treated as its interest therein.
"Qualifying Public Equity Offering" means a primary public offering
of common equity of the Parent Company (or in the case of a merger or
consolidation between the Parent Company and the Borrower, then of the
survivor of such merger or consolidation) which results in receipt by the
Parent Company of at least $30,000,000 in gross proceeds.
"Recapitalization" means the recapitalization of the Parent Company
pursuant to the terms of the Recapitalization Agreement, together with the
transactions contemplated by Section 2.2 thereof and the performance of
the obligations contemplated thereby.
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"Recapitalization Agreement" means that certain Recapitalization
Agreement, dated as of February 12, 1997, by and among the Parent Company,
Anvil VT, Inc., Vestar Equity Partners, L.P., Venture Partners, certain
members of the Management Group party thereto, BRS and the other existing
stockholders of the Parent, as amended, modified, extended or replaced
from time to time.
"Recapitalization Documents" means the Recapitalization Agreement,
the Senior Note Purchase Agreement, the Senior Note Indenture, the Units
Purchase Agreement, the Certificate of Designation, the Units Registration
Rights Agreement, the Units Stockholders Agreement and, if the Exchange
Debentures are issued, the Exchange Debenture Indenture.
"Receivables" shall have such meaning as provided in the definition
of "Eligible Receivables".
"Recovery Event" means the receipt by any Credit Party of any cash
insurance proceeds or condemnation award payable by reason of theft, loss,
physical destruction or damage, taking or similar event with respect to
any property or assets of any Credit Party.
"Registration Rights Agreement" means that certain Registration
Rights Agreement, dated as of the Closing Date, by and among Venture
Partners, BRS, Donaldson, Lufkin & Jenrette Securities Corporation and
certain members of the Management Group party thereto, as amended,
modified, extended or replaced from time to time.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof establishing reserve requirements.
"Regulation G" means Regulation G of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof establishing margin requirements.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof establishing margin requirements.
"Regulation X" means Regulation X of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to
all or a portion of establishing margin requirements.
"Reportable Event" means a "reportable event" as defined Section
4043 of ERISA with respect to which the notice requirements to the PBGC
have not been waived.
"Required Banks" means, at any time, (i) prior to termination of the
Commitments in their entirety hereunder, Banks holding 51% or more of the
aggregate of the Commitments (determined for purposes hereof based on each
Bank's Commitment
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Percentage), or (ii) after termination of the Commitments in their
entirety hereunder, Banks holding 51% or more of the Total Revolving
Obligations then outstanding (taking into account, and counting as direct
interests for purposes hereof the Participation Interests therein).
"Restricted Payment" means (i) any payment by any member of the
Consolidated Borrower Group of a dividend (other than a dividend payable
solely in stock) on, or any payment on account of the purchase, redemption
or retirement of, or any other distribution on (other than a distribution
of capital stock), any shares of any class of stock of any Credit Party,
except if and to the extent not prohibited by Section 7.7, and (ii) any
loan, advance or other payment by any member of the Consolidated Borrower
Group to any Affiliate of the Borrower or the Parent Company other than
(x) Permitted Investments, (y) any loan, advance or other payment referred
to in Section 7.8 or (z) any payment of interest-in-kind and/or
dividends-in-kind.
"Revolving Committed Amount" shall have such meaning as provided in
Section 2.1(a).
"Revolving Loan" shall have such meaning as provided in Section 2.1.
"Revolving Note" shall have such meaning as provided in Section
2.1(e).
"S&P" means Standard & Poors Corporation, and any successor thereof.
"Security Agreement" means, collectively, the Amended and Restated
Security and Pledge Agreement dated as of the date hereof given by the
Parent Company and the Credit Parties in favor of the Agent for the Banks
to secure the Borrower Obligations, and any financing statements, notices
of security interest or similar documents given in connection with the
interests granted pursuant to the Security Agreement, in each case as
amended, modified, extended, renewed or replaced from time to time in
connection with the Credit Agreement or otherwise.
"Senior Note" means any one of the 10 7/8% Senior Notes due 2007, in
an aggregate principal amount of $130,000,000, issued by the Borrower in
favor of the Senior Noteholders pursuant to the Senior Note Purchase
Agreement, in each case as amended, modified, extended or replaced from
time to time
"Senior Note Purchase Agreement" means that certain Purchase
Agreement, dated as of the Closing Date, by and among the Borrower and
each of the initial purchasers of the Senior Notes, as amended, modified,
extended or replaced from time to time.
"Senior Note Indenture" means that certain Indenture Agreement,
dated as of the Closing Date, by and among the Borrower and United States
Trust Company of New York, as trustee for the Senior Noteholders, as
amended, modified, extended or replaced from time to time.
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"Senior Noteholder" means any one of the holders from time to time
of the Senior Notes.
"Senior Preferred Stock" means, collectively, (i) up to 1,400,000
shares of senior preferred capital stock of the Parent Company issued in
connection with Units Offering and the Recapitalization and (ii) up to
500,000 additional shares of senior preferred capital stock of the Parent
Company which are authorized, but not issued, as of the Closing Date.
"Specified Sales" means (i) the sale, transfer, lease or other
disposition of inventory and materials in the ordinary course of business,
(ii) the sale, transfer, lease or other disposition of machinery, parts
and equipment no longer useful in the conduct of the business of such
Credit Party or is uneconomic or obsolete, (iii) the sale, transfer or
other disposition of Permitted Investments, and (iv) licenses or
sublicenses by the Borrower and its Subsidiaries of intellectual property
in the ordinary course of business.
"Standby Letter of Credit Fee" shall have such meaning as provided
in Section 2.7(c)(i).
"Stockholders Agreement" means that certain Stockholders Agreement,
dated as of the Closing Date, by and among the Parent Company, Venture
Partners, BRS and certain members of the Management Group party thereto,
as amended, modified, extended or replaced from time to time.
"Subordinated Debt" means (i) upon issuance thereof in accordance
with Section 7.11, the Exchange Debentures and (ii) other Indebtedness of
the Parent Company (a) incurred in connection with the repurchase by the
Parent Company of its capital stock from an employee, officer or director
of the Parent Company or any of its Subsidiaries and (b) which by its
terms is subordinated to the Total Revolving Obligations in a manner and
to an extent acceptable to the Required Banks.
"Subsidiary" means, as to any Person, (i) any corporation more than
50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such
corporation (irrespective of whether or not at the time, any class or
classes of such corporation shall have or might have voting power by
reason of the happening of any contingency) is at the time owned by such
Person directly or indirectly through other Subsidiaries, and (ii) any
partnership, association, joint venture or other entity in which such
person directly or indirectly through other Subsidiaries has more than 50%
equity interest at any time. Except as otherwise expressly provided, all
references herein to "Subsidiary" shall mean a Subsidiary of the Borrower.
"Termination Date" means March 14, 2002.
"Threshold Requirement" shall have such meaning as provided in
Section 6.12.
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"Total Revolving Obligations" means, collectively, Revolving Loans,
LOC Obligations and Participation Interests.
"Units Offering" means the issuance and sale by the Parent Company
on the Closing Date of up to 1,400,000 shares of Senior Preferred Stock
and up to 390,000 shares of Class B Common Stock pursuant to the Units
Purchase Agreement.
"Units Purchase Agreement" means that certain Purchase Agreement,
dated as of the Closing Date, by and among the Parent Company and the
initial purchasers named therein, as amended, modified, extended or
replaced from time to time.
"Units Registration Rights Agreement" means that certain
Registration Rights Agreement, dated as of the Closing Date, by and among
the Parent Company, the Borrower and Donaldson, Lufkin & Jenrette
Securities Corporation, as amended, modified, extended or replaced from
time to time.
"Units Stockholders Agreement" means that certain Registration
Rights and Securityholders Agreement, dated as of the Closing Date, by and
among the Parent Company, Venture Partners, BRS and the initial purchasers
party to the Units Purchase Agreement, as amended, modified, extended or
replaced from time to time.
"Venture Partners" means 399 Venture Partners, Inc., a Delaware
corporation, and its Affiliates (including for this purpose, all of their
respective employees, partners, officers and directors and family members
and relatives of such Persons).
"Voting Stock" means shares of voting stock or other securities of
any class or classes, the holders of which are ordinarily, in the absence
of contingencies, entitled to elect the corporate directors (or Persons
performing similar functions).
1.2 Computation of Time Periods, etc.
For purposes of computation of periods of time hereunder, the word "from"
means "from and including" and the words "to" and "until" each mean "to but
excluding."
1.3 Accounting Terms.
Except as otherwise expressly provided herein, accounting terms used but
not otherwise defined herein shall have the meanings provided by, and be
construed in accordance with, generally accepted accounting principles.
Notwithstanding the foregoing, the parties hereto acknowledge and agree
that, for purposes of all calculations made in determining compliance with the
financial covenants set forth in Section 6.11 (including without limitation for
purposes of the definitions of "Applicable Margin" and of "Pro Forma Basis" set
forth in Section 1.1), (i) with respect to any Indebtedness incurred by any
Credit Party in connection with an Acquisition, (A) such Indebtedness shall be
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included and deemed to have been incurred as of the first day of the applicable
period and (B) if such Indebtedness has a floating or formula rate, then the
implied rate of interest for such Indebtedness shall be determined by utilizing
the rate which is or would be in effect with respect to such Indebtedness as at
the relevant date of determination, (ii) Indebtedness which is retired in
connection with any Acquisition shall be excluded and deemed to have been
retired as of the first day of the applicable period and (iii) to the extent not
included in the corresponding figures for the Consolidated Borrower Group,
income statement items (whether positive or negative) attributable to any Person
acquired in an Acquisition shall be included to the extent relating to any
portion of the relevant period for such calculations occurring prior to such
Acquisition.
SECTION 2
CREDIT FACILITIES
2.1 Revolving Loans.
(a) Revolving Loan Commitment. Subject to and upon the terms and
conditions and relying upon the representations and warranties herein set
forth, each Bank severally agrees, from time to time in accordance with
the terms hereof from the Closing Date until the Termination Date to make
revolving credit loans (each a "Revolving Loan" and, collectively, the
"Revolving Loans") to the Borrower for the purposes hereinafter set forth;
provided, however, that (i) with regard to the Banks collectively, the
amount of Revolving Loans outstanding shall not at any time exceed
FIFTY-FIVE MILLION DOLLARS ($55,000,000) in the aggregate (as such
aggregate maximum amount may be reduced from time to time as hereinafter
provided, the "Revolving Committed Amount"), and (ii) with regard to each
Bank individually, each such Bank's pro rata share of outstanding
Revolving Loans plus LOC Obligations shall not at any time exceed such
Bank's Commitment Percentage of the Revolving Committed Amount; and
provided, further, that notwithstanding anything herein to the contrary,
(A) the sum of Revolving Loans plus LOC Obligations shall not at any time
exceed (B) the lesser of the aggregate Revolving Committed Amount or the
Borrowing Base.
(b) Revolving Loan Advances.
(i) Notices. Whenever the Borrower desires a Revolving Loan
advance hereunder, it shall give written notice (or telephone notice
promptly confirmed in writing) to the Agent (a "Notice of Borrowing") not
later than 11:00 A.M. (Charlotte, North Carolina time) on the Business Day
of the requested advance in the case of Base Rate Loans and on the third
Business Day prior to the requested advance in the case of Eurodollar
Loans. Each such notice shall be irrevocable and shall specify (i) that a
Revolving Loan is requested, (ii) the date of the requested advance (which
shall be a Business Day), (iii) the aggregate principal amount of
Revolving Loans requested, and (iv) whether the Revolving Loan requested
shall consist of Base Rate Loans, Eurodollar Loans or a combination
thereof, and if Eurodollar Loans are requested, the Interest Periods with
respect thereto. If the Borrower
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shall fail to specify in any Notice of Borrowing (A) an applicable
Interest Period in the case of a Eurodollar Loan, then such notice shall
be deemed to be a request for an Interest Period of one month or (B) the
type of Revolving Loan requested, then such notice shall be deemed to be a
request for a Base Rate Loan hereunder. The Agent shall as promptly as
practicable give each Bank notice of each requested Revolving Loan
advance, of such Bank's pro rata share thereof and of the other matters
covered in the Notice of Borrowing.
(ii) Minimum Amounts. Revolving Loan advances shall be in a
minimum aggregate amount of $500,000 and integral multiples of $100,000 in
excess thereof.
(iii) Advances. Each Bank will make its pro rata share of each
Revolving Loan advance available to the Agent by 2:00 P.M. (Charlotte,
North Carolina time) on the date specified in the Notice of Borrowing by
deposit in U.S. dollars of immediately available funds at the offices of
the Agent in Charlotte, North Carolina, or at such other address in the
United States as the Agent may designate in writing. All Revolving Loan
advances shall be made by the Banks pro rata on the basis of each Bank's
Commitment Percentage of the Revolving Committed Amount. No Bank shall be
responsible for the failure or delay by any other Bank in its obligation
to make Revolving Loan advances hereunder; provided, however, that the
failure of any Bank to fulfill its commitments hereunder shall not relieve
any other Bank of its commitments hereunder. The Agent will make such
funds available to the Borrower immediately upon receipt from the Banks on
the applicable date of advance. Unless the Agent shall have been notified
by any Bank prior to the date of any such Revolving Loan advance that such
Bank does not intend to make available to the Agent its portion of the
Revolving Loan advance to be made on such date, the Agent may assume that
such Bank has made such amount available to the Agent on the date of such
Revolving Loan advance, and the Agent, in reliance upon such assumption,
may (in its sole discretion without any obligation to do so) make
available to the Borrower a corresponding amount. If such corresponding
amount is not in fact made available to the Agent by a Bank on such date,
the Agent shall promptly demand payment from such Bank and shall be
entitled to recover such corresponding amount from such Bank. If such Bank
does not pay such corresponding amount forthwith upon the Agent's demand
therefor, the Agent will promptly notify the Borrower and the Borrower
shall immediately pay such corresponding amount to the Agent. The Agent
shall also be entitled to recover from such Bank or the Borrower, as the
case may be, interest on such corresponding amount in respect of each day
from the date such corresponding amount was made available by the Agent to
the Borrower to the date such corresponding amount is recovered by the
Agent, at a per annum rate equal to (i) if paid by such Bank, within two
(2) Business Days of making such corresponding amount available to the
Borrower, the overnight Federal Funds Effective Rate, and thereafter the
Base Rate, and (ii) if paid by the Borrower, the then applicable rate
calculated in accordance with Section 2.2.
(c) Repayment of the Revolving Loans. The Revolving Loans shall be
due and payable in full on the Termination Date.
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(d) Interest on the Revolving Loans. The Revolving Loans shall bear
interest as provided in Section 2.2.
(e) Revolving Notes. Revolving Loans by each Bank shall be evidenced
by a duly executed promissory note of the Borrower to each such Bank dated
as of the Closing Date in an original principal amount equal to such
Bank's Commitment Percentage of the Revolving Committed Amount and
substantially in the form of Schedule 2.1(e) (such promissory note, as
amended, modified, extended, renewed or replaced from time to time is
hereinafter referred to individually as a "Revolving Note" and
collectively as the "Revolving Notes").
2.2 Interest.
The Revolving Loans shall bear interest at a per annum rate equal to:
(a) Base Rate Loans. During such periods as Revolving Loans shall
consist of Base Rate Loans, the sum of the Base Rate plus the Applicable
Margin; and
(b) Eurodollar Loans. During such periods as Revolving Loans shall
consist of Eurodollar Loans, the sum of the Adjusted Eurodollar Rate plus
the Applicable Margin;
provided, however, that from and after any failure to make any payment of
principal or interest in respect of any of the Revolving Loans hereunder when
due, whether at scheduled or accelerated maturity or on account of any mandatory
prepayment, the principal of and, to the extent permitted by law, interest on,
the Revolving Loans shall bear interest, payable on demand, at a per annum rate
two percent (2%) in excess of the rate otherwise applicable hereunder. Interest
on the Revolving Loans shall be payable in arrears on each Interest Payment
Date.
2.3 Conversion.
The Borrower shall have the option, on any Business Day, to extend
existing Revolving Loans into a subsequent Interest Period or to convert
Revolving Loans into Revolving Loans of another type; provided, however, that
(i) except as provided in Sections 2.9(i) and (iii), Eurodollar Loans may be
converted into Revolving Loans of another type only on the last day of an
Interest Period applicable thereto, (ii) Eurodollar Loans may be extended, and
Revolving Loans may be converted into Eurodollar Loans only if no Default or
Event of Default is in existence on the date of extension or conversion, (iii)
Revolving Loans extended as, or converted into, Eurodollar Loans shall be in
such minimum amounts as provided in Section 2.1(b)(ii), and (iv) any request for
extension or conversion of a Eurodollar Loan which shall fail to specify an
Interest Period shall be deemed to be a request for an Interest Period of one
month. Each such extension or conversion shall be effected by the Borrower by
giving written notice (or telephone notice promptly confirmed in writing) to the
Agent (including requests for extensions and renewals, a "Notice of Conversion")
prior to 11:00 A.M. (Charlotte, North Carolina time) on the Business Day of, in
the case of Base Rate Loans, and on the third Business Day prior to, in the case
of Eurodollar Loans, the date of the proposed extension or conversion,
specifying the date of the proposed extension or conversion, the
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Revolving Loans to be so extended or converted, the types of Revolving Loans
into which such Revolving Loans are to be converted and, if appropriate, the
applicable Interest Periods with respect thereto. Each request for extension or
conversion shall be deemed to be a reaffirmation by the Borrower that no Default
or Event of Default then exists and is continuing. In the event the Borrower
fails to request extension or conversion of any Eurodollar Loan in accordance
with this Section, or any such conversion or extension is not permitted or
required by this Section, then such Revolving Loans shall be automatically
converted into Base Rate Loans at the end of their Interest Period. The Agent
shall give each Bank notice as promptly as practicable of any such proposed
conversion or extension affecting any Revolving Loans.
2.4 Letter of Credit Subfacility.
(a) Issuance. Subject to the terms and conditions hereof and of the
LOC Documents, if any, and any other terms and conditions which the
Issuing Bank may reasonably require, the Issuing Bank will issue and the
Banks will participate in the issuance by the Issuing Bank from time to
time, of such Letters of Credit from the Closing Date until the
Termination Date as the Borrower may request in a customary form
reasonably acceptable to the Issuing Bank; provided, however, that (i) the
aggregate amount of LOC Obligations shall not at any time exceed FIVE
MILLION DOLLARS ($5,000,000) (the "LOC Committed Amount"), (ii) with
regard to each Bank individually, each such Bank's pro rata share of
outstanding Revolving Loans plus LOC Obligations shall not at any time
exceed such Bank's Commitment Percentage of the Revolving Committed
Amount, (iii) the sum of Revolving Loans plus LOC Obligations shall not at
any time exceed the lesser of the aggregate Revolving Committed Amount or
the Borrowing Base, and (iv) Letters of Credit shall be issued solely in
the ordinary course of business for the benefit of the Borrower. Except as
otherwise expressly agreed upon by all the Banks, no standby Letters of
Credit shall have an original expiry date more than one year from the date
of issuance and no documentary Letters of Credit shall have an original
expiry date more than 180 days following the date of issuance, provided,
however, that no Letter of Credit as originally issued or as extended,
shall have an expiry date extending beyond the Termination Date. Each
Letter of Credit shall comply with the related LOC Documents. The issuance
and expiry date of each Letter of Credit shall be a Business Day.
(b) Notice and Reports. The request for the issuance of a Letter of
Credit shall be submitted to the Issuing Bank at least three (3) Business
Days prior to the requested date of issuance. The Issuing Bank will, at
least quarterly and more frequently upon request, provide to the Agent for
dissemination to the Banks a detailed report specifying the Letters of
Credit which are then issued and outstanding and any activity with respect
thereto which may have occurred since the date of the prior report, and
including therein, among other things, the account party, the beneficiary,
the face amount, expiry date, as well as any payment, reimbursement or
expiration which may have occurred. The Issuing Banks will further provide
to the Agent promptly upon request copies of the Letters of Credit. Each
Issuing Bank, by acceptance of its position as such, acknowledges that the
nature of the credit provided pursuant to this Credit Agreement
necessitates that the Agent be kept informed as to the nature and extent
of credit extended hereunder, including particularly
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LOC Obligations. To that end each Issuing Bank agrees to provide to the
Agent at least weekly, and more frequently upon request, a summary report
of the nature and extent of LOC Obligations then outstanding.
(c) Participations. Each Bank, upon issuance of a Letter of Credit
(or, in the case of each Existing Letter of Credit, on the Closing Date),
shall be deemed to have purchased without recourse a risk participation
from the Issuing Bank in such Letter of Credit and the obligations arising
thereunder and any collateral relating thereto, in each case in an amount
equal to its pro rata share of the face amount of the obligations under
such Letter of Credit (based on the respective Commitment Percentage of
each Bank) and shall absolutely, unconditionally and irrevocably assume
and be obligated to pay to the Issuing Bank therefor and discharge when
due (without regard to whether the Borrower has reimbursed or is able to
reimburse, the Issuing Bank therefor), its pro rata share of the
obligations arising under such Letter of Credit. Without limiting the
scope and nature of each Bank's participation in any Letter of Credit, to
the extent that the Issuing Bank has not been reimbursed as required
hereunder or under any such Letter of Credit, each such Bank shall pay to
the Issuing Bank its pro rata share of such unreimbursed drawing in same
day funds on the day of notification by the Issuing Bank of an
unreimbursed drawing pursuant to the provisions of subsections (d) and (e)
hereof. The obligation of each Bank to so reimburse the Issuing Bank shall
be absolute and unconditional and shall not be affected by the occurrence
of a Default, an Event of Default or any other occurrence or event. Any
such reimbursement shall not relieve or otherwise impair the obligation of
the Borrower to reimburse the Issuing Bank under any Letter of Credit,
together with interest as hereinafter provided. As of the Closing Date,
each Existing Letter of Credit shall be deemed for all purposes of the
Credit Agreement and the other Credit Documents to be a Letter of Credit.
(d) Reimbursement. In the event of any drawing under any Letter of
Credit, the Issuing Bank will promptly notify the Borrower. Unless the
Borrower shall immediately notify the Issuing Bank of its intent to
otherwise reimburse the Issuing Bank, the Borrower shall be deemed to have
requested a Revolving Loan in the amount of the drawing as provided in
subsection (e) hereof, the proceeds of which will be used to satisfy the
reimbursement obligations. The Borrower shall reimburse the Issuing Bank
on the day of drawing under any Letter of Credit (either with the proceeds
of a Revolving Loan obtained hereunder or otherwise) in same day funds as
provided herein or in the LOC Documents. If the Borrower shall fail to
reimburse the Issuing Bank as provided hereinabove, the unreimbursed
amount of such drawing shall bear interest at a per annum rate equal to
the Base Rate plus two percent (2%). The Borrower's reimbursement
obligations hereunder shall be absolute and unconditional under all
circumstances irrespective of any rights of set-off, counterclaim or
defense to payment the Borrower may claim or have against the Issuing
Bank, the Agent, the Banks, the beneficiary of the Letter of Credit drawn
upon or any other Person, including without limitation any defense based
on any failure of the Borrower to receive consideration or the legality,
validity, regularity or unenforceability of the Letter of Credit. The
Issuing Bank will promptly notify the other Banks of the amount of any
unreimbursed drawing and each Bank shall promptly pay to the Agent for the
account of the
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Issuing Bank in Dollars and in immediately available funds, the amount of
such Bank's pro rata share of such unreimbursed drawing. Such payment
shall be made on the day such notice is received by such Bank from the
Issuing Bank if such notice is received at or before 2:00 p.m. (Charlotte,
North Carolina time) otherwise such payment shall be made at or before
12:00 noon, (Charlotte, North Carolina time) on the Business Day next
succeeding the day such notice is received. If such Bank does not pay such
amount to the Issuing Bank in full upon such request, such Bank shall, on
demand, pay to the Agent for the account of the Issuing Bank interest on
the unpaid amount during the period from the date of such drawing until
such Bank pays such amount to the Issuing Bank in full at a rate per annum
equal to, if paid within two (2) Business Days of the date of drawing, the
Federal Funds Effective Rate and thereafter at a rate equal to the Base
Rate. Each Bank's obligation to make such payment to the Issuing Bank, and
the right of the Issuing Bank to receive the same, shall be absolute and
unconditional, shall not be affected by any circumstance whatsoever and
without regard to the termination of this Credit Agreement or the
Commitments hereunder, the existence of a Default or Event of Default or
the acceleration of the Total Revolving Obligations hereunder and shall be
made without any offset, abatement, withholding or reduction whatsoever.
(e) Repayment with Revolving Loans. On any day on which the Borrower
shall have requested, or been deemed to have requested, a Revolving Loan
advance to reimburse a drawing under a Letter of Credit, the Agent shall
give notice to the Banks that a Revolving Loan has been requested or
deemed requested in connection with a drawing under a Letter of Credit, in
which case a Revolving Loan advance comprised solely of Base Rate Loans
(each such borrowing, a "Mandatory Borrowing") shall be immediately made
from all Banks (without giving effect to any termination of the
Commitments pursuant to Section 8.2) pro rata based on each of the Banks'
respective Commitment Percentage of the Revolving Committed Amount
(determined before giving effect to any termination of the Commitments
pursuant to Section 8.2) and the proceeds thereof shall be paid directly
to the appropriate Issuing Bank(s) for application to the respective LOC
Obligations. Each such Bank hereby irrevocably agrees to make such
Revolving Loans immediately upon any such request or deemed request on
account of each Mandatory Borrowing in the amount and in the manner
specified in the preceding sentence and on the same such date
notwithstanding (i) the amount of Mandatory Borrowing may not comply with
the minimum amount for advances of Revolving Loans otherwise required
hereunder, (ii) whether any conditions specified in Section 2.5 are then
satisfied, (iii) whether a Default or an Event of Default then exists,
(iv) failure for any such request or deemed request for a Revolving Loan
to be made by the time otherwise required in Section 2.1(b)(ii), (v) the
date of such Mandatory Borrowing, or (vi) any reduction in the Revolving
Committed Amount after any such Letter of Credit may have been drawn upon;
provided, however, that in the event any such Mandatory Borrowing should
be less than the minimum amount for advances of Revolving Loans otherwise
provided in Section 2.1(b)(ii), the Borrower shall pay to the Agent for
its own account an administrative fee of $500. In the event that any
Mandatory Borrowing cannot for any reason be made on the date otherwise
required above (including, without limitation, as a result of the
commencement of a proceeding under the Bankruptcy Code with respect to the
Borrower or any other Credit Party), then each such Bank hereby agrees
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that it shall forthwith fund (as of the date the Mandatory Borrowing would
otherwise have occurred, but adjusted for any payments received from the
Borrower on or after such date and prior to such purchase) from the
Issuing Bank(s) such participations in the outstanding LOC Obligations as
shall be necessary to cause each such Bank to share in such LOC
Obligations ratably based upon its respective Commitment Percentage of the
Revolving Committed Amount (determined before giving effect to any
termination of the Commitments pursuant to Section 8.2), provided that at
the time any funding of participations pursuant to this sentence is
actually made, the purchasing Bank shall be required to pay to the Issuing
Bank interest on the principal amount of such participation for each day
from and including the day upon which the Mandatory Borrowing would
otherwise have occurred to but excluding the date of payment for such
participation, at the rate equal to, if paid with two (2) Business Days of
the date of the Revolving Loan advance, the Federal Funds Effective Rate,
and thereafter at a rate equal to the Base Rate.
(f) Uniform Customs and Practices. The Issuing Bank may have the
Letters of Credit be subject to The Uniform Customs and Practice for
Documentary Credits, as published by the International Chamber of Commerce
(Publication No. 500 or the most recent publication) (the "UCP"), in which
case the UCP may be incorporated therein and deemed in all respects to be
a part thereof.
(g) Provisions Relating to Documentary Letters of Credit.
(i) Each of the respective Credit Parties agrees to procure or
to cause the beneficiaries of each documentary Letter of Credit to procure
promptly any necessary import and export or other licenses for the import
or export or shipping of any goods referred to in or pursuant to a
documentary Letter of Credit and to comply and to cause the beneficiaries
to comply with all foreign and domestic governmental regulations with
respect to the shipment and warehousing of such goods or otherwise
relating to or affecting such documentary Letter of Credit, including
governmental regulations pertaining to transactions involving designated
foreign countries or their nationals, and to furnish such certificates in
that respect as the Issuing Bank thereof may at any time reasonably
require, and to keep such goods adequately covered by insurance in
amounts, with carriers and for such risks as shall be customary in the
industry and to cause the Issuing Bank's interest to be endorsed on such
insurance and to furnish the Issuing Bank at its request with reasonable
evidence thereof. Should such insurance (or lack thereof) upon said goods
for any reason not be reasonably satisfactory to such Issuing Bank, the
Issuing Bank may (but is not obligated to) obtain, at such Credit Party's
expense, insurance reasonably satisfactory to the Issuing Bank.
(ii) In connection with each documentary Letter of Credit,
neither any Issuing Bank nor any of their correspondents shall be
responsible for: (A) the existence, character, quality, quantity,
condition, packing, value or delivery of the property purporting to be
represented by documents; (B) any difference in character, quality,
quantity condition or value of the property from that expressed in
documents; (C) the time, place, manner or order in which shipment of the
property is made; (D) partial or incomplete shipment referred to in such
credit; (E) the character, adequacy or responsibility of any insurer, or
any
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other risk connected with insurance; (F) any deviation from instructions,
delay, default or fraud by the beneficiary or any one else in connection
with the property or the shipping thereof; (G) the solvency,
responsibility or relationship to the property of any party issuing any
documents in connection with the property; (H) delay in arrival or failure
to arrive of either the property or any of the documents relating thereto;
(I) delay in giving or failure to give notice of arrival or any other
notice; (J) any breach of contract between the shippers or vendors and the
respective Credit Party; (K) any laws, customs, and regulations which may
be effective in any jurisdiction where any negotiation and/or payment of
such documentary Letter of Credit occurs; (L) failure of documents (other
than documents required by the terms of the documentary Letter of Credit)
to accompany any draft at negotiation; or (M) failure of any person to
note the amount of any document, or drafts on the reverse of such
documentary Letter of Credit or to surrender or to take up such
documentary Letter of Credit or to forward documents other than documents
required by the terms of the documentary Letter of Credit. In connection
with each documentary Letter of Credit, no Issuing Bank shall be
responsible for any error, neglect or default of any of their
correspondents. None of the above shall affect, impair or prevent the
vesting of any of the Issuing Bank's rights or powers hereunder. If a
documentary Letter of Credit provides that payment is to be made by the
Issuing Bank's correspondent, neither the Issuing Bank nor such
correspondent shall be responsible for the failure of any of the documents
specified in such documentary Letter of Credit to come into the Issuing
Bank's hands, or for any delay in connection therewith, and Credit Parties
respective obligations to make reimbursements shall not be affected by
such failure or delay in the receipt of any such documents.
(iii) Notwithstanding but without limiting any of the
foregoing, with respect to any documentary Letter of Credit, the Credit
Parties shall have a claim against the respective Issuing Bank, and such
Issuing Bank shall be liable to such Credit Parties, to the extent, but
only to the extent, of any direct, as opposed to indirect or
consequential, damages suffered by the Credit Parties caused by the
Issuing Bank's willful misconduct or gross negligence.
2.5 Conditions of Lending.
(a) Conditions. The obligation to make any Extensions of Credit
hereunder is subject to satisfaction of the following conditions:
(i) receipt of a Notice of Borrowing pursuant to Section
2.1(b)(i) or request for a Letter of Credit pursuant to
Section 2.4;
(ii) the representations and warranties set forth in
Section 5 hereof shall be true and correct in all material
respects as of such date (except for those which expressly
relate to an earlier date);
(iii) immediately after giving effect to the requested
Extension of Credit, (A) with regard to each Bank
individually, the Bank's pro rata share of the sum of the
outstanding Revolving Loans plus interest in LOC
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Obligations shall not exceed such Bank's Commitment Percentage
of the Revolving Committed Amount, and (B) with regard to the
Banks collectively, (I) the sum of Revolving Loans plus LOC
Obligations then outstanding shall not exceed the lesser of
the Revolving Committed Amount or the Borrowing Base, and (II)
the aggregate amount of LOC Obligations shall not exceed the
LOC Committed Amount;
(iv) no Default or Event of Default shall exist and be
continuing either prior to or immediately after giving effect
thereto; and
(v) since January 31, 1996, there shall not have been a
material adverse change in or an event or condition materially
and adversely affecting the condition (financial or otherwise)
of, the properties, business or results of operations of the
Parent Company, the Borrower and the Guarantors, taken as a
whole.
(b) Reaffirmation. Each request for a Revolving Loan advance
pursuant to a Notice of Borrowing or a Notice of Conversion and for
issuance, extension or modification of a Letter of Credit shall be deemed
to be a representation and warranty of the correctness of the matters
specified in this subsections (a)(ii), (iii), (iv)and (v) hereof.
2.6 Termination of Commitments.
(a) Voluntary Reductions. The Borrower may from time to time,
without premium or penalty permanently terminate the Revolving Committed
Amount and/or the LOC Committed Amount in whole or in part (in minimum
aggregate amounts of $500,000 and integral multiples of $100,000 in excess
thereof) upon 5 Business Days' prior written notice to the Agent.
(b) Mandatory Reductions. On any date that the Revolving Loans are
required to be prepaid pursuant to Section 2.8(b)(ii) or are prepaid
pursuant to Section 6.15, the Revolving Committed Amount shall
automatically be permanently reduced by the amount of such prepayment or
reduction.
2.7 Fees.
(a) Agent's Fees. The Borrower agrees to pay to the Agent, for its
own account and NationsBanc Capital Markets, Inc., as applicable, the fees
referred to in the Agent's Fee Letter (the "Agent's Fees").
(b) Commitment Fee. In consideration for the Commitments by the
Banks hereunder, the Borrower agrees to pay to the Agent quarterly in
arrears on the 15th day following the last day of each of the Borrower's
fiscal quarters for the ratable benefit of the Banks a commitment fee (the
"Commitment Fee") at a rate equal to the Applicable Margin on the average
daily unused amount of the Revolving Committed Amount for such prior
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quarter. For purposes of computing the Commitment Fee hereunder, the face
amount of outstanding Letters of Credit shall be considered usage under
the Revolving Committed Amount.
(c) Letter of Credit Fees.
(i) Standby Letter of Credit Fee. In consideration of the
issuance of standby Letters of Credit hereunder, the Borrower or
other Credit Party agrees to pay to the Issuing Bank a fee (the
"Standby Letter of Credit Fee") at a rate equal to the Applicable
Margin computed on a per annum basis on the average daily maximum
amount available to be drawn under each such Letter of Credit from
the date of issuance to the date of expiration. Of such Standby
Letter of Credit Fee, the Issuing Bank shall retain for its own
account without sharing with the other Banks one-fourth of one
percent (1/4%) per annum thereon and shall promptly pay over to the
Agent for the ratable benefit of the Banks (including the Issuing
Bank) the remaining portion thereon. The Standby Letter of Credit
Fee will be payable quarterly in arrears on the 15th day following
the last day of each of the Borrower's fiscal quarters.
(ii) Documentary Letter of Credit Fee. In consideration of the
issuance of documentary Letters of Credit hereunder, the Borrower or
other Credit Party agrees to pay to the Issuing Bank a fee (the
"Documentary Letter of Credit Fee") equal to one-half of one percent
(1/2%) of the amount of each drawing under any such documentary
Letter of Credit (of if such Letter of Credit shall expire undrawn,
then on the face amount of the Letter of Credit payable 30 days
after the expiry thereof). Of such Documentary Letter of Credit Fee,
the Issuing Bank shall pay over to the Agent for the ratable benefit
of the Banks (including the Issuing Bank) one-fourth of one percent
(1/4%) thereof and the Issuing Bank may retain for its own account
without sharing by the other Banks one-fourth of one percent (1/4%)
thereof. The Documentary Letter of Credit Fee will be collected by
the Issuing Bank on the date of each drawing or if such Letter of
Credit shall expire undrawn, then 30 days after the expiry thereof,
the Banks' portion of which will be paid over to the Agent quarterly
on the last day of each calendar quarter for distribution to the
Banks (including the Issuing Bank). Payment to the Agent of the
Banks' portion of the Documentary Letter of Credit Fee will be
accompanied by a report providing the appropriate information
necessary for computation of such Fee.
(iii) Issuing Bank Fees. In addition to the Letter of Credit
Fees payable pursuant to subsections (i) and (ii) above, the
Borrower shall pay to the Issuing Bank for its own account without
sharing by the other Banks the customary administrative charges from
time to time of the Issuing Bank with respect to the issuance,
amendment, transfer, administration, cancellation and conversion of,
and drawings under, such Letters of Credit (collectively, the
"Issuing Bank Fees").
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2.8 Prepayments.
(a) Voluntary Prepayments. The Borrower shall have the right to
prepay Revolving Loans in whole or in part from time to time without
premium or penalty; provided, however, that (A) Eurodollar Loans may be
prepaid only on the last day of an Interest Period applicable thereto and
(B) each such partial prepayment shall be a minimum principal amount of
$100,000 (or the amount then outstanding, if less).
(b) Mandatory Prepayments.
(i) Revolving Committed Amount and Borrowing Base Limitations.
If at any time (1) the sum of Revolving Loans plus LOC Obligations
shall exceed the lesser of the Revolving Committed Amount or the
Borrowing Base, or (2) the aggregate amount of LOC Obligations shall
exceed the LOC Committed Amount, then in any such instance the
Borrower shall immediately (A) make payment on the Revolving Loans
in an amount equal to such excess or (B) in respect of the LOC
Obligations, establish a cash collateral account in an amount equal
to such excess as provided in Section 8.2(iv). Payments made
hereunder shall be applied to the Revolving Loans and then to a cash
collateral account in respect of the LOC Obligations.
(ii) Asset Sales. Other than with respect to Specified Sales,
the Borrower will make payment on the Revolving Loans in an amount
equal to 100% of the Net Proceeds received by the Credit Parties
from any Asset Sale to the extent such Net Proceeds exceed the
threshold amounts provided in Section 7.4(a)(ii). Any such payment
hereunder shall be made to the Agent promptly upon (but in any event
not later than five (5) Business Days following) receipt by any
Credit Party of the Net Proceeds from any such Asset Sale (taking
into account any periods permitted for reinvestment thereof as
provided in Section 7.4(a)).
(c) Notice. The Borrower will provide notice to the Agent of any
prepayment by 11:00 a.m. (Charlotte, North Carolina time) on the date of
prepayment. Amounts paid on the Revolving Loans under subsections (a) and
(b)(i) hereof may be reborrowed in accordance with the provisions hereof.
Amounts paid on the Revolving Loans under subsections (b)(ii) hereof or
pursuant to Section 6.15 may not be reborrowed. Amounts otherwise applied
under this Section 2.8 or Section 6.15, but as to which the Borrower shall
have failed to specify the manner of application, shall be applied first
to Base Rate Loans, then to Eurodollar Loans in direct order of Interest
Period Maturities.
2.9 Increased Costs, Illegality, etc.
In the event any Bank shall determine (which determination shall be final
and conclusive and binding on all the parties hereto absent manifest error)
that:
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(i) Unavailability. On any date for determining the
appropriate Adjusted Eurodollar Rate for any Interest Period, that
by reason of any changes arising on or after the date of this Credit
Agreement affecting the London interbank Eurodollar market, dollar
deposits in the principal amount requested are not generally
available in the London interbank Eurodollar Market or adequate and
fair means do not exist for ascertaining the applicable interest
rate on the basis provided for in the definition of Adjusted
Eurodollar Rate, then Eurodollar Loans will no longer be available,
and requests for a Eurodollar Loan shall be deemed requests for Base
Rate Loans, until such time as such Bank shall notify the Borrower
that the circumstances giving rise thereto no longer exist.
(ii) Increased Costs. At any time that such Bank shall incur
increased costs or reductions in the amounts received or receivable
hereunder with respect to any Eurodollar Loans because of (x) any
change since the date of this Credit Agreement in any applicable
law, governmental rule, regulation, guideline or order (or in the
interpretation or administration thereof, whether or not having the
force of law, if the effect of which would have a similar effect,
and including the introduction of any new law or governmental rule,
regulation, guideline or order) including without limitation the
imposition, modification or deemed applicability of any reserves,
deposits or similar requirements as related to Eurodollar deposits
(such as, for example, but not limited to, a change in official
reserve requirements, but, in all events, excluding reserves
required under Regulation D to the extent included in the
computation of the Adjusted Eurodollar Rate) and/or (y) other
circumstances affecting such Bank, the London interbank Eurodollar
market or the position of such Bank in such market; provided,
however, none of the foregoing shall include any taxes in respect of
the net income or profits of such Bank; then the Borrower shall pay
to such Bank promptly upon written demand therefor, such additional
amounts (in the form of an increased rate of, or a different method
of calculating, interest or otherwise as such Bank may determine in
its sole discretion) as may be required to compensate such Bank for
such increased costs or reductions in amounts receivable hereunder
(written notice as to the additional amounts owed to such Bank,
showing the basis for calculation thereof, shall, absent manifest
error, be final and conclusive and binding on all parties hereto;
provided, however, that such determinations are made on a reasonable
basis).
(iii) Illegality. At any time, that the making or continuance
of any Eurodollar Loan has become unlawful by compliance by such
Bank in good faith with any law, governmental rule, regulation,
guideline or order (or would conflict with any such governmental
rule, regulation, guideline or order not having the force of law
even though the failure to comply therewith would not be unlawful),
or has become impractical as a result of a contingency occurring
after the date of this Credit Agreement which materially and
adversely affects the interbank Eurodollar market; then Eurodollar
Loans will no longer be available, requests for Eurodollar Loans
shall be deemed requests for Base Rate Loans and the Borrower may,
and upon direction of the Bank, shall, as promptly as possible and,
in any event within
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the time period required by law, have any such Eurodollar Loans then
outstanding converted into Base Rate Loans.
2.10 Capital Adequacy.
If after the date hereof, any Bank has determined that the adoption or
effectiveness of any applicable law, rule or regulation regarding capital
adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by such Bank with any request or directive regarding capital adequacy (whether
or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on such Bank's capital or assets as a consequence of its commitments or
obligations hereunder to a level below that which such Bank could have achieved
but for such adoption, effectiveness, change or compliance (taking into
consideration such Bank's policies with respect to capital adequacy), then from
time to time, within 15 days after demand by such Bank, the Borrower shall pay
to such Bank such additional amount or amounts as will compensate such Bank for
such reduction. Upon determining in good faith that any additional amounts will
be payable pursuant to this Section, such Bank will give prompt written notice
thereof to the Borrower, which notice shall set forth the basis of the
calculation of such additional amounts, although the failure to give any such
notice shall not release or diminish any of the Borrower's obligations to pay
additional amounts pursuant to this Section. Determination by any such Bank of
amounts owing under this Section shall, absent manifest error, be final and
conclusive and binding on the parties hereto; provided, however, that such
determinations are made in good faith using averaging and attribution methods
which are reasonable. Failure on the part of any Bank to demand compensation for
any period hereunder shall not constitute a waiver of such Bank's rights to
demand any such compensation in such period or in any other period, except that
no Bank shall be entitled to compensation under this Section for any costs
incurred or reductions suffered with respect to any date unless such Bank shall
have notified the Borrower that it will demand compensation for such costs or
reductions not more than six months after the later of (i) such date or (ii) the
date on which such Bank shall have become aware of such costs or reductions.
2.11 Compensation.
The Borrower shall compensate each Bank, upon its written request (which
request shall set forth the basis for requesting such compensation), for all
reasonable losses, expenses and liabilities (including, without limitation, any
loss, expense or liability incurred by reason of the liquidation or reemployment
of deposits or other funds required by the Bank to fund its Eurodollar Loans)
which such Bank may sustain:
(i) if for any reason (other than a default by such Bank or the
Agent) a borrowing of Eurodollar Loans or a conversion to or extension of
Eurodollar Loans, does not occur on a date specified therefor in a Notice
of Borrowing or Notice of Conversion;
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(ii) if any repayment or conversion of any Eurodollar Loan occurs on
a date which is not the last day of an Interest Period applicable thereto
including without limitation in connection with any demand, acceleration
or otherwise;
(iii) if any prepayment of any Eurodollar Loan is not made on any
date specified in a notice of prepayment given by the Borrower; or
(iv) as a consequence of (x) any other default by the Borrower to
repay its Revolving Loans when required by the terms of this Credit
Agreement or (y) an election made pursuant to this Section.
Calculation of all amounts payable to a Bank under this Section shall be made as
though the Bank has actually funded its relevant Eurodollar Loan through the
purchase of a Eurodollar deposit bearing interest at the Eurodollar Rate in an
amount equal to the amount of that Revolving Loan, having a maturity comparable
to the relevant Interest Period and in the case of Eurodollar Loans, through the
transfer of such Eurodollar deposit from an offshore office of that Bank to a
domestic office of that Bank in the United States of America; provided, however,
that each Bank may fund each of its Eurodollar Loans in any manner it sees fit
and the foregoing assumption shall be utilized only for the calculation of
amounts payable under this Section.
2.12 Taxes.
(a) Each payment or prepayment hereunder and under the Revolving
Notes shall be made free and clear of, and without deduction for, any
present or future withholding or other taxes, duties or charges of any
nature imposed on such payments or prepayments by or on behalf of any
governmental authority thereof or therein, except for and excluding taxes
upon or determined by reference to the Bank's net income or franchise
taxes imposed by the United States, any political subdivision thereof or
any taxing authority with respect to any of them, or any jurisdiction in
which any such Bank is organized or has a principal or registered office
or branch profit taxes imposed by the United States (such excluded taxes
hereinafter being referred to as the "Excluded Taxes"). If any such taxes,
duties or charges (other than Excluded Taxes) are so levied or imposed on
any payment or prepayment to any Bank, the Borrower will make additional
payments in such amounts as may be necessary so that the net amount
received by such Bank, after withholding or deduction for or on account of
all such applicable taxes, duties or charges, (other than Excluded Taxes)
including deductions applicable to additional sums payable under this
Section 2.12 will be equal to the amount provided for herein or in such
Bank's Revolving Note provided, however, that the Borrower shall not be
required to increase any such amounts payable to any Bank that is not
organized under the laws of the United States of America or a state
thereof if such Bank fails to comply with the requirements of paragraph
(b) of this subsection, or to the extent that such Bank or Agent, as the
case may be, determines in its sole reasonable discretion, that it can,
after notice from the Borrower, through reasonable efforts eliminate or
reduce the amount of taxes payable (without additional costs or expenses
(unless the Borrower agrees to bear such costs or expenses) or other
disadvantages or risks (economic or otherwise) to such Bank or Agent).
Whenever
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any taxes, duties or charges are payable by the Borrower with respect to
any payments or prepayments hereunder or under any of the Revolving Notes,
the Borrower shall furnish promptly to the Agent for the account of the
applicable Bank information, including originals or certified copies of
official receipts (to the extent that the relevant governmental authority
delivers such receipts), evidencing payment of any such taxes, duties or
charges so withheld or deducted. If the Borrower fails to pay any such
taxes, duties or charges when due to the appropriate taxing authority or
fails to remit to the Agent for the account of the applicable Bank the
required information evidencing payment of any such taxes, duties or
charges so withheld or deducted, the Borrower shall indemnify the affected
Bank for any such applicable incremental taxes, duties, charges, interest
or penalties that may become payable by such Bank as a result of any such
failure.
(b) Each Bank (which, for purposes of this Section 2.12, shall
include any Affiliate of a Bank that makes any Eurodollar Loan pursuant to
the terms of this Credit Agreement) that is not a "United States person"
(as such term is defined in Section 7701(a)(30) of the Code) shall submit
to the Borrower and the Agent on or before the Closing Date (or, in the
case of a Person that becomes a Bank after the Closing Date by assignment,
promptly upon such assignment), two duly completed and signed copies of
(A) either (1) Form 1001 of the United States Internal Revenue Service
entitling such Bank to a complete exemption from withholding on all
amounts to be received by such Bank pursuant to this Agreement and/or the
Revolving Notes or (2) Form 4224 of the United States Internal Revenue
Service relating to all amounts to be received by such Bank pursuant to
this Agreement and/or the Revolving Notes and (B) an Internal Revenue
Service Form W-8 or W-9 entitling such Bank to receive a complete
exemption from United States backup withholding tax. Each such Bank shall,
from time to time after submitting either such form, submit to the
Borrower and the Agent such additional duly completed and signed copies of
such forms (or such successor forms or other documents as shall be adopted
from time to time by the relevant United States taxing authorities) as may
be (1) reasonably requested in writing by the Borrower or the Agent and
(2) appropriate under then current United States laws or regulations. Upon
the reasonable request of the Borrower or the Agent, each Bank that has
not provided the forms or other documents, as provided above, on the basis
of being a United States person shall submit to the Borrower and the Agent
a certificate to the effect that it is such a "United States person."
(c) The Borrower agrees to pay any present or future stamp or
documentary taxes, any intangibles tax or any other sales, excise or
property taxes, charges or similar levies now or hereafter assessed that
arise from and are attributable to any payment made hereunder, under the
Revolving Notes or from the execution, delivery of, or otherwise with
respect to, this Credit Agreement, the Revolving Notes or other Credit
Documents and any and all recording fees relating thereto ("Other Taxes").
(d) The Borrower shall indemnify each Bank and the Agent for the
full amount of any taxes, duties or charges other than Excluded Taxes
(including, without limitation, any taxes other than Excluded Taxes
imposed by any jurisdiction on amounts payable under this Section 2.12)
duly paid or payable by such Bank or the Agent and any liability
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(including penalties, interest and expenses) arising therefrom or with
respect thereto whether or not such taxes, duties or charges or other
taxes are correctly or legally asserted. If a Bank in its sole and
reasonable discretion determines that such taxes, duties or charges are
incorrectly or illegally asserted against it, and the Bank has made a
claim against the Borrower for such amounts, then the Bank shall have the
obligation to seek a refund and to deliver such refund, if received, to
the Borrower. Indemnification payments shall be made within 30 days from
the date such Bank or the Agent makes written demand therefor.
(e) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower
contained in this Section 2.12 shall survive the payment in full of
principal and interest hereunder and under the Revolving Notes
indefinitely.
(f) If any Bank receives a refund in respect of any taxes for which
it has received payment from the Borrower hereunder, such Bank shall
promptly notify the Borrower of such refund and such Bank shall repay the
amount of such refund to the Borrower; provided, that the Borrower, upon
the request of such Bank, agrees to return such refund (plus any
penalties, interest or other charges) to such Bank in the event such Bank
is required to repay such refund. The determination as to whether any such
Bank has received a refund shall be made by such Bank and such
determination shall be conclusive absent manifest error.
(g) Notwithstanding any other provision of this Credit Agreement, if
the Bank fails to provide a certificate, document or other evidence
required pursuant to Section 2.12(b), (x) the Borrower shall be entitled
to deduct or withhold on payments to such Bank as a result of such
failure, as required by law, and (y) the Borrower shall not be required to
make payments of additional amounts with respect to such withheld taxes
pursuant to Section 2.12(a) hereof to the extent such withholding is
required by reason of the failure of such Bank to provide the necessary
certificate, document or other evidence.
2.13 Indemnification; Nature of Issuing Bank's Duties.
(a) In addition to its other obligations under Section 2.4, the
Borrower hereby agrees to protect, indemnify, pay and save each Issuing
Bank harmless from and against any and all claims, demands, liabilities,
damages, losses, costs, charges and expenses (including reasonable
attorneys' fees) that the Issuing Bank may incur or be subject to as a
consequence, direct or indirect, of (A) the issuance of any Letter of
Credit or (B) the failure of the Issuing Bank to honor a drawing under a
Letter of Credit as a result of any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto government or
governmental authority (all such acts or omissions, herein called
"Government Acts").
(b) As between the Borrower and the Issuing Bank, the Borrower shall
assume all risks of the acts, omissions or misuse of any Letter of Credit
by the beneficiary thereof. The Issuing Bank shall not be responsible: (i)
for the form, validity, sufficiency, accuracy,
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genuineness or legal effect of any document submitted by any party in
connection with the application for and issuance of any Letter of Credit,
even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (ii) for the validity or
sufficiency of any instrument transferring or assigning or purporting to
transfer or assign any Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, that may prove to be
invalid or ineffective for any reason; (iii) for failure of the
beneficiary of a Letter of Credit to comply fully with conditions required
in order to draw upon a Letter of Credit; (iv) for errors, omissions,
interruptions or delays in transmission or delivery of any messages, by
mail, cable, telegraph, telex or otherwise, whether or not they be in
cipher; (v) for errors in interpretation of technical terms; (vi) for any
loss or delay in the transmission or otherwise of any document required in
order to make a drawing under a Letter of Credit or of the proceeds
thereof; and (vii) for any consequences arising from causes beyond the
control of the Issuing Bank, including, without limitation, any Government
Acts. None of the above shall affect, impair, or prevent the vesting of
the Issuing Bank's rights or powers hereunder.
(c) In furtherance and extension and not in limitation of the
specific provisions hereinabove set forth, any action taken or omitted by
the Issuing Bank, under or in connection with any Letter of Credit or the
related certificates, if taken or omitted in good faith, shall not put
such Issuing Bank under any resulting liability to the Borrower. It is the
intention of the parties that this Credit Agreement shall be construed and
applied to protect and indemnify the Issuing Bank against any and all
risks involved in the issuance of the Letters of Credit, all of which
risks are hereby assumed by the Borrower, including, without limitation,
any and all risks of the acts or omissions, whether rightful or wrongful,
of any present or future Government Acts. The Issuing Bank shall not, in
any way, be liable for any failure by the Issuing Bank or anyone else to
pay any drawing under any Letter of Credit as a result of any Government
Acts or any other cause beyond the control of the Issuing Bank.
(d) Nothing in this Section 2.13 is intended to limit the
reimbursement obligation of the Borrower contained in Section 2.4(d)
hereof. The obligations of the Borrower under this Section 2.13 shall
survive the termination of this Credit Agreement. No act or omissions of
any current or prior beneficiary of a Letter of Credit shall in any way
affect or impair the rights of the Issuing Bank to enforce any right,
power or benefit under this Credit Agreement.
(e) Notwithstanding anything to the contrary contained in this
Section 2.13, the Borrower shall have no obligation to indemnify any
Issuing Bank in respect of any liability incurred by such Issuing Bank
arising out of the gross negligence or willful misconduct of the Issuing
Bank or as a result of a wrongful dishonor of a drawing under a Letter of
Credit by the Issuing Bank, as determined by a court of competent
jurisdiction.
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2.14 Change of Lending Office.
Each Bank agrees that, upon the occurrence of any event giving rise to the
operation of Section 2.9(ii) or (iii) or 2.12, it will, if requested by the
Borrower, use reasonable efforts (subject to overall policy considerations of
such Bank) to designate another lending office for any Revolving Loans affected
by such event, provided that such designation is made on such terms that such
Bank and its lending office suffer no economic, legal or regulatory
disadvantage, with the object of avoiding the consequence of the event giving
rise to the operation of any such Section. Except in the case of a change of
lending office made at the request of the Borrower, no change in lending office
will be made if greater costs and expenses would result under Section 2.9(ii) or
(iii) or 2.12 on account of any such change in designation. Nothing in this
Section shall affect or postpone any of the obligations of the Borrower or the
right of any Bank provided in Section 2.9 or 2.12.
2.15 Payments and Computations.
Except as otherwise specifically provided herein, all payments hereunder
shall be made to the Agent in U.S. dollars in immediately available funds at its
offices at 101 North Tryon Street, Independence Center, NC1-001-15-04,
Charlotte, North Carolina 28255 not later than 2:00 p.m. (Charlotte, North
Carolina time) on the date when due. Payments received after such time shall be
deemed to have been received on the next succeeding Business Day. The Agent may
(but shall not be obligated to) debit the amount of any such payment which is
not made by such time to any ordinary deposit account of the Borrower maintained
with the Agent (with notice to the Borrower); provided, however, that failure to
give any such notice shall not limit or otherwise affect the right to make any
such debit or set-off. The Borrower shall, at the time it makes any payment
under this Credit Agreement, specify to the Agent the Revolving Loans, LOC
Obligations, Fees or other amounts payable by the Borrower hereunder to which
such payment is to be applied (and in the event that it fails so to specify, or
if such application would be inconsistent with the terms hereof, the Agent shall
distribute such payment to the Banks in such manner as the Agent may determine
to be appropriate in respect of obligations owing by the Borrower hereunder,
subject to the terms of Section 2.17). The Agent will thereafter cause to be
distributed promptly like funds relating to the payment of principal,
reimbursement of drawings under Letters of Credit, or interest or fees ratably
to the Banks entitled to receive such payments in accordance with the terms of
this Credit Agreement. Whenever any payment hereunder shall be stated to be due
on a day which is not a Business Day, the due date thereof shall be extended to
the next succeeding Business Day (subject to accrual of interest and Fees for
the period of such extension), except that in the case of Eurodollar Loans, if
the extension would cause the payment to be made in the next following calendar
month, then such payment shall instead be made on the next preceding Business
Day. All payments made by the Borrower hereunder shall be made without setoff or
counterclaim. Except as expressly provided otherwise herein, all computations of
interest and fees shall be made on the basis of actual number of days elapsed
over a year of 360 days, except with respect to the computation of interest on
Base Rate Loans which shall be calculated based on a year of 365 or 366 days, as
appropriate. Interest shall accrue from and include the date of advance, but
exclude the date of payment.
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2.16 Pro Rata Treatment.
Except to the extent otherwise provided herein:
(a) Revolving Loans. Each Revolving Loan advance (including without
limitation each Mandatory Borrowing), each payment or prepayment of
principal of any Revolving Loan, each payment of interest on the Revolving
Loans, each payment of Commitment Fees or Letter of Credit Fees (except
for the portion retained by the Issuing Bank for its own account), each
reduction of the Revolving Committed Amount, and each conversion or
continuation of any Revolving Loan, shall be allocated pro rata, after
giving effect to any assignment, among the relevant Banks in accordance
with the respective Commitment Percentages (or, if the Commitments of such
Banks have expired or been terminated, in accordance with the respective
principal amounts of their outstanding Revolving Loans and Participation
Interests of such Banks); and
(b) Letters of Credit. Each Bank shall be entitled to its pro rata
share of each payment of unreimbursed drawings in respect of LOC
Obligations; provided that, if any Bank shall have failed to pay its
applicable pro rata share of any drawing under any Letter of Credit, then
any amount to which such Bank would otherwise be entitled pursuant to this
subsection (b) shall instead be payable to the Issuing Bank; provided
further, that in the event any amount paid to any Bank pursuant to this
subsection (b) is rescinded or must otherwise be returned by the Issuing
Bank, each Bank shall, upon the request of the Issuing Bank, repay to the
Agent for the account of the Issuing Bank the amount so paid to such Bank,
with interest for the period commencing on the date such payment is
returned by the Issuing Bank until the date the Issuing Bank receives such
repayment at a rate per annum equal to, during the period to but excluding
the date two (2) Business Days after such request, the Federal Funds
Effective Rate, and thereafter, the Base Rate plus two percent (2%).
2.17 Sharing of Payments.
The Banks agree among themselves that, in the event that any Bank shall
obtain payment in respect of any Revolving Loan or unreimbursed drawing or
obligation to provide cash collateral with respect to any LOC Obligations owing
to such Bank under this Credit Agreement through the exercise of a right of
set-off, banker's lien, counterclaim or otherwise in excess of its pro rata
share as provided for in this Credit Agreement, such Bank shall promptly
purchase from the other Banks a participation in such Revolving Loans, LOC
Obligations and other obligations in such amounts, and make such other
adjustments from time to time, as shall be equitable to the end that all Banks
share such payment in accordance with their respective ratable shares as
provided for in this Credit Agreement. The Banks further agree among themselves
that if payment to a Bank obtained by such Bank through the exercise of a right
of set-off, banker's lien, counterclaim or otherwise as aforesaid shall be
rescinded or must otherwise be restored, each Bank which shall have shared the
benefit of such payment shall, by repurchase of a participation theretofore
sold, return its share of that benefit to each Bank whose payment shall have
been rescinded or otherwise restored. The Borrower and each other Credit Party
agrees that any Bank so purchasing such a participation may, to the fullest
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extent permitted by law, exercise all rights of payment, including set-off,
banker's lien or counterclaim, with respect to such participation as fully as if
such Bank were a holder of such Revolving Loan, LOC Obligation or other
obligation in the amount of such participation. Except as otherwise expressly
provided in this Credit Agreement, if any Bank or the Agent shall fail to remit
to the Agent or any other Bank an amount payable by such Bank or the Agent to
the Agent or such other Bank pursuant to this Credit Agreement on the date when
such amount is due, such payments shall be made together with interest thereon
for each date from the date such amount is due until the date such amount is
paid to the Agent or such other Bank at a rate per annum equal to the Federal
Funds Effective Rate.
SECTION 3
GUARANTEE
3.1 The Guarantee.
Each of the Guarantors hereby jointly and severally guarantees to each
Bank, the Agent and the Issuing Bank as hereinafter provided the prompt payment
of the Borrower Obligations in full when due (whether at stated maturity, as a
mandatory prepayment, by acceleration, as a mandatory cash collateralization or
otherwise) strictly in accordance with the terms thereof. The Guarantors hereby
further agree that if any of the Borrower Obligations are not paid in full when
due (whether at stated maturity, as a mandatory prepayment, by acceleration, as
a mandatory cash collateralization or otherwise), the Guarantors will, jointly
and severally, promptly pay the same, without any demand or notice whatsoever,
and that in the case of any extension of time of payment or renewal of any of
the Borrower Obligations, the same will be promptly paid in full when due
(whether at extended maturity, as a mandatory prepayment, by acceleration, as a
mandatory cash collateralization or otherwise) in accordance with the terms of
such extension or renewal.
Notwithstanding any provision to the contrary contained herein or in any
other of the Credit Documents, to the extent the obligations of a Guarantor
shall be adjudicated to be invalid or unenforceable for any reason (including,
without limitation, because of any applicable state or federal law relating to
fraudulent conveyances or transfers) then the obligations of each Guarantor
hereunder shall be limited to the maximum amount that is permissible under
applicable law (whether federal or state and including, without limitation, the
Bankruptcy Code).
3.2 Obligations Unconditional.
The obligations of the Guarantors under Section 3.1 hereof are joint and
several, absolute and unconditional, irrespective of the value, genuineness,
validity, regularity or enforceability of any of the Credit Documents, or any
other agreement or instrument referred to therein, or any substitution, release
or exchange of any other guarantee of or security for any of the Borrower
Obligations, and, to the fullest extent permitted by applicable law,
irrespective of any other circumstance whatsoever which might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor,
it being the intent of this Section 3.2 that the obligations of the Guarantors
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hereunder shall be absolute and unconditional under any and all circumstances.
Without limiting the generality of the foregoing, it is agreed that the
occurrence of any one or more of the following shall not alter or impair the
liability of any Guarantor hereunder which shall remain absolute and
unconditional as described above:
(i) at any time or from time to time, without notice to any
Guarantor, the time for any performance of or compliance with any of
the Borrower Obligations shall be extended, or such performance or
compliance shall be waived;
(ii) any of the acts mentioned in any of the provisions of any
of the Credit Documents or any other agreement or instrument
referred therein shall be done or omitted;
(iii) the maturity of any of the Borrower Obligations shall be
accelerated, or any of the Borrower Obligations shall be modified,
supplemented or amended in any respect, the amendment or
modification of this Credit Agreement or any other Credit Documents,
or any right under any of the Credit Documents or any other
agreement or instrument referred to therein shall be waived or any
other guarantee of any of the Borrower Obligations or any security
therefor shall be released or exchanged in whole or in part or
otherwise dealt with;
(iv) any Lien granted to, or in favor of, the Agent or any
Bank or Banks as security for any of the Borrower Obligations shall
fail to attach or be perfected; or
(v) any of the Borrower Obligations shall be determined to be
void or voidable (including, without limitation, for the benefit of
any creditor of any Guarantor) or shall be subordinated to the
claims of any Person (including, without limitation, any creditor of
any Guarantor).
With respect to its obligations hereunder, each Guarantor hereby expressly
waives diligence, presentment, demand of payment, protest and all notices
whatsoever, and any requirement that the Agent or any Bank exhaust any right,
power or remedy or proceed against any Person under any of the Credit Documents
or any other agreement or instrument referred to therein, or against any other
Person under any other guarantee of, or security for, any of the Borrower
Obligations.
3.3 Reinstatement.
The obligations of the Guarantors under this Section 3 shall be
automatically reinstated if and to the extent that for any reason any payment by
or on behalf of any Person in respect of the Borrower Obligations is rescinded
or must be otherwise restored by any holder of any of the Borrower Obligations,
whether as a result of any proceedings in bankruptcy or reorganization or
otherwise, and each Guarantor agrees that it will indemnify the Agent and each
Bank on demand for all reasonable costs and expenses (including, without
limitation, reasonable fees of counsel) incurred by the Agent or such Bank in
connection with such rescission or restoration, including any such costs and
expenses incurred in defending against any claim alleging that such payment
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constituted a preference, fraudulent transfer or similar payment under any
bankruptcy, insolvency or similar law.
3.4 Certain Additional Waivers.
Without limiting the generality of the provisions of this Section 4, each
Guarantor hereby specifically waives the benefits of N.C. Gen. Stat. ss.ss. 26-7
through 26-9, inclusive, to the extent applicable. Each Guarantor agrees that
such Guarantor shall have no right of recourse to security for the Borrower
Obligations. Each Guarantor further agrees that it shall have no right of
subrogation, reimbursement or indemnity, nor any right of recourse to security,
if any, for the Borrower Obligations, so long as any amounts payable to the
Agent or the Banks in respect of the Borrower Obligations shall remain
outstanding and until all of the Commitments under the Credit Agreement shall
have been terminated.
3.5 Remedies.
The Guarantors agree that, as between the Guarantors, on the one hand, and
the Agent and the Banks, on the other hand, the Borrower Obligations may be
declared to be forthwith due and payable as provided in Section 8.2 hereof (and
shall be deemed to have become automatically due and payable in the
circumstances provided in said Section 8.2) for purposes of Section 3.1 hereof
notwithstanding any stay, injunction or other prohibition preventing such
declaration (or preventing such Borrower Obligations from becoming automatically
due and payable) as against any other Person and that, in the event of such
declaration (or such Borrower Obligations being deemed to have become
automatically due and payable), such Borrower Obligations (whether or not due
and payable by any other Person) shall forthwith become due and payable by the
Guarantors for purposes of said Section 3.1.
3.6 Continuing Guarantee.
The guarantee in this Section 3 is a continuing guarantee, and shall apply
to all Borrower Obligations whenever arising.
3.7 Rights of Contribution.
The Guarantors hereby agree as among themselves that, if any Guarantor
shall make an Excess Payment (as defined below), such Guarantor shall have a
right of contribution from each other Guarantor in an amount equal to such other
Guarantor's Contribution Share (as defined below) of such Excess Payment. The
payment obligations of any Guarantor under this Section 3.7 shall be subordinate
and subject in right of payment to the prior payment in full to the Agent and
the Banks of the Guaranteed Obligations (as defined below), and none of the
Guarantors shall exercise any right or remedy under this Section 3.7 against any
other Guarantor until payment and satisfaction in full of all of such Guaranteed
Obligations. For purposes of this Section 3.7, (a) "Guaranteed Obligations"
shall mean any obligations arising under the other provisions of this Section 3;
(b) "Excess Payment" shall mean the amount paid by any Guarantor in excess of
its Pro Rata Share of such Guaranteed Obligations; (c) "Pro Rata Share" shall
mean, for any Guarantor in
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respect of any payment of Guaranteed Obligations, the ratio (expressed as a
percentage) as of the date of such payment of Guaranteed Obligations of (i) the
amount by which the aggregate present fair salable value of all of its assets
and properties exceeds the amount of all debts and liabilities of such Guarantor
(including contingent, subordinated, unmatured, and unliquidated liabilities,
but excluding the obligations of such Guarantor hereunder) to (ii) the amount by
which the aggregate present fair salable value of all assets and other
properties of the Borrower and all of the Guarantors exceeds the amount of all
of the debts and liabilities (including contingent, subordinated, unmatured, and
unliquidated liabilities, but excluding the obligations of the Borrower and the
Guarantors hereunder) of the Borrower and all of the Guarantors; provided,
however, that, for purposes of calculating the Pro Rata Shares of the Guarantors
in respect of any payment of Guaranteed Obligations, any Guarantor that became a
Guarantor subsequent to the date of any such payment shall be deemed to have
been a Guarantor on the date of such payment and the financial information for
such Guarantor as of the date such Guarantor became a Guarantor shall be
utilized for such Guarantor in connection with such payment; and (d)
"Contribution Share" shall mean, for any Guarantor in respect of any Excess
Payment made by any other Guarantor, the ratio (expressed as a percentage) as of
the date of such Excess Payment of (i) the amount by which the aggregate present
fair salable value of all of its assets and properties exceeds the amount of all
debts and liabilities of such Guarantor (including contingent, subordinated,
unmatured, and unliquidated liabilities, but excluding the obligations of such
Guarantor hereunder) to (ii) the amount by which the aggregate present fair
salable value of all assets and other properties of the Borrower and all of the
Guarantors other than the maker of such Excess Payment exceeds the amount of all
of the debts and liabilities (including contingent, subordinated, unmatured, and
unliquidated liabilities, but excluding the obligations of the Borrower and the
Guarantors hereunder) of the Borrower and all of the Guarantors other than the
maker of such Excess Payment; provided, however, that, for purposes of
calculating the Contribution Shares of the Guarantors in respect of any Excess
Payment, any Guarantor that became a Guarantor subsequent to the date of any
such Excess Payment shall be deemed to have been a Guarantor on the date of such
Excess Payment and the financial information for such Guarantor as of the date
such Guarantor became a Guarantor shall be utilized for such Guarantor in
connection with such Excess Payment. This Section 3.7 shall not be deemed to
affect any right of subrogation, indemnity, reimbursement or contribution that
any Guarantor may have under applicable law against the Borrower in respect of
any payment of Guaranteed Obligations or in respect of any Excess Payment.
SECTION 4
CONDITIONS PRECEDENT TO INITIAL LOANS AND INITIAL LETTERS OF CREDIT
The obligations of the Banks and the Issuing Bank to make the initial
Extensions of Credit on the Closing Date are subject to satisfaction of the
following conditions (in form and substance acceptable to the Banks) on the
Closing Date:
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4.1 Executed Credit Documents.
Receipt by the Agent of executed copies of this Credit Agreement, the
Revolving Notes and the other Credit Documents (in sufficient numbers to provide
a fully executed original of each, for each Bank).
4.2 No Default; Representations and Warranties.
Both at the time of the making of such initial Extensions of Credit and
after giving effect thereto (i) there shall exist no Default or Event of Default
and (ii) all representations and warranties contained herein or in the other
Credit Documents then in effect shall be true and correct in all material
respects.
4.3 Opinion of Counsel.
Receipt by the Agent of an opinion, or opinions, in form and substance
reasonably satisfactory to the Banks, addressed to the Agent and the Banks and
dated as of the Closing Date from counsel to the Borrower and the Guarantors (in
sufficient numbers to provide a fully executed original to each Bank).
4.4 Solvency.
Receipt by the Agent of (a) an opinion from Murray, Devine & Co. in usual
and customary form as to the financial condition, solvency and related matters
of the Borrower and the Parent Company, together with each of their respective
Subsidiaries on a consolidated basis, after giving effect on the Closing Date to
the initial Extensions of Credit hereunder, the Recapitalization, the issuance
of the Senior Notes and the Units Offering and (b) a certificate of a
knowledgeable financial officer of the Borrower, in form and substance
satisfactory to the Agent and the Required Banks, as to the financial condition,
solvency and related matters of each Credit Party and each of its Subsidiaries,
both collectively and individually after giving effect on the Closing Date to
the initial Extensions of Credit hereunder, the Recapitalization, the issuance
of the Senior Notes and the Units Offering
4.5 Liability and Casualty Insurance.
Copies of insurance policies or certificates of insurance evidencing
liability and casualty insurance meeting the requirements set forth in the
Mortgages. Satisfactory evidence of premium payments must also be provided.
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4.6 Corporate Documents.
Receipt by the Agent of the following:
(a) Charter Documents. Copies of the articles of incorporation or
charter documents of the Borrower and the Guarantors certified to be true
and complete as of a recent date by the appropriate governmental authority
of the state of its incorporation.
(b) Resolutions. Copies of resolutions of the Board of Directors of
the Borrower and the Guarantors approving and adopting the Credit
Documents, the transactions contemplated therein and authorizing execution
and delivery thereof, certified by a secretary or assistant secretary as
of the Closing Date to be true and correct and in force and effect as of
such date together with an incumbency certificate.
(c) Bylaws. A copy of the bylaws of the Borrower and the Guarantors
certified by a secretary or assistant secretary as of the Closing Date to
be true and correct and in force and effect as of such date.
(d) Good Standing. Copies of (i) certificates of good standing,
existence or its equivalent with respect to the Borrower and the
Guarantors certified as of a recent date by the appropriate governmental
authorities of the state of incorporation and each other state in which
the failure to so qualify and be in good standing in such state would have
a material adverse effect on the business or operations of the Borrower
and the Guarantors, taken as a whole, and (ii) to the extent available at
the Closing Date, a certificate indicating payment of all corporate
franchise taxes certified as of a recent date by the appropriate
governmental taxing authorities or evidence that such certificate has been
requested.
4.7 Recapitalization.
(a) Receipt by the Agent of certified copies of the Recapitalization
Agreement, the Stockholders Agreement and the Registration Rights Agreement, in
each case together with all exhibits and schedules thereto and in form and
substance satisfactory to the Agent and the Banks, together with evidence
satisfactory to the Agent that (i) the Recapitalization shall have been
consummated in accordance with the terms of the Recapitalization Agreement and
(ii) BRS shall have made a cash equity investment of at least $13,000,000 in the
Parent Company.
(b) Receipt by the Agent of certified copies of the Units Purchase
Agreement, the Units Registration Rights Agreement, the Units Stockholders
Agreement and the Certificate of Designation, in each case together with all
exhibits and schedules thereto and in form and substance satisfactory to the
Agent and the Banks, together with evidence satisfactory to it that (i) the
Units Offering shall have been consummated in accordance with the terms of the
Units Purchase Agreement and (ii) the Parent Company shall have received no more
than $35,000,000 from the Units Offering.
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(c) Receipt by the Agent of certified copies of the Senior Note Purchase
Agreement and the Senior Note Indenture, in each case together with all exhibits
and schedules thereto and in form and substance satisfactory to the Agent and
the Banks, together with evidence satisfactory to it that (i) the issuance of
the Senior Notes shall have been consummated in accordance with the terms of the
Senior Note Purchase Agreement and (ii) the Borrower shall have received up to
$130,000,000 in proceeds from the issuance of the Senior Notes.
(d) Receipt by the Agent of a certified copy of the Exchange Debenture
Indenture, together with all exhibits and schedules thereto, in form and
substance satisfactory to the Agent and the Banks.
4.8 Availability.
Evidence satisfactory to the Agent and the Banks that immediately after
giving effect to the acquisition, the commitments under this Credit Agreement
will be sufficient to meet the ongoing needs of the Borrower and its
Subsidiaries, and in any event there will be availability under the Revolving
Committed Amount of at least $17,500,000 immediately after giving effect to the
initial Extensions of Credit on the Closing Date.
4.9 Payment of Fees.
Payment to the Agent of all fees payable to it or the Banks on the Closing
Date in connection with the establishment of the credit facilities hereby.
SECTION 5
REPRESENTATIONS AND WARRANTIES
Each Credit Party hereby represents and warrants to the Agent and each
Bank that:
5.1 Organization and Good Standing.
Such Credit Party is a corporation duly incorporated, validly existing and
in good standing under the laws of the jurisdiction of its organization, is duly
qualified and in good standing as a foreign corporation authorized to do
business in every jurisdiction where the failure to so qualify would have a
Material Adverse Effect, and has the requisite corporate power and authority to
own its properties and to carry on its business as now conducted and as proposed
to be conducted.
5.2 Due Authorization.
Such Credit Party (i) has the requisite corporate power and authority to
execute, deliver and perform this Credit Agreement and the other Credit
Documents to which it is a party and to incur the obligations herein and therein
provided for, and (ii) is duly authorized to, and has been
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authorized by all necessary corporate action, to execute, deliver and perform
this Credit Agreement and the other Credit Documents to which it is a party.
5.3 No Conflicts.
Neither the execution and delivery of the Credit Documents, nor the
consummation of the transactions contemplated therein, nor performance of and
compliance with the terms and provisions thereof by such Credit Party (to the
extent such Credit Party is a party thereto) will (i) violate or conflict with
any provision of its charter documents or bylaws, (ii) violate, contravene or
materially conflict with any law, regulation (including without limitation
Regulation U or Regulation X), order, writ, judgment, injunction, decree or
permit applicable to it the violation of which would have a Material Adverse
Effect, (iii) violate, contravene or materially conflict with contractual
provisions of, or cause an event of default under, any indenture, loan
agreement, mortgage, deed of trust, contract or other agreement or instrument to
which it is a party or by which it may be bound, the violation of which would
have a Material Adverse Effect, (iv) result in or require the creation of any
lien, security interest or other charge or encumbrance (other than those
contemplated in or created in connection with the Credit Documents) upon or with
respect its properties, the creation of which would have a Material Adverse
Effect.
5.4 Consents.
No consent, approval, authorization or order of, or filing, registration
or qualification with, any court or governmental authority or third party in
respect of such Credit Party is required in connection with the execution,
delivery or performance of this Credit Agreement or any of the other Credit
Documents by the Borrower or any Guarantor, or if required, such consent,
approval and authorization has been obtained or if not obtained would not have a
Material Adverse Effect.
5.5 Enforceable Obligations.
This Credit Agreement and the other Credit Documents have been duly
executed and delivered and constitute legal, valid and binding obligations of
such Credit Party enforceable against such Credit Party in accordance with their
respective terms, except as may be limited by bankruptcy or insolvency laws or
similar laws affecting creditors' rights generally or by general equitable
principles.
5.6 Financial Condition.
The financial statements and financial information provided to the Banks,
consisting of, among other things, (i) an audited combined balance sheet of the
Consolidated Borrower Group dated as of January 27, 1996 together with related
combined statements of earnings and of cash flows certified by Delloite & Touche
LLP, certified public accountants, and (ii) a company-prepared combined balance
sheet of the Consolidated Borrower Group dated as of February 1, 1997, together
with related combined statements of income and of cash flows, present fairly the
combined financial position, results of operations and cash flows of the
Consolidated Borrower Group as of such date and for the period indicated,
subject in the case of the financial statements
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described in clause (ii) to normal year-end adjustments and the absence of
footnotes; such financial statements were prepared in conformity with generally
accepted accounting principles applied on a consistent basis (except as noted
therein); and since January 31, 1996 there have occurred no changes or
circumstances which have had or are likely to have a Material Adverse Effect.
5.7 No Default.
No Default or Event of Default presently exists.
5.8 Liens.
Except for Permitted Liens, such Credit Party owns or has a right to use
all properties and assets which are material to the operation of the business of
the Borrower and its Subsidiaries taken as a whole, free and clear of all liens,
encumbrances, mortgages, pledges, security interests and other adverse claims of
any nature.
5.9 Indebtedness.
As of the Closing Date, immediately after giving effect to the
Recapitalization, such Credit Party has no Indebtedness except (i) as disclosed
in the financial statements referenced in Section 5.6, (ii) Indebtedness arising
under the Senior Note Purchase Agreements and the Senior Notes and (iii) the
Indebtedness as set forth in Schedule 5.9.
5.10 Litigation.
Except as disclosed in Schedule 5.10, there are no actions, suits or
legal, equitable, arbitration or administrative proceedings, pending or, to the
knowledge of such Credit Party, threatened against such Credit Party which, if
adversely determined, would likely have a Material Adverse Effect. Since the
date of this Credit Agreement (or the date of the most recent update hereunder),
there has been no material adverse change in the status of any actions, suits,
investigations, litigation or proceedings disclosed hereunder the effect of
which is likely to result in a Material Adverse Effect.
5.11 Material Agreements.
Such Credit Party is not in default in any material respect under any
material contract, lease, loan agreement, indenture, mortgage, security
agreement or other material agreement or obligation to which it is a party or by
which any of its properties is bound which default would have a Material Adverse
Effect.
5.12 Taxes.
Such Credit Party has filed, or caused to be filed, all material tax
returns (federal, state, local and foreign) required to be filed and paid all
amounts of taxes shown thereon to be due (including interest and penalties) and
has paid all other material taxes, fees, assessments and other
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governmental charges (including mortgage recording taxes, documentary stamp
taxes and intangibles taxes) owing (or necessary to preserve any liens in favor
of the Banks or the collateral agent designated by the Banks) by such Credit
Party for which it has received a notice from a taxing authority except for such
taxes (i) which are not yet delinquent, (ii) as are being contested in good
faith and by proper proceedings, and against which adequate reserves are being
maintained in accordance with generally accepted accounting principles or (iii)
as would not have a Material Adverse Effect. As of the date hereof, such Credit
Party is not aware of any proposed material tax assessments against it or any of
its Subsidiaries.
5.13 Compliance with Law.
Except as set forth on Schedule 5.13, such Credit Party is in compliance
with all laws, rules, regulations, orders and decrees (including without
limitation environmental laws) applicable to it, or to its properties, the
failure to comply with which would have a Material Adverse Effect.
5.14 ERISA.
(i) No Reportable Event has occurred and is continuing with respect to any
Plan; (ii) no Plan has an accumulated funding deficiency determined under
Section 412 of the Code, (iii) no proceedings have been instituted, or, to the
knowledge of such Credit Party, are threatened or planned, to terminate any
Plan, (iv) neither such Credit Party nor any member of a Controlled Group, nor
any duly-appointed administrator of a Plan has instituted or intends to
institute proceedings to withdraw from any Multiemployer Plan; and (v) each Plan
has been maintained and funded in all material respects with its terms and with
the provisions of ERISA applicable thereto where, with respect to any of the
foregoing representations and warranties of this Section 5.14, the liability for
a failure thereof or as a result thereof would have a Material Adverse Effect.
Notwithstanding the foregoing, any representation or warranty of this Section
5.14 with respect to any Plan which is a Multiemployer Plan shall be made to the
best knowledge of the Credit Party.
5.15 Subsidiaries.
Set forth in Schedule 5.15 is a complete and accurate list of all
Subsidiaries of each Credit Party as of the date hereof. Information on the
attached Schedule includes jurisdiction of incorporation; the number of shares
of each class of capital stock or other equity interests outstanding; the number
and percentage of outstanding shares of each class owned (directly or
indirectly) by such Credit Party; and the number and effect, if exercised, of
all outstanding options, warrants, rights of conversion or purchase and similar
rights. The outstanding capital stock and other equity interests of all such
Subsidiaries is validly issued, fully paid and non-assessable and is owned by
such Credit Party, directly or indirectly, free and clear of all liens, security
interests and other charges or encumbrances (other than Permitted Liens).
5.16 Use of Proceeds; Margin Stock.
The proceeds of the Revolving Loans hereunder will be used solely for the
purposes specified in Section 6.10. None of such proceeds will be used for the
purpose of purchasing or
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carrying any "margin stock" as defined in Regulation U, Regulation X or
Regulation G, or for the purpose of reducing or retiring any Indebtedness which
was originally incurred to purchase or carry "margin stock" or for any other
purpose which might constitute this transaction a "purpose credit" within the
meaning of Regulation U, Regulation X or Regulation G. Such Credit Party does
not own "margin stock".
5.17 Government Regulation.
Such Credit Party is not subject to regulation under the Public Utility
Holding Company Act of 1935, the Federal Power Act, the Investment Company Act
of 1940 or the Interstate Commerce Act, each as amended. In addition, such
Credit Party is not (i) an "investment company" registered or required to be
registered under the Investment Company Act of 1940, as amended, and is not
controlled by such a company, or (ii) a "holding company," or a "Subsidiary
company" of a "holding company," or an "affiliate" of a "holding company" or of
a "Subsidiary" or a "holding company," within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
5.18 Hazardous Substances.
Except as disclosed on Schedule 5.18 or except as would not reasonably be
expected to have a Material Adverse Effect, the real property owned or leased by
such Credit Party and its Subsidiaries or on which it or its Subsidiaries
operates (the "Subject Property") (i) is free from "releases" of "hazardous
substances" as such terms are defined in the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, 42 U.S.C. ss.ss. 9601 et seq.,
as amended, and the regulations promulgated thereunder; (ii) no portion of the
Subject Property is subject to federal, state or local regulation or liability
because of the presence of stored, leaked or spilled petroleum products, waste
materials or debris, "PCB's" or PCB items (as defined in 40 C.F.R. ss.763.3),
underground storage tanks, "asbestos" (as defined in 40 C.F.R. ss.763.63) or the
past or present accumulation, spillage or leakage of any such substance; (iii)
such Credit Party and its Subsidiaries are in substantial compliance with all
federal, state and local requirements relating to protection of health or the
environment in connection with the operation of their businesses; and (iv) such
Credit Party knows of no complaint or investigation regarding real property
which it or any other Credit Party owns or leases or on which it or any other
Credit Party operates.
5.19 Patents, Franchises, etc.
Except as disclosed on Schedule 5.19, to the best knowledge of each Credit
Party, the Borrower (i) possesses or has the right to use in the United States
all material patents, trademarks, service marks, trade names, copyrights,
licenses and other rights, free from burdensome restrictions, that are
reasonably necessary for the operation of its business as presently conducted
and (ii) has obtained all material licenses, permits, franchises or other
governmental authorizations in the United States necessary to the ownership of
its respective property and to the conduct of its business except as would not
reasonably be expected to have a Material Adverse Effect.
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5.20 Solvency.
Such Credit Party and each of its Subsidiaries, both collectively and
individually, is and, after consummation of this Credit Agreement and after
giving effect to all Indebtedness incurred hereunder, will be solvent.
5.21 No Material Misstatements.
As of the Closing Date, there is no fact known to the Borrower that the
Borrower has not disclosed in writing to the Agent that, so far as the Borrower
can reasonably foresee, would have a Material Adverse Effect.
SECTION 6
AFFIRMATIVE COVENANTS
Each Credit Party hereby covenants and agrees that until the Revolving
Loans and LOC Obligations, together with interest, and fees hereunder, have been
paid in full and the Commitments hereunder shall have terminated:
6.1 Information Covenants.
The Credit Parties will furnish, or cause to be furnished, to the Agent
and each Bank:
(a) Annual Financial Statements. As soon as available and in any
event within 90 days after the close of each fiscal year of the Borrower,
beginning with the fiscal year ending February 1, 1997, a consolidated
balance sheet of the Parent Company, the Borrower and their Subsidiaries
as at the end of such fiscal year together with related consolidated
statements of income and retained earnings and of cash flows for such
fiscal year, setting forth in comparative form consolidated figures for
the preceding fiscal year, all in reasonable detail and audited by KPMG
Peat Marwick, Deloitte & Touche, LLP or other independent certified public
accountants of recognized national standing reasonably acceptable to the
Required Banks and whose opinion shall be to the effect that such
consolidated financial statements have been prepared in accordance with
generally accepted accounting principles then in effect applied on a
Consistent Basis (except for changes with which such accountants concur).
In addition, as soon as available and in any event within 90 days after
the close of each fiscal year of the Borrower, an unaudited
company-prepared consolidating balance sheet of the Parent Company, the
Borrower and their Subsidiaries (and a combined balance sheet for the
Consolidated Borrower Group) as at the end of such fiscal year together
with related consolidating (and, for the Consolidated Borrower Group,
combined) statements of income and retained earnings and of cash flows for
such fiscal year, setting forth in comparative form consolidating (and for
the Consolidated Borrower Group, combined) figures for the preceding
fiscal year.
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(b) Monthly Financial Statements. As soon as available and in any
event within 30 days after the end of each month, a combined balance sheet
for the Consolidated Borrower Group as at the end of such monthly period
together with related combined statements of income and retained earnings
and of cash flows for the Consolidated Borrower Group for such monthly
period and for the portion of the fiscal year ending with such period, in
each case setting forth in comparative form combined figures for the
corresponding period of the preceding fiscal year, all in reasonable form
and detail reasonably acceptable to the Required Banks, and accompanied by
a certificate of a knowledgeable financial officer of the Borrower having
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis (unless otherwise disclosed therein),
subject to changes resulting from audit and normal year-end adjustments
and the absence of footnotes and to the best of his knowledge and belief,
as being true and correct in all material respects.
(c) Annual Budget Plan. As soon as available, but in any event no
more than 30 days after the end of each fiscal year, a copy of the
detailed annual budget or plan for the next fiscal year, in form and
detail reasonably acceptable to the Required Banks, together with a
summary of the material assumptions made in the preparation of the budget
or plan.
(d) Borrowing Base Certificates. As soon as practicable and in any
event within 25 days after the end of each calendar month, a statement of
the Borrowing Base and its components as of the end of the immediately
preceding monthly accounting period, substantially in the form of Schedule
6.1(d) hereto, certified by a knowledgeable financial officer of the
Borrower to be true and correct in all material respects as of such date.
(e) Officer's Certificate. At the time of delivery of the financial
statements provided for in Sections 6.1(a) and (b) hereof, a certificate
of a knowledgeable financial officer of the Borrower substantially in the
form of Schedule 6.1(e) to the effect that to the best of his knowledge
and belief no Default or Event of Default exists, or if any Default or
Event of Default does exist specifying the nature and extent thereof and
what action the Borrower proposes to take with respect thereto. In
addition, within 45 days after the end of each fiscal quarter of the
Borrower, the Borrower shall deliver an officer's certificate which
demonstrates compliance with the financial covenants contained in Section
6.11 by calculation thereof on or attached to such certificate as of the
end of each such fiscal period which certificate shall also include a
summary of any differences in the application of generally accepted
accounting principles as applied in such financial statements delivered
from those required by this Credit Agreement, an estimation of their
effect and a reconciliation therefor as to the financial covenants setout
in Section 6.11 hereof.
(f) Accountant's Certificate. Within the period for delivery of the
annual financial statements provided in Section 6.1(a), a certificate of
the accountants conducting the annual audit stating whether, in the course
of their audit, they have become aware of any Default or Event of Default
(insofar as any such terms or provisions pertain to accounting matters)
and, if any such Default or Event of Default exists, specifying the nature
and extent (if quantifiable) thereof.
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(g) Auditor's Reports. Promptly upon request, a copy of any other
report or "management letter" submitted by independent accountants to the
Parent Company, the Borrower or a Subsidiary in connection with any
annual, interim or special audit of the consolidated financial statements
of the Parent Company, the Borrower or any of their Subsidiaries.
(h) SEC and Other Reports. Promptly upon transmission thereof,
copies of any filings and registrations with, and reports to, the
Securities and Exchange Commission, or any successor agency, by the Parent
Company, the Borrower or any of its Subsidiaries, and copies of all
financial statements, proxy statements, notices and reports as the Parent
Company, the Borrower or its Subsidiaries shall send to its shareholders
or to the holders of any other Indebtedness (including specifically
without limitation, any Subordinated Debt) in their capacity as such
holders.
(i) Other Information. With reasonable promptness upon any such
request, such other information regarding the business, properties or
financial condition of the Borrower and its Subsidiaries as the Agent or
the Required Banks may reasonably request.
(j) Notice of Default or Litigation. Upon any Credit Party obtaining
knowledge thereof, it will give written notice to the Agent (i)
immediately, of the occurrence of an event or condition consisting of a
Default or Event of Default, specifying the nature and existence thereof
and what action the Borrower proposes to take with respect thereto, and
(ii) promptly, but in any event within 5 Business Days, of the occurrence
of any of the following with respect to any of the Credit Parties: (A) the
pendency or commencement of any litigation, arbitral or governmental
proceeding which if adversely determined is likely to have a Material
Adverse Effect, (B) any levy of an attachment, execution or other process
against its assets having a value of $500,000 or more, (C) the occurrence
of an event or condition which shall constitute a default or event of
default under any Indebtedness in an amount greater than $1,000,000, (D)
any development in its business or affairs which has resulted in, or which
will likely result in, a Material Adverse Effect, or (E) the institution
of any proceedings with respect to, or the receipt of notice by such
Person of potential liability or responsibility for violation, or alleged
violation of any federal, state or local law, rule or regulation,
including but not limited to, regulations promulgated under the Resource
Conservation and Recovery Act of 1976, 42 U.S.C. ss.ss. 6901 et seq.,
regulating the generation, handling or disposal of any toxic or hazardous
waste or substance or the release into the environment or storage of any
toxic or hazardous waste or substance, which liability, violation or
alleged violation of which would likely have a Material Adverse Effect, or
(F) any notice or determination concerning the imposition of any
withdrawal liability by a Multiemployer Plan against any of the Credit
Parties, the determination that a Multiemployer Plan is, or is expected to
be, in reorganization within the meaning of Title IV or ERISA, the
termination of any Plan, and the amount of liability incurred or which may
be incurred in connection with any such event in each case, only to the
extent that any of the foregoing subjects a Credit Party to a liability
which would have a Material Adverse Effect.
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6.2 Preservation of Existence and Franchises.
Except as otherwise permitted under Section 7.4, each of the Credit
Parties will do all things necessary to preserve and keep in full force and
effect its existence, material rights, franchises and authority.
6.3 Books, Records and Inspections.
Each of the Credit Parties will keep proper books and records of its
transactions in accordance with good accounting practices. Each of the Credit
Parties will permit on reasonable notice and, prior to the occurrence of an
Event of Default, at reasonable times during normal business hours, officers or
designated representatives of the Agent or any Bank to visit and inspect its
books of account and records and any of its properties or assets (in whomever's
possession) and to discuss the affairs, finances and accounts of such Credit
Parties with, and be advised as to the same by, its and their officers,
directors and independent accountants.
6.4 Compliance with Law.
Each of the Credit Parties will comply with all applicable laws, rules,
regulations and orders of, and all applicable restrictions imposed by all
applicable Governmental Authorities applicable to it and its property (including
applicable statutes, regulations, orders and restrictions relating to
environmental standards and controls) if noncompliance with any such law, rule,
regulation or restriction would have a Material Adverse Effect.
6.5 Payment of Taxes and Other Indebtedness.
Each of the Credit Parties will pay and discharge (i) all taxes,
assessments and governmental charges or levies imposed upon it, or upon its
income or profits, or upon any of its properties, before they shall become
delinquent, (ii) all lawful claims (including claims for labor, materials and
supplies) which, if unpaid, might give rise to a Lien or charge upon any of its
properties, and (iii) except as prohibited hereunder, all of its other
Indebtedness as it shall become due; provided, however, that a Credit Party
shall not be required to pay any such tax, assessment, charge, levy, claim or
Indebtedness (A) which is being contested in good faith by appropriate
proceedings and as to which adequate reserves therefor have been established in
accordance with generally accepted accounting principles, or (B) if the failure
to make any such payment would not have a Material Adverse Effect.
6.6 Insurance.
Each of the Credit Parties will, at all times maintain in full force and
effect insurance or self-insurance (including worker's compensation insurance,
liability insurance, casualty insurance and business interruption insurance) in
such amounts, covering such risks and liabilities and with such deductibles or
self-insurance retentions as are reasonable and adequate in the Credit Party's
reasonable discretion unless higher limits or other types of coverage are
usually maintained by
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companies of similar size in a similar industry, in which case, the Required
Banks may require such Credit Party to maintain insurance in accordance with
such standards. The present coverage is outlined as to carrier, policy number,
expiration date, type and amount on Schedule 6.6 hereto and is acceptable to the
Banks as of the Closing Date. Each such policy shall name the Agent as
additional insured, or if the Agent shall request, as loss payee, and shall
provide that the Agent shall request, as loss payee, and shall provide that the
Agent will be provided with 30 days' prior written notice in the case of
cancellation. Unless otherwise requested, liability insurance shall name the
Agent as additional insured and casualty insurance shall name the Agent as loss
payee.
6.7 Maintenance of Property.
Except as otherwise permitted by Section 7.4, each of the Credit Parties
will maintain and preserve its properties and equipment material to the conduct
of its business in good repair, working order and condition, normal wear and
tear excepted, and will make, or cause to be made, in such properties and
equipment from time to time all repairs, renewals, replacements, extensions,
additions, betterments and improvements thereto as may be needed or proper, to
the extent and in the manner customary for companies in similar businesses.
6.8 Performance of Obligations.
Each of the Credit Parties will perform in all material respects all of
its obligations (including, except as may be otherwise prohibited or
contemplated hereunder, payment of Indebtedness in accordance with its terms)
under the terms of all material agreements, indentures, mortgages, security
agreements or other debt instruments to which it is a party or by which it is
bound, except where the failure to do so would not have a Material Adverse
Effect.
6.9 ERISA.
Each Credit Party will, (a) at all times, make prompt payment of all
contributions required under all employee pension benefit plans (as defined in
Section 3(2) of ERISA) ("Pension Plans") and be required to meet the minimum
funding standard set forth in ERISA with respect to each Plan, except where the
failure to do so would not have a Material Adverse Effect; (b) promptly upon
request, furnish the Agent and the Banks copies of each annual report/return
(Form 5500 Series), as well as all schedules and attachments required to be
filed with the Department of Labor and/or the Internal Revenue Service pursuant
to ERISA, and the regulations promulgated thereunder, in connection with each of
its Pension Plans for each Plan Year; (c) notify the Agent within ten (10)
Business Days of any fact, including, but not limited to, any Reportable Event
arising in connection with any of its Plans, which might constitute grounds for
termination thereof by the PBGC or for the appointment by the appropriate United
States District Court of a trustee to administer such Plan, together with a
statement, if requested by the Bank, as to the reason therefor and the action,
if any, proposed to be taken with respect thereof; and (d) as soon as reasonably
possible furnish to the Agent, upon its request, such additional information
concerning any of its Plans as may be reasonably requested by the Agent.
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6.10 Use of Proceeds.
Extensions of Credit hereunder may be used to (i) refinance Indebtedness
outstanding under the Existing Credit Agreement, (ii) pay fees and expenses
incurred in connection with this Credit Agreement, and (iii) provide for working
capital and other general corporate purposes not prohibited by this Credit
Agreement.
6.11 Financial Covenants.
(a) Ave. Funded Debt to Consolidated EBITDA. As of the end of each
fiscal quarter set forth below, there shall be maintained an Ave. Funded
Debt to Consolidated EBITDA Ratio of not greater than the ratio specified
below:
Fiscal Quarter Ending Ratio
--------------------- -----
May 3, 1997 and each fiscal quarter ending 6.00 : 1.00
thereafter until but including the fiscal
quarter ending November 1, 1997
January 31, 1998 and each fiscal quarter ending 5.25 : 1.00
thereafter until but including the fiscal
quarter ending October 31, 1998
January 30, 1999 and each fiscal quarter ending 4.75 : 1.00
thereafter until but including the fiscal
quarter ending October 30, 1999
January 29, 2000 and each fiscal quarter ending 4.50 : 1.00
thereafter until but including the fiscal
quarter ending October 28, 2000
January 27, 2001 and each fiscal quarter ending 4.25 : 1.00
thereafter until but including the fiscal
quarter ending October 27, 2001
February 2, 2002 and thereafter 4.00 : 1.00
(b) Consolidated Fixed Charge Coverage Ratio. As of the end of each
fiscal quarter, there shall be maintained a Consolidated Fixed Charge
Coverage Ratio of not less than the ratio specified below:
Fiscal Quarter Ending Ratio
--------------------- -----
May 3, 1997 and each fiscal quarter ending 1.10 : 1.00
thereafter until but including the fiscal
quarter ending October 30, 1999
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January 29, 2000 and each fiscal quarter ending 1.15 : 1.00
thereafter until but including the fiscal
quarter ending October 27, 2001
February 2, 2002 and thereafter 1.20 : 1.00
(c) Consolidated Interest Coverage Ratio. As of the end of each
fiscal quarter, there shall be maintained a Consolidated Interest Coverage
Ratio of not less than the ratio specified below:
Fiscal Quarter Ending Ratio
--------------------- -----
May 3, 1997 and each fiscal quarter ending 1.50 : 1.00
thereafter until but including the fiscal
quarter ending October 30, 1999
January 29, 2000 and each fiscal quarter ending 1.75 : 1.00
thereafter until but including the fiscal
quarter ending October 27, 2001
February 2, 2002 and thereafter 2.00 : 1.00
6.12 Additional Subsidiary Guarantors.
The Borrower will cause each of its Domestic Subsidiaries (other than
Anvil (Czech), Inc.), whether newly formed, after acquired or otherwise
existing, to promptly become a "Guarantor" hereunder by way of execution of a
Joinder Agreement. The obligations of any such Additional Credit Party shall be
secured by a pledge of 100% of the capital stock of its Domestic Subsidiaries
and, subject to the terms of Section 6.13, 65% of the capital stock (or other
equity interest) of its other Subsidiaries, to the extent any such pledge is
permissible under applicable law. Each Additional Credit Party shall deliver
such other documentation as the Agent may reasonably request in connection with
the foregoing, including, without limitation, appropriate UCC-1 financing
statements, certified resolutions and other organizational and authorizing
documents of such Person and favorable opinions of counsel to such Person (which
shall cover, among other things, the legality, validity, binding effect and
enforceability of the documentation referred to above and the perfection of the
Agent's liens thereunder), all in form, content and scope reasonably
satisfactory to the Agent.
6.13 Pledged Assets.
Each Credit Party will cause (i) all of its owned real properties and
personal property (other than fixtures located at 228 East 45th Street, New
York, New York 10017) located in the United States, (ii) to the extent deemed to
be material by the Agent in its sole reasonable discretion, all of its other
owned real properties and personal property and (iii) all of its leased real
properties located in the United States to be subject at all times to first
priority, perfected
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and, in the case of real property (whether leased or owned), title insured Liens
in favor of the Agent pursuant to the terms and conditions hereunder or under
any of the other Credit Documents or, with respect to any such property acquired
subsequent to the Closing Date, such other additional security documents as the
Agent shall reasonably request. Without limiting the generality of the above,
the Credit Parties will cause 100% of the capital stock (or other equity
interests) in each of their direct or indirect Domestic Subsidiaries and, to the
extent permitted by applicable law, 65% of the capital stock (or other equity
interests) in each of their direct Foreign Subsidiaries to be subject at all
times to a first priority, perfected Lien in favor of the Agent pursuant to the
terms and conditions hereunder, under any of the other Credit Documents or under
such other security documents as the Agent shall reasonably request; provided
that, notwithstanding the foregoing, the Credit Parties shall not be required to
cause the Agent's Lien in 65% of the equity interests of A.K.H., S.A. to be
perfected unless, if A.K.H., S.A. has any assets, A.K.H., S.A. shall not have
been dissolved by the first anniversary of the Closing Date.
If, subsequent to the Closing Date, a Credit Party shall (a) acquire any
intellectual property, securities, instruments, chattel paper or other personal
property required to be delivered to the Agent as collateral hereunder or under
any of the other Credit Documents or (b) acquire or lease any real property, the
Borrower shall promptly (and in any event within three (3) Business Days after
any officer of a Credit Party acquires knowledge of same) notify the Agent of
same. Each Credit Party shall take such action, at its own expense, as requested
by the Agent to ensure that the Banks have a first priority perfected Lien in
(i) all owned real properties and personal property of the Credit Parties
located in the United States, (ii) to the extent deemed to be material by the
Agent in its sole reasonable discretion, all other owned real properties and
personal property of the Credit Parties and (iii) all leased real properties
located in the United States, subject in each case only to Permitted Liens.
6.14 Title Commitment, Survey and Flood Hazard Certification.
As soon as available and in any event within sixty (60) days of the
Closing Date, the Credit Parties will furnish, or cause to be furnished, to the
Agent and each Bank:
(a) A standard ALTA mortgagee title insurance commitment (or
sufficient endorsements to existing title insurance policies) as to the
premises owned and leased by the Borrower which are the subject of the
Mortgages from a company or companies reasonably acceptable to the Agent
and the Banks, providing coverage for the most recently appraised value of
such premises and containing no title exceptions not reasonably acceptable
to the Agent and the Banks.
(b) A copy of a recent survey (or a recent certification as to the
accuracy of an existing survey) of the premises owned and leased by the
Borrower which are the subject of the Mortgages prepared by a registered
engineer or land surveyor in a form reasonably acceptable to the Agent and
the Banks and including thereon a certificate that none of the
improvements on the subject premises are located within any area
designated by the Director of the Federal Emergency Management Agency as a
"special flood hazard" area unless then the Credit Party will provide a
flood insurance policy naming the Agent as
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mortgagee. The survey shall include reasonably satisfactory evidence that
such premises abut and have fully adequate direct and free access to a
dedicated public street and thoroughfare.
6.15 Equity Transactions.
Promptly upon (but in any event not later than five (5) Business Days
following) receipt of any Net Proceeds in connection with any Equity Transaction
by the Parent Company, the Borrower or any of their Subsidiaries, the Credit
Parties will prepay (with a corresponding commitment reduction in the case of
any revolving Funded Debt) Funded Debt of the Borrower or any of its
Subsidiaries, as the Borrower may elect, in an aggregate amount equal to 100% of
the Net Proceeds actually received by the Parent Company, the Borrower and/or
their Subsidiaries therefrom. To the extent that the Revolving Loans are prepaid
with any Net Proceeds pursuant to the terms hereof, such amounts shall be
applied in accordance with the terms of Section 2.8(c) and may not be
reborrowed.
6.16 Anvil (Czech), Inc.
As soon as is reasonably practical, the Borrower will cause Anvil (Czech),
Inc. to be dissolved.
SECTION 7
NEGATIVE COVENANTS
Each Credit Party hereby covenants and agrees that until the Revolving
Loans and LOC Obligations, together with interest, and fees hereunder, have been
paid in full and the Commitments hereunder shall have terminated:
7.1 Indebtedness.
None of the Credit Parties will contract, create, incur, assume or permit
to exist any Indebtedness, except:
(a) Indebtedness arising under this Credit Agreement and the other
Credit Documents;
(b) Indebtedness arising under the Senior Note Purchase Agreement,
the Senior Note Indenture and the Senior Notes;
(c) Indebtedness existing as of the Closing Date as referenced in
Section 5.9 (and renewals, refinancings or extensions thereof on terms and
conditions no more favorable in any material respect (taken as a whole) to
such Person than such existing Indebtedness (taking into account
reasonable market conditions existing at such time) and
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in a principal amount not in excess of that Indebtedness outstanding
thereunder as of the date of such renewal, refinancing or extension);
(d) Indebtedness in respect of current accounts payable or accrued
expenses (other than for borrowed money or purchase money obligations)
incurred in the ordinary course of business;
(e) purchase money Indebtedness incurred to finance the purchase of
fixed assets and Capital Lease Obligations generally (other than, and in
addition to, as provided in Section 7.1(c)) and any renewals, refinancings
or extensions thereof, provided that (i) the total of all such
Indebtedness and Capital Lease Obligations permitted by this subsection
(e) shall not exceed the sum of an aggregate principal amount of
$1,000,000 at any one time outstanding; (ii) such Indebtedness and Capital
Lease Obligations when incurred shall not exceed the purchase price of the
asset financed plus reasonable transaction expenses related thereto; and
(iii) no such Indebtedness and Capital Lease Obligations shall be
refinanced for a principal amount in excess of the Indebtedness
outstanding thereon at the time of such refinancing;
(f) Indebtedness owing by the Borrower to a Guarantor, by a
Guarantor to the Borrower or by a Guarantor to another Guarantor;
(g) Guaranty Obligations of Indebtedness for borrowed money and
Capital Lease Obligations, each to the extent otherwise permitted by this
Section 7.1;
(h) other Indebtedness (and including any letters of credit issued
outside of this Credit Agreement) which does not exceed $1,000,000 in the
aggregate at any time outstanding;
(i) obligations of the Borrower in respect of Hedging Agreements
entered into in order to manage existing or anticipated interest rate or
exchange rate risks and not for speculative purposes; and
(j) Indebtedness of the Parent Company in respect of the
Subordinated Debt.
Notwithstanding the foregoing, nothing in this Section 7.1 shall be deemed to
permit the Borrower or any of its Subsidiaries to have any Guaranty Obligations
in respect of any Subordinated Debt.
7.2 Liens.
None of the Credit Parties will create, incur, assume or permit to exist
any Lien with respect to any of its property or assets of any kind (whether real
or personal, tangible or intangible), whether now owned or after acquired,
except for Permitted Liens.
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7.3 Nature of Business.
None of the Credit Parties will engage in a business substantially
different from the business conducted by the Credit Parties as of the Closing
Date other than reasonable expansions and extensions. The Parent Company shall
not engage in any business, activity or operations other than owning and holding
capital stock of the Borrower, actions necessary for consummation of the
Recapitalization, incurring Subordinated Debt to the extent permitted by Section
7.1(j), guaranteeing Indebtedness of the Borrower, pledging its assets as
security for obligations under the Credit Documents, and activities related
thereto.
7.4 Consolidation, Merger, Sale of Assets, etc.
None of the Credit Parties will
(a) dissolve, liquidate, or wind up its affairs, sell, transfer,
lease or otherwise dispose of all or any substantial part of its property
or assets outside the ordinary course of its business or agree to do so at
a future time except the following, without duplication, shall be
expressly permitted:
(i) Specified Sales; and
(ii) other Asset Sales, provided that in the event the Net Proceeds
resulting therefrom in any twelve-month period exceed $500,000
in any single instance or $1,000,000 in the aggregate during
any twelve-month period, then such Net Proceeds shall be used
to repay Indebtedness of the Borrower or any Subsidiary who is
a Credit Party; however, notwithstanding the foregoing, in the
event such Net Proceeds are the result of a Recovery Event or
otherwise, the Borrower or any Subsidiary who is a Credit
Party may use all or any part of such Net Proceeds to repair
or replace damaged property or to purchase or otherwise
acquire new assets or property provided that such purchase or
acquisition is committed to by such Credit Party with 180 days
of the receipt of such Net Proceeds and such purchase or
acquisition is consummated within 270 days of such receipt;
as used herein, "substantial part" shall mean if the book value of such
assets, when added to the book value of all other assets sold, leased or
otherwise disposed of by the Credit Parties, taken as a whole (other than
in the ordinary course of business), during the 12-month period ending
with the date of such Asset Sale exceeds 5% of consolidated assets,
determined as of the end of the immediately preceding fiscal year; or
(b) enter into any transaction of merger or consolidation, or agree
to a merger or consolidation at a future time, except for (i) the merger
or consolidation of a Credit Party (other than the Parent Company) into
the Borrower, provided that the Borrower shall be the surviving or
continuing corporation, (ii) the merger or consolidation of a Credit Party
(other than the Parent Company or the Borrower) into another Credit Party
(other than the Parent
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Company or the Borrower), (iii) the merger or consolidation of another
Person into a Credit Party (other than the Parent Company) made in
connection with an acquisition by such Credit Party permitted by Section
7.5, provided that such Credit Party shall be the surviving or continuing
corporation and (iv) the Borrower may merge with the Parent Company in
connection with a Qualifying Public Equity Offering if (a) the Borrower
shall be the continuing or surviving corporation, (b) after giving effect
thereto, no Default or Event of Default exists and (c) the Borrower shall
prepay (with a corresponding commitment reduction in the case of any
revolving Funded Debt) Funded Debt of the Borrower and its Subsidiaries
with 100% of the Net Proceeds from the Qualifying Public Equity Offering
as contemplated by the terms of Section 6.15.
7.5 Investments.
None of the Credit Parties will make any Investment in any Person, except
for Permitted Investments.
7.6 Prepayments of Indebtedness, etc.
None of the Credit Parties will
(a) if any Default or Event of Default has occurred and is
continuing or would be directly or indirectly caused as a result thereof,
(i) after the issuance thereof, amend or modify (or permit the amendment
or modification of) any of the terms of any Indebtedness if such amendment
or modification would add or change any terms in a manner adverse to the
Banks, including, but not limited to, shortening the final maturity or
average life to maturity or requiring any payment to be made sooner than
originally scheduled or increasing the interest rate applicable thereto or
changing any subordination provision thereof, or (ii) except as set forth
in Section 6.15, make (or give any notice with respect thereto) any
voluntary or optional payment or any prepayment or any redemption or any
acquisition for value of (including without limitation, by way of
depositing money or securities with the trustee with respect thereto
before due for the purpose of paying when due), refund, refinance or
exchange of any other Indebtedness;
(b) after the issuance thereof, amend or modify, or permit the
amendment or modification of
(i) any of the subordination provisions of any Subordinated
Debt; or
(ii) any other material terms of any Subordinated Debt, except
(A) for a waiver by the holder of such Subordinated Debt with
respect to compliance with the terms thereof, and (B) after fifteen
(15) days prior written notice to the Agent and each of the Banks,
of any such amendment or modification which is not adverse to either
the issuer thereof or to the interests of the Banks in their
capacity as the holders of any of the Total Revolving Obligations,
or
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(c) make any payment, prepayment, redemption, acquisition for
value of (including without limitation, by way of depositing money
or securities with the trustee with respect thereto before due for
the purpose of paying when due), refund, refinance or exchange of
any Subordinated Debt (including, without limitation, interest
thereon); provided, however, the foregoing shall not prohibit the
following, (i) any payment, prepayment, redemption, acquisition made
from and to the extent of the Net Proceeds of any Equity Transaction
as permitted by Section 7.7(iv), (ii) in the case of Subordinated
Debt owing to a member of the Management Group, to the extent
permitted in Section 7.7(iii), and (iii) upon issuance of the
Exchange Debentures, payments-in-kind of interest on the Exchange
Debentures, but only to the extent such payments are not prohibited
by Section 10.3 of the Exchange Debenture Indenture.
7.7 Restricted Payments.
None of the Credit Parties will make any Restricted Payments; except (i)
Subsidiaries of the Borrower may pay dividends or make other payments or
advances to the Borrower, (ii) the Borrower may pay dividends or make payments
to the Parent Company (A) pursuant to an intercompany tax sharing arrangement
but only to an extent that the amount of such dividend or other payment reflects
the applicable tax liability of the Parent Company and its consolidated
Subsidiaries which dividend or payment will be paid by the Parent Company, (B)
to enable the Parent Company to pay ordinary and necessary expenses associated
with the limited activities of the Parent Company, such as reasonable accounting
and professional expenses to third parties and director's fees and reasonable
expenses which director's fees
(1) in the case of directors which are Investors or officers,
directors or employees of an Investor, directors' fees shall not
exceed $50,000 in the aggregate in any single calendar year; and
(2) in the case of directors which are not Investors or
officers, directors or employees of an Investor, directors' fees
shall not be in excess of amounts which would be reasonable and
customary for outside directors of similarly situated companies,
and any and all state franchise taxes and similar taxes, and (C) in an amount
necessary to redeem or otherwise purchase capital stock of the Management Group
to the extent permitted by clause (iii) of this Section 7.7, (iii) any Credit
Party may redeem or otherwise purchase capital stock of members of the
Management Group in an aggregate cash amount (including in connection herewith
payment or prepayment of Subordinated Debt owing to members of the Managing
Group under Section 7.1(j) of up to $500,000 in any calendar year (or if less
than such amount is paid in any year, the "unused" portion may be carried-over
for a period of three (3) successive calendar years and serve to increase
amounts otherwise permitted in such subsequent years, with purchases and
redemptions in a given year being applied first to carry-over amounts, beginning
with the oldest carry-over amounts and working forward to the most recent
carry-over amounts, and then to the amount permitted for the year in which they
are made), but not to exceed $2,500,000 during the term of this Credit
Agreement, provided, that the aggregate amount of any such redemptions may be
increased in a given fiscal year by an amount equal to actual cash consideration
received in such
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fiscal year from members of the Management Group from the sale of capital stock,
(iv) the portion of Net Proceeds from any Equity Transaction which is not paid
to the Banks for application to the Revolving Loans may used to prepay (with a
corresponding commitment reduction in the case of any revolving Funded Debt)
Funded Debt of the Borrower and/or its Subsidiaries in accordance with the
provisions of Section 6.15, (v) upon issuance of the Exchange Debentures in
accordance with Section 7.11, the Parent Company may repurchase fractional
shares of and pay accrued dividends owing with respect to the Senior Preferred
Stock and (vi) pursuant to the terms of the Recapitalization Agreement, any
payments made in connection with the Recapitalization.
7.8 Transactions with Affiliates.
None of the Credit Parties will enter into any transaction or series of
transactions, whether or not in the ordinary course of business, with any
officer, director, shareholder of any Credit Party or to any Subsidiary which is
not a Credit Party or Affiliate of any Credit Party (other than another Credit
Party) other than on terms and conditions substantially as favorable than would
be obtainable in a comparable arm's-length transaction with a Person other than
an Affiliate, except that the restriction contained in this Section 7.8 shall
not apply to (i) Permitted Investments, (ii) transactions permitted by Section
7.5 and 7.7, (iii) transactions contemplated by the Recapitalization Agreement,
including any and all payments required to be paid pursuant to the terms
thereof, (iv) transaction fees and reimbursement of expenses paid to such
officer, director, shareholder or Affiliate in connection with the transactions
contemplated by the Recapitalization Agreement (and the agreements executed in
connection therewith) in an amount not to exceed $4,000,000, (v) transactions
contemplated by the Stockholders Agreement, the Registration Rights Agreement,
the Units Registration Rights Agreement or the Units Stockholders Agreement,
(vi) transactions with employees or officers of any Credit Party in the ordinary
course of business so long as any material transactions have been approved by
the Board of Directors of such Credit Party, (vii) transactions among and
between the Credit Parties, (viii) the redemption or other purchase of capital
stock of members of the Management Group to the extent permitted by Section 7.7
and (ix) the sale of equity securities by the Parent Company.
7.9 Ownership of Subsidiaries.
Neither the Parent Company, the Borrower nor any of their Subsidiaries
will sell, transfer or otherwise dispose of, any shares of capital stock or
permit the Borrower or any Subsidiaries to issue, sell or otherwise dispose of,
any shares of capital stock of any Subsidiary, except (i) the Units Offering,
(ii) in the case of a Subsidiary, capital stock that is issued, sold or
transferred to the Borrower or any other Subsidiary of the Borrower, (iii)
pursuant to any Equity Transaction so long as the Net Proceeds therefrom are, to
the extent required, applied to prepay (with a corresponding commitment
reduction in the case of any revolving Funded Debt) Funded Debt of the Borrower
and its Subsidiaries pursuant to Section 6.15, (iv) by the Parent Company, the
Borrower or any of its Subsidiaries expressly for the purpose of acquiring new
assets or property, provided that such purchase or acquisition is committed to
within 180 days of receipt of such Net Proceeds therefrom and such purchase or
acquisition is consummated within 270 days of such receipt, and (v) in any
transaction not constituting an Equity Transaction. Neither the Borrower nor any
of its Subsidiaries will create, form or acquire a Subsidiary unless such
Subsidiary is or would be a Subsidiary.
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7.10 Fiscal Year.
Unless required by applicable law, none of the Credit Parties will change
its fiscal year without the consent of the Agent, which consent shall not be
unreasonably withheld or delayed.
7.11 Exchange Debentures.
So long as any Default or Event of Default shall exist and be continuing,
no Credit Party will permit the Senior Preferred Stock to be exchanged for
Exchange Debentures.
SECTION 8
EVENTS OF DEFAULT
8.1 Events of Default.
An Event of Default shall exist upon the occurrence of any of the
following specified events (each an "Event of Default"):
(a) Payment. Any Credit Party shall:
(i) default in the payment when due of any principal of any of
the Revolving Loans or of any reimbursement obligations arising from
drawings under Letters of Credit, or in providing cash collateral
when due pursuant to Section 8.2(iv) (or payment of any guaranty
obligations in respect thereof), or
(ii) default, and such default shall continue for three or
more Business Days, in the payment when due of any interest on the
Revolving Loans, or of any fees or other amounts owing hereunder,
under any of the other Credit Documents or in connection herewith
(or payment of any guaranty obligations in respect thereof); or
(b) Representations. Any representation, warranty or statement made
or deemed to be made by any Credit Party herein, in any of the other
Credit Documents, or in any statement or certificate delivered or required
to be delivered pursuant hereto or thereto shall prove untrue in any
material respect on the date as of which it was deemed to have been made;
or
(c) Covenants. Any Credit Party shall:
(i) default in the due performance or observance of any term,
covenant or agreement contained in Sections 6.1(j), 6.2, 6.11 or 7.1
through 7.11, inclusive, or
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(ii) default in the due performance or observance by it of any
term, covenant or agreement (other than those referred to in
subsections (a), (b) or (c)(i) this Section 8.1) contained in any
Credit Document and such default shall continue unremedied for a
period of at least 30 days after the earlier of a responsible
officer of a Credit Party becoming aware of such default or notice
thereof to the Borrower by the Agent; or
(d) Other Credit Documents. Any Credit Document shall fail to be in
full force and effect or to give the Agent and/or the Banks the security
interests, liens, rights, powers and privileges purported to be created
thereby; or
(e) Guaranties and Subordination Provisions. The guaranty given by
the Credit Parties hereunder or by any Additional Credit Party hereafter
or any provision thereof shall cease to be in full force and effect, or
any guarantor thereunder or any Person acting by or on behalf of such
guarantor shall deny or disaffirm such guarantor's obligations under such
guaranty, or any guarantor shall default in the due performance or
observance of any term, covenant or agreement on its part to be performed
or observed pursuant to any guaranty; or the subordination provisions of
the Subordinated Debt permitted under Section 7.1 or any material
provision thereof shall cease to be in full force and effect (other than
as a result of payment in full permitted by the terms of this Credit
Agreement); or
(f) Bankruptcy, etc. A Credit Party shall commence a voluntary case
concerning itself under the Bankruptcy Code; or an involuntary case is
commenced against a Credit Party under the Bankruptcy Code and the
petition is not dismissed within 60 days, after commencement of the case;
or a custodian (as defined in the Bankruptcy Code) is appointed for, or
takes charge of all or substantially all of the property of a Credit
Party; or a Credit Party commences any other proceeding under any
reorganization, arrangement, adjustment of the debt, relief of creditors,
dissolution, insolvency or similar law of any jurisdiction whether now or
hereafter in effect relating to a Credit Party; or there is commenced
against a Credit Party any such proceeding which remains undismissed for a
period of 60 days; or a Credit Party is adjudicated insolvent or bankrupt;
or any order of relief or other order approving any such case or
proceeding is entered; or a Credit Party suffers appointment of any
custodian or the like for it or for any substantial part of its property
to continue unchanged or unstayed for a period of 60 days; or a Credit
Party makes a general assignment for the benefit of creditors; or any
corporate action is taken by a Credit Party for the purpose of effecting
any of the foregoing; or
(g) Defaults under Other Agreements. With respect to any
Indebtedness (other than Indebtedness outstanding under any Credit
Document) of the Credit Parties in a principal amount in excess of
$1,000,000, (i) a Credit Party shall (A) default in any payment (beyond
the applicable grace period with respect thereto, if any) with respect to
any such Indebtedness, or (B) default (after giving effect to any
applicable grace period) in the observance or performance relating to such
Indebtedness or contained in any instrument or agreement evidencing,
securing or relating thereto, or any other event or condition shall occur
or condition exist, the effect of which default or other event or
condition is to cause,
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or permit, the holder or holders of such Indebtedness (or trustee or agent
on behalf of such holders) to cause (determined without regard to whether
any notice or lapse of time is required), any such Indebtedness to become
due prior to its stated maturity; or (ii) any such Indebtedness shall be
declared due and payable, or required to be prepaid other than by a
regularly scheduled required prepayment, prior to the stated maturity
thereof; or
(h) Judgments. One or more judgments, orders, or decrees shall be
entered against any Credit Party involving a liability of $500,000 or more
in the aggregate (to the extent not paid or covered by insurance provided
by a carrier who has not denied coverage) shall be rendered by a court of
competent jurisdiction and such judgments, orders or decrees shall
continue unsatisfied, undischarged and unstayed for a period ending on the
first to occur of (i) the last day on which such judgment, order or decree
becomes final and unappealable or (ii) 60 days; or
(i) ERISA. Any Credit Party or any member of the Controlled Group
shall fail to pay when due an amount or amounts aggregating which it shall
have become liable to pay under Title IV of ERISA; or notice of intent to
terminate a Plan or Plans which in the aggregate have unfunded liabilities
(individually and collectively, a "Material Plan") shall be filed under
Title IV of ERISA by any such Credit Party or any member of the Controlled
Group, any plan administrator or any combination of the foregoing; or the
PBGC shall institute proceedings under Title IV of ERISA to terminate, to
impose liability (other than for premiums under Section 4007 of ERISA) in
respect of, or to cause a trustee to be appointed to administer any
Material Plan; or a condition shall exist by reason of which the PBGC
would be entitled to obtain a decree adjudicating that any Material Plan
must be terminated; or there shall occur a complete or partial withdrawal
from, or a default, within the meaning of Section 4219(c)(5) of ERISA,
with respect to, one or more Multiemployer Plans; provided, however, a
default shall only exist as a result of the occurrence of any of the
events referred to in this clause (i) if the effect of such event would
result in a Material Adverse Effect; or
(j) Recapitalization Documents. There shall occur and be continuing
any Event of Default under and as defined in any Recapitalization
Document; or
(k) Ownership. There shall occur a Change of Control.
8.2 Acceleration; Remedies.
Upon the occurrence of an Event of Default, and at any time thereafter
unless and until such Event of Default has been waived by the Required Banks or
cured to the satisfaction of the Required Banks, the Agent may, and shall, upon
the request and direction of the Required Banks, by written notice to the
Borrower take any of the following actions without prejudice to the rights of
the Agent or any Bank to enforce its claims against the Credit Parties, except
as otherwise specifically provided for herein:
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(i) Termination of Commitments. Declare the Commitments
terminated whereupon the Commitments shall be immediately
terminated.
(ii) Acceleration of Revolving Loans. Declare the unpaid
principal of and any accrued interest in respect of all Revolving
Loans and unreimbursed drawings in respect of LOC Obligations and
any and all other indebtedness or obligations of any and every kind
owing by the Borrower to any of the Banks hereunder to be due
whereupon the same shall be immediately due and payable without
presentment, demand, protest or other notice of any kind, all of
which are hereby waived by the Borrower.
(iii) Enforcement of Rights. Enforce any and all rights and
interests created and existing under the Credit Documents and all
rights of set-off.
(iv) Cash Collateral. Direct the Credit Parties to pay (and
the Credit Parties agree that upon receipt of such notice, or upon
the occurrence of an Event of Default under Section 8.1(f), they
will immediately pay) to the Agent additional cash, to be held by
the Agent, for the benefit of the Banks, in a cash collateral
account as additional security for the LOC Obligations for
subsequent drawings under all then outstanding Letters of Credit in
an amount equal to the maximum aggregate amount which may be drawn
under all Letters of Credits then outstanding.
Notwithstanding the foregoing, if an Event of Default specified in Section
8.1(f) shall occur, then the Commitments shall automatically terminate and all
Revolving Loans and LOC Obligations, all accrued interest in respect thereof,
all accrued and unpaid Fees and other indebtedness or obligations owing to the
Banks hereunder shall immediately become due and payable without the giving of
any notice or other action by the Agent or the Banks.
SECTION 9
AGENCY PROVISIONS
9.1 Appointment.
Each Bank hereby designates and appoints NationsBank, N.A. as agent (in
such capacity as Agent hereunder, the "Agent") of such Bank to act as specified
herein and the other Credit Documents, and each such Bank hereby authorizes the
Agent, as the agent for such Bank, to take such action on its behalf under the
provisions of this Credit Agreement and the other Credit Documents and to
exercise such powers and perform such duties as are expressly delegated by the
terms hereof and of the other Credit Documents, together with such other powers
as are reasonably incidental thereto. Notwithstanding any provision to the
contrary elsewhere herein and in the other Credit Documents, the Agent shall not
have any duties or responsibilities, except those expressly set forth herein and
therein, or any fiduciary relationship with any Bank, and no implied covenants,
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functions, responsibilities, duties, obligations or liabilities shall be read
into this Credit Agreement or any of the other Credit Documents, or shall
otherwise exist against the Agent. To the extent the provisions of this Section
relate to intercreditor or other issues as between and among the Agent and the
Banks, the provisions of this Section are solely for the benefit of the Agent
and the Banks and none of the Credit Parties shall have any rights as a third
party beneficiary of the provisions hereof. In performing its functions and
duties under this Credit Agreement and the other Credit Documents, the Agent
shall act solely as agent of the Banks and does not assume and shall not be
deemed to have assumed any obligation or relationship of agency or trust with or
for the Borrower or any other Credit Party.
9.2 Delegation of Duties.
The Agent may execute any of its duties hereunder or under the other
Credit Documents by or through agents or attorneys-in-fact and shall be entitled
to advice of counsel concerning all matters pertaining to such duties. The Agent
shall not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by them with reasonable care.
9.3 Exculpatory Provisions.
Neither the Agent nor any of its respective officers, directors,
employees, agents, attorneys-in-fact or affiliates shall be (i) liable for any
action lawfully taken or omitted to be taken by it or such Person under or in
connection herewith or in connection with any of the other Credit Documents
(except for its or such Person's own gross negligence or willful misconduct), or
(ii) responsible in any manner to any of the Banks for any recitals, statements,
representations or warranties made by any of the Credit Parties contained herein
or in any of the other Credit Documents or in any certificate, report, statement
or other document referred to or provided for in, or received by the Agent under
or in connection herewith or in connection with the other Credit Documents, or
enforceability or sufficiency hereof or of any of the other Credit Documents, or
for any failure of the Borrower or the Guarantors to perform their obligations
hereunder or thereunder. The Agent shall not be responsible to any Bank for the
effectiveness, genuineness, validity, enforceability, collectability or
sufficiency of this Credit Agreement, or any of the other Credit Documents or
for any representations, warranties, recitals or statements made herein or
therein or made by the Borrower or any Credit Party in any written or oral
statement or in any financial or other statements, instruments, reports,
certificates or any other documents in connection herewith or therewith
furnished or made by the Agent to the Banks or by or on behalf of the Credit
Parties to the Agent or any Bank or be required to ascertain or inquire as to
the performance or observance of any of the terms, conditions, provisions,
covenants or agreements contained herein or therein or as to the use of the
proceeds of the Revolving Loans or of the existence or possible existence of any
Default or Event of Default or to inspect the properties, books or records of
the Credit Parties.
9.4 Reliance on Communications.
The Agent shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, telecopy, telex or teletype message,
statement, order or other document or conversation believed by it to be
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genuine and correct and to have been signed, sent or made by the proper Person
or Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to the Borrower or any of the other Credit Parties,
independent accountants and other experts selected by the Agent with reasonable
care). The Agent may deem and treat the Banks as the owner of its interests
hereunder for all purposes unless a written notice of assignment, negotiation or
transfer thereof shall have been filed with the Agent in accordance with Section
10.3(b) hereof. The Agent shall be fully justified in failing or refusing to
take any action under this Credit Agreement or under any of the other Credit
Documents unless it shall first receive such advice or concurrence of the
Required Banks as it deems appropriate or it shall first be indemnified to its
satisfaction by the Banks against any and all liability and expense which may be
incurred by it by reason of taking or continuing to take any such action. The
Agent shall in all cases be fully protected in acting, or in refraining from
acting, hereunder or under any of the other Credit Documents in accordance with
a request of the Required Banks (or to the extent specifically provided in
Section 10.6, all the Banks) and such request and any action taken or failure to
act pursuant thereto shall be binding upon all the Banks (including their
successors and assigns).
9.5 Notice of Default.
The Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default hereunder unless the Agent has
received notice from a Bank or a Credit Party referring to the Credit Document,
describing such Default or Event of Default and stating that such notice is a
"notice of default." In the event that the Agent receives such a notice, the
Agent shall give prompt notice thereof to the Banks. The Agent shall take such
action with respect to such Default or Event of Default as shall be directed by
the Required Banks.
9.6 Non-Reliance on Agent and Other Banks.
Each Bank expressly acknowledges that neither the Agent nor any of its
respective officers, directors, employees, agents, attorneys-in-fact or
affiliates has made any representations or warranties to it and that no act by
the Agent or any affiliate thereof hereinafter taken, including any review of
the affairs of the Borrower or other Credit Parties, shall be deemed to
constitute any representation or warranty by the Agent to any Bank. Each Bank
represents to the Agent that it has, independently and without reliance upon the
Agent or any other Bank, and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, assets, operations, property, financial and other conditions,
prospects and creditworthiness of the Credit Parties and made its own decision
to make its Revolving Loans hereunder and enter into this Credit Agreement. Each
Bank also represents that it will, independently and without reliance upon the
Agent or any other Bank, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Credit
Agreement, and to make such investigation as it deems necessary to inform itself
as to the business, assets, operations, property, financial and other
conditions, prospects and creditworthiness of the Credit Parties. Except for
notices, reports and other documents expressly required to be furnished to the
Banks by the Agent hereunder, the Agent shall not have any duty or
responsibility to provide any Bank with any credit or other information
concerning the business, operations, assets, property, financial or
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other conditions, prospects or creditworthiness of the Borrower which may come
into the possession of the Agent or any of its respective officers, directors,
employees, agents, attorneys-in-fact or affiliates.
9.7 Indemnification.
The Banks agree to indemnify the Agent in its capacity as such (to the
extent not reimbursed by the Borrower and without limiting the obligation of the
Borrower to do so), ratably according to its Commitments, from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind whatsoever which
may at any time (including without limitation at any time following the payment
of the Total Revolving Obligations) be imposed on, incurred by or asserted
against the Agent in its capacity as such in any way relating to or arising out
of this Credit Agreement or the other Credit Documents or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the Agent under
or in connection with any of the foregoing; provided that no Bank shall be
liable for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the gross negligence or willful misconduct of the Agent. If any
indemnity furnished to the Agent for any purpose shall, in the opinion of the
Agent, be insufficient or become impaired, the Agent may call for additional
indemnity and cease, or not commence, to do the acts indemnified against until
such additional indemnity is furnished. The agreements in this Section shall
survive the payment of the Total Revolving Obligations and all other amounts
payable hereunder and under the other Credit Documents.
9.8 Agent in Its Individual Capacity.
The Agent and its affiliates may make loans to, accept deposits from and
generally engage in any kind of business with the Borrower or any other Credit
Party as though the Agent were not the Agent hereunder. With respect to the
Revolving Loans made and all Total Revolving Obligations owing to it, the Agent
shall have the same rights and powers under this Credit Agreement as any Bank
and may exercise the same as though it were not Agent, and the terms "Bank" and
"Banks" shall include the Agent in its individual capacity.
9.9 Successor Agent.
The Agent may, at any time, resign upon 20 days' written notice to the
Borrower and the Banks, and be removed with or without cause by the Required
Banks upon 30 days' written notice to the Borrower and the Agent. Upon any such
resignation or removal, the Required Banks shall have the right to appoint a
successor Agent. If no successor Agent shall have been so appointed by the
Required Banks, and shall have accepted such appointment, within 30 days after
the notice of resignation or notice of removal, as appropriate, then the
retiring Agent shall select a successor Agent provided such successor is a Bank
hereunder or a commercial bank organized under the laws of the United States of
America or of any State thereof and has a combined capital and surplus of at
least $500,000,000. Upon the acceptance of any appointment as Agent hereunder by
a successor, such successor Agent shall thereupon succeed to and become vested
with all the rights, powers,
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privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations as Agent under this Credit Agreement
and the other Credit Documents and the provisions of this Section 9 shall inure
to its benefit as to any actions taken or omitted to be taken by it while it was
Agent under this Credit Agreement.
9.10 Co-Agents.
The Co-Agents, in their capacities as such, shall have no rights, powers,
duties or obligations under this Credit Agreement or any of the other Credit
Documents.
SECTION 10
MISCELLANEOUS
10.1 Notices.
Except as otherwise expressly provided herein, all notices and other
communications shall have been duly given and shall be effective (i) when
delivered, (ii) when transmitted via telecopy (or other facsimile device) to the
number set out below, (iii) the day following the day on which the same has been
delivered prepaid to a reputable national overnight air courier service, or (iv)
the third Business Day following the day on which the same is sent by certified
or registered mail, postage prepaid, in each case to the respective parties at
the address, in the case of the Borrower and the Agent, set forth below, and in
the case of the Banks, set forth on Schedule 2.1(a), or at such other address as
such party may specify by written notice to the other parties hereto:
if to the Borrower or the Guarantors:
Anvil Knitwear, Inc.
228 East 45th Street
New York, New York 10017
Attn: Jacob Hollander
Telephone: (212) 476-0352
Telecopy: (212) 885-9411
if to the Agent:
NationsBank, N.A.
101 N. Tryon Street
Independence Center
NC1-001-15-04
Charlotte, North Carolina 28255
Attn: Cliff Luckadoo
Telephone: (704) 386-7637
Telecopy: (704) 388-9436
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with a copy to:
NationsBank, N.A.
NationsBank Corporate Center
100 North Tryon Street
NC1-007-08-11
Charlotte, North Carolina 28255
Attn: Joseph R. Netzel
Telephone: (704) 386-1185
Telecopy: (704) 386-1270
10.2 Right of Set-Off.
In addition to any rights now or hereafter granted under applicable law or
otherwise, and not by way of limitation of any such rights, upon the occurrence
and during the continuance of an Event of Default and the commencement of
remedies described in Section 8.2 hereof, each Bank is authorized at any time
and from time to time, without presentment, demand, protest or other notice of
any kind (all of which rights being hereby expressly waived), to set-off and to
appropriate and apply any and all deposits (general or special) and any other
indebtedness at any time held or owing by such Bank (including, without
limitation branches, agencies or Affiliates of such Bank wherever located) to or
for the credit or the account of the Borrower against obligations and
liabilities of the Borrower to such Bank hereunder, under the Revolving Notes,
the other Credit Documents or otherwise, irrespective of whether such Bank shall
have made any demand hereunder and although such obligations, liabilities or
claims, or any of them, may be contingent or unmatured, and any such set-off
shall be deemed to have been made immediately upon the occurrence of an Event of
Default even though such charge is made or entered on the books of such Bank
subsequent thereto. Amounts received by a Bank pursuant to an exercise of rights
under this Section are subject to the sharing provisions of Section 2.17. The
Borrower hereby agrees that any Person purchasing a participation in the
Revolving Loans and Commitments hereunder pursuant to Section 10.3(c) or Section
2.17 may exercise all rights of set-off with respect to its participation
interest as fully as if such Person were a Bank hereunder.
10.3 Benefit of Agreement.
(a) Generally. This Credit Agreement shall be binding upon and inure
to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto; provided that the Borrower may not assign
and transfer any of its interests without prior written consent of all of
the Banks; provided further that the rights of each Bank to transfer,
assign or grant participations in its rights and/or obligations hereunder
shall be limited as set forth in this Section 10.3, provided however that
nothing herein shall prevent or prohibit any Bank from (i) pledging its
Revolving Loans hereunder to a Federal Reserve Bank in support of
borrowings made by such Bank from such Federal Reserve Bank, or (ii)
granting assignments or participation in such Bank's Revolving Loans
and/or Commitments hereunder to its parent company and/or to any affiliate
of such Bank which is at least 50% owned by such Bank or its parent
company.
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(b) Assignments. Each Bank may, with the prior written consent of
the Borrower, which consent shall not be unreasonably withheld or delayed,
assign all or a portion of its rights and obligations hereunder pursuant
to an assignment agreement substantially in the form of Schedule 10.3(b)
to one or more Eligible Assignees, provided that any such assignment shall
be in a minimum aggregate amount of $5,000,000 of the Commitments and in
integral multiples of $1,000,000 above such amount. Such assignments need
not be pro rata across all the facilities. Any assignment hereunder shall
be effective upon delivery to the Agent of written notice of the
assignment together with a transfer fee of $3,500 payable to the Agent for
its own account. The assigning Bank will give prompt notice to the Agent
and the Borrower of any such assignment. Upon the effectiveness of any
such assignment (and after notice to the Borrower as provided herein), the
assignee shall become a "Bank" for all purposes of this Credit Agreement
and the other Credit Documents and, to the extent of such assignment, the
assigning Bank shall be relieved of its obligations hereunder to the
extent of the Revolving Loans and Commitment components being assigned.
Along such lines the Borrower agrees that upon notice of any such
assignment and surrender of the appropriate Revolving Note or Revolving
Notes, it will promptly provide to the assigning Bank and to the assignee
separate promissory notes in the amount of their respective interests
substantially in the form of the original Revolving Note (but with
notation thereon that it is given in substitution for and replacement of
the original Revolving Note or any replacement notes thereof).
By executing and delivering an assignment agreement in accordance with
this Section 10.3(b), the assigning Bank thereunder and the assignee
thereunder shall be deemed to confirm to and agree with each other and the
other parties hereto as follows: (i) such assigning Bank warrants that it
is the legal and beneficial owner of the interest being assigned thereby
free and clear of any adverse claim and the assignee warrants that it is
an Eligible Assignee; (ii) except as set forth in clause (i) above, such
assigning Bank makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with this Credit Agreement, any
of the other Credit Documents or any other instrument or document
furnished pursuant hereto or thereto, or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Credit
Agreement, any of the other Credit Documents or any other instrument or
document furnished pursuant hereto or thereto or the financial condition
of any Credit Party or the performance or observance by any Credit Party
of any of its obligations under this Credit Agreement, any of the other
Credit Documents or any other instrument or document furnished pursuant
hereto or thereto; (iii) such assignee represents and warrants that it is
legally authorized to enter into such assignment agreement; (iv) such
assignee confirms that it has received a copy of this Credit Agreement,
the other Credit Documents and such other documents and information as it
has deemed appropriate to make its own credit analysis and decision to
enter into such assignment agreement; (v) such assignee will independently
and without reliance upon the Agent, such assigning Bank or any other
Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Credit Agreement and the other
Credit Documents; (vi) such assignee appoints and authorizes the
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Agent to take such action on its behalf and to exercise such powers under
this Credit Agreement or any other Credit Document as are delegated to the
Agent by the terms hereof or thereof, together with such powers as are
reasonably incidental thereto; and (vii) such assignee agrees that it will
perform in accordance with their terms all the obligations which by the
terms of this Credit Agreement and the other Credit Documents are required
to be performed by it as a Bank.
(c) Participations. Each Bank may sell, transfer, grant or assign
participations in all or any part of such Bank's interests and obligations
hereunder; provided that (i) such selling Bank shall remain a "Bank" for
all purposes under this Credit Agreement (such selling Bank's obligations
under the Credit Documents remaining unchanged) and the participant shall
not constitute a Bank hereunder, (ii) no such participant shall have, or
be granted, rights to approve any amendment or waiver relating to this
Credit Agreement or the other Credit Documents except to the extent any
such amendment or waiver would (A) reduce the principal of or rate of
interest on or fees in respect of any Revolving Loans in which the
participant is participating, (B) postpone the date fixed for any payment
of principal (including extension of the Termination Date or the date of
any mandatory prepayment), interest or fees in which the participant is
participating, or (C) release all or substantially all of the collateral
or guaranties (except as expressly provided in the Credit Documents)
supporting any of the Revolving Loans or Commitments in which the
participant is participating, and (iii) sub-participations by the
participant (except to an affiliate, parent company or affiliate of a
parent company of the participant) shall be prohibited. In the case of any
such participation, the participant shall not have any rights under this
Credit Agreement or the other Credit Documents (the participant's rights
against the selling Bank in respect of such participation to be those set
forth in the participation agreement with such Bank creating such
participation) and all amounts payable by the Borrower hereunder shall be
determined as if such Bank had not sold such participation, provided,
however, that such participant shall be entitled to receive additional
amounts under Sections 2.9, 2.10, 2.11 and 2.12 to the same extent that
the Bank from which such participant acquired its participation would be
entitled to the benefit of such cost protection provisions; provided, that
the Borrower shall not be required to reimburse the participant pursuant
to Sections 2.9, 2.10, 2.11 or 2.12 in an amount which exceeds the amount
that would have been payable thereunder to such selling Bank had such Bank
not sold such participation.
10.4 No Waiver; Remedies Cumulative.
No failure or delay on the part of the Agent or any Bank in exercising any
right, power or privilege hereunder or under any other Credit Document and no
course of dealing between the Borrower or any Guarantor and the Agent or any
Bank shall operate as a waiver thereof; nor shall any single or partial exercise
of any right, power or privilege hereunder or under any other Credit Document
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege hereunder or thereunder. The rights and remedies
provided herein are cumulative and not exclusive of any rights or remedies which
the Agent or any Bank would otherwise have. No notice to or demand on the
Borrower in any case shall entitle the Borrower or any Guarantor to any other
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or further notice or demand in similar or other circumstances or constitute a
waiver of the rights of the Agent or the Banks to any other or further action in
any circumstances without notice or demand.
10.5 Payment of Expenses, etc.
The Borrower agrees to: (i) pay all reasonable out-of-pocket costs and
expenses of the Agent in connection with the negotiation, preparation, execution
and delivery of this Credit Agreement and the other Credit Documents and the
documents and instruments referred to therein (including, without limitation,
the reasonable fees and expenses of Moore & Van Allen, special counsel to the
Agent) and any amendment, waiver or consent relating hereto and thereto
including, but not limited to, any such amendments, waivers or consents
resulting from or related to any work-out, renegotiation or restructure relating
to the performance by the Borrower under this Credit Agreement and of the Agent
and the Banks in connection with enforcement of the Credit Documents and the
documents and instruments referred to therein (including, without limitation, in
connection with any such enforcement, the reasonable fees and disbursements of
counsel for the Agent and each of the Banks); (ii) pay and hold each of the
Banks harmless from and against any and all present and future stamp and other
similar taxes with respect to the foregoing matters and save each of the Banks
harmless from and against any and all liabilities with respect to or resulting
from any delay or omission (other than to the extent attributable to such Bank)
to pay such taxes; and (iii) indemnify each Bank, its officers, directors,
employees, representatives and agents from and hold each of them harmless
against any and all losses, liabilities, claims, damages or expenses incurred by
any of them as a result of, or arising out of, or in any way related to, or by
reason of, (A) any investigation, litigation or other proceeding (whether or not
any Bank is a party thereto) related to the entering into and/or performance of
any Credit Document or the use of any Extension of Credit hereunder or the
consummation of any other transactions contemplated in any Credit Document,
including, without limitation, the reasonable fees and disbursements of counsel
incurred in connection with any such investigation, litigation or other
proceeding or (B) the use, generation, manufacture, production, storage,
release, threatened release, discharge, disposal or presence of any Hazardous
Substance on, under or about any property or operations of the Borrower or any
of its Subsidiaries or any property leased to the Borrower or any of its
Subsidiaries (but excluding in the case of either clause (A) or (B) above, any
such losses, liabilities, claims, damages or expenses to the extent incurred by
reason of gross negligence or willful misconduct on the part of the Person to be
indemnified). For purposes of this Section 10.5, "Hazardous Substance" means any
substance which is or becomes designated as "hazardous" or "toxic" under any
federal, state or local law.
10.6 Amendments, Waivers and Consents.
Neither this Credit Agreement nor any other Credit Document nor any of the
terms hereof or thereof may be amended, changed, waived, discharged or
terminated unless such amendment, change, waiver, discharge or termination is in
writing signed by the Required Banks, provided that no such amendment, change,
waiver, discharge or termination shall, without the consent of each Bank, (i)
extend the scheduled maturities (including the final maturity and any mandatory
prepayments) of any Revolving Loan, or any portion thereof, or extend the expiry
date for a Letter of Credit beyond the period permitted by the terms of Section
2.4(a), or reduce the rate or extend
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the time of payment of interest (other than as a result of waiving the
applicability of any post-default increase in interest rates) thereon or fees
hereunder or reduce the principal amount thereof, or increase the Commitments of
the Banks over the amount thereof in effect (it being understood and agreed that
a waiver of any Default or Event of Default or of a mandatory reduction in the
total commitments shall not constitute a change in the terms of any Commitment
of any Bank), (ii) release of any material portion of collateral securing the
Total Revolving Obligations hereunder, (iii) release any Guarantor from its
guaranty obligations hereunder, (iv) amend, modify or waive any provision of
this Section or Section 2.9, 2.10, 2.11, 2.12, 2.13, 2.16, 2.17, 8.1(a), 9.7,
10.2 and 10.3, (v) reduce any percentage specified in, or otherwise modify, the
definition of Required Banks or (vi) consent to the assignment or transfer by
the Borrower (or Guarantor) of any of its rights and obligations under (or in
respect of) this Credit Agreement. No provision of Section 9 may be amended
without the consent of the Agent.
10.7 Counterparts.
This Credit Agreement may be executed in any number of counterparts, each
of which where so executed and delivered shall be an original, but all of which
shall constitute one and the same instrument. It shall not be necessary in
making proof of this Credit Agreement to produce or account for more than one
such counterpart.
10.8 Headings.
The headings of the sections and subsections hereof are provided for
convenience only and shall not in any way affect the meaning or construction of
any provision of this Credit Agreement.
10.9 Survival of Indemnification.
All indemnities set forth herein, including, without limitation, in
Section 2.10, 2.11, 2.12 or 10.5 shall survive the execution and delivery of
this Credit Agreement, and the making of the Revolving Loans, the repayment of
the Total Revolving Obligations and the termination of the Commitments
hereunder.
10.10 Governing Law; Submission to Jurisdiction; Venue.
(a) THIS CREDIT AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE
GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK. Any legal action or proceeding with respect to this
Credit Agreement or any other Credit Document may be brought in the courts
of the State of New York sitting in New York City or of the federal courts
of the United States sitting in New York City and, by execution and
delivery of this Credit Agreement, each party hereby irrevocably accepts
for itself and in respect of its property, generally and unconditionally,
the jurisdiction of such courts. Each party further irrevocably consents
to the service of process out of any of the aforementioned courts in any
such action or proceeding by the mailing of copies thereof
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by registered or certified mail, postage prepaid, to it at the address set
out notices pursuant to Section 10.1. Nothing herein shall affect the
right of any party to serve process in any other manner permitted by law.
(b) Each party hereby irrevocably waives any objection which it may
now or hereafter have to the laying of venue of any of the aforesaid
actions or proceedings arising out of or in connection with this Credit
Agreement or any other Credit Document brought in the courts referred to
in subsection (a) hereof and hereby further irrevocably waives and agrees
not to plead or claim in any such court that any such action or proceeding
brought in any such court has been brought in an inconvenient forum.
10.11 Severability.
If any provision of any of the Credit Documents is determined to be
illegal, invalid or unenforceable, such provision shall be fully severable and
the remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.
10.12 Entirety.
This Credit Agreement together with the other Credit Documents represent
the entire agreement of the parties hereto and thereto, and supersede all prior
agreements and understandings, oral or written, if any, including any commitment
letters or correspondence relating to the Credit Documents or the transactions
contemplated herein and therein.
10.13 Survival of Representations and Warranties.
All representatives and warranties made by the Borrower herein shall
survive delivery of the Revolving Notes and the making of the Revolving Loans
hereunder.
10.14 Confidentiality.
The Agent and each Bank will hold all non-public information, obtained
pursuant to the requirements of this Credit Agreement and which has been
identified by the Borrower as such (and including the financial information), in
accordance with its customary procedure for handling confidential information of
such nature and in accordance with safe and sound banking practices, but may, in
any event, make disclosure (i) to its officers, directors, employees, agents,
representatives and advisers (including regular and special accountants and
legal counsel), (ii) to any transferee or participant, or prospective transferee
or participant, in connection with the contemplated transfer of the Total
Revolving Obligations and Commitments hereunder or participations thereof,
provided such transferees or participants, or prospective transferees or
participants, shall consent in writing to be bound by the terms of this Section
10.14, (iii) as required or requested by any governmental agency or
representative thereof in the ordinary course of the Bank's regulatory
compliance, or (iv) pursuant to legal process provided that such party shall, to
the extent reasonably possible, give the Borrower five days prior written notice
thereof; provided,
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further, however, that the failure to give any such notice shall not give rise
to any action or claim on account of any such failure; provided that, neither
the Agent nor any of the Banks shall have any obligation under this Section to
the extent that any such information becomes available on a non-confidential
basis from a source other than the Parent Company, the Borrower or their
Subsidiaries, or that any such information becomes publicly available other than
by breach of this Section.
10.15 Waiver of Jury Trial.
TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, EACH OF THE AGENT, EACH OF
THE BANKS AND EACH OF THE CREDIT PARTIES HEREBY IRREVOCABLY WAIVES ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS CREDIT AGREEMENT, ANY OF THE OTHER CREDIT DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
10.16 Binding Effect; Termination of Existing Credit Agreement.
This Credit Agreement shall become effective as such time on the Closing
Date when it shall have been executed by each of the Credit Parties and the
Agent, and the Agent shall have received copies hereof (telefaxed or otherwise)
which, when taken together, bear the signatures of each Bank (including the
Issuing Bank), and thereafter this Credit Agreement shall be binding upon and
inure to the benefit of each Credit Party, each Bank (including the Issuing
Bank) and the Agent, together with their respective successors and assigns. The
Credit Parties and the Banks (including the Issuing Bank) party to the Existing
Credit Agreement each hereby agrees that, at such time as this Credit Agreement
shall have become effective pursuant to the terms of the immediately preceding
sentence, (i) the Existing Credit Agreement automatically shall be deemed
amended and restated in its entirety by this Credit Agreement, (ii) the
Commitments under the Existing Credit Agreement and as defined therein
automatically shall be terminated and (iii) all of the promissory notes executed
by the Borrower in connection with the Existing Credit Agreement automatically
shall be canceled.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of
this Credit Agreement to be duly executed and delivered as of the date first
above written.
BORROWER: ANVIL KNITWEAR, INC.
a Delaware corporation
By /s/ Jacob Hollander
---------------------------------
Jacob Hollander, Executive Vice President
GUARANTORS: ANVIL HOLDINGS, INC.,
a Delaware corporation
By /s/ Jacob Hollander
---------------------------------
Jacob Hollander, Vice President
COTTONTOPS, INC.,
a Delaware corporation
By /s/ Jacob Hollander
---------------------------------
Jacob Hollander, Vice President
[Signatures Continue]
<PAGE>
BANKS: NATIONSBANK, N.A.,
individually in its capacity as a
Bank and in its capacity as Agent
By /s/ Joseph R. Netzel
---------------------------------
Joseph R. Netzel, Vice President
[Signatures Continue]
<PAGE>
BANK OF AMERICA ILLINOIS,
individually in its capacity as a
Bank and in its capacity as Co-Agent
By /s/ George C. Lyman
---------------------------------
Name: George C. Lyman
Title: Vice-President
[Signatures Continue]
<PAGE>
BANQUE NATIONALE DE PARIS,
individually in its capacity as a
Bank and in its capacity as Co-Agent
By /s/ Alan Hustasch
---------------------------------
Name: Alan Hustasch
Title: VP
By /s/ Stephen P. Kovacs
---------------------------------
Name: Stephen P. Kovacs
Title: AVP
[Signatures Continue]
<PAGE>
HELLER FINANCIAL, INC.,
individually in its capacity as a
Bank and in its capacity as Co-Agent
By /s/ Jeffrey A. Schumacher
---------------------------------
Name: Jeffrey A. Schumacher
Title: Assistant Vice President
[Signatures Continue]
<PAGE>
THE CHASE MANHATTAN BANK, N.A.
By /s/ Roberta Weissenberg
---------------------------------
Name: Roberta Weissenberg
Title: V.P.
[Signatures Continue]
<PAGE>
FLEET NATIONAL BANK
By /s/ Eric Vandermel
---------------------------------
Name: Eric Vandermel
Title: V.P.
<PAGE>
AMENDED AND RESTATED
SECURITY AND PLEDGE AGREEMENT
THIS AMENDED AND RESTATED SECURITY AND PLEDGE AGREEMENT, dated as of March
14, 1997 (as amended, modified, restated, renewed, extended or replaced from
time to time, this "Agreement" or "Security Agreement"), amends and restates
that certain Security and Pledge Agreement, dated as of January 30, 1995, by and
among ANVIL KNITWEAR, INC., a Delaware corporation (the "Borrower"), ANVIL
HOLDINGS, INC., a Delaware corporation (the "Parent Company"), certain
Subsidiaries of the Borrower party thereto (hereinafter, together with the
Parent Company, the "Prior Guarantors") and NATIONSBANK, N.A. (successor in
interest to NationsBank, N.A. (Carolinas)), as Collateral Agent (in its capacity
as Collateral Agent thereunder and hereunder, together with any successor in
such capacity, the "Collateral Agent") for the Banks under the Existing Credit
Agreement described below (the "Prior Banks").
W I T N E S S E T H:
WHEREAS, NationsBank, N.A. (as successor in interest to NationsBank, N.A.
(Carolinas)) and the Prior Banks entered into that certain Credit Agreement,
dated as of January 30, 1995, among the Borrower, the Parent Company, the other
Prior Guarantors, the Prior Banks and NationsBank, N.A. (successor in interest
to NationsBank, N.A. (Carolinas)), as Agent and the Chase Manhattan Bank, N.A.,
as Documentation Agent (as amended and/or modified from time to time thereafter,
the "Existing Credit Agreement");
WHEREAS, NationsBank, N.A. and various other banks and financial
institutions as may now or hereafter become a party thereto (such banks and
financial institutions, together with their successors and assigns, may
hereinafter be referred to collectively as the "Banks" and individually as a
"Bank") have agreed to amend and restate the Existing Credit Agreement pursuant
to that certain Amended and Restated Credit Agreement, dated as of the date
hereof, among the Borrower, the Parent Company, those Subsidiaries of the
Borrower identified on the signature pages thereto and such other Subsidiaries
of the Borrower which may become a Guarantor in accordance with the terms
thereof (hereinafter together with the Parent Company sometimes referred to
individually as a "Guarantor" and collectively as the "Guarantors"), the Banks,
NationsBank, N.A., as Agent, and Bank of America Illinois, Banque Nationale de
Paris and Heller Financial, Inc., as Co-Agents (as amended, modified, extended,
renewed or replaced from time to time, the "Credit Agreement");
WHEREAS, the Banks have required that the Borrower and the Guarantors
(hereinafter the Borrower and the Guarantors may be referred to collectively as
the "Credit Parties" and individually as a "Credit Party") secure or resecure,
as applicable, their respective obligations under the Credit Agreement and the
other Credit Documents pursuant to the terms of this Security Agreement;
<PAGE>
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Definitions. Terms used but not otherwise defined herein shall have the
meanings provided in the Credit Agreement; provided, however, that terms which
are defined in the Code shall have the meaning provided in the Code unless
specifically provided otherwise herein or in the Credit Agreement. As used
herein:
"Bank" or "Banks" means such terms as identified and defined in the
recitals hereto.
"Borrower" means Anvil Knitwear, Inc., a Delaware corporation.
"Code" means such term as defined in Section 3(g) hereof.
"Collateral Agent" means NationsBank, N.A., in its capacity as
collateral agent for the Banks under this Agreement, as identified and
defined in the opening paragraph hereto, together with its successors and
assigns in such capacity.
"Collateral" means, collectively, the General Collateral and the
Pledged Collateral.
"Copyright Licenses" means any written agreement, naming any Credit
Party as licensor, granting any right under any Copyright including,
without limitation, any thereof referred to in Schedule 1 hereto.
"Copyrights" means (a) all registered United States copyrights in
all Works, now existing or hereafter created or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, including, without limitation, registrations, recordings and
applications in the United States Copyright office including, without
limitation, any thereof referred to in Schedule 1 hereto, and (b) all
renewals thereof including, without limitation, any thereof referred to in
Schedule 1 hereto.
"Credit Agreement" means such term as defined in the Recitals
hereof.
"Credit Documents" means such terms as defined in the Credit
Agreement.
"Credit Party" or "Credit Parties" means such terms as identified
and defined in the opening paragraph hereto.
"Default" means an event or condition which upon notice or lapse of
time, or both, would constitute an Event of Default.
"Default Rate" means such term as defined in Section 3(h) hereof.
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"Equipment" means, with respect to any Credit Party, all of such
Credit Party's equipment, machinery, tools, trade fixtures, furniture,
furnishings, office equipment, vehicles (including vehicles or equipment
subject to a certificate of title law), and rolling stock in each case now
or hereafter used or usable in connection with the Credit Party's
business, and including all substitutions and replacements, together with
all parts, accessories and attachments relating to any of the foregoing.
"Event of Default" means such term as defined in the Credit
Agreement.
"General Collateral" means such term as defined in Section 2(a)
hereof.
"Inventory" means, with respect to any Credit Party, all of such
Credit Party's inventory and goods (i) which are held for sale or lease or
are to be furnished under contracts of service or consumed in the Credit
Party's business, or (ii) which are raw materials, work in process,
finished goods, packaging materials and all other materials and supplies
of every nature in each case used or usable in connection with the Credit
Party's business or the acquisition, manufacture, processing, supply,
servicing, storing, packing, shipping, advertising, selling, leasing or
furnishing of such goods and any constituents or ingredients thereof, or
(iii) which are returned or repossessed goods, and (iv) documents and
documents of title.
"Patent License" means all written agreements providing for the
grant by or to a Credit Party of any right to manufacture, use or sell any
invention covered by a Patent, including, without limitation, any thereof
referred to in Schedule 1 hereto.
"Patents" means (a) all letters patent of the United States or any
other country and all reissues and extensions thereof, including, without
limitation, any thereof referred to in Schedule 1 hereto, and (b) all
applications for letters patent of the United States or any other country
and all divisions, continuations and continuations-in-part thereof,
including, without limitation, any thereof referred to in Schedule 1
hereto.
"Permitted Collateral Locations" means such term as defined in
Section 3(b) hereof.
"Permitted Liens" means such term as defined in the Credit
Agreement.
"Pledged Collateral" means such term as defined in Section 2(b)
hereof.
"Pledged Securities" means such term as defined in Section 2(b)
hereof.
"Receivables and General Intangibles" means with respect to any
Credit Party, all of such Credit Party's accounts, accounts receivable,
factor balances, contracts, contract rights, book debts, instruments,
notes, checks, drafts, acceptances, documents (including documents of
title), chattel paper, choses in action, any right of the Credit Party for
services rendered or for rights or privileges granted, whether arising
from the sale of
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inventory or otherwise and whether or not earned by performance, and all
other forms of obligations owing to the Credit Party (including without
limitation amounts due from factors), and all of the Credit Party's rights
to any merchandise (including without limitation any returned or
repossessed goods and the rights of stoppage in transit) which is
represented by, arises from or is related to any of the foregoing, and all
franchises, franchise rights, all causes of action, Copyrights, Copyright
Licenses, Patents, Patent Licenses, Trademarks, Trademark Licenses,
goodwill and similar intangibles and all income tax refunds, all
privileges, immunities, contracts, contract rights, licenses, permits and
similar intangibles, all leases and other agreements relating to real or
personal property, any rights to receive any payments in connection of any
pension plan or employee stock ownership plan or trust established for the
benefit of employees of the Credit Party, and any and all general
intangibles (as defined in the Code as in effect in the State of New York
or in any other relevant jurisdiction from time to time) not otherwise
covered in this definition.
"Records" means such term as defined in Section 2(a)(iv) hereof.
"Secured Obligations" means (i) in the case of the Borrower, all
indebtedness, obligations and liabilities of the Borrower under or in
connection with (A) the Credit Agreement, (B) any Hedging Agreement, (C)
this Security Agreement or (D) any other of the Credit Documents, whether
now existing or hereafter arising, due or to become due, direct or
indirect, absolute or contingent, and howsoever evidenced, held or
acquired, (ii) in the case of each of the Guarantors, all obligations,
including guaranty obligations, of the Guarantors under or in connection
with the Credit Agreement (whether as an original party thereto or by way
of Joinder Agreement), this Security Agreement or any other of the Credit
Documents, whether now existing or hereafter arising, due or to become
due, direct or indirect, absolute or contingent, and howsoever evidenced,
held or acquired, and (iii) all expenses and charges, legal and otherwise,
reasonably incurred by the Collateral Agent or the Banks, or any of them,
in collecting or enforcing any of such indebtedness, obligations and
liabilities or in realizing on or protecting any security therefor,
including without limitation the security afforded hereunder, together
with any and all modifications, extensions, renewals and/or substitutions
thereof.
"Subsidiary" or "Subsidiaries" means such terms as identified and
defined in the opening paragraph hereto, including any newly formed or
acquired subsidiaries which are made a party hereto subsequent to the date
hereof.
"Trademark License" means any written agreement providing for the
grant by or to a Credit Party of any right to use any Trademark,
including, without limitation, any thereof referred to in Schedule 1
hereto.
"Trademarks" means (a) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles,
service marks, logos and other source or business identifiers, and the
goodwill associated therewith, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all applications
in connection
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therewith, whether in the United States Patent and Trademark Office or in
any similar office or agency of the United States, any State thereof or
any other country or any political subdivision thereof, or otherwise,
including, without limitation, any thereof referred to in Schedule 1
hereto, and (b) all renewals thereof.
"Work" means any work which is subject to copyright protection
pursuant to Title 17 of the United States Code.
2. Grant of Security Interest in the Collateral. To secure the prompt
payment and performance when due of the Secured Obligations:
(a) Security Interest in Inventory, Receivables and General
Intangibles and Equipment. Each of the Credit Parties hereby grants to the
Collateral Agent for the benefit of the Banks a security interest in, and
acknowledges and agrees that the Collateral Agent has and shall continue
to have for the benefit of the Banks a continuing security interest, in
any and all right, title and interest of each Credit Party in and to:
(i) Inventory. All Inventory, wherever located and by
whomsoever held, whether now owned or existing or hereafter acquired
or arising.
(ii) Receivables and General Intangibles. All Receivables and
General Intangibles, whether now owned or existing or hereafter
acquired or arising, in which the Credit Party now has or hereafter
acquires any rights.
(iii) Equipment. All Equipment, wherever located and by
whomsoever held, whether now owned or hereafter acquired.
(iv) Records. Supporting evidence and documents relating to
any of the property described in subparagraphs (i)-(iii) above,
including, without limitation, written applications, credit
information, account cards, payment records, correspondence,
delivery and installation certificates, invoice copies, delivery
receipts, notes and other evidences of indebtedness, insurance
certificates and the like, together with all books of account,
ledgers and cabinets in which the same are reflected or maintained
(including computer records, tapes, software and the like), all
whether now existing or hereafter arising (the "Records").
(v) Accessions and Additions. All accessions and additions to
and substitutions and replacements of any and all of the foregoing,
whether now existing or hereafter arising.
(vi) Proceeds and Products. All proceeds and products of the
foregoing and all insurance relating to the foregoing collateral and
proceeds thereof (including without limitation insurance proceeds
payable on account of business interruption), whether now existing
or hereafter arising.
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Notwithstanding the foregoing, the foregoing grant of security
interest shall (i) exclude contracts, general intangibles or instruments
(other than rights to the payment of money) arising under contracts or
other agreements or instruments that, to the extent legally enforceable,
expressly prohibit assignment of such rights, or grant of security
interest in or lien on, without the prior written consent of the other
party(ies) thereto; provided, however, that, to the extent that such
contracts or other agreements or instruments do not prevent assignment of
or grant of security interest in the payments or rights to payment made
under such contracts or other agreements or instruments or the prohibition
of the assignment of or grant of security interest in such payment or
rights to payment is not effective under applicable law, the Collateral
Agent is granted a security interest in such payments or rights to
payment, and that if and when any such prohibition on the assignment,
pledge or grant of a security interest in such contract, general
intangible or instrument, as the case may be, is removed, the Collateral
Agent will be granted a security interest in such contract, general
intangible or instrument as of the date hereof, and the collateral will
include such contract, general intangible or instrument, (ii) exclude any
fixtures located at 228 E. 45th St., New York, New York 10017 and (iii)
not be construed as an assignment of any Copyrights, Copyright Licenses,
Patents, Patent Licenses, Trademarks or Trademark Licenses.
All of the foregoing items of Collateral described in this
subsection (a) may hereinafter sometimes be referred to collectively as
the "General Collateral".
(b) Pledge of Interest in Pledged Securities. Each of the Credit
Parties hereby pledges to the Collateral Agent for the benefit of the
Banks, and grants to the Collateral Agent for the benefit of the Banks, a
continuing security interest in any and all right, title and interest of
such Credit Party in and to the following, whether now owned or existing
or owned, acquired, or arising hereafter (collectively, the "Pledged
Collateral"):
(i) Pledged Securities. (A) 100% (or, if less, the full amount
owned by such Credit Party) of the issued and outstanding shares of
capital stock owned by such Credit Party of each Domestic Subsidiary
set forth on Schedule 2(b) attached hereto and (B) 65% (or, if less,
the full amount owned by such Credit Party) of the issued and
outstanding shares of each class of capital stock or other ownership
interests entitled to vote (within the meaning of Treas. Reg.
Section 1.956-2(c)(2)) ("Voting Equity") and 100% (or, if less, the
full amount owned by such Credit Party) of the issued and
outstanding shares of each class of capital stock or other ownership
interests not entitled to vote (within the meaning of Treas. Reg.
Section 1.956-2(c)(2)) ("Non-Voting Equity") owned by such Credit
Party of each other Subsidiary set forth on Schedule 2(b) attached
hereto, in each case together with the certificates (or other
agreements or instruments), if any, representing such shares, and
all options and other rights, contractual or otherwise, with respect
thereto (collectively, together with the shares of capital stock
described in Section 2(b)(ii) and 2(b)(iii) below, the "Pledged
Securities"), including, but not limited to, the following:
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<PAGE>
(1) all shares or securities representing a dividend on
any of the Pledged Securities, or representing a distribution
or return of capital upon or in respect of the Pledged
Securities, or resulting from a stock split, revision,
reclassification or other exchange therefor, and any
subscriptions, warrants, rights or options issued to the
holder of, or otherwise in respect of, the Pledged Securities;
and
(2) without affecting the obligations of such Credit
Party under any provision prohibiting such action hereunder,
in the event of any consolidation or merger in which a Credit
Party is not the surviving corporation, all shares of each
class of the capital stock of the successor corporation formed
by or resulting from such consolidation or merger.
(ii) Additional Shares. 100% (or, if less, the full amount
owned by such Credit Party) of the issued and outstanding shares of
capital stock owned by such Credit Party of any Person which
hereafter becomes a Domestic Subsidiary and 65% (or, if less, the
full amount owned by such Credit Party) of the Voting Equity and
100% (or, if less, the full amount owned by such Credit Party) of
the Non-Voting Equity owned by such Credit Party of any other Person
which hereafter becomes a Subsidiary, including, without limitation,
the certificates representing such shares.
(iii) Other Equity Interests. Any and all other equity
interests of each Credit Party in any Domestic Subsidiary or any
other Subsidiary.
(iv) Proceeds. Except as otherwise set forth in Section 6
hereof, all proceeds and products of the foregoing, however and
whenever acquired and in whatever form.
Without limiting the generality of the foregoing, it is hereby
specifically understood and agreed that a Credit Party may from time to
time hereafter deliver additional shares of stock to the Collateral Agent
as collateral security for the Secured Obligations (upon delivery to the
Collateral Agent, such additional shares of stock shall be deemed to be
part of the Pledged Collateral of such Credit Party and shall be subject
to the terms of this Security Agreement whether or not Schedule 2(b) is
amended to refer to such additional shares).
3. General Representations, Warranties, Covenants and Agreements. The
Credit Parties hereby represent and warrant to, and covenant and agree with the
Collateral Agent for the benefit of the Banks that:
(a) Chief Executive Office. As of the date hereof, each such Credit
Party's chief executive office and chief place of business and other
executive offices and places of business are as shown on Schedule 3(a). As
of the date hereof, each such Credit Party has no executive offices or
places of business other than as shown on Schedule 3(a) and will
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<PAGE>
not move or otherwise change its chief executive office or establish or
maintain an executive office or place of business at a location other than
as shown on Schedule 3(a) without providing the Collateral Agent with at
least 30 days' prior written notice and, in any such case, Schedule 3(a)
shall be deemed to include such new location.
(b) Location of Collateral. The Inventory or Equipment of each of
the Credit Parties is (and, as otherwise noted, has for the four months
immediately preceding the date of this Agreement been), and will remain,
in each such Credit Party's possession or control at the locations,
including ports of entry, shown on Schedule 3(a) (collectively with the
chief executive office shown thereon, the "Permitted Collateral
Locations"), except for Inventory or Equipment (i) which in the ordinary
course of the Credit Party's business as presently conducted is in
transit, (ii) consisting of vehicles and equipment which are subject to a
certificate of title law (and as to which a change in registration is not
required on account of any such transit), (iii) such other locations
within the United States as to which the Credit Parties shall have given
the Collateral Agent at least 30 days' prior written notice (except, in
the case of ports of entry, in which case the Credit Party shall provide
the Collateral Agent, on a quarterly basis, with the existing ports of
entry) or (iv) such other locations outside of the United States with
respect to raw materials or work-in-process being processed in the
ordinary course of business of such Credit Party. The Credit Parties will
not hold General Collateral, have General Collateral held or permit
General Collateral to be held at a location other than a Permitted
Collateral Location without the prior written consent of the Collateral
Agent. In addition, each of the Credit Parties will promptly give written
notice to the Collateral Agent of any change in the identity or location
of the General Collateral, or any material portion thereof. Each such
Credit Party owns, and will continue to own or lease, its respective
Permitted Collateral Locations except as otherwise indicated on Schedule
3(a).
(c) Books and Records. The books and records of each such Credit
Party relating to the Collateral (including ledger sheets, correspondence
and invoice documents and instruments relating to or evidencing the
Collateral) are, and will at all times be kept, at such Credit Party's
chief executive office unless otherwise indicated on Schedule 3(a). Each
such Credit Party will keep the books and records relating to the
Collateral current and in good order and will take reasonable steps to
safeguard them (including making and storing copies thereof where
appropriate).
(d) Legal Name and Trade Names. Each such Credit Party represents
and warrants that as of the date hereof (A) its correct legal name is as
shown in this Agreement, (B) it has not in the four months immediately
preceding the date of this Agreement changed its name, been a party to a
merger, consolidation or other change in structure and (C) except as shown
on Schedule 3(d), it does not use, and has not at any time in the four
months immediately preceding the date of this Agreement used, any trade
names or assumed names in the invoicing of accounts or otherwise in the
conduct of its business or the ownership of its properties. Each such
Credit Party further covenants and agrees that it will not change its
legal name, be a party to a merger, consolidation or other
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change in structure or use a trade name or assumed names in its business
without first giving the Collateral Agent at least 30 days' prior written
notice.
(e) Priority. The Collateral and every part thereof is and will be,
and except as otherwise consented to by the Required Banks, free and clear
of all security interests, liens (including without limitation mechanics,
laborers and statutory liens), attachments, levies, encumbrances of every
kind, nature and description and whether voluntary or involuntary, and
licenses for the use thereof except for Permitted Liens. Each such Credit
Party will warrant and defend the Collateral against any claims and
demands (other than the Permitted Liens) of all persons at any time
claiming the same or any interest in the Collateral. Each such Credit
Party further represents, warrants, covenants and agrees that the security
interest in the Collateral granted to the Collateral Agent hereunder,
other than the Permitted Liens, is not subject to (nor have any financing
statements been filed and remain of record, and that such Credit Party
will not grant or permit to exist), any other security interests, liens,
encumbrances or claims (including without limitation claims of the United
States of America or any department, agency or instrumentality thereof, or
any state, county or local governmental agency) on or against the
Collateral, whether senior, superior, junior, subordinate or equal to the
security interest granted to the Collateral Agent hereby, or otherwise.
(f) Inspection. Each such Credit Party will, upon reasonable notice
and at reasonable times during normal business hours (and also outside of
normal business hours after the occurrence and during the continuance of
an Event of Default), allow the Collateral Agent and/or any of the Banks
or their respective representatives free access to and right of inspection
of the Collateral and the books and records relating thereto and shall
otherwise cooperate with and promptly respond to the reasonable requests
of the Collateral Agent and/or any of the Banks or their respective
representatives with respect thereto. As to any premises not owned by such
Credit Party wherein any of the Collateral is located the Credit Party
shall, promptly upon request, use its commercially reasonable efforts to
cause each owner of such premises to enter into an agreement in form and
substance reasonably satisfactory to the Collateral Agent waiving any lien
such owner may have by contract or under law with respect to such
Collateral, and allowing the inspection and removal of such Collateral by
the Collateral Agent and otherwise.
(g) Perfection of Security Interest. Except as set forth in Section
3(e) and except to the extent that security interests may be inconsistent
with or prohibited by governmental permits and except to the extent a
security interest can not be granted and perfected under applicable law,
each such Credit Party represents that this Agreement creates a valid
security interest in the Collateral (subject only to Permitted Liens)
securing payment and performance of the Secured Obligations and that all
filings and other action reasonably necessary to perfect such security
interest have been taken or shall be promptly taken upon the reasonable
request of the Collateral Agent. Each such Credit Party agrees to execute
and deliver to the Collateral Agent such further agreements and
assignments or other instruments (including affidavits, notices,
reaffirmations and amendments and restatements of existing documents, as
the Collateral Agent may reasonably request) and
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to do all such other things as the Collateral Agent may reasonably deem
necessary (i) to assure to the Collateral Agent its security interest
hereunder, including (A) such financing statements (including renewal
statements), statements or amendments thereof or supplements thereto or
other instruments as the Collateral Agent may from time to time reasonably
request in order to maintain the security interest granted hereunder in
accordance with the Uniform Commercial Code as enacted in the State of New
York, or other such jurisdiction as may be applicable, and any successor
statute(s) thereto (the "Code"), (B) with regard to Copyrights, a Notice
of Grant of Security Interest in Copyrights in the form of Schedule
3(g)(i), (C) with regard to Patents, a Notice of Grant of Security
Interest in Patents for filing with the United States Patent and Trademark
Office in the form of Schedule 3(g)(ii) attached hereto and (D) with
regard to Trademarks, a Notice of Grant of Security Interest in Trademarks
for filing with the United States Patent and Trademark Office in the form
of Schedule 3(g)(iii) attached hereto, (ii) to consummate the transactions
contemplated hereby and (iii) to otherwise protect and assure the
Collateral Agent and the Banks of their rights and interests hereunder. To
that end, each such Credit Party agrees that (i) in the event any Credit
Party shall refuse to provide additional financing statements upon the
reasonable request of the Collateral Agent, or shall fail to respond
promptly to any such request, and (ii) at any time after the occurrence
and during the continuance of an Event of Default, the Collateral Agent
may file one or more financing statements disclosing its security interest
in any or all of the Collateral without such Credit Party's signature
thereon, and further such Credit Party also hereby irrevocably makes,
constitutes and appoints the Collateral Agent, its nominee or any other
person whom the Collateral Agent may designate, as such Credit Party's
attorney in fact with full power to sign in the name of such Credit Party
any such financing statements, or amendments and supplements to financing
statements, renewal financing statements, notices or any similar documents
which in the Collateral Agent's reasonable discretion would be necessary,
appropriate or convenient in order to perfect and maintain perfection of
the security interests granted hereunder, such power, being coupled with
an interest, being and remaining irrevocable so long as any of the Secured
Obligations remain outstanding. Each such Credit Party hereby agrees that
a carbon, photographic or other reproduction of this Agreement or any such
financing statement is sufficient for filing as a financing statement by
the Collateral Agent without notice thereof to such Credit Party wherever
the Collateral Agent may in its sole discretion desire to file the same.
In the event for any reason the law of any jurisdiction other than New
York becomes or is applicable to the Collateral or any part thereof, or to
any of the Secured Obligations, each such Credit Party agrees to execute
and deliver all such instruments and to do all such other things as the
Collateral Agent reasonably deems necessary or appropriate to preserve,
protect and enforce the security interest of the Collateral Agent under
the law of such other jurisdiction (and, if any such Credit Party shall
fail to do promptly upon the request of the Collateral Agent, then the
Collateral Agent may execute any and all such requested documents on
behalf of such Credit Party pursuant to the power of attorney granted
hereinabove). If any Collateral is in the possession or control of any of
such Credit Party's agents and the Collateral Agent reasonably requests,
the Credit Party agrees to notify such agents in writing of the Collateral
Agent's security interest therein and, at any time after the occurrence,
and during the continuance, of an Event of Default, upon the Collateral
Agent's request,
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instruct them to hold all such Collateral for the Collateral Agent's
account and subject to the Collateral Agent's instructions. Each such
Credit Party agrees, upon the reasonable request of the Collateral Agent,
to mark its books and records to reflect the security interest of the
Collateral Agent in the Collateral.
(h) Advances by Secured Parties. On failure of any such Credit Party
to perform any of the covenants and agreements herein contained, the
Collateral Agent may, at its option, perform the same and in so doing may
expend such sums as the Collateral Agent may reasonably deem advisable in
the performance thereof, including without limitation the payment of any
insurance premiums, the payment of any taxes, liens and encumbrances,
expenditures made in defending against any adverse claim and all other
expenditures which the Collateral Agent may be compelled to make by
operation of law or which the Collateral Agent may make by agreement or
otherwise for the protection of the security hereof. All such sums and
amounts so expended shall be repayable by the Credit Parties promptly upon
demand, shall constitute additional Secured Obligations and shall bear
interest from the date said amounts are expended at the rate per annum
equal to the default rate provided in Section 2.2 of the Credit Agreement
for Revolving Loans which are Base Rate Loans (such rate per annum as so
determined being hereinafter referred to as the "Default Rate"). No such
performance of any covenant or agreement by the Collateral Agent on behalf
of any Credit Party, and no such advance or expenditure therefor, shall
relieve any Credit Party of any default under the terms of this Agreement.
The Collateral Agent, in making any payment hereby authorized may do so
according to any bill, statement or estimate procured from the appropriate
public office or holder of the claim to be discharged without inquiry into
the accuracy of such bill, statement or estimate or into the validity of
any tax assessment, sale, forfeiture, tax lien or title or claim. The
Collateral Agent, in performing any act hereunder, shall be the judge in
its reasonable discretion of whether such Credit Party is required to
perform the same under the terms of this Agreement.
4. Special Provisions regarding Receivables and General Intangibles.
(a) Contract Rights. Each such Credit Party represents and warrants,
and shall hereafter be deemed to have represented and warranted, that, as
of the time any contract right shall become subject to the security
interest hereunder, each and all of such contract rights and the papers
and documents relating thereto are genuine and in all respects what they
purport to be. Each Credit Party shall remain obligated and liable with
respect to all contract rights and general intangibles subject to the
grant of the security interest hereby and none of such obligations or
liabilities shall be assumed by the Collateral Agent or any of the Banks
on account hereof. Each such Credit Party agrees to provide to the
Collateral Agent, from time to time upon request, documents of title
relating to Inventory and promissory notes, chattel paper and other
instruments relating to receivables and General Intangibles, in each case
to the extent necessary to perfect the security interest of the Collateral
Agent. Further, the Borrower has by letter dated as of the Closing Date
identified to the Collateral Agent all promissory notes and chattel paper
as to which it is the payee evidencing indebtedness in excess of $25,000,
and will promptly give notice to
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the Collateral Agent of its receipt after the Closing Date of any
promissory notes and chattel paper evidencing indebtedness in excess of
$25,000, and deliver such promissory notes and chattel paper promptly upon
request.
(b) Chief Executive Office. Each such Credit Party, in accordance
with the provisions of Sections 3(a) and 3(c) hereof, will keep all of its
books and records relating to its Receivables and General Intangibles only
at its chief executive office (or at other executive offices or places of
business identified in Schedule 3(a)) and will not change its chief
executive office without prior written notice to the Collateral Agent as
specified in Section 3(a).
5. Special Provisions regarding Inventory and Equipment.
(a) Treatment of Equipment. No material Equipment is or will be
attached to real estate in such a manner that it may become or be
considered to be a fixture, unless the Collateral Agent shall have a deed
of trust or mortgage on the subject property or such Credit Party shall
furnish or have furnished agreements by the parties having rights in or
liens on the subject property disclaiming rights or interests in or liens
on such Equipment unless the Collateral Agent shall otherwise consent.
(b) Inventory Location. Each such Credit Party represents and
warrants, and shall hereafter be deemed to have represented and warranted,
that, as of the time any Inventory shall become subject to the security
interest hereunder, such Inventory is located at its respective Permitted
Collateral Locations unless otherwise permitted by Section 3(b).
(c) Reports. Each such Credit Party will, from time to time promptly
upon the reasonable request of the Collateral Agent, provide the
Collateral Agent with such reports and schedules listing, summarizing
and/or identifying by location any or all of the Inventory and Equipment
as the Collateral Agent may reasonably request.
(d) Insurance. Each such Credit Party will insure the Collateral as
provided in the Credit Agreement.
6. Special Provisions Regarding Pledged Collateral.
(a) Representations and Warranties. Each such Credit Party
represents and warrants to the Collateral Agent for the benefit of the
Banks that (i) except for those Permitted Liens as identified in
subsections (i), (iii), (iv), (xii) and (xiii) of the definition thereof,
it is the owner of the Pledged Securities as identified on Schedule 2(b)
free and clear of all claims, pledges, liens, encumbrances or security
interests of every kind or nature except, (ii) except as identified on
Schedule 2(b), the Pledged Securities represent each such Credit Party's
entire interest in the issuer of such Pledged Securities, (iii) the
Pledged Securities have been duly and validly issued, (iv) except as
identified on Schedule 2(b), the Pledged Securities have been duly and
validly pledged to the Collateral Agent
12
<PAGE>
hereby and (v) no consent or approval of any body, governmental,
regulatory or otherwise (including that of the subject entity, co-owners
or other shareholders), is required for the pledge contemplated hereby or
has not otherwise been obtained. Each such Credit Party covenants and
agrees that its entire interest in each issuer of such Pledged Securities
which is a Domestic Subsidiary (as defined in the Credit Agreement) (and
as to the Parent Company, its interest in the Borrower) will at all times
be subject to the grant and pledge contained herein in accordance with the
provisions hereof.
(b) Delivery of Stock Certificates in Transferable Form. All Pledged
Securities (including specifically without limitation share certificates
acquired subsequent to the date of this Agreement) will be delivered to
the Collateral Agent in form transferable for delivery together with
undated stock powers duly executed in blank in the form provided in
Schedule 6(h) hereto.
(c) Dividends, etc. Stock certificates, evidences of ownership and
other instruments acquired by or otherwise coming into the possession of
any such Credit Party on account of or in respect of the Pledged
Collateral, whether by stock dividend, stock split, recapitalization,
reorganization or otherwise, will be promptly delivered to the Collateral
Agent, together with appropriate undated stock powers executed in blank,
to be held as additional Pledged Collateral hereunder and will constitute
Pledged Collateral for all purposes hereunder. Subject to the terms of the
Credit Documents, so long as no Event of Default has occurred and is
continuing, dividends (other than stock dividends and other dividends
constituting Pledged Collateral which are addressed hereinabove) may be
paid to and accepted by any such Credit Party. Upon the occurrence and
during the continuance of an Event of Default, dividends (other than stock
dividends and other dividends constituting Pledged Collateral which are
addressed hereinabove) will be immediately paid over to the Collateral
Agent and held as additional Collateral hereunder. Any such other
dividends received by any of the Credit Parties after the occurrence and
during the continuance of an Event of Default will be accepted in trust
for the benefit of, and will be promptly paid over to, the Collateral
Agent.
(d) Endorsement. Upon the occurrence and during the continuance of
an Event of Default, the Collateral Agent shall have the right, for and in
the name, place and stead of any such Credit Party, to execute
endorsements, assignments or other instruments of conveyance or transfer
with respect to all or any of the Pledged Collateral.
(e) Collateral Agent's Obligation. The Collateral Agent shall have
no duty as to the collection or protection of the Pledged Collateral or
any income thereon or as to the preservation of any rights pertaining
thereto, beyond the safe custody of any thereof actually in its
possession. To the extent permitted by law, each such Credit Party
releases the Collateral Agent from any claims, causes of action and
demands at any time arising out of or with respect to this Agreement, the
Pledged Collateral and/or any actions, taken or omitted to be taken by the
Collateral Agent with respect thereto, and each such Credit Party hereby
agrees to hold the Collateral Agent harmless from and with respect to any
13
<PAGE>
and all such claims, causes of action and demands in each case other than
those resulting from the gross negligence, willful misconduct or unlawful
conduct of the Collateral Agent.
(f) Waivers. Each such Credit Party acknowledges that if the Pledged
Collateral is of a type customarily sold on a recognized market then in
such case no demand, advertisement or notice, all of which are, to the
extent permitted by law, hereby expressly waived by each such Credit
Party, shall be required in connection with any sale or other disposition
of any part of the Pledged Collateral. The Collateral Agent shall not be
obligated to make any sale of Pledged Collateral if it shall determine not
to do so, regardless of the fact that notice of sale may have been given.
The Collateral Agent may, without notice or publication, adjourn any
public or private sale or cause the same to be adjourned from time to time
by announcement at the time and place fixed for sale, and such sale may,
without further notice, be made at the time and place to which the same
was so adjourned. Upon each private sale of Pledged Collateral of a type
customarily sold in a recognized market or subject to widely distributed
standard price quotations and upon each public sale, the Collateral Agent
may purchase all or any of the Pledged Collateral being sold, free from
any equity or right of redemption, which is hereby waived and released by
each such Credit Party, and may make payment therefor by endorsement
without recourse of the Secured Obligations in lieu of cash to the amount
then due thereon which such Credit Party hereby agrees to accept. In the
case of all sales of Pledged Collateral, public or private, the Credit
Parties shall pay all costs and expenses of every kind for sale or
delivery, including brokers' and attorneys' fees, and after deducting such
costs and expenses from the proceeds of sale, the Collateral Agent shall
apply any amount remaining to the payment of the Secured Obligations, and
the Credit Parties shall continue to be liable for any deficiency. The
balance, if any, remaining after payment in full of all of the Secured
Obligations, shall be paid to the Credit Parties.
(g) Unregistered Securities. Each such Credit Party recognizes that
the Collateral Agent may be unable to effect a public sale of all or a
part of the Pledged Securities by reason of certain prohibitions contained
in the Securities Act of 1933, as amended, as now or hereafter in effect,
or in applicable state securities laws, as now or hereafter in effect, but
may be compelled to resort to one or more private sales to a restricted
group of purchasers who will be obliged to agree, among other things, to
acquire such Pledged Securities for their own account, for investment and
not with a view to the distribution or resale thereof. Each such Credit
Party acknowledges, understands and agrees that private sales so made may
be at prices and other terms less favorable to the seller than if such
Pledged Securities were sold at public sales, and that neither the
Collateral Agent nor the Banks shall have any obligation to delay sale of
any such Pledged Securities for the period of time necessary to permit the
issuer of such Pledged Securities even if such issuer would agree, to
register such Pledged Securities for public sale under such applicable
securities laws. Each such Credit Party agrees that (i) if the Collateral
Agent shall, pursuant to the terms of this Agreement, sell or cause the
Pledged Securities or any portion thereof to be sold at private sale, the
Collateral Agent shall have the right to rely upon the advice and opinion
of any national brokerage or investment firm having a seat on the New York
Stock Exchange as to the best manner in which to expose the
14
<PAGE>
Pledged Securities for sale and as to the best price reasonably obtainable
at the private sale thereof, and (ii) that private sales made under the
foregoing circumstances shall be deemed to have been made in a
commercially reasonable manner.
(h) Voting Rights. So long as no Event of Default has occurred and
is continuing, to the extent permitted by law, each Credit Party may
exercise any and all voting and other consensual rights pertaining to the
Pledged Collateral of such Credit Party or any part thereof for any
purpose not inconsistent with the terms of this Agreement or the Credit
Agreement. Upon the occurrence and during the continuance of an Event of
Default, all rights of a Credit Party to exercise the voting and other
consensual rights which it would otherwise be entitled to exercise
pursuant to this paragraph (h) shall cease and all such rights shall
thereupon become vested in the Agent.
7. Remedies.
(a) General Remedies. Upon the occurrence of an Event of Default and
at any time thereafter unless and until such Event of Default has been
waived by the Required Banks or cured to the satisfaction of the Required
Banks in accordance with the terms of the Credit Agreement, the Collateral
Agent shall have in addition to the rights and remedies provided herein,
in the Credit Documents or by law, the rights and remedies of a secured
party under the Code (regardless of whether the Code is the law of the
jurisdiction where the rights and remedies are asserted and regardless of
whether the Code applies to the affected Collateral), and further the
Collateral Agent may with or without judicial process or the aid and
assistance of others (i) enter on any premises on which any of the
Collateral may be located and, without resistance or interference by any
such Credit Party, take possession of the Collateral, (ii) dispose of any
Collateral on any such premises, (iii) require any such Credit Party to
assemble and make available to the Collateral Agent at its own expense any
Collateral at any place and time designated by the Collateral Agent which
is reasonably convenient to both parties, (iv) remove any Collateral from
any such premises for the purpose of effecting sale or other disposition
thereof, and/or (v) without demand and without advertisement, notice,
hearing or process of law, all of which each such Credit Party hereby
waives to the extent permitted by law, at any place and time or times,
sell and deliver any or all Collateral held by or for it at public or
private sale, by one or more contracts, in one or more parcels, for cash,
upon credit or otherwise, at such prices and upon such terms as the
Collateral Agent deems advisable, in its sole discretion, provided that
said disposition complies with any and all mandatory legal requirements.
In addition to all other sums due the Collateral Agent or any Bank
hereunder, the Credit Parties shall pay the Collateral Agent all
reasonable costs and expenses incurred by the Collateral Agent, including
reasonable attorneys' fees (including the allocated costs of in-house
counsel) and court costs, in obtaining or liquidating the Collateral, in
enforcing payment of Secured Obligations, or in the prosecution or defense
of any action or proceeding by or against the Collateral Agent or any Bank
concerning any matter arising out of or connected with this Agreement or
the Collateral or Secured Obligations, including without limitation any of
the foregoing arising in, arising under or related to a case under the
United States Bankruptcy Code. To the extent the rights of notice cannot
15
<PAGE>
be legally waived hereunder, each such Credit Party agrees that any
requirement of reasonable notice shall be met if such notice is personally
served on or otherwise sent to such Credit Party in accordance with
Section 11 hereof at least 10 days before the time of sale or other event
giving rise to the requirement of such notice. The Collateral Agent shall
not be obligated to make any sale or other disposition of the Collateral
regardless of notice having been given. To the extent permitted by law,
the Collateral Agent or any Bank may be the purchaser at any such sale. To
the extent permitted by applicable law, each such Credit Party hereby
waives all of its rights of redemption from any such sale. Subject to the
provisions of applicable law, the Collateral Agent may postpone or cause
the postponement of the sale of all or any portion of the Collateral by
announcement at the time and place of such sale, and such sale may,
without further notice, to the extent permitted by law, be made at the
time and place to which the sale was postponed or the Collateral Agent may
further postpone such sale by announcement made at such time and place.
(b) Remedies relating to Pledged Collateral. Upon the occurrence of
an Event of Default and at any time thereafter unless and until such Event
of Default has been waived by the Required Banks or cured to the
satisfaction of the Required Banks in accordance with the terms of the
Credit Agreement, and to the extent permitted by law, with regard to the
Pledged Collateral, the Collateral Agent may, but is not obligated to,
immediately (i) have the right to vote such Pledged Securities and (ii)
cause all or any of the Pledged Securities to be transferred to it or
registered in the name of its nominee(s).
(c) Access. In addition to the rights and remedies hereunder, upon
the occurrence of an Event of Default and at any time thereafter unless
and until such Event of Default has been waived by the Required Banks or
cured to the satisfaction of the Required Banks in accordance with the
terms of the Credit Agreement, the Collateral Agent shall have the right
to enter and remain upon the various premises of each such Credit Party
without cost or charge to the Collateral Agent, and use the same, together
with materials, supplies, books and records of such Credit Party for the
purpose of collecting and liquidating the Collateral, or for preparing for
sale and conducting the sale of the Collateral, whether by foreclosure,
auction or otherwise. In addition, the Collateral Agent may remove the
Collateral, or any part thereof, from such premises and/or any records
with respect thereto, in order to effectively collect or liquidate the
Collateral.
(d) Nonexclusive Nature of Remedies. Failure by the Collateral Agent
to exercise any right, remedy or option under this Agreement or any other
agreement between any such Credit Party and the Collateral Agent or any of
the Banks, or provided by law, or delay by the Collateral Agent in
exercising the same, shall not operate as a waiver; no waiver hereunder
shall be effective unless it is in writing, signed by the party against
whom such waiver is sought to be enforced and then only to the extent
specifically stated, which in the case of the Collateral Agent shall only
be granted as provided in Section 12 hereof. To the extent permitted by
law, neither the Collateral Agent nor any Bank, nor any party acting as
attorney for the Collateral Agent or any Bank, shall be liable hereunder
for any acts or omissions or for any error of judgment or mistake of fact
or law
16
<PAGE>
other than for its gross negligence, willful misconduct or unlawful
conduct hereunder. The rights and remedies of the Collateral Agent under
this Agreement shall be cumulative and not exclusive of any other right or
remedy which the Collateral Agent or the Banks may have.
(e) Retention of Collateral. The Collateral Agent may, after
providing the notices required by Section 9-505(2) of the Code or
otherwise complying with the requirements of applicable law of the
relevant jurisdiction, to the extent the Collateral Agent is in possession
of any of the Collateral, retain the Collateral in satisfaction of the
Secured Obligations. Unless and until the Collateral Agent shall have
provided such notices, however, the Collateral Agent shall not be deemed
to have retained any Collateral in satisfaction of any Secured Obligations
for any reason.
(f) Deficiency. In the event that the proceeds of any sale,
collection or realization are insufficient to pay all amounts to which the
Collateral Agent or the Banks are legally entitled, the Credit Parties
shall be jointly and severally liable for the deficiency, together with
interest thereon at the default rate specified in Section 2.2 of the
Credit Agreement for Revolving Loans that are Base Rate Loans, together
with the costs of collection and the reasonable fees of any attorneys
employed by the Collateral Agent to collect such deficiency. Any surplus
remaining after the full payment and satisfaction of the Secured
Obligations shall be returned to the Credit Parties or to whomsoever a
court of competent jurisdiction shall determine to be entitled thereto.
8. Application of Proceeds. Upon the occurrence, and during the
continuance, of an Event of Default, any payments in respect of the Secured
Obligations and any proceeds of the Collateral, when received by the Collateral
Agent in cash or its equivalent, will be applied first to costs and expenses of
collection and sale and then in reduction of the Secured Obligations in such
order and manner as the Collateral Agent may direct in its sole discretion, and
each such Credit Party irrevocably waives the right to direct the application of
such payments and proceeds and acknowledges and agrees that the Collateral Agent
shall have the continuing and exclusive right to apply and reapply any and all
such payments and proceeds in the Collateral Agent's sole discretion,
notwithstanding any entry to the contrary upon any of its books and records.
Each of the Credit Parties shall remain liable to the Collateral Agent for any
deficiency. Any surplus remaining after the full payment and satisfaction of the
Secured Obligations shall be returned to such Credit Parties or to whomsoever a
court of competent jurisdiction shall determine to be entitled thereto.
9. Costs of Counsel. If at any time hereafter, after the occurrence of an
Event of Default and until such time as such Event of Default has been waived by
the Required Banks or cured to the satisfaction of the Required Banks in
accordance with the terms of the Credit Agreement, the Collateral Agent employs
counsel to prepare or consider amendments, waivers or consents with respect to
this Agreement, or to take action or make a response in or with respect to any
legal or arbitral proceeding relating to this Agreement or relating to the
Collateral, or to protect the Collateral or exercise any rights or remedies
under this Agreement or with respect to the Collateral, then the Credit Parties
agree to promptly pay upon demand any and all such
17
<PAGE>
reasonable costs and expenses of the Collateral Agent, all of which costs
and expenses shall constitute Secured Obligations hereunder.
10. Continuing Agreement.
(a) This Agreement shall be a continuing agreement in every respect
and shall remain in full force and effect until all of the Loans and LOC
Obligations together with interest and fees under the Credit Agreement
(and all guaranty obligations in respect thereof) shall have been paid in
full and all commitments relating thereto shall have been terminated. Upon
such payment and termination, this Agreement shall automatically be
terminated and the Collateral Agent shall, upon the request and at the
expense of the Credit Parties, forthwith release all of its liens and
security interests hereunder and shall execute and deliver to the Credit
Parties, or to such person or persons as the Credit Parties shall
reasonably designate, all Uniform Commercial Code termination statements
and similar documents prepared by the Credit Parties which the Credit
Parties shall reasonably request to evidence such termination.
Notwithstanding the foregoing all releases and indemnities provided
hereunder shall survive termination of this Agreement.
(b) Without limiting the foregoing, notwithstanding anything else to
the contrary in this Agreement, all Collateral sold, transferred or
otherwise disposed of in accordance with the terms of the Credit Agreement
shall be sold, transferred or otherwise disposed of free and clear of the
lien and security interest created hereunder. In connection with the
foregoing, the Collateral Agent shall execute and deliver to the Credit
Parties, or to such other person or persons as the Credit Parties shall
reasonably designate, all Uniform Commercial Code termination statements
and similar documents prepared by the Credit Parties which the Credit
Parties shall reasonably request to evidence the release of the lien and
security interest created hereunder with respect to any such Collateral.
(c) This Agreement shall continue to be effective or be
automatically reinstated, as the case may be, if at any time payment, in
whole or in part, of any of the Secured Obligations is rescinded or must
otherwise be restored or returned by the Collateral Agent or any Bank as a
preference, fraudulent conveyance or otherwise under any bankruptcy,
insolvency or similar law, all as though such payment had not been made;
provided that in the event payment of all or any part of the Secured
Obligations is rescinded or must be restored or returned, all reasonable
costs and expenses (including without limitation any reasonable legal fees
and disbursements) incurred by the Collateral Agent or any Bank in
defending and enforcing such reinstatement shall be deemed to be included
as a part of the Secured Obligations.
11. Notices. Except as otherwise expressly provided herein, all notices
and other communications shall have been duly given and shall be effective (i)
when personally delivered, (ii) when transmitted via telecopy (or other
facsimile device) to the number set out below, (iii) the day following the day
on which the same has been delivered prepaid to a reputable national overnight
air courier service, or (iv) the third Business Day following the day on which
the same is sent by certified or registered mail, postage prepaid, in the case
of the Credit Parties to the
18
<PAGE>
address set out on Schedule 3(a) hereto, and in the case of the Collateral Agent
at the address set out below, or at such other address as such party may specify
by written notice to the other parties:
if to the Borrower or to a Credit Party:
Anvil Knitwear, Inc.
228 East 45th Street
New York, New York 10017
Attn: Jacob Hollander
Telephone: (212) 476-0352
Telecopy: (212) 885-9411
if to the Collateral Agent:
NationsBank, N.A.
101 N. Tryon Street
Independence Center
NC1-001-15-04
Charlotte, North Carolina 28255
Attn: Cliff Luckadoo
Telephone: (704) 386-7637
Telecopy: (704) 388-9436
with a copy to:
NationsBank, N.A.
NationsBank Corporate Center
100 North Tryon Street
NC1-007-08-11
Charlotte, North Carolina 28255
Attn: Joe Netzel
Telephone: (704) 386-1185
Telecopy: (704) 386-1270
The Credit Parties hereby acknowledge and agree that notices and other
communications to the Borrower at its address referred to above shall be deemed
adequate notice to each of the other Credit Parties.
12. Amendments; Waivers; Modifications. This Agreement and the provisions
hereof may not be amended, waived, modified, changed, discharged or terminated
except with the prior written consent of the Credit Parties and the Collateral
Agent.
13. Successors in Interest. This Agreement shall create a continuing
security interest in the Collateral and shall be binding upon the Credit
Parties, their respective successors and
19
<PAGE>
assigns and shall inure, together with the rights and remedies of the Collateral
Agent hereunder, to the benefit of the Collateral Agent and its successors and
assigns; provided, however, that the Credit Parties may not assign their
respective rights or delegate their respective duties hereunder without the
Collateral Agent's prior written consent. To the extent permitted by law, each
such Credit Party hereby releases the Collateral Agent and the Banks, and their
respective successors and assigns, from any liability for any act or omission
relating to this Agreement or the Collateral, except for any liability arising
from the Collateral Agent's gross negligence or willful misconduct.
14. Counterparts. This Agreement may be executed in any number of
counterparts, each of which where so executed and delivered shall be an
original, but all of which shall constitute one and the same instrument. It
shall not be necessary in making proof of this Agreement to produce or account
for more than one such counterpart.
15. Headings. The headings of the sections and subsections hereof are
provided for convenience only and shall not in any way affect the meaning or
construction of any provision of this Agreement.
16. Governing Law; Submission to Jurisdiction; Venue.
(a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. Any
legal action or proceeding with respect to this Agreement may be brought
in the courts of the State of New York, or of the federal courts of the
United States sitting in New York City, and, by execution and delivery of
this Agreement, each party hereby irrevocably accepts for itself and in
respect of its property, generally and unconditionally, the jurisdiction
of such courts. Each party further irrevocably consents to the service or
process out of any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by registered or certified
mail, postage prepaid, to such party at its address for notices pursuant
to Section 11. Nothing herein shall affect the right of any party to serve
process in any other manner permitted by law.
(b) Each party hereby irrevocably waives any objection which it may
now or hereafter have to the laying of venue of any of the aforesaid
actions or proceedings arising out of or in connection with this Agreement
or any other Credit Document brought in the courts referred to in
subsection (a) hereof and hereby further irrevocably waives and agrees not
to plead or claim in any such court that any such action or proceeding
brought in any such court has been brought in an inconvenient forum.
(c) EACH PARTY HEREBY IRREVOCABLY WAIVES, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED THEREBY.
20
<PAGE>
17. Severability. If any provision of any of this Agreement is determined
to be illegal, invalid or unenforceable, such provision shall be fully severable
and the remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.
18. The Collateral Agent. In acting under or by virtue of this Agreement,
the Collateral Agent shall be entitled to all the rights, authority, privileges
and immunities provided in the Credit Agreement, all of which provisions are
incorporated by reference herein with the same force and effect as if set forth
herein.
19. Entirety. This Agreement together with the other Credit Documents
represent the entire agreement of the parties hereto and thereto, and supersede
all prior agreements and understandings, oral or written, if any, including any
commitment letters or correspondence relating to the Credit Documents or the
transactions contemplated herein and therein. In the event of any inconsistency
between this Agreement and the Credit Agreement, the terms of the Credit
Agreement shall control.
20. Survival. All representations and warranties of the Credit Parties
hereunder shall survive the execution and delivery of this Agreement and the
other Credit Documents.
21. Other Security. To the extent that any of the Secured Obligations are
now or hereafter secured by property other than the Collateral, or by a
guarantee, endorsement or property of any other person, then the Collateral
Agent or Banks shall have the right to proceed against such other property,
guarantee or endorsement upon the occurrence of any Event of Default and at any
time thereafter unless and until such Event of Default has been waived by the
Required Banks or cured to the satisfaction of the Required Banks in accordance
with the terms of the Credit Agreement, and the Collateral Agent shall have the
right, in its sole discretion, to determine which rights, security, liens,
security interests or remedies the Collateral Agent shall at any time pursue,
relinquish, subordinate, modify or take any other action with respect thereto,
without in any way modifying or affecting any of them or any of the Collateral
Agent's rights or the Secured Obligations under this Agreement or under any
other of the Credit Documents.
22. No Liability. Neither the Collateral Agent nor the Banks shall be
liable for or be responsible for any obligations under, or in respect of, any
contracts, agreements or other interest which comprise a part of the Collateral
hereunder on account of the security interests granted hereby.
[Remainder of Page Intentionally Left Blank]
21
<PAGE>
IN WITNESS WHEREOF, the Credit Parties have caused this Security and
Pledge Agreement to be duly executed under seal as of the date first above
written.
BORROWER ANVIL KNITWEAR, INC.,
a Delaware corporation
By:
------------------------------
Name:
Title:
GUARANTORS ANVIL HOLDINGS, INC.,
a Delaware corporation
By:
------------------------------
Name:
Title:
COTTONTOPS, INC.,
a Delaware corporation
By:
------------------------------
Name:
Title:
Accepted and agreed to as of the date first above written.
NATIONSBANK, N.A.,
as Collateral Agent for the Banks
By:
------------------------------
Name:
Title:
22
<PAGE>
SCHEDULE 1
INTELLECTUAL PROPERTY
<PAGE>
SCHEDULE 2(b)
PLEDGED SECURITIES
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Percentage
Certificate No. of of Total
Issuer Nominal Owner No. Shares Ownership
- ------ ------------- --- ------ ---------
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Anvil Knitwear, Inc., Anvil Holdings, Inc., 1 1000 100%
a Delaware corporation a Delaware corporation
- ------------------------------------------------------------------------------------------------------
Cottontops, Inc., Anvil Knitwear, Inc., 1 100 100%
a Delaware corporation a Delaware corporation
- ------------------------------------------------------------------------------------------------------
A.K.H. S.A. Anvil Knitwear, Inc.,
a Delaware corporation
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SCHEDULE 3(a)
COLLATERAL LOCATIONS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Other Places Record Owner
of Business and of Location
Credit Party Notice Address Chief Executive Office Collateral Locations (if not Credit Party)
------------ -------------- ----------------------- --------------------- ---------------------
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Anvil Knitwear, Inc. 228 E. 45th St. 228 E. 45th Street Aynor, SC
New York, New York 10017 New York, New York 10017
Hamer, SC
Mullins, SC
Gibson, NC
Kings Mountain, NC
Red Springs, NC
Swannanoa, NC
Whiteville, NC
- ------------------------------------------------------------------------------------------------------------------------------------
Anvil Holdings, Inc. 228 E. 45th Street 228 E. 45th Street
New York, New York 10017 New York, New York 10017
- ------------------------------------------------------------------------------------------------------------------------------------
Cottontops, Inc. P.O. Box 789 P.O. Box 789
Farmville, NC 27828 Farmville, NC 27828
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SCHEDULE 3(d)
PERMITTED TRADE NAMES
Company Fictitious Names Location
- ------- ---------------- --------
Anvil Knitwear, Inc. Teak, a division of Anvil Knitwear, Inc. Same as above
<PAGE>
SCHEDULE 3(g)(i)
NOTICE
OF
GRANT OF SECURITY INTEREST
IN
COPYRIGHTS
United States Copyright Office
Gentlemen:
Please be advised that pursuant to the Amended and Restated Security and
Pledge Agreement dated as of March 14, 1997 (the "Security Agreement") by and
among the Credit Parties party thereto (each a "Credit Party" and collectively,
the "Credit Parties") and NationsBank, N.A., as Collateral Agent (the
"Collateral Agent") for the banks referenced therein (the "Banks"), the
undersigned Credit Party has granted a continuing security interest in and
continuing lien upon, the copyrights and copyright applications shown below to
the Collateral Agent for the ratable benefit of the Banks:
COPYRIGHTS
Date of
Copyright No. Description of Copyright Copyright
- ------------- ------------------------ ---------
Copyright Applications
Copyright Description of Copyright Date of Copyright
Applications No. Applied For Applications
- ---------------- ----------------- --------------
<PAGE>
The Credit Parties and the Collateral Agent, on behalf of the Banks,
hereby acknowledge and agree that the security interest in the foregoing
copyrights and copyright applications (i) may only be terminated in accordance
with the terms of the Security Agreement and (ii) is not to be construed as an
assignment of any copyright or copyright application.
Very truly yours,
----------------------------------
[Credit Party]
By:_______________________________
Name:_____________________________
Title:____________________________
Acknowledged and Accepted:
NATIONSBANK, N.A., as Collateral Agent
By:___________________________________
Name:_________________________________
Title:________________________________
<PAGE>
SCHEDULE 3(g)(ii)
NOTICE
OF
GRANT OF SECURITY INTEREST
IN
PATENTS
United States Patent and Trademark Office
Gentlemen:
Please be advised that pursuant to the Amended and Restated Security and
Pledge Agreement dated as of March 14, 1997 (the "Security Agreement") by and
among the Credit Parties party thereto (each a "Credit Party" and collectively,
the "Credit Parties") and NationsBank, N.A., as Collateral Agent (the
"Collateral Agent") for the banks referenced therein (the "Banks"), the
undersigned Credit Party has granted a continuing security interest in and
continuing lien upon, the patents and patent applications shown below to the
Collateral Agent for the ratable benefit of the Banks:
PATENTS
-------
Description of Patent Date of
Patent No. Item Patent
- ---------- ---- ------
Patent Applications
-------------------
Patent Description of Patent Date of Patent
Applications No. Applied For Applications
- ---------------- ----------- ------------
<PAGE>
The Credit Parties and the Collateral Agent, on behalf of the Banks,
hereby acknowledge and agree that the security interest in the foregoing patents
and patent applications (i) may only be terminated in accordance with the terms
of the Security Agreement and (ii) is not to be construed as an assignment of
any patent or patent application.
Very truly yours,
----------------------------------
[Credit Party]
By:
------------------------------
Name:_____________________________
Title:____________________________
Acknowledged and Accepted:
NATIONSBANK, N.A., as Collateral Agent
By:
------------------------------
Name:_____________________________
Title:____________________________
<PAGE>
SCHEDULE 3(g)(iii)
NOTICE
OF
GRANT OF SECURITY INTEREST
IN
TRADEMARKS
United States Patent and Trademark Office
Gentlemen:
Please be advised that pursuant to the Amended and Restated Security and
Pledge Agreement dated as of March 14, 1997 (the "Security Agreement") by and
among the Credit Parties party thereto (each a "Credit Party" and collectively,
the "Credit Parties") and NationsBank, N.A., as Collateral Agent (the
"Collateral Agent") for the banks referenced therein (the "Banks"), the
undersigned Credit Party has granted a continuing security interest in and
continuing lien upon, the trademarks and trademark applications shown below to
the Collateral Agent for the ratable benefit of the Banks:
TRADEMARKS
----------
Description of Trademark Date of
Trademark No. Item Trademark
- ------------- ---------- ---------
Trademark Applications
----------------------
Trademark Description of Trademark Date of Trademark
Applications No. Applied For Applications
- ---------------- ----------------- --------------
<PAGE>
The Credit Parties and the Collateral Agent, on behalf of the Banks,
hereby acknowledge and agree that the security interest in the foregoing
trademarks and trademark applications (i) may only be terminated in accordance
with the terms of the Security Agreement and (ii) is not to be construed as an
assignment of any trademark or trademark application.
Very truly yours,
----------------------------------
[Credit Party]
By:
------------------------------
Name:_____________________________
Title:____________________________
Acknowledged and Accepted:
NATIONSBANK, N.A., as Collateral Agent
By:
------------------------------
Name:_____________________________
Title:____________________________
<PAGE>
SCHEDULE 6(h)
FORM OF
IRREVOCABLE STOCK POWER
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers to
the following shares of capital stock of [ISSUING CORPORATION], a _____________
corporation:
Certificate No. No. of Shares
--------------- -------------
and irrevocably appoints
its agent and attorney-in-fact to transfer all or any part of such capital stock
and to take all necessary and appropriate action to effect any such transfer.
The agent and attorney-in-fact may substitute and appoint one or more persons to
act for him. The effectiveness of a transfer pursuant to this stock power shall
be subject to any and all transfer restrictions referenced on the face of the
certificates evidencing such interest or in the certificate of incorporation or
bylaws of the subject corporation, to the extent they may from time to time
exist.
-------------------------------
Dated [Credit Party]
By:
---------------------------
Name:__________________________
Title:_________________________
[Address]
Witnessed by:
- ------------------------
- ------------------------
<PAGE>
================================================================================
REGISTRATION RIGHTS AGREEMENT
Dated as of March 14, 1997
by and among
Anvil Knitwear, Inc.
and
Anvil Holdings, Inc.
and
Cottontops, Inc.
and
Donaldson, Lufkin & Jenrette Securities Corporation,
Wasserstein Perella Securities, Inc.
and
NationsBanc Capital Markets, Inc.
(collectively, the "Initial Purchasers")
================================================================================
<PAGE>
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and entered
into as of March 14, 1997 by and among Anvil Knitwear, Inc., a Delaware
corporation ("Anvil"), and Anvil Holdings, Inc., a Delaware corporation
("Holdings"), Cottontops, Inc., a Delaware corporation ("Cottontops") and
Donaldson, Lufkin & Jenrette Securities Corporation, Wasserstein Perella
Securities, Inc. and NationsBanc Capital Markets, Inc. (each an "Initial
Purchaser" and, collectively, the "Initial Purchasers"), each of whom has agreed
to purchase Anvil's 10-7/8% Senior Notes due 2007 (the "Series A Senior Notes")
pursuant to the Purchase Agreement (as defined below).
This Agreement is made pursuant to the Purchase Agreement, dated March 11,
1997 (the "Purchase Agreement"), by and among Anvil, Holdings and the Initial
Purchasers. In order to induce the Initial Purchasers to purchase the Senior
Notes, Anvil has agreed to provide the registration rights set forth in this
Agreement. The execution and delivery of this Agreement is a condition to the
obligations of the Initial Purchasers set forth in Section 4(p) of the Purchase
Agreement.
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have the
following meanings:
Broker-Dealer: Any broker or dealer registered under the Exchange Act.
Business Day: Any day other than a Legal Holiday.
Closing Date: The date of this Agreement.
Commission: The Securities and Exchange Commission.
Consummate: A Registered Exchange Offer shall be deemed "Consummated" for
purposes of this Agreement upon the occurrence of (i) the filing and
effectiveness under the Securities Act of the Exchange Offer Registration
Statement relating to the Series B Senior Notes (and the related Holdings
Guarantee) to be issued in the Exchange Offer, (ii) the maintenance of such
Registration Statement as continuously effective and the keeping open of the
Exchange Offer for a period not less than the minimum period required pursuant
to Section 3(b) hereof and (iii) the delivery, by Holdings and Anvil to the
Registrar under the Indenture, of Series B Senior Notes (and the related
Holdings Guarantee) in the same aggregate principal amount as the aggregate
principal amount of Series A Senior Notes tendered by the Holders thereof
pursuant to the Exchange Offer.
<PAGE>
Damages Payment Date: With respect to the Series A Senior Notes, each
Interest Payment Date.
Effectiveness Target Date: As defined in Section 5.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Exchange Offer: The registration by Holdings and Anvil under the
Securities Act of the Series B Senior Notes (and the related Holdings Guarantee)
pursuant to a Registration Statement pursuant to which Anvil and Holdings offer
the Holders of all outstanding Transfer Restricted Securities the opportunity to
exchange all such outstanding Transfer Restricted Securities held by such
Holders for Series B Senior Notes (and the related Holdings Guarantee) in an
aggregate principal amount equal to the aggregate principal amount of Transfer
Restricted Securities tendered by such Holders in response to such exchange
offer.
Exchange Offer Registration Statement: The Registration Statement relating
to the Exchange Offer, including the related Prospectus.
Exempt Resales: The transactions in which the Initial Purchasers propose
to sell the Series A Senior Notes to certain "qualified institutional buyers,"
as such term is defined in Rule 144A under the Securities Act, and to certain
institutional "accredited investors," as such term is defined in Rule 501(1),
(2), (3) and (7) of Regulation D under the Act.
Holders: As defined in Section 2(b) hereof.
Holdings Guarantee: The guarantee by Holdings of the obligations of Anvil
under the Series B Senior Notes, substantially in the form attached as Exhibit C
to the Indenture.
Indemnified Holder: As defined in Section 8(a) hereof.
Indenture: The Indenture, dated as of March 14, 1997, among Anvil,
Holdings, Cottontops, the other Subsidiary Guarantors and United States Trust
Company of New York, as trustee (the "Trustee"), pursuant to which the Senior
Notes are to be issued, as such Indenture is amended or supplemented from time
to time in accordance with the terms thereof.
Initial Purchaser: As defined in the preamble hereto.
Interest Payment Date: As defined in the Indenture and the Senior Notes.
Legal Holiday: A Saturday, a Sunday or a day on which federal offices or
banking institutions in the City of New York, in the city of the Corporate Trust
Office of the Trustee, or at a place of payment are authorized by law,
regulation or executive order to remain closed. If a payment date is a Legal
Holiday, payment may be made on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period.
NASD: National Association of Securities Dealers, Inc.
2
<PAGE>
Person: An individual, partnership, corporation, trust or unincorporated
organization, or a government or agency or political subdivision thereof.
Prospectus: The prospectus included in a Registration Statement, as
amended or supplemented by any prospectus supplement and by all other amendments
thereto, including post-effective amendments, and all material incorporated by
reference into such Prospectus.
Record Holder: With respect to any Damages Payment Date relating to Senior
Notes, each Person who is a Holder of Senior Notes on the record date with
respect to the Interest Payment Date on which such Damages Payment Date shall
occur.
Registration Default: As defined in Section 5 hereof.
Registration Statement: Any registration statement of Anvil and Holdings
relating to (a) an offering of Series B Senior Notes (and related Holdings
Guarantee) pursuant to an Exchange Offer or (b) the registration for resale of
Transfer Restricted Securities pursuant to the Shelf Registration Statement,
which is filed pursuant to the provisions of this Agreement, in each case,
including the Prospectus included therein, all amendments and supplements
thereto (including post-effective amendments) and all exhibits and material
incorporated by reference therein.
Securities Act: The Securities Act of 1933, as amended.
Senior Notes: The Series A Senior Notes and the Series B Senior Notes.
Series B Senior Notes: Anvil's 10-7/8% Series B Senior Notes due 2007 to
be issued pursuant to the Indenture in the Exchange Offer.
Shelf Filing Deadline: As defined in Section 4 hereof.
Shelf Registration Statement: As defined in Section 4 hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb) as
in effect on the date of the Indenture.
Transfer Restricted Securities: Each Senior Note, until the earliest to
occur of (a) the date on which such Senior Note is exchanged in the Exchange
Offer by a Person other than a Broker-Dealer for a Series B Senior Note and is
entitled to be resold to the public by the Holder thereof without complying with
the prospectus delivery requirements of the Securities Act, (b) following the
exchange by a Broker-Dealer in the Exchange Offer of a Senior Note for a Series
B Senior Note, the date on which such Series B Senior Note is sold to a
purchaser who receives from such Broker-Dealer on or prior to the date of such
sale a copy of the prospectus contained in the Exchange Offer Registration
Statement, (c) the date on which such Senior Note effectively has been
registered under the Securities Act and disposed of in accordance with the Shelf
Registration Statement or (iv) the date on which such Senior Note is distributed
to the public pursuant to Rule 144 under the Securities Act.
3
<PAGE>
Underwritten Registration or Underwritten Offering: A registration in
which securities of Anvil are sold to an underwriter for reoffering to the
public.
SECTION 2. SECURITIES SUBJECT TO THIS AGREEMENT
(a) Transfer Restricted Securities. The securities entitled to the
benefits of this Agreement are the Transfer Restricted Securities.
(b) Holders of Transfer Restricted Securities. A Person is deemed to be a
holder of Transfer Restricted Securities (each, a "Holder") whenever such Person
owns Transfer Restricted Securities.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permissible under applicable
law or Commission policy (after the procedures set forth in Section 6(a) below
have been complied with), Holdings and Anvil shall (i) cause to be filed under
the Securities Act with the Commission as soon as practicable after the Closing
Date, but in no event later than 60 days after the Closing Date, an Exchange
Offer Registration Statement relating to the Series B Senior Notes (and the
related Holdings Guarantee) and the Exchange Offer, (ii) use their best efforts
to cause such Exchange Offer Registration Statement to become effective at the
earliest possible time, but in no event later than 120 days after the Closing
Date, (iii) in connection with the foregoing, file (A) all pre-effective
amendments to such Exchange Offer Registration Statement as may be necessary in
order to cause such Exchange Offer Registration Statement to become effective,
(B) if applicable, a post-effective amendment to such Exchange Offer
Registration Statement pursuant to Rule 430A under the Securities Act and (C)
all filings in connection with the registration and qualification of the Series
B Senior Notes (and the related Holdings Guarantee) as are necessary under the
Blue Sky laws of such jurisdictions in order to permit Consummation of the
Exchange Offer, and (iv) upon the effectiveness of such Registration Statement,
use their best efforts to issue on or prior to 150 days after the Closing Date
(the "Exchange Offer Effectiveness Date") Series B Senior Notes (and the related
Holdings Guarantee) in exchange for all Series A Senior Notes tendered prior
thereto in the Exchange Offer. The Exchange Offer shall be on the appropriate
form permitting registration of the Series B Senior Notes (and the related
Holdings Guarantee) to be offered in exchange for the Transfer Restricted
Securities and to permit resales of Senior Notes held by Broker-Dealers as
contemplated by Section 3(c) below.
(b) Holdings and Anvil shall cause the Exchange Offer Registration
Statement to be effective continuously and shall keep the Exchange Offer open
for a period of not less than the minimum period required under applicable
federal and state securities laws to Consummate the Exchange Offer; provided,
however, that in no event shall such period be less than 20 Business Days.
Holdings and Anvil shall cause the Exchange Offer to comply with all applicable
federal and state securities laws. No securities other than the Series B Senior
Notes (and the related Holdings Guarantee) shall be included in the Exchange
Offer Registration Statement. Holdings and Anvil shall use their best efforts to
cause the Exchange Offer to be Consummated on the
4
<PAGE>
earliest practicable date after the Exchange Offer Registration Statement has
become effective, but in no event later than 30 Business Days thereafter.
(c) Holdings and Anvil shall indicate in a "Plan of Distribution" section
contained in the Prospectus contained in the Exchange Offer Registration
Statement that any Broker-Dealer who holds Series A Senior Notes that are
Transfer Restricted Securities and that were acquired for its own account as a
result of market-making activities or other trading activities (other than
Transfer Restricted Securities acquired directly from Anvil), may exchange such
Series A Senior Notes pursuant to the Exchange Offer; however, such
Broker-Dealer may be deemed to be an "underwriter" within the meaning of the
Securities Act and, consequently, must deliver a prospectus meeting the
requirements of the Securities Act in connection with any resales of the Series
B Senior Notes received by such Broker-Dealer in the Exchange Offer, which
prospectus delivery requirement may be satisfied by the delivery by such
Broker-Dealer of the Prospectus contained in the Exchange Offer Registration
Statement. Such "Plan of Distribution" section shall also contain all other
information with respect to such resales by Broker-Dealers that the Commission
may require in order to permit such resales pursuant thereto, but such "Plan of
Distribution" shall not name any such Broker-Dealer or disclose the amount of
Senior Notes held by any such Broker-Dealer except to the extent required by the
Commission as a result of a change in policy after the date of this Agreement.
Holdings and Anvil shall use their reasonable best efforts to keep the
Exchange Offer Registration Statement continuously effective, supplemented and
amended as required by the provisions of Section 6(c) below to the extent
necessary to ensure that it is available for resales of Senior Notes acquired by
Broker-Dealers for their own accounts as a result of market-making activities or
other trading activities, and to ensure that such Exchange Offer Registration
Statement conforms with the requirements of this Agreement, the Securities Act
and the policies, rules and regulations of the Commission as announced from time
to time, for a period equal to the shorter of (A) one hundred and eighty (180)
consecutive days after the date the Exchange Offer is Consummated (subject to
the provisions of Section 6(c)(i) below) and (B) the date on which all Transfer
Restricted Securities acquired in the Exchange Offer by Restricted
Broker-Dealers have been sold to the public by such Restricted Broker-Dealers.
In order to facilitate such resales, at any time during such 180-day period
Anvil shall provide to Broker-Dealers, promptly upon request, and in no event
more than five Business Days after any such request, sufficient copies of the
latest version of such Prospectus.
SECTION 4. SHELF REGISTRATION
(a) Shelf Registration. If (i) Holdings and Anvil are not required to file
an Exchange Offer Registration Statement with respect to the Series B Senior
Notes (and the related Holdings Guarantee) or permitted to consummate the
Exchange Offer because the Exchange Offer is not permitted by applicable law
(after the procedures set forth in Section 6(a) below have been complied with)
or Commission policy or (ii) if any Holder of Transfer Restricted Securities
shall notify Holdings and Anvil within 10 Business Days following Consummation
of the Exchange Offer that (A) such Holder was prohibited by law or Commission
policy from participating in the Exchange Offer, (B) such Holder may not resell
the Series B Senior Notes acquired by it in
5
<PAGE>
the Exchange Offer to the public without delivering a prospectus and the
Prospectus contained in the Exchange Offer Registration Statement is not
appropriate or available for such resales by such Holder, or (C) such Holder is
a Broker-Dealer and holds Series A Senior Notes acquired directly from Anvil or
one of its affiliates, then Holdings and Anvil shall
(x) cause to be filed on or prior to (1) in the case of a Registration
Statement filed pursuant to clause (i) above, the earlier to occur of 45 days
after the date on which Holdings and Anvil determine that they are not
required to file the Exchange Offer Registration Statement or 75 days after
the Closing Date and (2) in the case of a Registration Statement filed
pursuant to clause (ii) above, 45 days after the date on which Holdings and
Anvil receive the notice specified in clause (ii) above, a shelf registration
statement pursuant to Rule 415 under the Securities Act (which may be an
amendment to the Exchange Offer Registration Statement (in either event, the
"Shelf Registration Statement")), relating to all Transfer Restricted
Securities the Holders of which shall have provided the information required
pursuant to Section 4(b) hereof, and shall
(y) use their reasonable best efforts to cause such Shelf Registration
Statement to become effective on or prior to (1) in the case of a
Registration Statement filed pursuant to clause (i) above, 120 days after the
date on which Holdings and Anvil become obligated to file such Shelf
Registration Statement and (2) in the case of a Registration Statement filed
pursuant to clause (ii) above, 120 days after the date on which Holdings and
Anvil receive the notice specified in clause (ii) above. If, after Holdings
and Anvil have filed an Exchange Offer Registration Statement which satisfies
the requirements of Section 3(a) above, Holdings and Anvil are required to
file and make effective a Shelf Registration Statement solely because the
Exchange Offer shall not be permitted under applicable federal law, then the
filing of the Exchange Offer Registration Statement shall be deemed to
satisfy the requirements of clause (x) above. Such an event shall have no
effect on the requirements of clause (y) above, or on the Effectiveness
Target Date as defined in Section 5 below.
Each of Holdings and Anvil shall use its reasonable best efforts to keep
such Shelf Registration Statement continuously effective, supplemented and
amended as required by the provisions of Sections 6(b) and (c) hereof for a
period of three years from the effective date thereof (as extended pursuant to
Section 6(c)(i) or such shorter period that will terminate when all Senior Notes
are no longer Transfer Restricted Securities or all Senior Notes covered by such
Shelf Registration Statement have been sold pursuant thereto, and to ensure that
such Shelf Registration Statement conforms with the requirements of this
Agreement, the Securities Act and the policies, rules and regulations of the
Commission as announced from time to time, for a period of three years from the
effective date thereof (as extended pursuant to Section 6(c)(i)) or such shorter
period that will terminate when all Senior Notes are no longer Transfer
Restricted Securities or all Senior Notes covered by such Shelf Registration
Statement have been sold pursuant thereto.
(b) Provision by Holders of Certain Information in Connection with the
Shelf Registration Statement. No Holder of Transfer Restricted Securities may
include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
Holdings and Anvil in writing, within 20 Business
6
<PAGE>
Days after receipt of a request therefor, such information as Holdings and Anvil
reasonably may request for use in connection with any Shelf Registration
Statement or Prospectus or preliminary Prospectus included therein. No Holder of
Transfer Restricted Securities shall be entitled to Liquidated Damages pursuant
to Section 5 hereof unless and until such Holder shall have used its best
efforts to provide all such reasonably requested information. Each Holder as to
which any Shelf Registration Statement is being effected agrees to furnish
promptly to Holdings and Anvil all information required to be disclosed in order
to make the information previously furnished to Holdings and Anvil by such
Holder not materially misleading.
(c) Restrictions on Sale of Certain Securities by Others. Holdings and
Anvil agree not to, and to use their reasonable best efforts to cause their
affiliates not to, offer, sell, contract to sell or grant any option to purchase
or otherwise transfer or dispose of any debt security issued by Holdings or
Anvil or any security convertible into or exchangeable or exercisable for any
such debt security, including a sale pursuant to Rule 144 under the Securities
Act, during the 30- day period beginning on the closing date of each
Underwritten Offering made pursuant to the Shelf Registration Statement (except
as part of such Underwritten Registration).
SECTION 5. LIQUIDATED DAMAGES
If (i) any of the Registration Statements required by this Agreement are
not filed with the Commission on or prior to the date specified for such filing
in Section 3 or 4 of this Agreement, (ii) any of such Registration Statements
have not been declared effective by the Commission on or prior to the date
specified for such effectiveness in Section 3 or 4 of this Agreement (the
"Effectiveness Target Date"), (iii) the Exchange Offer has not been Consummated
within 30 days of the Effectiveness Target Date with respect to the Exchange
Offer Registration Statement or (iv) subject to the provisions of Section
6(c)(i) below, any Registration Statement required by this Agreement is filed
and declared effective but shall thereafter cease to be effective or fail to be
usable for its intended purpose without being succeeded immediately by a
post-effective amendment to such Registration Statement that cures such failure
and that is itself immediately declared effective (each such event referred to
in clauses (i) through (iv), a "Registration Default"), Holdings and Anvil
hereby, jointly and severally, agree to pay liquidated damages to each Holder of
Transfer Restricted Securities, during the first 90-day period immediately
following the occurrence of such Registration Default, in an amount equal to
$.05 per week per $1,000 principal amount of the Transfer Restricted Securities
held by such Holder for so long as the Registration Default continues. The
amount of liquidated damages payable to each Holder shall increase by an
additional $.05 per week per $1,000 principal amount of Transfer Restricted
Securities held by such Holder for each subsequent 90-day period, up to a
maximum amount of liquidated damages of $.30 per week per $1,000 principal
amount of Transfer Restricted Securities held by such Holder. All accrued
liquidated damages shall be paid by Holdings and Anvil on each Damages Payment
Date (i) to the Global Note Holder by wire transfer of immediately available
funds and (ii) to Holders of Certificated Securities by wire transfer to the
accounts specified by them or by mailing checks to their registered addresses if
no such accounts have been specified, as provided in the Indenture. Following
the cure of all Registration Defaults relating to any particular Transfer
Restricted Securities, the accrual of liquidated damages with respect to such
Transfer Restricted Securities will cease.
7
<PAGE>
All obligations of Holdings and Anvil set forth in the preceding paragraph
that are outstanding with respect to any Transfer Restricted Security at the
time such security ceases to be a Transfer Restricted Security shall survive
until such time as all such obligations with respect to such security shall have
been satisfied in full.
SECTION 6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection with the Exchange
Offer, Holdings and Anvil shall comply with all of the provisions of Section
6(c) below, shall use their reasonable best efforts to effect such exchange to
permit the sale of Transfer Restricted Securities being sold in accordance with
the intended method or methods of distribution thereof, and shall comply with
all of the following provisions:
(i) If in the reasonable opinion of counsel to Holdings and Anvil
there is a question as to whether the Exchange Offer is permitted by
applicable law, Holdings and Anvil hereby agree to seek a no-action letter or
other favorable decision from the Commission allowing Holdings and Anvil to
Consummate an Exchange Offer for such Series A Senior Notes. Holdings and
Anvil hereby agree to pursue the issuance of such a decision to the
Commission staff level, but shall not be required to take commercially
unreasonable action to effect a change of Commission policy. Holdings and
Anvil hereby agree, however, (A) to participate in telephonic conferences
with the Commission, (B) to deliver to the Commission staff an analysis
prepared by counsel to Holdings and Anvil setting forth the legal bases, if
any, upon which such counsel has concluded that such an Exchange Offer should
be permitted and (C) to pursue diligently a resolution (which need not be
favorable) by the Commission staff of such submission.
(ii) As a condition to its participation in the Exchange Offer
pursuant to the terms of this Agreement, each Holder of Transfer Restricted
Securities shall furnish, upon the request of Holdings and Anvil, prior to
the Consummation thereof, a written representation to Holdings and Anvil
(which may be contained in the letter of transmittal contemplated by the
Exchange Offer Registration Statement) to the effect that such Holder (A) is
not an affiliate of Holdings or Anvil, (B) is not engaged in, and does not
intend to engage in, and has no arrangement or understanding with any person
to participate in, a distribution of the Series B Senior Notes to be issued
in the Exchange Offer and (C) is acquiring the Series B Senior Notes in its
ordinary course of business. Each Holder hereby acknowledges and agrees (X)
that any Broker-Dealer and any such Holder using the Exchange Offer to
participate in a distribution of the securities to be acquired in the
Exchange Offer (1) could not under Commission policy as in effect on the date
of this Agreement rely on the position of the Commission enunciated in Morgan
Stanley and Co., Inc. (available June 5, 1991) and Exxon Capital Holdings
Corporation (available May 13, 1988), as interpreted in the Commission's
letter to Shearman & Sterling dated July 2, 1993, and similar no-action
letters (including any no-action letter obtained pursuant to clause (i)
above), and (2) must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with a secondary resale
transaction and (Y) that such a secondary resale transaction should be
covered by an effective registration statement containing the selling
security holder information required by Item 507 or 508, as applicable, of
Regulation S-K if the resales are
8
<PAGE>
of Series B Senior Notes obtained by such Holder in exchange for Series A
Senior Notes acquired by such Holder directly from Anvil.
(iii) Prior to effectiveness of the Exchange Offer Registration
Statement, Holdings and Anvil shall provide, if requested by the Commission,
a supplemental letter to the Commission (A) stating that Holdings and Anvil
are registering the Exchange Offer in reliance on the position of the
Commission enunciated in Exxon Capital Holdings Corporation (available May
13, 1988), Morgan Stanley and Co., Inc. (available June 5, 1991) and, if
applicable, any no-action letter obtained pursuant to clause (i) above and
(B) including a representation that Holdings and Anvil have not entered into
any arrangement or understanding with any Person to distribute the Series B
Senior Notes (and the related Holdings Guarantee) to be received in the
Exchange Offer and that, to the best of Holdings' and Anvil's information and
belief, each Holder participating in the Exchange Offer is acquiring the
Series B Senior Notes (and the related Holdings Guarantee) in its ordinary
course of business and has no arrangement or understanding with any Person to
participate in the distribution of the Series B Senior Notes (and the related
Holdings Guarantee) received in the Exchange Offer.
(b) Shelf Registration Statement. In connection with the Shelf
Registration Statement, Holdings and Anvil shall comply with all of the
provisions of Section 6(c) below and shall use their best efforts to effect such
registration to permit the sale of the Transfer Restricted Securities being sold
in accordance with the intended method or methods of distribution thereof, and
pursuant thereto Holdings and Anvil as expeditiously as possible will prepare
and file with the Commission a Registration Statement relating to the
registration on any appropriate form under the Securities Act, which form shall
be available for the sale of the Transfer Restricted Securities in accordance
with the intended method or methods of distribution thereof.
(c) General Provisions. In connection with any Registration Statement and
any Prospectus required by this Agreement in order to permit the sale or resale
of Transfer Restricted Securities (including, without limitation, any
Registration Statement and the related Prospectus required to permit resales of
Senior Notes by Broker-Dealers), Holdings and Anvil shall:
(i) use their reasonable best efforts to keep such Registration
Statement continuously effective and provide all requisite financial
statements for the period specified in Section 3 or 4 of this Agreement, as
applicable. Upon the occurrence of any event that would cause any such
Registration Statement or the Prospectus contained therein (A) to contain a
material misstatement or omission or (B) not to be effective and usable for
resale of Transfer Restricted Securities during the period required by this
Agreement, Holdings and Anvil promptly shall file an appropriate amendment to
such Registration Statement, in the case of clause (A), correcting any such
misstatement or omission, and, in the case of either clause (A) or (B), use
their best efforts to cause such amendment to be declared effective and such
Registration Statement and the related Prospectus to become usable for their
intended purpose(s) as soon as practicable thereafter. Notwithstanding the
foregoing, Holdings and Anvil may suspend the effectiveness of (1) the
Registration Statement relating to the Exchange Offer for up to 10 days
during the 180-day period referred to in Section 3(c) and
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(2) the Shelf Registration Statement for up to 30 days in each year during
which such Shelf Registration Statement is required to be effective and
usable hereunder (measured from the date of effectiveness of such Shelf
Registration Statement to successive anniversaries thereof) if (A) either
(y)(I) Holdings and Anvil shall be engaged in a material acquisition or
disposition and (II)(aa) such acquisition or disposition is required to be
disclosed in the Registration Statement, the related Prospectus or any
amendment or supplemental thereto, or the failure by Holdings and Anvil to
disclose such transaction in the Registration Statement or related
Prospectus, or any amendment or supplemental thereto, as then amended or
supplemented, would cause such Registration Statement, Prospectus or
amendment or supplement thereto, to contain an untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statement therein not misleading, in the light of the circumstances under
with they were made, (bb) information regarding the existence of such
acquisition or disposition has not then been publicly disclosed by or on
behalf of Holdings and Anvil and (cc) a majority of the Board of Directors of
Holdings or Anvil determines in the exercise of its good faith judgment that
disclosure of such acquisition or disposition would not be in the best
interest of Holdings or Anvil and its subsidiaries or would have a material
adverse effect on the consummation of such acquisition or disposition or (z)
a majority of the Board of Directors of Holdings or Anvil determines in the
exercise of its good faith judgment that compliance with the disclosure
obligations set forth in this Section 6(c)(i) would otherwise have a material
adverse effect on Holdings or Anvil and its subsidiaries, taken as a whole,
and (B) Holdings and Anvil notify the Holders within two Business Days after
such Board of Directors makes the relevant determination set forth in clause
(A); provided, however, that in each such case the applicable period
specified in Section 3 and 4 hereof during which the applicable Registration
Statement is required to be kept effective and usable shall be extended by
the number of days during which such effectiveness was suspended pursuant to
the foregoing;
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the Registration Statement as may be necessary
to keep the Registration Statement effective for the applicable period set
forth in Section 3 or 4 hereof, as applicable, or such shorter period as will
terminate when all Transfer Restricted Securities covered by such
Registration Statement have been sold; cause the Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented to
be filed pursuant to Rule 424 under the Securities Act, and to comply fully
with the applicable provisions of Rules 424 and 430A under the Securities Act
in a timely manner; and comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such Registration
Statement during the applicable period in accordance with the intended method
or methods of distribution by the sellers thereof set forth in such
Registration Statement or supplement to the Prospectus;
(iii) advise the underwriter(s), if any, and selling Holders and, if
requested by such Persons, confirm such advice in writing, (A) when the
Prospectus or any Prospectus supplement or post-effective amendment has been
filed, and, with respect to any Registration Statement or any post-effective
amendment thereto, when the same has become effective, (B) of any request by
the Commission for amendments to the Registration Statement or amendments or
supplements to the Prospectus or for additional information relating thereto,
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(C) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement under the Securities Act or of
the suspension by any state securities commission of the qualification of the
Transfer Restricted Securities for offering or sale in any jurisdiction, or
the initiation of any proceeding for any of the preceding purposes, (D) of
the existence of any fact or the happening of any event that makes any
statement of a material fact made in the Registration Statement, the
Prospectus, any amendment or supplement thereto or any document incorporated
by reference therein untrue, or that requires the making of any additions to
or changes in the Registration Statement or the Prospectus in order to make
the statements therein not misleading. If at any time the Commission shall
issue any stop order suspending the effectiveness of the Registration
Statement, or any state securities commission or other regulatory authority
shall issue an order suspending the qualification or exemption from
qualification of the Transfer Restricted Securities under state securities or
Blue Sky laws, Holdings and Anvil shall use their best efforts to obtain the
withdrawal or lifting of such order at the earliest possible time;
(iv) furnish to each Initial Purchaser, each of the selling Holders
and each of the underwriter(s), if any, before filing with the Commission,
copies of any Registration Statement or any Prospectus included therein or
any amendments or supplements to any such Registration Statement or
Prospectus (including all documents incorporated by reference after the
initial filing of such Registration Statement), which documents will be
subject to the review of such Holders and underwriter(s), if any, for a
period of at least five Business Days, and neither Holdings nor Anvil will
file any such Registration Statement or Prospectus or any amendment or
supplement to any such Registration Statement or Prospectus (including all
such documents incorporated by reference) to which a selling Holder of
Transfer Restricted Securities covered by such Registration Statement or the
underwriter(s), if any, shall object within five Business Days after the
receipt thereof. A selling Holder or underwriter, if any, shall be deemed to
have objected reasonably to such filing if such Registration Statement,
amendment, Prospectus or supplement, as applicable, as proposed to be filed,
contains a material misstatement or omission or fails to comply with the
applicable requirements of the Securities Act;
(v) promptly prior to the filing of any document that is to be
incorporated by reference into a Registration Statement or Prospectus,
provide copies of such document to the selling Holders and to the
underwriter(s), if any, make Holdings' and Anvil's representatives available
for discussion of such document and other customary due diligence matters,
and include such information in such document prior to the filing thereof as
such selling Holders or underwriter(s), if any, reasonably may request;
(vi) make available at reasonable times for inspection by the
selling Holders, any underwriter participating in any disposition pursuant to
such Registration Statement, and any attorney or accountant retained by such
selling Holders or any of the underwriter(s), all financial and other
records, pertinent corporate documents and properties of Holdings and Anvil
and cause Holdings' and Anvil's officers, directors and employees to supply
all information reasonably requested by any such Holder, underwriter,
attorney or accountant in connection with such Registration Statement
subsequent to the filing thereof and prior to its effectiveness;
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(vii) if requested by any selling Holders or the underwriter(s), if
any, promptly incorporate in any Registration Statement or Prospectus,
pursuant to a supplement or post- effective amendment if necessary, such
information as such selling Holders and underwriter(s), if any, reasonably
may request to have included therein, including, without limitation,
information relating to the "Plan of Distribution" of the Transfer Restricted
Securities, information with respect to the principal amount of Transfer
Restricted Securities being sold to any such underwriter(s), the purchase
price being paid therefor and any other terms of the Transfer Restricted
Securities to be sold in such offering; and make all required filings of such
Prospectus supplement or post-effective amendment as soon as practicable
after Holdings and Anvil are notified of the matters to be incorporated in
such Prospectus supplement or post-effective amendment;
(viii) cause the Transfer Restricted Securities covered by the
Registration Statement to be rated with the appropriate rating agencies, if
so requested by the Holders of a majority in aggregate principal amount of
Senior Notes covered thereby or the underwriter(s), if any;
(ix) furnish to each selling Holder and each of the underwriter(s),
if any, without charge, at least one copy of the Registration Statement, as
first filed with the Commission, and of each amendment thereto, including all
documents incorporated by reference therein and all exhibits (including
exhibits incorporated therein by reference);
(x) deliver to each selling Holder and each of the underwriter(s),
if any, without charge, as many copies of the Prospectus (including each
preliminary prospectus) and any amendment or supplement thereto as such
Persons reasonably may request; Holdings and Anvil hereby consent to the use
of the Prospectus and any amendment or supplement thereto by each of the
selling Holders and each of the underwriter(s), if any, in connection with
the offering and the sale of the Transfer Restricted Securities covered by
the Prospectus or any amendment or supplement thereto;
(xi) enter into such agreements (including an underwriting
agreement), and make such representations and warranties, and take all such
other actions in connection therewith in order to expedite or facilitate the
disposition of the Transfer Restricted Securities pursuant to any
Registration Statement contemplated by this Agreement, all to such extent as
may be requested by any Initial Purchaser or by any Holder of Transfer
Restricted Securities or underwriter in connection with any sale or resale
pursuant to any Registration Statement contemplated by this Agreement; and
whether or not an underwriting agreement is entered into and whether or not
the registration is an Underwritten Registration, each of Holdings and Anvil
shall:
(A) furnish to each Initial Purchaser, each selling Holder and each
underwriter, if any, in such substance and scope as they may request and
as are customarily made by issuers to underwriters in primary underwritten
offerings, upon the date of the Consummation of the Exchange Offer and, if
applicable, upon the effectiveness of the Shelf Registration Statement:
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(1) a certificate, dated the date of Consummation of the Exchange
Offer or the date of effectiveness of the Shelf Registration Statement,
as the case may be, signed by (x) the President or any Vice President
and (y) a principal financial or accounting officer of each of Holdings
and Anvil, confirming, as of the date thereof, the matters set forth in
paragraphs (a), (b), (c) and (d) and (e) of Section 7 of the Purchase
Agreement and such other matters as such parties may reasonably
request;
(2) an opinion, dated the date of Consummation of the Exchange
Offer or the date of effectiveness of the Shelf Registration Statement,
as the case may be, of counsel for Holdings and Anvil covering the
matters set forth in paragraphs (g) and (h) of Section 7 of the
Purchase Agreement and such other matters as the Holders and/or
managing underwriter(s) reasonably may request, and in any event
including a statement to the effect that such counsel has participated
in conferences with officers and other representatives of Holdings and
Anvil, representatives of the independent public accountants for
Holdings and Anvil, the Initial Purchasers' representatives and the
Initial Purchasers' counsel in connection with the preparation of such
Registration Statement and the related Prospectus and have considered
the matters required to be stated therein and the statements contained
therein, although such counsel has not independently verified the
accuracy, completeness or fairness of such statements; and that on the
basis of the foregoing (relying upon facts provided to such counsel by
officers and other representatives of Holdings and Anvil and without
independent check or verification), that no facts came to such
counsel's attention that caused such counsel to believe that the
applicable Registration Statement, at the time such Registration
Statement or any post-effective amendment thereto became effective,
and, in the case of the Exchange Offer Registration Statement, as of
the date of Consummation, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, or that the
Prospectus contained in such Registration Statement as of its date and,
in the case of the opinion dated the date of Consummation of the
Exchange Offer, as of the date of Consummation, contained an untrue
statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Without
limiting the foregoing, such counsel may state further that such
counsel assumes no responsibility for, and has not independently
verified, the accuracy, completeness or fairness of the financial
statements, notes and schedules and other financial data included in
any Registration Statement contemplated by this Agreement or the
related Prospectus; and
(3) customary comfort letters, dated as of the date of
Consummation of the Exchange Offer or the date of effectiveness of the
Shelf Registration Statement, as the case may be, from Holdings' and
Anvil's past and present independent accountants, in the customary form
and covering matters of the type customarily covered in comfort letters
to underwriters in connection with primary underwritten offerings, and
affirming the matters set forth in the comfort letters delivered
pursuant to Section 7(l) of the Purchase Agreement, without exception;
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(B) set forth in full or incorporate by reference in the underwriting
agreement, if any, the indemnification provisions and procedures of
Section 8 hereof with respect to all parties to be indemnified pursuant to
said Section; and
(C) deliver such other documents and certificates as reasonably may be
requested by such parties to evidence compliance with clause (A) above and
with any customary conditions contained in the underwriting agreement or
other agreement entered into by Holdings and Anvil pursuant to this clause
(xi), if any.
The provisions of this clause (A) shall be applicable at each closing
under such underwriting or similar agreement, as and to the extent required
thereunder and, if at any time the representations and warranties of Holdings
and Anvil contemplated in clause (A)(1) above cease to be true and correct,
Holdings and Anvil promptly shall so advise the Initial Purchasers and the
underwriter(s), if any, and each selling Holder and, if requested by such
Persons, shall confirm such advice in writing;
(xii) prior to any public offering of Transfer Restricted Securities,
cooperate with the selling Holders, the underwriter(s), if any, and their
respective counsel in connection with the registration and qualification of
the Transfer Restricted Securities under the securities or Blue Sky laws of
such jurisdictions as the selling Holders or underwriter(s) may request and
do any and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Transfer Restricted Securities
covered by the Shelf Registration Statement; provided, however, that neither
Holdings nor Anvil shall be required to register or qualify as a foreign
corporation where it is not now so qualified or to take any action that would
subject it to the service of process in suits or to taxation, other than as
to matters and transactions relating to the Registration Statement, in any
jurisdiction where it is not now so subject;
(xiii) upon the request of any Holder of Series A Senior Notes
covered by the Shelf Registration Statement, issue Series B Senior Notes,
having an aggregate principal amount equal to the aggregate principal amount
of Series A Senior Notes surrendered to Anvil by such Holder in exchange
therefor or being sold by such Holder, such Series B Senior Notes to be
registered in the name of such Holder or in the name of the purchaser(s) of
such Senior Notes, as the case may be; in return, the Series A Senior Notes
held by such Holder shall be surrendered to Anvil for cancellation;
(xiv) cooperate with the selling Holders and the underwriter(s), if
any, to facilitate the timely preparation and delivery of certificates
representing Transfer Restricted Securities to be sold and not bearing any
restrictive legends, and enable such Transfer Restricted Securities to be in
such denominations and registered in such names as the Holders or the
underwriter(s), if any, may request at least two Business Days prior to any
sale of Transfer Restricted Securities made by such underwriter(s);
(xv) use their best efforts to cause the Transfer Restricted
Securities covered by the Registration Statement to be registered with or
approved by such other governmental agencies or authorities as may be
necessary in order to enable the seller or sellers thereof
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or the underwriter(s), if any, to consummate the disposition of such Transfer
Restricted Securities, subject to the proviso contained in clause (xii)
above;
(xvi) if any fact or event contemplated by clause (c)(iii)(D) above
shall exist or have occurred, prepare a supplement or post-effective
amendment to the Registration Statement or related Prospectus or any document
incorporated therein by reference or file any other required document so
that, as thereafter delivered to the purchasers of Transfer Restricted
Securities, the Prospectus will not contain an untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein not misleading; provided, however, Holdings and Anvil shall not be
required to comply with this clause (xvi) if, and only for so long as (A)
either (l)(y) Holdings and Anvil shall be engaged in a material acquisition
or disposition and (z)(I) such acquisition or disposition is required to be
disclosed in the Registration Statement, the related Prospectus or any
amendment or supplement thereto, or the failure by Holdings and Anvil to
disclose such transaction in the Registration Statement or related
Prospectus, or any amendment or supplement thereto, as then amended or
supplemented, would cause such Registration Statement, Prospectus or
amendment or supplement thereto, to contain an untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements therein no misleading, in the light of the circumstances under
with they were made, (II) information regarding the existence of such
acquisition or disposition has not been publicly disclosed by or on behalf of
Holdings and Anvil and (III) a majority of the Board of Directors of Holdings
or Anvil determines in the exercise of its good faith judgment that
disclosure of such acquisition or disposition would not be in the best
interests of Holdings and Anvil and its subsidiaries or would have a material
adverse effect on the consummation of such acquisition or disposition or (2)
a majority of the Board of Directors of Holdings or Anvil determines in the
exercise of its good faith judgment that compliance with the disclosure
obligations set forth in this clause (xvi) would otherwise have a material
adverse effect on Holdings and Anvil and its subsidiaries, taken as whole,
and (B) Anvil notifies the Holders within two Business Days after the Board
of Directors makes the relevant determination set forth in clause (A);
provided, however, that in each such case the period specified in Section 3
and 4 hereof during which the applicable Registration Statement is required
to be kept effective and usable shall be extended by the number of days
during which such effectiveness was suspended pursuant to the foregoing;
(xvii) provide a CUSIP number for all Transfer Restricted Securities
not later than the effective date of the Registration Statement, and provide
the Trustee under the Indenture with printed certificates for the Transfer
Restricted Securities which are in a form eligible for deposit with the
Depository Trust Company;
(xviii) cooperate and assist in any filings required to be made with
the NASD and in the performance of any due diligence investigation by any
underwriter (including any "qualified independent underwriter") that is
required to be retained in accordance with the rules and regulations of the
NASD, and use their reasonable best efforts to cause such Registration
Statement to become effective and approved by such governmental agencies or
authorities as may be necessary to enable the Holders selling Transfer
Restricted Securities to Consummate the disposition of such Transfer
Restricted Securities;
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(xix) otherwise use their reasonable best efforts to comply with all
applicable rules and regulations of the Commission, and make generally
available to their security holders, as soon as practicable, a consolidated
earnings statement meeting the requirements of Rule 158 (which need not be
audited) for the twelve-month period (A) commencing at the end of any fiscal
quarter in which Transfer Restricted Securities are sold to underwriters in a
firm or best efforts Underwritten Offering or (B) if not sold to underwriters
in such an offering, beginning with the first month of Holdings' and Anvil's
first fiscal quarter commencing after the effective date of the Registration
Statement;
(xx) cause the Indenture to be qualified under the TIA not later than
the effective date of the first Registration Statement required by this
Agreement, and, in connection therewith, cooperate with the Trustee and the
Holders of Senior Notes to effect such changes to the Indenture as may be
required for such Indenture to be so qualified in accordance with the terms
of the TIA; and execute and use their best efforts to cause the Trustee to
execute, all documents that may be required to effect such changes and all
other forms and documents required to be filed with the Commission to enable
such Indenture to be so qualified in a timely manner;
(xxi) use their reasonable best efforts to cause all Transfer
Restricted Securities covered by the Registration Statement to be listed on
each securities exchange on which similar securities issued by Holdings and
Anvil are then listed if requested by the Holders of a majority of the
outstanding shares or aggregate principal amount of Series A Senior Notes, or
the underwriters, if any; and
(xxii) provide promptly to each Holder upon request each document
filed with the Commission pursuant to the requirements of Section 13 and
Section 15 of the Exchange Act.
Each Holder agrees by acquisition of a Transfer Restricted Security that,
upon receipt of any notice from Holdings and Anvil of the existence of any fact
of the kind described in Section 6(c)(iii)(D) hereof, such Holder will forthwith
discontinue disposition of Transfer Restricted Securities pursuant to the
applicable Registration Statement until such Holder's receipt of the copies of
the supplemented or amended Prospectus contemplated by Section 6(c)(xvi) hereof,
or until it is advised in writing (the "Advice") by Holdings and Anvil that the
use of the Prospectus may be resumed, and has received copies of any additional
or supplemental filings that are incorporated by reference in the Prospectus. If
so directed by Holdings and Anvil, each Holder will deliver to Anvil (at Anvil's
expense) all copies, other than permanent file copies then in such Holder's
possession, of the Prospectus covering such Transfer Restricted Securities that
was current at the time of receipt of such notice. In the event Holdings and
Anvil shall give any such notice, the time period regarding the effectiveness of
such Registration Statement set forth in Section 3 or 4 hereof, as applicable,
shall be extended by the number of days during the period from and including the
date of the giving of such notice pursuant to Section 6(c)(iii)(D) hereof to and
including the date when each selling Holder covered by such Registration
Statement shall have received the copies of the supplemented or amended
Prospectus contemplated by Section 6(c)(xvi) hereof or shall have received the
Advice.
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SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to Holdings' and Anvil's performance of or
compliance with this Agreement will be borne by Holdings and Anvil, regardless
of whether a Registration Statement becomes effective, including without
limitation: (i) all registration and filing fees and
expenses (including filings made by any Initial Purchaser or Holder with the
NASD (and, if applicable, the fees and expenses of any "qualified independent
underwriter" and its counsel that may be required by the rules and regulations
of the NASD)); (ii) all fees and expenses of compliance with federal securities
and state Blue Sky or securities laws; (iii) all expenses of printing (including
printing certificates for the Series B Senior Notes to be issued in the Exchange
Offer and printing of Prospectuses), messenger and delivery services and
telephone; (iv) all fees and disbursements of counsel for Anvil and, subject to
Section 7(b) below, the Holders of Transfer Restricted Securities; (v) all
application and filing fees in connection with listing Senior Notes on a
national securities exchange or automated quotation system pursuant to the
requirements hereof; and (vi) all fees and disbursements of independent
certified public accountants of Holdings and Anvil (including the expenses of
any special audit and comfort letters required by or incident to such
performance).
Each of Holdings and Anvil will, in any event, bear its internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expenses of any annual
audit and the fees and expenses of any Person, including special experts,
retained by Holdings or Anvil.
(b) Holdings and Anvil, jointly and severally, will reimburse the Initial
Purchasers and the Holders for the reasonable fees and disbursements of Simpson
Thacher & Bartlett, acting for the Initial Purchasers or Holders in connection
with the offer and sale of the Senior Notes pursuant to each Registration
Statement.
SECTION 8. INDEMNIFICATION
(a) Holdings and Anvil, jointly and severally, agree to indemnify and hold
harmless (i) each Holder and (ii) each person, if any, who controls (within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act)
any Holder (any of the persons referred to in this clause (ii) being hereinafter
referred to as a "controlling person") and (iii) the respective officers,
directors, partners, employees, representatives and agents of each Holder and
each controlling person (any person referred to in clause (i), (ii) or (iii) may
hereinafter be referred to as an "Indemnified Holder") to the fullest extent
lawful, from and against any and all losses, claims, damages, judgments, actions
and other liabilities (collectively, "Liabilities"), and will reimburse each
Indemnified Holder for all fees and expenses (including, without limitation, the
reasonable fees and expenses of counsel to any Indemnified Holder)
(collectively, "Expenses") as they are incurred in investigating, preparing,
pursuing or defending any claim or action, or any proceeding or investigation by
any governmental agency or body, whether or not in connection with pending or
threatened litigation and whether or not any Indemnified Holder is a party
(collectively, "Actions"), directly or indirectly caused by, related to, based
upon, arising out of or in connection with any untrue statement or alleged
untrue statement of a material fact contained in any Registration Statement,
preliminary Prospectus or Prospectus (including any
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amendments thereof and supplements thereto), or 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 the light of the circumstances
under which they were made, not misleading, except insofar as such Liabilities
or Expenses are caused by an untrue statement or omission or alleged untrue
statement or omission (i) that is made in reliance upon and in conformity with
information relating to an Indemnified Holder furnished in writing to Holdings
or Anvil by such Indemnified Holder expressly for use therein or (ii) that is
made in any preliminary Prospectus if a copy of the final Prospectus (as then
amended or supplemented) was not sent or given by or on behalf of the Holder to
the person asserting any such loss, claim, damage, liability or expense, if
required by law so to have been delivered, at or prior to the written
confirmation of the sale of the Senior Notes and the final prospectus (as then
amended or supplemented) would have corrected such untrue statement or omission.
Holdings and Anvil, jointly and severally, also agree to reimburse each
Indemnified Holder for all Expenses as incurred in connection with enforcing
such Indemnified Holder's rights under this Agreement (including, without
limitation, its rights under this Section 8); provided, that if either Anvil or
Holdings reimburses a Holder hereunder for any Expenses, such Holder hereby
agrees to refund such reimbursement of Expenses to the extent that the Holder is
not entitled to be indemnified hereunder. Holdings or Anvil shall notify each
Indemnified Holder promptly of the institution, threat or assertion of any
Action in connection with the matters addressed by this Agreement which involves
Holdings or Anvil or an Indemnified Holder.
Upon receipt by an Indemnified Holder of notice of an Action against such
Indemnified Holder with respect to which indemnity may be sought under this
Section 8, such Indemnified Holder shall promptly notify Holdings and Anvil in
writing; provided that the failure to so notify Anvil shall not relieve Holdings
and Anvil from any liability which Anvil may have on account of this indemnity
or otherwise, except to the extent Holdings and Anvil shall have been materially
prejudiced by such failure. Holdings and Anvil shall, if requested by such
Indemnified Holder, assume the defense of any such Action, including the
employment of counsel reasonably satisfactory to such Indemnified Holder. Any
Indemnified Holder shall have the right to employ separate counsel in any such
action and participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Holder, unless: (i) Holdings
and Anvil have failed promptly to assume the defense and employ counsel
reasonably satisfactory to such Indemnified Holder, (ii) the indemnifying party
has authorized the employment of counsel for such Indemnified Holder at the
expense of the indemnifying party or (iii) the named parties to any such Action
(including any impleaded parties) include such Indemnified Holder and Holdings
and Anvil, and such Indemnified Holder shall have been advised by counsel that
there may be one or more legal defenses available to it which are different from
or in addition to those available to Holdings and Anvil; provided that Holdings
and Anvil shall not in such event be responsible hereunder for the fees and
expenses of more than one firm of separate counsel in connection with any Action
in the same jurisdiction, in addition to any local counsel. Holdings and Anvil
shall not be liable for any settlement of any Action effected without its
written consent (which shall not be unreasonably withheld) and Holdings and
Anvil agree to indemnify and hold harmless any Indemnified Holder from and
against any Liability or Expense by reason of any settlement of any Action
effected with the written consent of Holdings and Anvil. Notwithstanding the
immediately preceding sentence, if at any time an Indemnified Holder shall have
requested Holdings and Anvil to reimburse the
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Indemnified Holder for fees and expenses of counsel as contemplated by the third
sentence of this paragraph, each of Holdings and Anvil agree 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 sixty (60) Business Days after
receipt by Holdings and Anvil of the aforesaid request and (ii) Holdings and
Anvil shall not have reimbursed the Indemnified Holder in accordance with such
request prior to the date of such settlement. In addition, Holdings and Anvil
will not, without the prior written consent of each Indemnified Holder, settle
any pending or threatened Action in respect of which indemnification or
contribution may be sought hereunder (whether or not any Indemnified Holder is a
party thereto), unless such settlement includes an unconditional release of such
Indemnified Holder from all Liabilities on claims that are the subject matter of
such proceeding.
(b) Each Holder of Transfer Restricted Securities agrees, severally and
not jointly, to indemnify and hold harmless Holdings and Anvil, and its
directors, officers, and any person controlling (within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act) Holdings and Anvil,
and the respective officers, directors, partners, employees, representatives and
agents of each such person, to the same extent as the foregoing indemnity from
Holdings and Anvil to each of the Indemnified Holders, but only with respect to
Liabilities and Expenses incurred in investigating, preparing, pursuing or
defending Actions directly or indirectly caused by, related to, based upon,
arising out of or in connection with any untrue statement or omission or alleged
untrue statement of a material fact contained in any Registration Statement,
preliminary Prospectus or Prospectus (including any amendments thereof and
supplements thereto) that was made in reliance upon and in conformity with
information relating to such Holder furnished in writing by or on behalf of such
Holder expressly for use in any Registration Statement or Prospectus or any
amendment or supplement thereto. In case any Action shall be brought against
Holdings and Anvil or their directors or officers or any such controlling person
in respect of which indemnity may be sought against a Holder of Transfer
Restricted Securities, such Holder shall have the rights and duties given
Holdings and Anvil and Holdings and Anvil or its directors or officers or such
controlling person shall have the rights and duties given to each Holder by the
preceding paragraph. In no event shall the liability of any selling Holder
hereunder be greater than the amount by which the total proceeds received by
such Holder upon the sale of the Registrable Securities giving rise to such
indemnification obligation exceeds the sum of (A) the amount paid by such Holder
for such Registrable Securities plus (B) the amount of any damages which such
Holder has otherwise been required to pay by reason of a claim or action based
on such information.
(c) If the indemnification provided for in this Section 8 is unavailable
to an indemnified party under Section 8(a) or Section 8(b) hereof (other than by
reason of exceptions provided in those Sections) in respect of any Liabilities
or Expenses referred to therein, then each applicable indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such Liabilities or Expenses
(i) in such proportion as is appropriate to reflect the relative benefits
received by Anvil on the one hand and the Holders on the other hand from their
sale of Transfer Restricted Securities or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of Holdings and Anvil and of the Indemnified
Holder, as well as any
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other relevant equitable considerations. The relative benefits received by
Holdings and Anvil and any Indemnified Holder shall be deemed to be in the same
proportion as (x) the total proceeds from the offering of Senior Notes to the
Initial Purchasers (net of discounts but before deducting expenses) received by
Holdings and Anvil and (y) the total proceeds received by such Indemnified
Holder upon its sale of Transfer Restricted Services which otherwise would give
rise to the indemnification obligation, respectively. The relative fault of
Holdings and Anvil on the one hand and of the Indemnified Holder 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 Holdings and Anvil
or by the Indemnified Holder and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.
Holdings and Anvil and each Holder of Transfer Restricted Securities agree
that it would not be just and equitable if contribution pursuant to this Section
8(c) were determined by pro rata allocation (even if the Holders were treated as
one entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an indemnified party as a
result of the Liabilities and Expenses referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth in
the second paragraph of Section 8(a), any legal or other fees or expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any Action. Notwithstanding any other provision of this Section 8,
none of the Holders (and its related Indemnified Holders) shall be required to
contribute, in the aggregate, an amount in excess of the amount by which the
total proceeds received by such Holder with respect to the sale of its Series A
Senior Notes giving rise to such Liabilities or Expenses exceeds the sum of (A)
the amount paid by such Holder for such Series A Senior Notes plus (B) the
amount of any damages which such Holder 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 Holders'
obligations to contribute pursuant to this Section 8(c) are several in
proportion to the principal amount of Series A Senior Notes held by each of the
Holders hereunder and not joint.
SECTION 9. RULE 144A
Holdings and Anvil hereby agree with each Holder, for so long as any
Transfer Restricted Securities remain outstanding, to make available to any
Holder or beneficial owner of Transfer Restricted Securities in connection with
any sale thereof and any prospective purchaser of such Transfer Restricted
Securities from such Holder or beneficial owner, the information required by
Rule 144A(d)(4) under the Securities Act in order to effect resales of such
Transfer Restricted Securities pursuant to Rule 144A.
SECTION 10. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
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No Holder may participate in any Underwritten Registration hereunder
unless such Holder (a) agrees to sell such Holder's Transfer Restricted
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 reasonable questionnaires, powers of attorney, indemnities,
underwriting agreements, lock-up letters and other documents required under the
terms of such underwriting arrangements.
SECTION 11. SELECTION OF UNDERWRITERS
The Holders of Transfer Restricted Securities covered by the Shelf
Registration Statement who desire to do so may sell such Transfer Restricted
Securities in an Underwritten Offering. In any such Underwritten Offering, the
investment banker or investment bankers and manager or managers that will
administer the offering will be selected by the Holders of a majority in
aggregate principal amount of the Transfer Restricted Securities included in
such offering; provided that such investment bankers and managers must be
reasonably satisfactory to Holdings and Anvil.
SECTION 12. OBLIGATIONS OF SUBSIDIARY GUARANTORS
Cottontops shall have the same obligations hereunder as are set forth as
applicable to Holdings. Without limiting the generality of the foregoing, the
obligations of Holdings with respect to the registration of the Holdings
Guarantee shall apply with equal force to the registration by Cottontops of its
guarantee of the obligations of Anvil under the Senior Notes. Anvil and Holdings
agree to cause any other subsidiary which becomes a Subsidiary Guarantor (as
defined in the Indenture) pursuant to the Indenture prior to the completion of
the Exchange Offer to comply with the terms of this Agreement on the same basis
as Cottontops.
SECTION 13. MISCELLANEOUS
(a) Remedies. Each Holder, in addition to being entitled to exercise all
rights provided herein, in the Indenture, the Purchase Agreement or granted by
law, including recovery of liquidated or other damages, will be entitled to
specific performance of its rights under this Agreement. Holdings and Anvil
agree that a breach of any of the provisions of this Agreement will cause
irreparable injury to the Holders, that the Holders have no adequate remedy by
law in respect of such breach and, as a consequence, that each and every
provision contained in this Agreement shall be specifically enforceable against
Holdings and Anvil, and Holdings and Anvil hereby waive and agree not to assert
as a defense to the request or granting of specific performance of any such
provision that any breach of any such provision does not or would not cause
irreparable harm or is or would be compensable by an award of money damages in
respect of such breach.
(b) No Inconsistent Agreements. Holdings and Anvil will not enter, on or
after the date of this Agreement, into any agreement with respect to its
securities that would be inconsistent with the rights granted to the Holders in
this Agreement or otherwise would conflict with the provisions hereof. Holdings
and Anvil previously have not entered into any agreement granting any
registration rights with respect to its securities to any Person. The rights
granted to the
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Holders hereunder do not in any way conflict with and are not inconsistent in
any way with the rights granted to the holders of Holdings' and Anvil's
securities under any agreement in effect on the date hereof.
(c) Adjustments Affecting the Senior Notes. Holdings and Anvil will not
take any action, or permit any change to occur, with respect to the Senior Notes
that would materially and adversely affect the ability of the Holders to
Consummate any Exchange Offer.
(d) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given unless Holdings and Anvil have obtained
the written consent of Holders of a majority of the outstanding principal amount
of Transfer Restricted Securities. Notwithstanding the foregoing, the Holders of
a majority of the outstanding principal amount of Transfer Restricted Securities
being tendered or registered may give a waiver or consent to departure from the
provisions hereof, which waiver or consent relates exclusively to the rights of
Holders whose securities are being tendered pursuant to the Exchange Offer and
does not directly or indirectly affect the rights of other Holders whose
securities are not being tendered pursuant to such Exchange Offer.
(e) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, then at the address set forth on the records of
the Registrar under the Indenture, with a copy to the Registrar under the
Indenture; and
(ii) if to Anvil, Holdings or Cottontops, then:
Anvil Knitwear, Inc.
228 East 45th Street
New York, New York 10017
Telecopier No.: (212) 885-9411
Attention: Jacob Hollander
With a copy to:
Kirkland & Ellis
Citicorp Center
153 East 53rd Street
New York, New York 10022
Telecopier No.: (312) 861-2200
Attention: Lance C. Balk, Esq.
and with copies to:
399 Venture Partners, Inc.
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399 Park Avenue, 14th Floor
New York, New York 10043
Telecopier No.: (212) 888-2940
AttentionDavid F. Thomas
and
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Bruckmann, Rosser, Sherrill & Co., Inc.
126 East 56th Street, 29th Floor
New York, New York 10022
Telecopier No.: (212) 521-3799
AttentionStephen F. Edwards
All such notices and communications shall be deemed to have been duly
given as follows: (A) at the time delivered by hand, if personally delivered;
(B) five Business Days after being deposited in the mail, postage prepaid, if
mailed; (C) when answered back, if telexed; (D) when receipt acknowledged, if
telecopied; and (E) on the next Business Day, if timely delivered to an air
courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be
delivered concurrently to the Trustee, at the address specified in the
Indenture, by the Person giving the same.
(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 Transfer Restricted Securities; 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 acquired
Transfer Restricted Securities from such Holder.
(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,
WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF.
(j) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(k) Entire Agreement. This Agreement together with the other Operative
Documents (as defined in the Purchase Agreement) is intended by the parties as a
final expression of their agreement and 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. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted by Anvil with respect to the
Transfer Restricted Securities. This Agreement supersedes all prior agreements
and understandings between the parties with respect to such subject matter.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
ANVIL KNITWEAR, INC.
By:
----------------------------------
Name:
Title
ANVIL HOLDINGS, INC.
By:
----------------------------------
Name:
Title
COTTONTOPS,INC.
By:
----------------------------------
Name:
Title
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Accepted and agreed to as of
the date first above written:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By:
----------------------------------
Name:
Title
WASSERSTEIN PERELLA
SECURITIES, INC.
By:
----------------------------------
Name:
Title
NATIONSBANC CAPITAL
NARKETS, INC.
By:
----------------------------------
Name:
Title
<PAGE>
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this "Agreement"), made as of January 31, 1995, by
and between Anvil Knitwear, Inc., a New York corporation (the "Company"), and
Bernard Geller, a resident of New York (the "Executive").
W I T N E S S E T H:
WHEREAS, Executive is currently serving McGregor Corporation ("McGregor")
in the position of Chairman of the Anvil Knitwear division of McGregor and Vice
President of McGregor; and
WHEREAS, the Company desires to retain Executive to serve it in the same
capacity or a similar capacity without a significant reduction in status and
responsibilities, and to perform services on its behalf in said position;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises and covenants herein contained, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. EMPLOYMENT
The Company agrees to employ Executive and Executive agrees to serve the
Company on the terms and conditions set forth herein.
2. TERM
This Agreement shall be for an initial period of four (4) years (the
"Initial Term"); provided, the term of this Agreement shall be extended for one
year unless prior to the third anniversary of the date hereof, the Company or
Executive notifies the other that the Agreement will be terminated at the end of
the Initial Term. Successive one-year extensions occur thereafter in the same
manner unless notice of termination is given by the Company or Executive at
least one year prior to the end of the then effective Term. As used herein,
"Term" means the Initial Term and any extensions thereof as provided for in this
Section 2.
3. POSITION AND DUTIES
(a) Executive shall serve as Chief Executive Officer of the Company and
shall perform such duties and exercise such supervision and powers over and with
regard to the business of the Company customarily associated with the position
of Chief Executive Officer, as well as such duties and services prescribed
herein and as may be prescribed from time to time by the Board of Directors
<PAGE>
of the Company (the "Board"). Executive shall perform such duties to the best of
his ability and in a diligent and proper manner.
(b) Except during vacations and periods of illness, Executive shall,
during the term of this Agreement, devote all his business time and attention to
the performance of services for the Company. Executive shall cooperate
reasonably in any sale of the Company, IPO or similar transaction.
(c) In the event that the Company fails to extend Executive's term of
employment pursuant to Section 2 above, or the Company is sold in a Strategic
Sale (as defined in subsection 5(d) hereof), Executive may spend a reasonable
part of his time during the final year of the Term hereof seeking other
employment.
4. COMPENSATION AND RELATED MATTERS
(a) Salary. During the period of Executive's employment hereunder, the
Company shall pay to Executive a salary at a rate of not less than $330,000 per
annum payable in accordance with normal payroll practices of the Company but not
less frequently than monthly. The Executive's salary may be increased from time
to time and, if so increased, shall not thereafter be decreased during the Term
of this Agreement. As used herein, "Base Salary" means the Executive's initial
salary hereunder as the same is increased from time to time. The salary payments
hereunder shall not in any way limit or reduce any other obligation of the
Company hereunder, and no other compensation, benefit or payment hereunder shall
in any way limit or reduce the obligation of the Company to pay Executive's Base
Salary hereunder.
(b) Welfare and Retirement Benefits. From and after the date of this
Agreement, Executive shall be entitled to participate in all of the Company's
employee pension plans, welfare benefit plans, tax-deferred savings plans, or
other welfare or retirement benefits or arrangements (including any insurance or
trust arrangements maintained generally for the benefit of the Company's
directors and officers) and in which the executive officers of the Company are
entitled generally to participate (collectively, the "Company Benefit Plans") on
the same basis as other executive employees. For purposes of determining
Executive's "years of service" credit under any of the Company Benefit Plans,
Executive shall be given full credit for years of service with McGregor and its
subsidiaries.
(c) Bonus/Incentive Compensation. Executive shall be entitled to such
additional compensation as may be awarded by the Company in the sole discretion
of the CEO and the Board in the form of bonus or other incentive compensation,
and to participate in the bonus plan described in the letter from D. J. Manella
dated April 9, 1990. Executive shall be entitled to participate in any stock
option plan adopted by Anvil Holdings, Inc. ("Holdings") for management
employees of Holdings and its subsidiaries in accordance with the term sheet
attached hereto as Exhibit A.
(d) Vacations. Executive shall be entitled to the number of paid vacation
days in each calendar year determined in accordance with the Company's vacation
policies.
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(e) Expenses. During the term of Executive's employment hereunder,
Executive shall be entitled to receive prompt reimbursement from the Company of
all reasonable business-related expenses incurred by Executive in performing
services hereunder, including all expenses of travel and living expenses while
away from home on business or at the request of, and in the service of, the
Company, provided that such expenses are incurred and accounted for in
accordance with the policies and procedures established by the Company from time
to time.
(f) Certain Benefits. The Company shall furnish Executive with office
space, secretarial assistance and such other facilities and services as shall be
suitable to Executive's position and adequate for the performance of his duties
as set forth in Section 3 hereof and with the use of a company provided
automobile.
5. TERMINATION
Executive's employment hereunder may be terminated under the following
circumstances:
(a) Death. Executive's employment hereunder shall terminate upon his
death.
(b) Disability. If Executive is unable to timely and regularly perform its
duties hereunder due to physical or mental illness, injury or incapacity, as
determined by the Board in good faith, based on medical evidence acceptable to
it (a "Disability") and such Disability continues for a period of nine
consecutive months, then, notwithstanding the provisions of Section 2, the
Company may terminate Executive's employment hereunder. A return to work for
less than thirty consecutive days during any period of Disability shall not be
deemed to interrupt the running of (and shall be included in) the aforementioned
nine-month period.
(c) Cause. The Company may terminate Executive's employment hereunder at
any time for Cause. For purposes of this Agreement, the Company shall have
"Cause" to terminate Executive's employment hereunder upon (i) a material breach
of this Agreement by Executive which breach is not cured within 30 days of
receipt of written notice from the Board, (ii) Executive's willful and repeated
failure to comply with the lawful directives of the Board or his superior
officer(s) consistent with the terms of this Agreement, (iii) gross negligence
or willful misconduct in the performance of Executive's duties under this
Agreement resulting in material injury to Holdings, the Company or their
subsidiaries, (iv) fraud committed by Executive with respect to Holdings, the
Company or their subsidiaries, or (v) indictment for (A) a felony or (B) a crime
involving moral turpitude conviction of which would materially injure
relationships with customers, suppliers or employees or otherwise cause material
injury to Holdings, the Company or their subsidiaries. Executive shall not be
deemed to have been terminated for Cause unless the Company shall have given or
delivered to Executive (1) reasonable notice setting forth, in reasonable detail
the facts and circumstances, if any, claimed to provide a basis for termination
for Cause, (2) a reasonable opportunity for Executive, together with his
counsel, to be heard before the Board, and (3) after being given a reasonable
opportunity to be heard, a Notice of Termination stating that, in
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<PAGE>
the good faith opinion of not less than a majority of the entire membership of
the Board, "Cause" exists to terminate Executive under this Agreement.
For purposes of determining whether Executive was given "reasonable
notice" and "reasonable opportunity to be heard" in connection with any
determination by the Board as to whether Cause exists, 15 business days notice
of the Board meeting shall be deemed to constitute "reasonable notice" (without
prejudice to the determination of whether some other period would also
constitute "reasonable notice") and the opportunity for Executive and his
counsel to present arguments to the Board at such meeting as to why Executive
believes that no Cause exists shall constitute "reasonable opportunity to be
heard" (without prejudice to the determination of whether some other forum or
method would also constitute a "reasonable opportunity to be heard").
In the event that Executive is terminated under clause (v) above but is
not ultimately convicted of the crime for which he was indicted, Executive shall
be eligible to be reinstated in the position he held on the date of his
termination. If Executive is so reinstated, this contract shall become effective
with a term equal to the term remaining on the date of termination.
Notwithstanding the foregoing, the Company at the option of its Chief Executive
Officer may determine that reinstatement is not in the best interests of the
Company, in which event the Executive shall not be reinstated.
(d) Termination by Executive for Good Reason. Executive may voluntarily
terminate his employment hereunder at any time for Good Reason. For purposes of
this Agreement, "Good Reason" shall mean (i) a material breach of this Agreement
which has not been cured within thirty (30) days after the Board's receipt of
written notice of such non-compliance from the Executive; (ii) the assignment to
Executive by the Company of duties inconsistent with Executive's position,
duties or responsibilities as in effect immediately after the date of execution
of this Agreement including, but not limited to, any material reduction in such
position, duties or responsibilities, or a change in Executive's titles or
offices, as then in effect, or any removal of Executive from, or any failure to
reelect Executive to, any of such positions, except in connection with the
termination of his employment pursuant to subsections 5(a), 5(b) or 5(c); (iii)
upon the relocation by the Company of its executive offices to a location
outside a thirty (30) mile radius around its current location or (iv) upon a
sale of the Company to a corporation or other legal entity that is, or is part
of a group of such entities, engaged in operating a material business in
competition with, or similar or related to the business of the Company at the
time of such sale (a "Strategic Sale"). Notwithstanding the foregoing, Executive
shall be entitled to elect to terminate his employment for "Good Reason" only if
Executive gives the Company a Notice of Termination notifying the Company of his
election to terminate employment for "Good Reason," (A) in the case of
termination pursuant to subsection 5(d)(i), 5(d)(ii) or 5(d)(iii), within 90
days after the occurrence of the event which Executive asserts as the basis for
Executive's right to terminate his employment for "Good Reason," and (B) in the
case of termination pursuant to subsection 5(d)(iv), within twelve months after
the occurrence of the Strategic Sale (and at least 30 days prior to the
termination date).
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<PAGE>
(e) Retirement. Executive may retire from his employment at any time after
four years after the date hereof upon giving thirty days prior written notice to
the Company.
(f) Termination by Company Without Cause. The Company may at any time
terminate the Executive for any reason and, except for the amounts payable
pursuant to subsection 6(a) hereof, Executive shall have no claim against the
Company under this Agreement or otherwise by reason of such termination.
Termination of Executive's employment pursuant to this subsection 5(f) shall be
deemed to be exclusive of termination under any other subsection of this Section
5 and of termination of Executive's employment upon expiration of the Term of
this Agreement.
(g) Resignation following Non-Extension. If the Company gives Executive
timely notice of its election not to extend the Term of this Agreement pursuant
to Section 2 (and Executive has not given the Company notice of his election not
to extend the Term of this Agreement pursuant to Section 2), then at any time
during the last nine months of the Term of this Agreement, Executive may resign
his employment with the Company.
(h) Notice of Termination. Any termination of Executive's employment by
the Company or by Executive (other than termination pursuant to subsection 5(a)
hereof) shall be communicated by written Notice of Termination to the other
party hereto. For purposes of this Agreement, a "Notice of Termination" shall
mean a notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances, if any, claimed to provide a basis for termination of Executive's
employment under the provision so indicated.
6. COMPENSATION UPON TERMINATION
(a) (i) If Executive's employment is terminated by the Company pursuant to
subsection 5(f), or if Executive shall terminate his employment pursuant to
subsection 5(d)(i), 5(d)(ii) or 5(d)(iii), then the Company shall pay to
Executive, within 30 days of such termination (or, if there is a dispute
regarding such termination, within 30 days of the date such dispute is resolved)
the following amounts, and in lieu of any further salary and bonus or other
incentive compensation payments to Executive for periods subsequent to the date
of termination, an amount (the "Severance Payment") equal to the aggregate
salary payments (based on the Base Salary in effect on the termination date)
that would have been paid to Executive from the date of termination to the end
of the Term then in effect, plus the bonus that would have been payable to
Executive for the bonus year in which such termination occurs (which shall not
be discounted to take into account present value), and the Executive shall be
entitled to continue to participate in all Company Benefit Plans on the same
basis as the Company's executive employees through the end of the fiscal year in
which such termination occurs; provided, that if (A) (i) the period from the
date of Executive's termination for reasons described in this Section 6(a)(i) to
the end of the Term then in effect (the "Severance Period") is less than two
years or (ii) the Company gives notice under Section 2 that the term will not be
beyond the last year of the term then in effect (the last day of such term is
referred to as the "Nonrenewal Date") and (B) Executive is not engaged in
regular employment (whether as an
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employee or as a self-employed person) at the end of the Severance Period or at
the Nonrenewal Date, then at the end of the Severance Period, or on the
Nonrenewal Date as the case may be the Company shall begin making additional
monthly severance payments ("Supplemental Severance Payments") to Executive
(based on Executive's Base Salary at the time of termination, payable in
arrears, pro rated for the months in which such payments begin and end and
otherwise calculated and paid in accordance with the Company's payroll practices
for its executive employees) until the earlier of (1) if clause (A)(i) of this
proviso applies, the second anniversary of the date of such Executive's
termination, or if clause (A)(ii) of this proviso applies, the first anniversary
of the Nonrenewal Date and (2) the date that the Executive finds regular
employment, whether as an employee or as a self-employed person, provided that
the Company may at any time, in the discretion of the Company's chief executive
officer, elect not to pay, or elect to discontinue payment of any, Supplemental
Severance Payments, if at the time of such election, Bernard Geller is the Chief
Executive Officer of the Company. If Bernard Geller is not then Chief Executive
Officer, such election shall be made by Prakash A. Melwani so long as Vestar
Equity Partners, L.P., together with its general partner and their respective
affiliates, own, or have the power to vote or direct the voting of, shares of
the capital stock of the Company sufficient to elect a majority of the Company's
Board of Directors. The provision in clause (A)(ii) of the foregoing proviso
relating to continuing payments after the Nonrenewal Date on account of the
Company's failure to extend the Term shall not be applicable if Executive's
employment is terminated prior to the Nonrenewal Date.
(ii) If Executive's employment terminates for any reason other than
pursuant to subparagraph 5(f), 5(d)(i), 5(d)(ii) or 5(d)(iii), Executive shall
receive compensation and benefits through the end of the calendar month in which
termination occurs (or, if earlier, the end of the Term then in effect) and
shall thereafter receive no other compensation or, except as required by law,
any benefits of any kind whatsoever; it being understood that no bonus shall be
payable for the year in which such termination occurs.
(iii) Any sums due pursuant to the provisions of this subsection
6(a) shall be reduced by any sums payable to Executive pursuant to any severance
or termination pay program maintained by the Company.
(b) Executive shall not be required to mitigate the amount of any payment
provided for in this Section 6 by seeking other employment or otherwise.
(c) Section 6 of the employment contract of Executive with Faberge,
Incorporated, dated February 1, 1989, as amended through the date hereof, is
incorporated herein by this reference, as are all the defined terms in said
contract to the extent that they relate to Section 6 thereof. Said provision
shall apply notwithstanding anything to the contrary in this agreement.
7. ARBITRATION; LEGAL FEES; REIMBURSEMENT OF CERTAIN EXPENSES
(a) To the extent that the parties are unable to resolve any disputes
arising under this Agreement, then either party may submit the dispute to
binding arbitration in New York City in
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accordance with the rules of the American Arbitration Association then in effect
(and the Company will pay all filing fees for commencing such arbitration). The
arbitrator's decision shall be made in accordance with such rules, shall be
delivered in writing to the parties and shall be conclusive and binding upon the
parties. Nothing in this Section 7(a) shall obligate the Company or entitle
Executive to submit any claim arising under Section 10 or 11 of this Agreement
to arbitration or otherwise limit the Company's rights under subsection 11(d).
(b) The Company shall promptly reimburse Executive for the first $100,000
of reasonable legal fees and reasonable expenses incurred by Executive in
connection with obtaining or enforcing in good faith any right or benefit
provided to Executive by the Company pursuant to or in accordance with this
Agreement and for 50% of all such amounts incurred by Executive in excess of
$100,000. In addition, the Company hereby agrees that the amount of any such
legal fees and expenses reimbursed to Executive in connection with obtaining or
enforcing any right or benefit provided to Executive by the Company pursuant to
or in accordance with this Agreement will not be taken into account by the
Company in determining the aggregate compensation paid or payable to Executive
under this Agreement.
8. INDEMNIFICATION
The Company shall indemnify Executive (and his legal representatives or
other successors), unless expressly prohibited by applicable law, against all
losses, claims, damages, liabilities, costs, charges and expenses whatsoever
(including but not limited to all legal fees payable to attorneys reasonably
acceptable to the Company and designated by Executive and any other expenses and
other disbursements incurred in connection with investigating, preparing to
defend or defending any action, suit or proceeding, including any inquiry or
investigation, commenced or threatened, or in preparing to defend any claim or
threatened claim) incurred or sustained by him or his legal representatives in
connection with any action, suit or proceeding to which he (or his legal
representatives or other successors) may be made a party by reason of his being
or having been a director, officer or employee of the Company including payment
of expenses in advance of the final disposition of the proceeding. The Company
further agrees, upon demand by Executive, promptly to reimburse Executive for,
or pay, any loss, claim, damage, liability or expense, unless expressly
prohibited by applicable law, to which the Company has agreed to indemnify
Executive pursuant to Sections 7 and 8 hereof. If any action, suit or proceeding
is brought or threatened against Executive in respect of which indemnity may be
sought against the Company pursuant to the foregoing, Executive shall notify the
Company promptly in writing as soon as practicable of the threat or the
institution of such action, suit or proceeding. Within 30 days of such notice,
the Company shall inform Executive in writing whether it elects to control and
direct the proceedings relating to such action or claim. If it so elects, the
Company shall have the right to direct, control and supervise Executive's
defense of such action, suit or proceeding with counsel of the Company's
choosing. Executive may designate separate counsel, at his own expense, and
shall be entitled to participate in all aspects of the defense of such action,
suit or proceeding. If the Company fails to elect to control the proceeding,
Executive shall direct and control the proceeding at Company's expense and the
Company shall have the right to participate in all aspects of such defense.
Neither
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Executive nor the Company shall settle or compromise any such action, suit or
proceeding without the written consent of the other party hereto, which consent
may not be unreasonably withheld; notwithstanding the foregoing, the consent of
Executive shall not be required if such settlement or compromise solely involves
the payment of money or property by the Company or otherwise has no adverse
effect on Executive.
9. TAXES
The Company shall deduct from all amounts payable under this Agreement all
federal, state, local and other taxes required by law to be withheld with
respect to such payments.
10. CONFIDENTIALITY
Executive acknowledges that the information, observations and data
obtained by him while employed by the Company (including those obtained while
employed by McGregor prior to the date of this Agreement and the acquisition of
Anvil Knitwear division by the Company) concerning the business or affairs of
the Company, Holdings, and their subsidiaries ("Confidential Information") are
the property of the Company, Holdings or such subsidiary. Therefore, Executive
agrees that he shall not disclose to any unauthorized person or use for his own
account any Confidential Information without the prior written consent of the
Board, unless and to the extent that the aforementioned matters become generally
known to and available for use by the public other than as a result of
Executive's acts or omissions to act. Executive shall deliver to the Company at
the termination of employment, or at any other time the Company may request, all
memoranda, notes, plans, records, reports, computer tapes and software and other
documents and data (and copies thereof) relating to the Confidential
Information, work product or the business of the Company, Holdings or any of
their subsidiaries which he may then possess or have under his control.
11. NON-COMPETE, NON-SOLICITATION
(a) Executive agrees that during the Noncompete Period (as defined below),
he shall not directly or indirectly own, manage, control, participate in,
consult with, render services for, or in any manner engage in any business that
competes anywhere in the United States, Canada or anywhere else in the world
with the businesses of Holdings, the Company or their subsidiaries as businesses
exist or are in process on the date of the termination of Executive's
employment. Nothing herein shall prohibit Executive from owning not more than 5%
of the outstanding stock of any class of a corporation which is publicly traded,
so long as Executive has no active participation in the business of such
corporation. For purposes of this Agreement, the term "Noncompete Period" means
the period beginning on the date of this Agreement and ending on the fourth
anniversary of the date of this Agreement; provided, that if and when the Term
of this Agreement is extended beyond the Initial Term pursuant to Section 2
hereof, or if payments are being made pursuant to the last proviso in Section
6(a)(i) the Noncompete Period shall be extended to the end of the Term as so
extended or through the date such payments are actually made, as the case may
be; and, provided, further, that if Executive's employment is terminated by the
Company pursuant to subsection 5(f) or by Executive
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pursuant to subsection 5(d) or subsection 5(g), the Noncompete Period shall
terminate upon termination of Executive's employment with the Company.
(b) During his employment with the Company (or such longer period as
Executive is receiving payments under Section 6(a)(i) and for the "Applicable
Period" thereafter, Executive shall not directly or indirectly through another
entity (i) induce or attempt to induce any employee of Holdings, the Company or
their subsidiaries to leave the employ of Holdings, the Company or such
subsidiary, or in any way interfere with the relationship between Holdings, the
Company or their subsidiaries and any employee thereof, (ii) hire any person who
was an employee of Holdings, the Company or their subsidiaries at any time
during Executive's employment with the Company, or (iii) induce or attempt to
induce any customer, supplier, licensee or other business relation of Holdings,
the Company or their subsidiaries to cease doing business with Holdings, the
Company or their subsidiaries, or in any way interfere with the relationship
between any such customer, supplier, licensee or business relation and Holdings,
the Company or their subsidiaries. The Applicable Period for purposes of clause
(i) and (iii) shall be two years and for clause (ii) shall be one year.
(c) If, at the time of enforcement of this Section 11, a court or
arbitrator shall hold that the duration, scope or area restrictions stated
herein are unreasonable under circumstances then existing, the parties agree
that the maximum duration, scope or area reasonable under such circumstances
shall be substituted for the stated duration, scope or area and that the court
or arbitrator shall be allowed to revise the restrictions contained herein to
cover the maximum period, scope and area permitted by law.
(d) In the event of the breach or a threatened breach by Executive, of any
of the provisions of Section 10 or this Section 11, the Company, in addition and
supplementary to other rights and remedies existing in its favor, may apply to
any court of law or equity of competent jurisdiction for specific performance or
injunctive or other relief in order to enforce or prevent any violations of the
provisions hereof (without posting a bond or other security).
12. SUCCESSORS; BINDING AGREEMENT
(a) This Agreement shall be binding upon and inure to the benefit of the
Company and any successor of the Company, including, any corporation acquiring
directly or indirectly all or substantially all of the stock, business or assets
of Holdings or the Company, whether by merger, restructuring, reorganization,
consolidation, sale or otherwise (and such successor shall thereafter be deemed
the "Company" for the purposes of this Agreement). Each of Holdings and its and
the Company's subsidiaries are hereby acknowledged to be third-party
beneficiaries with respect to the provisions of Sections 10 and 11 hereof and
shall be entitled to enforce such provisions as if they were parties hereto.
(b) This Agreement and all rights of Executive hereunder shall inure to
the benefit of and be enforceable by Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If Executive should die while any amounts
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would be still payable to him hereunder if he had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to Executive's devisee, legatee, or other beneficiary
or, if there be no such beneficiary, to Executive's estate.
13. NOTICE
For the purposes of this Agreement, notices, demands and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when hand delivered or (unless otherwise
specified) when mailed by United States certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to Executive:
Bernard Geller
681 East 17th Street
Brooklyn, New York 11230
If to the Board:
Vestar Capital Partners
245 Park Avenue, 40th Floor
New York, New York 10167
Attention: Prakash A. Melwani,
Chairman of the Board
If to the Company:
Anvil Knitwear, Inc.
228 W. 45th Street
New York, New York 10017
Attention: General Counsel
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
14. SURVIVORSHIP
The respective rights and obligations of the parties hereunder, including
the rights and obligations set forth in Sections 6, 7, 8, 9, 10 and 11 of this
Agreement, shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations.
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15. REPRESENTATIONS AND WARRANTIES
The Company represents and warrants that (a) it is fully authorized and
empowered to enter into this Agreement and that the Board has approved the terms
of this Agreement, (b) the execution of this Agreement and the performance of
its obligations under this Agreement will not violate or result in a breach of
the terms of any material agreement to which the Company is a party or by which
it is bound, (c) no approval by any governmental authority or body is required
for it to enter into this Agreement, and (d) the Agreement is valid, binding and
enforceable against the Company in accordance with its terms, except to the
extent affected or limited by applicable bankruptcy laws or other statutes
governing the right of creditors generally and any regulations or
interpretations thereof. Executive represents and warrants that his execution of
this Agreement and his performance of his duties and responsibilities under this
Agreement will not violate or result in a breach of the terms of any material
agreement to which he is a party or by which he is bound.
16. PRIOR AGREEMENT
Executive hereby waives any and all claims he may have against McGregor or
Holdings or the Company, and releases each of them from any liability, under any
contract between McGregor and such Executive or in respect of any facts or
circumstances relating to his employment which arose prior to the closing of the
sale of Anvil Knitwear division to the Company (the "Closing"). The waiver of
claims against McGregor shall be conditioned on payments of all amounts due
Executive through the date of Closing and shall not apply to claims described in
clause (v) of the definition of "Excluded Liabilities" as set forth in the Asset
Purchase Agreement dated as of December 29, 1994 among McGregor, the Company,
Holdings and the other parties thereto.
17. MISCELLANEOUS
The parties hereto agree that this Agreement contains the entire
understanding and agreement between them, and supersedes all prior
understandings and agreements between the parties respecting the employment by
the Company of Executive, and that the provisions of this Agreement may not be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by the parties hereto. No waiver by either party
hereto at any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement. The validity, interpretations, construction and
performance of this Agreement shall be governed by the laws of the State of New
York without giving effect to the conflict of laws principles thereof.
18. VALIDITY
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The invalidity or unenforceability of any provision or provisions of this
Agreement shall not affect the validity or enforceability of any other provision
or provisions of this Agreement, which shall remain in full force and effect.
19. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original but all of which together will constitute one
and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and the year first above written.
ANVIL KNITWEAR, INC.
By:
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Name:
Title:
--------------------------------
Bernard Geller
<PAGE>
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this "Agreement"), made as of January 31, 1995, by
and between Anvil Knitwear, Inc., a New York corporation (the "Company"), and
Jacob Hollander, a resident of New York (the "Executive").
W I T N E S S E T H:
WHEREAS, Executive is currently serving each of McGregor Corporation
("McGregor") and Astrum International Corp. ("Astrum") in the position of Vice
President, Secretary and General Counsel; and
WHEREAS, the Company desires to retain Executive to serve it in the same
capacity or a similar capacity without a significant reduction in status and
responsibilities, and to perform services on its behalf in said position;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises and covenants herein contained, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. EMPLOYMENT
The Company agrees to employ Executive and Executive agrees to serve the
Company on the terms and conditions set forth herein.
2. TERM
This Agreement shall be for an initial period of four (4) years (the
"Initial Term"); provided, the term of this Agreement shall be extended for one
year unless prior to the third anniversary of the date hereof, the Company or
Executive notifies the other that the Agreement will be terminated at the end of
the Initial Term. Successive one-year extensions occur thereafter in the same
manner unless notice of termination is given by the Company or Executive at
least one year prior to the end of the then effective Term. As used herein,
"Term" means the Initial Term and any extensions thereof as provided for in this
Section 2.
3. POSITION AND DUTIES
(a) Executive shall serve as Executive Vice President, Chief
Administrative Officer, Secretary and General Counsel of the Company and shall
perform such duties and exercise such supervision and powers over and with
regard to the business of the Company customarily associated with the position
of Executive Vice President, Chief Administrative Officer, Secretary and General
Counsel, as well as such duties and services prescribed herein and as may be
prescribed from time to time by the Board of Directors of the Company (the
"Board"). Executive shall perform such duties to the best of his ability and in
a diligent and proper manner.
<PAGE>
(b) Except during vacations and periods of illness, Executive shall,
during the term of this Agreement, devote all his business time and attention to
the performance of services for the Company; provided that the Executive may
engage in the activities listed on Schedule A hereto so long as they do not
materially interfere with Executive's performance of his obligations hereunder.
Executive shall cooperate reasonably in any sale of the Company, IPO or similar
transaction.
(c) In the event that the Company fails to extend Executive's term of
employment pursuant to Section 2 above, or the Company is sold in a Strategic
Sale (as defined in subsection 5(d) hereof), Executive may spend a reasonable
part of his time during the final year of the Term hereof seeking other
employment.
4. COMPENSATION AND RELATED MATTERS
(a) Salary. During the period of Executive's employment hereunder, the
Company shall pay to Executive a salary at a rate of not less than $250,000 per
annum payable in accordance with normal payroll practices of the Company but not
less frequently than monthly. The Executive's salary may be increased from time
to time and, if so increased, shall not thereafter be decreased during the Term
of this Agreement. As used herein, "Base Salary" means the Executive's initial
salary hereunder as the same is increased from time to time. The salary payments
hereunder shall not in any way limit or reduce any other obligation of the
Company hereunder, and no other compensation, benefit or payment hereunder shall
in any way limit or reduce the obligation of the Company to pay Executive's Base
Salary hereunder.
(b) Welfare and Retirement Benefits. From and after the date of this
Agreement, Executive shall be entitled to participate in all of the Company's
employee pension plans, welfare benefit plans, tax-deferred savings plans, or
other welfare or retirement benefits or arrangements (including any insurance or
trust arrangements maintained generally for the benefit of the Company's
directors and officers) and in which the executive officers of the Company are
entitled generally to participate (collectively, the "Company Benefit Plans") on
the same basis as other executive employees. For purposes of determining
Executive's "years of service" credit under any of the Company Benefit Plans,
Executive shall be given full credit for years of service with McGregor, Astrum
and their subsidiaries.
(c) Bonus/Incentive Compensation. Executive shall be entitled to such
additional compensation as may be awarded by the Company in the sole discretion
of the CEO and the Board in the form of bonus or other incentive compensation,
and to participate in the bonus plan described in the letter from D. J. Manella
dated April 9, 1990. Executive shall be entitled to participate in any stock
option plan adopted by Anvil Holdings, Inc. ("Holdings") for management
employees of Holdings and its subsidiaries in accordance with the term sheet
attached hereto as Exhibit A.
(d) Vacations. Executive shall be entitled to the number of paid vacation
days in each calendar year determined in accordance with the Company's vacation
policies.
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(e) Expenses. During the term of Executive's employment hereunder,
Executive shall be entitled to receive prompt reimbursement from the Company of
all reasonable business-related expenses incurred by Executive in performing
services hereunder, including all expenses of travel and living expenses while
away from home on business or at the request of, and in the service of,
the Company, provided that such expenses are incurred and accounted for in
accordance with the policies and procedures established by the Company from time
to time.
(f) Certain Benefits. The Company shall furnish Executive with office
space, secretarial assistance and such other facilities and services as shall be
suitable to Executive's position and adequate for the performance of his duties
as set forth in Section 3 hereof and with the use of a Company provided
automobile.
5. TERMINATION
Executive's employment hereunder may be terminated under the following
circumstances:
(a) Death. Executive's employment hereunder shall terminate upon his
death.
(b) Disability. If Executive is unable to timely and regularly perform its
duties hereunder due to physical or mental illness, injury or incapacity, as
determined by the Board in good faith, based on medical evidence acceptable to
it (a "Disability") and such Disability continues for a period of nine
consecutive months, then, notwithstanding the provisions of Section 2, the
Company may terminate Executive's employment hereunder. A return to work for
less than thirty consecutive days during any period of Disability shall not be
deemed to interrupt the running of (and shall be included in) the aforementioned
nine-month period.
(c) Cause. The Company may terminate Executive's employment hereunder at
any time for Cause. For purposes of this Agreement, the Company shall have
"Cause" to terminate Executive's employment hereunder upon (i) a material breach
of this Agreement by Executive which breach is not cured within 30 days of
receipt of written notice from the Board, (ii) Executive's willful and repeated
failure to comply with the lawful directives of the Board or his superior
officer(s) consistent with the terms of this Agreement, (iii) gross negligence
or willful misconduct in the performance of Executive's duties under this
Agreement resulting in material injury to Holdings, the Company or their
subsidiaries, (iv) fraud committed by Executive with respect to Holdings, the
Company or their subsidiaries, or (v) indictment for (A) a felony or (B) a crime
involving moral turpitude conviction of which would materially injure
relationships with customers, suppliers or employees or otherwise cause material
injury to Holdings, the Company or their subsidiaries. Executive shall not be
deemed to have been terminated for Cause unless the Company shall have given or
delivered to Executive (1) reasonable notice setting forth, in reasonable detail
the facts and circumstances, if any, claimed to provide a basis for termination
for Cause, (2) a reasonable opportunity for Executive, together with his
counsel, to be heard before the Board, and (3) after being given a reasonable
opportunity to be heard, a Notice of Termination stating that, in the good faith
opinion of not less than a majority of the entire membership of the Board,
"Cause" exists to terminate Executive under this Agreement. The Board shall
consult with the CEO prior to
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taking action to terminate Executive for Cause and shall give the CEO at least
15 business days prior notice of the first Board meeting at which the existence
of Cause for termination is scheduled to be considered.
For purposes of determining whether Executive was given "reasonable
notice" and "reasonable opportunity to be heard" in connection with any
determination by the Board as to whether Cause exists, 15 business days notice
of the Board meeting shall be deemed to constitute "reasonable notice" (without
prejudice to the determination of whether some other period would also
constitute "reasonable notice") and the opportunity for Executive and his
counsel to present arguments to the Board at such meeting as to why Executive
believes that no Cause exists shall constitute "reasonable opportunity to be
heard" (without prejudice to the determination of whether some other forum or
method would also constitute a "reasonable opportunity to be heard").
In the event that Executive is terminated under clause (v) above but is
not ultimately convicted of the crime for which he was indicted, Executive shall
be eligible to be reinstated in the position he held on the date of his
termination. If Executive is so reinstated, this contract shall become effective
with a term equal to the term remaining on the date of termination.
Notwithstanding the foregoing, the Company at the option of its Chief Executive
Officer may determine that reinstatement is not in the best interests of the
Company, in which event the Executive shall not be reinstated.
(d) Termination by Executive for Good Reason. Executive may voluntarily
terminate his employment hereunder at any time for Good Reason. For purposes of
this Agreement, "Good Reason" shall mean (i) a material breach of this Agreement
which has not been cured within thirty (30) days after the Board's receipt of
written notice of such non-compliance from the Executive; (ii) the assignment to
Executive by the Company of duties inconsistent with Executive's position,
duties or responsibilities as in effect immediately after the date of execution
of this Agreement including, but not limited to, any material reduction in such
position, duties or responsibilities, or a change in Executive's titles or
offices, as then in effect, or any removal of Executive from, or any failure to
reelect Executive to, any of such positions, except in connection with the
termination of his employment pursuant to subsections 5(a), 5(b) or 5(c); (iii)
upon the relocation by the Company of its executive offices to a location
outside a thirty (30) mile radius around its current location or (iv) upon a
sale of the Company to a corporation or other legal entity that is, or is part
of a group of such entities, engaged in operating a material business in
competition with, or similar or related to the business of the Company at the
time of such sale (a "Strategic Sale"). Notwithstanding the foregoing, Executive
shall be entitled to elect to terminate his employment for "Good Reason" only if
Executive gives the Company a Notice of Termination notifying the Company of his
election to terminate employment for "Good Reason," (A) in the case of
termination pursuant to subsection 5(d)(i), 5(d)(ii) or 5(d)(iii), within 90
days after the occurrence of the event which Executive asserts as the basis for
Executive's right to terminate his employment for "Good Reason," and (B) in the
case of termination pursuant to subsection 5(d)(iv), within twelve months after
the occurrence of the Strategic Sale (and at least 30 days prior to the
termination date).
(e) Retirement. Executive may retire from his employment at any time after
attaining the age of 65 years upon giving thirty days prior written notice to
the Company.
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(f) Termination by Company Without Cause. The Company may at any time
terminate the Executive for any reason and, except for the amounts payable
pursuant to subsection 6(a) hereof, Executive shall have no claim against the
Company under this Agreement or otherwise by reason of such termination.
Termination of Executive's employment pursuant to this subsection 5(f) shall be
deemed to be exclusive of termination under any other subsection of this Section
5 and of termination of Executive's employment upon expiration of the Term of
this Agreement.
(g) Resignation following Non-Extension. If the Company gives Executive
timely notice of its election not to extend the Term of this Agreement pursuant
to Section 2 (and Executive has not given the Company notice of his election not
to extend the Term of this Agreement pursuant to Section 2), then at any time
during the last nine months of the Term of this Agreement, Executive may resign
his employment with the Company.
(h) Notice of Termination. Any termination of Executive's employment by
the Company or by Executive (other than termination pursuant to subsection 5(a)
hereof) shall be communicated by written Notice of Termination to the other
party hereto. For purposes of this Agreement, a "Notice of Termination" shall
mean a notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances, if any, claimed to provide a basis for termination of Executive's
employment under the provision so indicated.
6. COMPENSATION UPON TERMINATION
(a) (i) If Executive's employment is terminated by the Company pursuant to
subsection 5(f), or if Executive shall terminate his employment pursuant to
subsection 5(d)(i), 5(d)(ii) or 5(d)(iii), then the Company shall pay to
Executive, within 30 days of such termination (or, if there is a dispute
regarding such termination, within 30 days of the date such dispute is resolved)
the following amounts, and in lieu of any further salary and bonus or other
incentive compensation payments to Executive for periods subsequent to the date
of termination, an amount (the "Severance Payment") equal to the aggregate
salary payments (based on the Base Salary in effect on the termination date)
that would have been paid to Executive from the date of termination to the end
of the Term then in effect, plus the bonus that would have been payable to
Executive for the bonus year in which such termination occurs (which shall not
be discounted to take into account present value), and the Executive shall be
entitled to continue to participate in all Company Benefit Plans on the same
basis as the Company's executive employees through the end of the fiscal year in
which such termination occurs; provided, that if (A) (i) the period from the
date of Executive's termination for reasons described in this Section 6(a)(i) to
the end of the Term then in effect (the "Severance Period") is less than two
years or (ii) the Company gives notice under Section 2 that the term will not be
beyond the last year of the term then in effect (the last day of such term is
referred to as the "Nonrenewal Date") and (B) Executive is not engaged in
regular employment (whether as an employee or as a self-employed person) at the
end of the Severance Period or at the Nonrenewal Date, then at the end of the
Severance Period, or on the Nonrenewal Date as the case may be the Company shall
begin making additional monthly severance payments ("Supplemental Severance
Payments") to Executive (based on Executive's Base Salary at the time of
termination, payable in arrears, pro rated for the months in which such payments
begin and end and otherwise calculated and
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paid in accordance with the Company's payroll practices for its executive
employees) until the earlier of (1) if clause (A)(i) of this proviso applies,
the second anniversary of the date of such Executive's termination, or if clause
(A)(ii) of this proviso applies, the first anniversary of the Nonrenewal Date
and (2) the date that the Executive finds regular employment, whether as an
employee or as a self-employed person, provided that the Company may at any
time, in the discretion of the Company's chief executive officer, elect not to
pay, or elect to discontinue payment of any, Supplemental Severance Payments, if
at the time of such election, Bernard Geller is the Chief Executive Officer of
the Company. If Bernard Geller is not then Chief Executive Officer, such
election shall be made by Prakash A. Melwani so long as Vestar Equity Partners,
L.P., together with its general partner and their respective affiliates, own, or
have the power to vote or direct the voting of, shares of the capital stock of
the Company sufficient to elect a majority of the Company's Board of Directors.
The provision in clause (A)(ii) of the foregoing proviso relating to continuing
payments after the Nonrenewal Date on account of the Company's failure to extend
the Term shall not be applicable if Executive's employment is terminated prior
to the Nonrenewal Date.
(ii) If Executive's employment terminates for any reason other than
pursuant to subparagraph 5(f), 5(d)(i), 5(d)(ii) or 5(d)(iii), Executive shall
receive compensation and benefits through the end of the calendar month in which
termination occurs (or, if earlier, the end of the Term then in effect) and
shall thereafter receive no other compensation or, except as required by law,
any benefits of any kind whatsoever; it being understood that no bonus shall be
payable for the year in which such termination occurs.
(iii) Any sums due pursuant to the provisions of this subsection
6(a) shall be reduced by any sums payable to Executive pursuant to any severance
or termination pay program maintained by the Company.
(b) Executive shall not be required to mitigate the amount of any payment
provided for in this Section 6 by seeking other employment or otherwise.
7. ARBITRATION; LEGAL FEES; REIMBURSEMENT OF CERTAIN EXPENSES
(a) To the extent that the parties are unable to resolve any disputes
arising under this Agreement, then either party may submit the dispute to
binding arbitration in New York City in accordance with the rules of the
American Arbitration Association then in effect (and the Company will pay all
filing fees for commencing such arbitration). The arbitrator's decision shall be
made in accordance with such rules, shall be delivered in writing to the parties
and shall be conclusive and binding upon the parties. Nothing in this Section
7(a) shall obligate the Company or entitle Executive to submit any claim arising
under Section 10 or 11 of this Agreement to arbitration or otherwise limit the
Company's rights under subsection 11(d).
(b) The Company shall promptly reimburse Executive for the first $100,000
of reasonable legal fees and reasonable expenses incurred by Executive in
connection with obtaining or enforcing in good faith any right or benefit
provided to Executive by the Company pursuant to or in accordance with this
Agreement and for 50% of all such amounts incurred by Executive in excess of
$100,000. In addition, the Company hereby agrees that the amount of any such
legal fees
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and expenses reimbursed to Executive in connection with obtaining or enforcing
any right or benefit provided to Executive by the Company pursuant to or in
accordance with this Agreement will not be taken into account by the Company in
determining the aggregate compensation paid or payable to Executive under this
Agreement.
8. INDEMNIFICATION
The Company shall indemnify Executive (and his legal representatives or
other successors), unless expressly prohibited by applicable law, against all
losses, claims, damages, liabilities, costs, charges and expenses whatsoever
(including but not limited to all legal fees payable to attorneys reasonably
acceptable to the Company and designated by Executive and any other expenses and
other disbursements incurred in connection with investigating, preparing to
defend or defending any action, suit or proceeding, including any inquiry or
investigation, commenced or threatened, or in preparing to defend any claim or
threatened claim) incurred or sustained by him or his legal representatives in
connection with any action, suit or proceeding to which he (or his legal
representatives or other successors) may be made a party by reason of his being
or having been a director, officer or employee of the Company including payment
of expenses in advance of the final disposition of the proceeding. The Company
further agrees, upon demand by Executive, promptly to reimburse Executive for,
or pay, any loss, claim, damage, liability or expense, unless expressly
prohibited by applicable law, to which the Company has agreed to indemnify
Executive pursuant to Sections 7 and 8 hereof. If any action, suit or proceeding
is brought or threatened against Executive in respect of which indemnity may be
sought against the Company pursuant to the foregoing, Executive shall notify the
Company promptly in writing as soon as practicable of the threat or the
institution of such action, suit or proceeding. Within 30 days of such notice,
the Company shall inform Executive in writing whether it elects to control and
direct the proceedings relating to such action or claim. If it so elects, the
Company shall have the right to direct, control and supervise Executive's
defense of such action, suit or proceeding with counsel of the Company's
choosing. Executive may designate separate counsel, at his own expense, and
shall be entitled to participate in all aspects of the defense of such action,
suit or proceeding. If the Company fails to elect to control the proceeding,
Executive shall direct and control the proceeding at Company's expense and the
Company shall have the right to participate in all aspects of such defense.
Neither Executive nor the Company shall settle or compromise any such action,
suit or proceeding without the written consent of the other party hereto, which
consent may not be unreasonably withheld; notwithstanding the foregoing, the
consent of Executive shall not be required if such settlement or compromise
solely involves the payment of money or property by the Company or otherwise has
no adverse effect on Executive.
9. TAXES
The Company shall deduct from all amounts payable under this Agreement all
federal, state, local and other taxes required by law to be withheld with
respect to such payments.
10. CONFIDENTIALITY
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<PAGE>
Executive acknowledges that the information, observations and data
obtained by him while employed by the Company (including those obtained while
employed by McGregor or Astrum prior to the date of this Agreement and the
acquisition of Anvil Knitwear division by the Company) concerning the business
or affairs of the Company, Holdings, and their subsidiaries ("Confidential
Information") are the property of the Company, Holdings or such subsidiary.
Therefore, Executive agrees that he shall not disclose to any unauthorized
person or use for his own account any Confidential Information without the prior
written consent of the Board, unless and to the extent that the aforementioned
matters become generally known to and available for use by the public other than
as a result of Executive's acts or omissions to act. Executive shall deliver to
the Company at the termination of employment, or at any other time the Company
may request, all memoranda, notes, plans, records, reports, computer tapes and
software and other documents and data (and copies thereof) relating to the
Confidential Information, work product or the business of the Company, Holdings
or any of their subsidiaries which he may then possess or have under his
control.
11. NON-COMPETE, NON-SOLICITATION
(a) Executive agrees that during the Noncompete Period (as defined below),
he shall not directly or indirectly own, manage, control, participate in,
consult with, render services for, or in any manner engage in any business that
competes anywhere in the United States, Canada or anywhere else in the world
with the businesses of Holdings, the Company or their subsidiaries as businesses
exist or are in process on the date of the termination of Executive's
employment. Nothing herein shall prohibit Executive from owning not more than 5%
of the outstanding stock of any class of a corporation which is publicly traded,
so long as Executive has no active participation in the business of such
corporation. For purposes of this Agreement, the term "Noncompete Period" means
the period beginning on the date of this Agreement and ending on the fourth
anniversary of the date of this Agreement; provided, that if and when the Term
of this Agreement is extended beyond the Initial Term pursuant to Section 2
hereof, or if payments are being made pursuant to the last proviso in Section
6(a)(i) the Noncompete Period shall be extended to the end of the Term as so
extended or through the date such payments are actually made, as the case may
be; and, provided, further, that if Executive's employment is terminated by the
Company pursuant to subsection 5(f) or by Executive pursuant to subsection 5(d)
or subsection 5(g), the Noncompete Period shall terminate upon termination of
Executive's employment with the Company.
(b) During his employment with the Company (or such longer period as
Executive is receiving payments under Section 6(a)(i) and for the "Applicable
Period" thereafter, Executive shall not directly or indirectly through another
entity (i) induce or attempt to induce any employee of Holdings, the Company or
their subsidiaries to leave the employ of Holdings, the Company or such
subsidiary, or in any way interfere with the relationship between Holdings, the
Company or their subsidiaries and any employee thereof, (ii) hire any person who
was an employee of Holdings, the Company or their subsidiaries at any time
during Executive's employment with the Company, or (iii) induce or attempt to
induce any customer, supplier, licensee or other business relation of Holdings,
the Company or their subsidiaries to cease doing business with Holdings, the
Company or their subsidiaries, or in any way interfere with the relationship
between any such customer, supplier, licensee or business relation and Holdings,
the Company or their subsidiaries. The Applicable Period for purposes of clause
(i) and (iii) shall be two years and for clause (ii) shall be one year.
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<PAGE>
(c) If, at the time of enforcement of this Section 11, a court or
arbitrator shall hold that the duration, scope or area restrictions stated
herein are unreasonable under circumstances then existing, the parties agree
that the maximum duration, scope or area reasonable under such circumstances
shall be substituted for the stated duration, scope or area and that the court
or arbitrator shall be allowed to revise the restrictions contained herein to
cover the maximum period, scope and area permitted by law.
(d) In the event of the breach or a threatened breach by Executive, of any
of the provisions of Section 10 or this Section 11, the Company, in addition and
supplementary to other rights and remedies existing in its favor, may apply to
any court of law or equity of competent jurisdiction for specific performance or
injunctive or other relief in order to enforce or prevent any violations of the
provisions hereof (without posting a bond or other security).
12. SUCCESSORS; BINDING AGREEMENT
(a) This Agreement shall be binding upon and inure to the benefit of the
Company and any successor of the Company, including, any corporation acquiring
directly or indirectly all or substantially all of the stock, business or assets
of Holdings or the Company, whether by merger, restructuring, reorganization,
consolidation, sale or otherwise (and such successor shall thereafter be deemed
the "Company" for the purposes of this Agreement). Each of Holdings and its and
the Company's subsidiaries are hereby acknowledged to be third-party
beneficiaries with respect to the provisions of Sections 10 and 11 hereof and
shall be entitled to enforce such provisions as if they were parties hereto.
(b) This Agreement and all rights of Executive hereunder shall inure to
the benefit of and be enforceable by Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If Executive should die while any amounts would be still
payable to him hereunder if he had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to Executive's devisee, legatee, or other beneficiary or, if there be
no such beneficiary, to Executive's estate.
13. NOTICE
For the purposes of this Agreement, notices, demands and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when hand delivered or (unless otherwise
specified) when mailed by United States certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to Executive:
Jacob Hollander
4 Dora Lane
New Rochelle, New York 10804
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<PAGE>
If to the Board:
Vestar Capital Partners
245 Park Avenue, 40th Floor
New York, New York 10167
Attention: Prakash A. Melwani,
Chairman of the Board
If to the Company:
Anvil Knitwear, Inc.
228 W. 45th Street
New York, New York 10017
Attention: Chief Executive Officer
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
14. SURVIVORSHIP
The respective rights and obligations of the parties hereunder, including
the rights and obligations set forth in Sections 6, 7, 8, 9, 10 and 11 of this
Agreement, shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations.
15. REPRESENTATIONS AND WARRANTIES
The Company represents and warrants that (a) it is fully authorized and
empowered to enter into this Agreement and that the Board has approved the terms
of this Agreement, (b) the execution of this Agreement and the performance of
its obligations under this Agreement will not violate or result in a breach of
the terms of any material agreement to which the Company is a party or by which
it is bound, (c) no approval by any governmental authority or body is required
for it to enter into this Agreement, and (d) the Agreement is valid, binding and
enforceable against the Company in accordance with its terms, except to the
extent affected or limited by applicable bankruptcy laws or other statutes
governing the right of creditors generally and any regulations or
interpretations thereof. Executive represents and warrants that his execution of
this Agreement and his performance of his duties and responsibilities under this
Agreement will not violate or result in a breach of the terms of any material
agreement to which he is a party or by which he is bound.
16. PRIOR AGREEMENT
Executive hereby waives any and all claims he may have against McGregor or
Astrum or Holdings or the Company, and releases each of them from any liability,
under any contract between McGregor or Astrum and such Executive or in respect
of any facts or circumstances relating to his employment which arose prior to
the closing of the sale of Anvil Knitwear division to the Company (the
"Closing"). The waiver of claims against McGregor and Astrum shall be
conditioned on
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payments of all amounts due Executive through the date of Closing (including
without limitation amounts due in respect of salary) and shall not apply to (a)
claims described in clause (v) of the definition of "Excluded Liabilities" as
set forth in the Asset Purchase Agreement dated as of December 29, 1994 among
McGregor, the Company, Holdings and the other parties thereto or (b) medical
benefits, executive medical, 401(k) and expense reimbursement.
17. MISCELLANEOUS
The parties hereto agree that this Agreement contains the entire
understanding and agreement between them, and supersedes all prior
understandings and agreements between the parties respecting the employment by
the Company of Executive, and that the provisions of this Agreement may not be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by the parties hereto. No waiver by either party
hereto at any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement. The validity, interpretations, construction and
performance of this Agreement shall be governed by the laws of the State of New
York without giving effect to the conflict of laws principles thereof.
18. VALIDITY
The invalidity or unenforceability of any provision or provisions of this
Agreement shall not affect the validity or enforceability of any other provision
or provisions of this Agreement, which shall remain in full force and effect.
19. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original but all of which together will constitute one
and the same instrument.
[END OF PAGE]
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and the year first above written.
ANVIL KNITWEAR, INC.
By:
---------------------------
Name:
Title:
--------------------------------
Jacob Hollander
<PAGE>
Schedule A
Subject to the terms of Section 3(b) of this Agreement, Executive may engage in
the following activities:
1. Assist Astrum and McGregor with inquiries or other issues related to
services provided by Executive to Astrum or McGregor prior to the date of
this Agreement; and
2. Provide outside legal services to family members or otherwise not
requiring a material amount of time or effort; provided that the provision
of such services would not otherwise constitute a violation of the
Agreement.
<PAGE>
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this "Agreement"), made as of January 31, 1995, by
and between Anvil Knitwear, Inc., a New York corporation (the "Company"), and
William Turner, a resident of South Carolina (the "Executive").
W I T N E S S E T H:
WHEREAS, Executive is currently serving McGregor Corporation ("McGregor")
in the position of Executive Vice President of Manufacturing of the Anvil
Knitwear division of McGregor; and
WHEREAS, the Company desires to retain Executive to serve it in the same
capacity or a similar capacity without a significant reduction in status and
responsibilities, and to perform services on its behalf in said position;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises and covenants herein contained, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. EMPLOYMENT
The Company agrees to employ Executive and Executive agrees to serve the
Company on the terms and conditions set forth herein.
2. TERM
This Agreement shall be for an initial period of four (4) years (the
"Initial Term"); provided, the term of this Agreement shall be extended for one
year unless prior to the third anniversary of the date hereof, the Company or
Executive notifies the other that the Agreement will be terminated at the end of
the Initial Term. Successive one-year extensions occur thereafter in the same
manner unless notice of termination is given by the Company or Executive at
least one year prior to the end of the then effective Term. As used herein,
"Term" means the Initial Term and any extensions thereof as provided for in this
Section 2.
3. POSITION AND DUTIES
(a) Executive shall serve as Executive Vice President of Manufacturing of
the Company and shall perform such duties and exercise such supervision and
powers over and with regard to the business of the Company customarily
associated with the position of Executive Vice President of Manufacturing, as
well as such duties and services prescribed herein and as may be prescribed from
<PAGE>
time to time by the Board of Directors of the Company (the "Board"). Executive
shall perform such duties to the best of his ability and in a diligent and
proper manner.
(b) Except during vacations and periods of illness, Executive shall,
during the term of this Agreement, devote all his business time and attention to
the performance of services for the Company. Executive shall cooperate
reasonably in any sale of the Company, IPO or similar transaction.
(c) In the event that the Company fails to extend Executive's term of
employment pursuant to Section 2 above, or the Company is sold in a Strategic
Sale (as defined in subsection 5(d) hereof), Executive may spend a reasonable
part of his time during the final year of the Term hereof seeking other
employment.
4. COMPENSATION AND RELATED MATTERS
(a) Salary. During the period of Executive's employment hereunder, the
Company shall pay to Executive a salary at a rate of not less than $150,000 per
annum payable in accordance with normal payroll practices of the Company but not
less frequently than monthly. The Executive's salary may be increased from time
to time and, if so increased, shall not thereafter be decreased during the Term
of this Agreement. As used herein, "Base Salary" means the Executive's initial
salary hereunder as the same is increased from time to time. The salary payments
hereunder shall not in any way limit or reduce any other obligation of the
Company hereunder, and no other compensation, benefit or payment hereunder shall
in any way limit or reduce the obligation of the Company to pay Executive's Base
Salary hereunder.
(b) Welfare and Retirement Benefits. From and after the date of this
Agreement, Executive shall be entitled to participate in all of the Company's
employee pension plans, welfare benefit plans, tax-deferred savings plans, or
other welfare or retirement benefits or arrangements (including any insurance or
trust arrangements maintained generally for the benefit of the Company's
directors and officers) and in which the executive officers of the Company are
entitled generally to participate (collectively, the "Company Benefit Plans") on
the same basis as other executive employees. For purposes of determining
Executive's "years of service" credit under any of the Company Benefit Plans,
Executive shall be given full credit for years of service with McGregor and its
subsidiaries.
(c) Bonus/Incentive Compensation. Executive shall be entitled to such
additional compensation as may be awarded by the Company in the sole discretion
of the CEO and the Board in the form of bonus or other incentive compensation,
and to participate in the bonus plan described in the letter from D. J. Manella
dated April 9, 1990. Executive shall be entitled to participate in any stock
option plan adopted by Anvil Holdings, Inc. ("Holdings") for management
employees of Holdings and its subsidiaries in accordance with the term sheet
attached hereto as Exhibit A.
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<PAGE>
(d) Vacations. Executive shall be entitled to the number of paid vacation
days in each calendar year determined in accordance with the Company's vacation
policies.
(e) Expenses. During the term of Executive's employment hereunder,
Executive shall be entitled to receive prompt reimbursement from the Company of
all reasonable business-related expenses incurred by Executive in performing
services hereunder, including all expenses of travel and living expenses while
away from home on business or at the request of, and in the service of, the
Company, provided that such expenses are incurred and accounted for in
accordance with the policies and procedures established by the Company from time
to time.
(f) Certain Benefits. The Company shall furnish Executive with office
space, secretarial assistance and such other facilities and services as shall be
suitable to Executive's position and adequate for the performance of his duties
as set forth in Section 3 hereof and with the use of a Company provided
automobile.
5. TERMINATION
Executive's employment hereunder may be terminated under the following
circumstances:
(a) Death. Executive's employment hereunder shall terminate upon his
death.
(b) Disability. If Executive is unable to timely and regularly perform its
duties hereunder due to physical or mental illness, injury or incapacity, as
determined by the Board in good faith, based on medical evidence acceptable to
it (a "Disability") and such Disability continues for a period of nine
consecutive months, then, notwithstanding the provisions of Section 2, the
Company may terminate Executive's employment hereunder. A return to work for
less than thirty consecutive days during any period of Disability shall not be
deemed to interrupt the running of (and shall be included in) the aforementioned
nine-month period.
(c) Cause. The Company may terminate Executive's employment hereunder at
any time for Cause. For purposes of this Agreement, the Company shall have
"Cause" to terminate Executive's employment hereunder upon (i) a material breach
of this Agreement by Executive which breach is not cured within 30 days of
receipt of written notice from the Board, (ii) Executive's willful and repeated
failure to comply with the lawful directives of the Board or his superior
officer(s) consistent with the terms of this Agreement, (iii) gross negligence
or willful misconduct in the performance of Executive's duties under this
Agreement resulting in material injury to Holdings, the Company or their
subsidiaries, (iv) fraud committed by Executive with respect to Holdings, the
Company or their subsidiaries, or (v) indictment for (A) a felony or (B) a crime
involving moral turpitude conviction of which would materially injure
relationships with customers, suppliers or employees or otherwise cause material
injury to Holdings, the Company or their subsidiaries. Executive shall not be
deemed to have been terminated for Cause unless the Company shall have given or
delivered to Executive (1) reasonable notice setting forth, in reasonable detail
the facts and circumstances, if any, claimed to provide a basis for termination
for Cause, (2) a
3
<PAGE>
reasonable opportunity for Executive, together with his counsel, to be heard
before the Board, and (3) after being given a reasonable opportunity to be
heard, a Notice of Termination stating that, in the good faith opinion of not
less than a majority of the entire membership of the Board, "Cause" exists to
terminate Executive under this Agreement. The Board shall consult with the CEO
prior to taking action to terminate Executive for Cause and shall give the CEO
at least 15 business days prior notice of the first Board meeting at which the
existence of Cause for termination is scheduled to be considered.
For purposes of determining whether Executive was given "reasonable
notice" and "reasonable opportunity to be heard" in connection with any
determination by the Board as to whether Cause exists, 15 business days notice
of the Board meeting shall be deemed to constitute "reasonable notice" (without
prejudice to the determination of whether some other period would also
constitute "reasonable notice") and the opportunity for Executive and his
counsel to present arguments to the Board at such meeting as to why Executive
believes that no Cause exists shall constitute "reasonable opportunity to be
heard" (without prejudice to the determination of whether some other forum or
method would also constitute a "reasonable opportunity to be heard").
In the event that Executive is terminated under clause (v) above but is
not ultimately convicted of the crime for which he was indicted, Executive shall
be eligible to be reinstated in the position he held on the date of his
termination. If Executive is so reinstated, this contract shall become effective
with a term equal to the term remaining on the date of termination.
Notwithstanding the foregoing, the Company at the option of its Chief Executive
Officer may determine that reinstatement is not in the best interests of the
Company, in which event the Executive shall not be reinstated.
(d) Termination by Executive for Good Reason. Executive may voluntarily
terminate his employment hereunder at any time for Good Reason. For purposes of
this Agreement, "Good Reason" shall mean (i) a material breach of this Agreement
which has not been cured within thirty (30) days after the Board's receipt of
written notice of such non-compliance from the Executive; (ii) the assignment to
Executive by the Company of duties inconsistent with Executive's position,
duties or responsibilities as in effect immediately after the date of execution
of this Agreement including, but not limited to, any material reduction in such
position, duties or responsibilities, or a change in Executive's titles or
offices, as then in effect, or any removal of Executive from, or any failure to
reelect Executive to, any of such positions, except in connection with the
termination of his employment pursuant to subsections 5(a), 5(b) or 5(c); (iii)
upon the relocation by the Company of its executive offices to a location
outside a thirty (30) mile radius around its current location or (iv) upon a
sale of the Company to a corporation or other legal entity that is, or is part
of a group of such entities, engaged in operating a material business in
competition with, or similar or related to the business of the Company at the
time of such sale (a "Strategic Sale"). Notwithstanding the foregoing, Executive
shall be entitled to elect to terminate his employment for "Good Reason" only if
Executive gives the Company a Notice of Termination notifying the Company of his
election to terminate employment for "Good Reason," (A) in the case of
termination pursuant to subsection 5(d)(i), 5(d)(ii) or 5(d)(iii), within 90
days after the occurrence of the event which Executive asserts
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<PAGE>
as the basis for Executive's right to terminate his employment for "Good
Reason," and (B) in the case of termination pursuant to subsection 5(d)(iv),
within twelve months after the occurrence of the Strategic Sale (and at least 30
days prior to the termination date).
(e) Retirement. Executive may retire from his employment at any time after
attaining the age of 65 years upon giving thirty days prior written notice to
the Company.
(f) Termination by Company Without Cause. The Company may at any time
terminate the Executive for any reason and, except for the amounts payable
pursuant to subsection 6(a) hereof, Executive shall have no claim against the
Company under this Agreement or otherwise by reason of such termination.
Termination of Executive's employment pursuant to this subsection 5(f) shall be
deemed to be exclusive of termination under any other subsection of this Section
5 and of termination of Executive's employment upon expiration of the Term of
this Agreement.
(g) Resignation following Non-Extension. If the Company gives Executive
timely notice of its election not to extend the Term of this Agreement pursuant
to Section 2 (and Executive has not given the Company notice of his election not
to extend the Term of this Agreement pursuant to Section 2), then at any time
during the last nine months of the Term of this Agreement, Executive may resign
his employment with the Company.
(h) Notice of Termination. Any termination of Executive's employment by
the Company or by Executive (other than termination pursuant to subsection 5(a)
hereof) shall be communicated by written Notice of Termination to the other
party hereto. For purposes of this Agreement, a "Notice of Termination" shall
mean a notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances, if any, claimed to provide a basis for termination of Executive's
employment under the provision so indicated.
6. COMPENSATION UPON TERMINATION
(a) (i) If Executive's employment is terminated by the Company pursuant to
subsection 5(f), or if Executive shall terminate his employment pursuant to
subsection 5(d)(i), 5(d)(ii) or 5(d)(iii), then the Company shall pay to
Executive, within 30 days of such termination (or, if there is a dispute
regarding such termination, within 30 days of the date such dispute is resolved)
the following amounts, and in lieu of any further salary and bonus or other
incentive compensation payments to Executive for periods subsequent to the date
of termination, an amount (the "Severance Payment") equal to the aggregate
salary payments (based on the Base Salary in effect on the termination date)
that would have been paid to Executive from the date of termination to the end
of the Term then in effect, plus the bonus that would have been payable to
Executive for the bonus year in which such termination occurs (which shall not
be discounted to take into account present value), and the Executive shall be
entitled to continue to participate in all Company Benefit Plans on the same
basis as the Company's executive employees through the end of the fiscal year in
which such termination occurs; provided, that if (A) (i) the period from the
date of Executive's termination for
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<PAGE>
reasons described in this Section 6(a)(i) to the end of the Term then in effect
(the "Severance Period") is less than two years or (ii) the Company gives notice
under Section 2 that the term will not be beyond the last year of the term then
in effect (the last day of such term is referred to as the "Nonrenewal Date")
and (B) Executive is not engaged in regular employment (whether as an employee
or as a self-employed person) at the end of the Severance Period or at the
Nonrenewal Date, then at the end of the Severance Period, or on the Nonrenewal
Date as the case may be the Company shall begin making additional monthly
severance payments ("Supplemental Severance Payments") to Executive (based on
Executive's Base Salary at the time of termination, payable in arrears, pro
rated for the months in which such payments begin and end and otherwise
calculated and paid in accordance with the Company's payroll practices for its
executive employees) until the earlier of (1) if clause (A)(i) of this proviso
applies, the second anniversary of the date of such Executive's termination, or
if clause (A)(ii) of this proviso applies, the first anniversary of the
Nonrenewal Date and (2) the date that the Executive finds regular employment,
whether as an employee or as a self-employed person, provided that the Company
may at any time, in the discretion of the Company's chief executive officer,
elect not to pay, or elect to discontinue payment of any, Supplemental Severance
Payments, if at the time of such election, Bernard Geller is the Chief Executive
Officer of the Company. If Bernard Geller is not then Chief Executive Officer,
such election shall be made by Prakash A. Melwani so long as Vestar Equity
Partners, L.P., together with its general partner and their respective
affiliates, own, or have the power to vote or direct the voting of, shares of
the capital stock of the Company sufficient to elect a majority of the Company's
Board of Directors. The provision in clause (A)(ii) of the foregoing proviso
relating to continuing payments after the Nonrenewal Date on account of the
Company's failure to extend the Term shall not be applicable if Executive's
employment is terminated prior to the Nonrenewal Date.
(ii) If Executive's employment terminates for any reason other than
pursuant to subparagraph 5(f), 5(d)(i), 5(d)(ii) or 5(d)(iii), Executive shall
receive compensation and benefits through the end of the calendar month in which
termination occurs (or, if earlier, the end of the Term then in effect) and
shall thereafter receive no other compensation or, except as required by law,
any benefits of any kind whatsoever; it being understood that no bonus shall be
payable for the year in which such termination occurs.
(iii) Any sums due pursuant to the provisions of this subsection
6(a) shall be reduced by any sums payable to Executive pursuant to any severance
or termination pay program maintained by the Company.
(b) Executive shall not be required to mitigate the amount of any payment
provided for in this Section 6 by seeking other employment or otherwise.
7. ARBITRATION; LEGAL FEES; REIMBURSEMENT OF CERTAIN EXPENSES
(a) To the extent that the parties are unable to resolve any disputes
arising under this Agreement, then either party may submit the dispute to
binding arbitration in New York City in accordance with the rules of the
American Arbitration Association then in effect (and the Company
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<PAGE>
will pay all filing fees for commencing such arbitration). The arbitrator's
decision shall be made in accordance with such rules, shall be delivered in
writing to the parties and shall be conclusive and binding upon the parties.
Nothing in this Section 7(a) shall obligate the Company or entitle Executive to
submit any claim arising under Section 10 or 11 of this Agreement to arbitration
or otherwise limit the Company's rights under subsection 11(d).
(b) The Company shall promptly reimburse Executive for the first $100,000
of reasonable legal fees and reasonable expenses incurred by Executive in
connection with obtaining or enforcing in good faith any right or benefit
provided to Executive by the Company pursuant to or in accordance with this
Agreement and for 50% of all such amounts incurred by Executive in excess of
$100,000. In addition, the Company hereby agrees that the amount of any such
legal fees and expenses reimbursed to Executive in connection with obtaining or
enforcing any right or benefit provided to Executive by the Company pursuant to
or in accordance with this Agreement will not be taken into account by the
Company in determining the aggregate compensation paid or payable to Executive
under this Agreement.
8. INDEMNIFICATION
The Company shall indemnify Executive (and his legal representatives or
other successors), unless expressly prohibited by applicable law, against all
losses, claims, damages, liabilities, costs, charges and expenses whatsoever
(including but not limited to all legal fees payable to attorneys reasonably
acceptable to the Company and designated by Executive and any other expenses and
other disbursements incurred in connection with investigating, preparing to
defend or defending any action, suit or proceeding, including any inquiry or
investigation, commenced or threatened, or in preparing to defend any claim or
threatened claim) incurred or sustained by him or his legal representatives in
connection with any action, suit or proceeding to which he (or his legal
representatives or other successors) may be made a party by reason of his being
or having been a director, officer or employee of the Company including payment
of expenses in advance of the final disposition of the proceeding. The Company
further agrees, upon demand by Executive, promptly to reimburse Executive for,
or pay, any loss, claim, damage, liability or expense, unless expressly
prohibited by applicable law, to which the Company has agreed to indemnify
Executive pursuant to Sections 7 and 8 hereof. If any action, suit or proceeding
is brought or threatened against Executive in respect of which indemnity may be
sought against the Company pursuant to the foregoing, Executive shall notify the
Company promptly in writing as soon as practicable of the threat or the
institution of such action, suit or proceeding. Within 30 days of such notice,
the Company shall inform Executive in writing whether it elects to control and
direct the proceedings relating to such action or claim. If it so elects, the
Company shall have the right to direct, control and supervise Executive's
defense of such action, suit or proceeding with counsel of the Company's
choosing. Executive may designate separate counsel, at his own expense, and
shall be entitled to participate in all aspects of the defense of such action,
suit or proceeding. If the Company fails to elect to control the proceeding,
Executive shall direct and control the proceeding at Company's expense and the
Company shall have the right to participate in all aspects of such defense.
Neither Executive nor the Company shall settle or compromise any such action,
suit or proceeding without
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the written consent of the other party hereto, which consent may not be
unreasonably withheld; notwithstanding the foregoing, the consent of Executive
shall not be required if such settlement or compromise solely involves the
payment of money or property by the Company or otherwise has no adverse effect
on Executive.
9. TAXES
The Company shall deduct from all amounts payable under this Agreement all
federal, state, local and other taxes required by law to be withheld with
respect to such payments.
10. CONFIDENTIALITY
Executive acknowledges that the information, observations and data
obtained by him while employed by the Company (including those obtained while
employed by McGregor or Astrum prior to the date of this Agreement and the
acquisition of Anvil Knitwear division by the Company) concerning the business
or affairs of the Company, Holdings, and their subsidiaries ("Confidential
Information") are the property of the Company, Holdings or such subsidiary.
Therefore, Executive agrees that he shall not disclose to any unauthorized
person or use for his own account any Confidential Information without the prior
written consent of the Board, unless and to the extent that the aforementioned
matters become generally known to and available for use by the public other than
as a result of Executive's acts or omissions to act. Executive shall deliver to
the Company at the termination of employment, or at any other time the Company
may request, all memoranda, notes, plans, records, reports, computer tapes and
software and other documents and data (and copies thereof) relating to the
Confidential Information, work product or the business of the Company, Holdings
or any of their subsidiaries which he may then possess or have under his
control.
11. NON-COMPETE, NON-SOLICITATION
(a) Executive agrees that during the Noncompete Period (as defined below),
he shall not directly or indirectly own, manage, control, participate in,
consult with, render services for, or in any manner engage in any business that
competes anywhere in the United States, Canada or anywhere else in the world
with the businesses of Holdings, the Company or their subsidiaries as businesses
exist or are in process on the date of the termination of Executive's
employment. Nothing herein shall prohibit Executive from owning not more than 5%
of the outstanding stock of any class of a corporation which is publicly traded,
so long as Executive has no active participation in the business of such
corporation. For purposes of this Agreement, the term "Noncompete Period" means
the period beginning on the date of this Agreement and ending on the fourth
anniversary of the date of this Agreement; provided, that if and when the Term
of this Agreement is extended beyond the Initial Term pursuant to Section 2
hereof, or if payments are being made pursuant to the last proviso in Section
6(a)(i) the Noncompete Period shall be extended to the end of the Term as so
extended or through the date such payments are actually made, as the case may
be; and, provided, further, that if Executive's employment is terminated by the
Company pursuant to subsection 5(f) or by Executive
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pursuant to subsection 5(d) or subsection 5(g), the Noncompete Period shall
terminate upon termination of Executive's employment with the Company.
(b) During his employment with the Company (or such longer period as
Executive is receiving payments under Section 6(a)(i) and for the "Applicable
Period" thereafter, Executive shall not directly or indirectly through another
entity (i) induce or attempt to induce any employee of Holdings, the Company or
their subsidiaries to leave the employ of Holdings, the Company or such
subsidiary, or in any way interfere with the relationship between Holdings, the
Company or their subsidiaries and any employee thereof, (ii) hire any person who
was an employee of Holdings, the Company or their subsidiaries at any time
during Executive's employment with the Company, or (iii) induce or attempt to
induce any customer, supplier, licensee or other business relation of Holdings,
the Company or their subsidiaries to cease doing business with Holdings, the
Company or their subsidiaries, or in any way interfere with the relationship
between any such customer, supplier, licensee or business relation and Holdings,
the Company or their subsidiaries. The Applicable Period for purposes of clause
(i) and (iii) shall be two years and for clause (ii) shall be one year.
(c) If, at the time of enforcement of this Section 11, a court or
arbitrator shall hold that the duration, scope or area restrictions stated
herein are unreasonable under circumstances then existing, the parties agree
that the maximum duration, scope or area reasonable under such circumstances
shall be substituted for the stated duration, scope or area and that the court
or arbitrator shall be allowed to revise the restrictions contained herein to
cover the maximum period, scope and area permitted by law.
(d) In the event of the breach or a threatened breach by Executive, of any
of the provisions of Section 10 or this Section 11, the Company, in addition and
supplementary to other rights and remedies existing in its favor, may apply to
any court of law or equity of competent jurisdiction for specific performance or
injunctive or other relief in order to enforce or prevent any violations of the
provisions hereof (without posting a bond or other security).
12. SUCCESSORS; BINDING AGREEMENT
(a) This Agreement shall be binding upon and inure to the benefit of the
Company and any successor of the Company, including, any corporation acquiring
directly or indirectly all or substantially all of the stock, business or assets
of Holdings or the Company, whether by merger, restructuring, reorganization,
consolidation, sale or otherwise (and such successor shall thereafter be deemed
the "Company" for the purposes of this Agreement). Each of Holdings and its and
the Company's subsidiaries are hereby acknowledged to be third-party
beneficiaries with respect to the provisions of Sections 10 and 11 hereof and
shall be entitled to enforce such provisions as if they were parties hereto.
(b) This Agreement and all rights of Executive hereunder shall inure to
the benefit of and be enforceable by Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If Executive should die while any amounts
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would be still payable to him hereunder if he had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to Executive's devisee, legatee, or other beneficiary
or, if there be no such beneficiary, to Executive's estate.
13. NOTICE
For the purposes of this Agreement, notices, demands and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when hand delivered or (unless otherwise
specified) when mailed by United States certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to Executive:
William Turner
204 Warwick Drive
Marion, South Carolina 29571
If to the Board:
Vestar Capital Partners
245 Park Avenue, 40th Floor
New York, New York 10167
Attention: Prakash A. Melwani,
Chairman of the Board
If to the Company:
Anvil Knitwear, Inc.
228 W. 45th Street
New York, New York 10017
Attention: Chief Executive Officer
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
14. SURVIVORSHIP
The respective rights and obligations of the parties hereunder, including
the rights and obligations set forth in Sections 6, 7, 8, 9, 10 and 11 of this
Agreement, shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations.
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15. REPRESENTATIONS AND WARRANTIES
The Company represents and warrants that (a) it is fully authorized and
empowered to enter into this Agreement and that the Board has approved the terms
of this Agreement, (b) the execution of this Agreement and the performance of
its obligations under this Agreement will not violate or result in a breach of
the terms of any material agreement to which the Company is a party or by which
it is bound, (c) no approval by any governmental authority or body is required
for it to enter into this Agreement, and (d) the Agreement is valid, binding and
enforceable against the Company in accordance with its terms, except to the
extent affected or limited by applicable bankruptcy laws or other statutes
governing the right of creditors generally and any regulations or
interpretations thereof. Executive represents and warrants that his execution of
this Agreement and his performance of his duties and responsibilities under this
Agreement will not violate or result in a breach of the terms of any material
agreement to which he is a party or by which he is bound.
16. PRIOR AGREEMENT
Executive hereby waives any and all claims he may have against McGregor or
Holdings or the Company, and releases each of them from any liability, under any
contract between McGregor and such Executive or in respect of any facts or
circumstances relating to his employment which arose prior to the closing of the
sale of Anvil Knitwear division to the Company (the "Closing"). The waiver of
claims against McGregor shall be conditioned on payments of all amounts due
Executive through the date of Closing and shall not apply to claims described in
clause (v) of the definition of "Excluded Liabilities" as set forth in the Asset
Purchase Agreement dated as of December 29, 1994 among McGregor, the Company,
Holdings and the other parties thereto.
17. MISCELLANEOUS
The parties hereto agree that this Agreement contains the entire
understanding and agreement between them, and supersedes all prior
understandings and agreements between the parties respecting the employment by
the Company of Executive, and that the provisions of this Agreement may not be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by the parties hereto. No waiver by either party
hereto at any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement. The validity, interpretations, construction and
performance of this Agreement shall be governed by the laws of the State of New
York without giving effect to the conflict of laws principles thereof.
18. VALIDITY
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The invalidity or unenforceability of any provision or provisions of this
Agreement shall not affect the validity or enforceability of any other provision
or provisions of this Agreement, which shall remain in full force and effect.
19. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original but all of which together will constitute one
and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and the year first above written.
ANVIL KNITWEAR, INC.
By:
-------------------------
Name:
Title:
--------------------------------
William Turner
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EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this "Agreement"), made as of January 31, 1995, by
and between Anvil Knitwear, Inc., a New York corporation (the "Company"), and
Anthony Corsano, a resident of New York (the "Executive").
W I T N E S S E T H:
WHEREAS, Executive is currently serving McGregor Corporation ("McGregor")
in the position of Executive Vice President of Sales and Marketing of the Anvil
Knitwear division of McGregor; and
WHEREAS, the Company desires to retain Executive to serve it in the same
capacity or a similar capacity without a significant reduction in status and
responsibilities, and to perform services on its behalf in said position;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises and covenants herein contained, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. EMPLOYMENT
The Company agrees to employ Executive and Executive agrees to serve the
Company on the terms and conditions set forth herein.
2. TERM
This Agreement shall be for an initial period of four (4) years (the
"Initial Term"); provided, the term of this Agreement shall be extended for one
year unless prior to the third anniversary of the date hereof, the Company or
Executive notifies the other that the Agreement will be terminated at the end of
the Initial Term. Successive one-year extensions occur thereafter in the same
manner unless notice of termination is given by the Company or Executive at
least one year prior to the end of the then effective Term. As used herein,
"Term" means the Initial Term and any extensions thereof as provided for in this
Section 2.
3. POSITION AND DUTIES
(a) Executive shall serve as Executive Vice President of Sales and
Marketing of the Company and shall perform such duties and exercise such
supervision and powers over and with regard to the business of the Company
customarily associated with the position of Executive Vice
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President of Sales and Marketing, as well as such duties and services prescribed
herein and as may be prescribed from time to time by the Board of Directors of
the Company (the "Board"). Executive shall perform such duties to the best of
his ability and in a diligent and proper manner.
(b) Except during vacations and periods of illness, Executive shall,
during the term of this Agreement, devote all his business time and attention to
the performance of services for the Company. Executive shall cooperate
reasonably in any sale of the Company, IPO or similar transaction.
(c) In the event that the Company fails to extend Executive's term of
employment pursuant to Section 2 above, or the Company is sold in a Strategic
Sale (as defined in subsection 5(d) hereof), Executive may spend a reasonable
part of his time during the final year of the Term hereof seeking other
employment.
4. COMPENSATION AND RELATED MATTERS
(a) Salary. During the period of Executive's employment hereunder, the
Company shall pay to Executive a salary at a rate of not less than $235,000 per
annum payable in accordance with normal payroll practices of the Company but not
less frequently than monthly. The Executive's salary may be increased from time
to time and, if so increased, shall not thereafter be decreased during the Term
of this Agreement. As used herein, "Base Salary" means the Executive's initial
salary hereunder as the same is increased from time to time. The salary payments
hereunder shall not in any way limit or reduce any other obligation of the
Company hereunder, and no other compensation, benefit or payment hereunder shall
in any way limit or reduce the obligation of the Company to pay Executive's Base
Salary hereunder.
(b) Welfare and Retirement Benefits. From and after the date of this
Agreement, Executive shall be entitled to participate in all of the Company's
employee pension plans, welfare benefit plans, tax-deferred savings plans, or
other welfare or retirement benefits or arrangements (including any insurance or
trust arrangements maintained generally for the benefit of the Company's
directors and officers) and in which the executive officers of the Company are
entitled generally to participate (collectively, the "Company Benefit Plans") on
the same basis as other executive employees. For purposes of determining
Executive's "years of service" credit under any of the Company Benefit Plans,
Executive shall be given full credit for years of service with McGregor and its
subsidiaries.
(c) Bonus/Incentive Compensation. Executive shall be entitled to such
additional compensation as may be awarded by the Company in the sole discretion
of the CEO and the Board in the form of bonus or other incentive compensation,
and to participate in the bonus plan described in the letter from D. J. Manella
dated April 9, 1990. Executive shall be entitled to participate in any stock
option plan adopted by Anvil Holdings, Inc. ("Holdings") for management
employees of Holdings and its subsidiaries in accordance with the term sheet
attached hereto as Exhibit A.
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(d) Vacations. Executive shall be entitled to the number of paid vacation
days in each calendar year determined in accordance with the Company's vacation
policies.
(e) Expenses. During the term of Executive's employment hereunder,
Executive shall be entitled to receive prompt reimbursement from the Company of
all reasonable business-related expenses incurred by Executive in performing
services hereunder, including all expenses of travel and living expenses while
away from home on business or at the request of, and in the service of, the
company, provided that such expenses are incurred and accounted for in
accordance with the policies and procedures established by the Company from time
to time.
(f) Certain Benefits. The Company shall furnish Executive with office
space, secretarial assistance and such other facilities and services as shall be
suitable to Executive's position and adequate for the performance of his duties
as set forth in Section 3 hereof and with the use of a Company provided
automobile.
5. TERMINATION
Executive's employment hereunder may be terminated under the following
circumstances:
(a) Death. Executive's employment hereunder shall terminate upon his
death.
(b) Disability. If Executive is unable to timely and regularly perform its
duties hereunder due to physical or mental illness, injury or incapacity, as
determined by the Board in good faith, based on medical evidence acceptable to
it (a "Disability") and such Disability continues for a period of nine
consecutive months, then, notwithstanding the provisions of Section 2, the
Company may terminate Executive's employment hereunder. A return to work for
less than thirty consecutive days during any period of Disability shall not be
deemed to interrupt the running of (and shall be included in) the aforementioned
nine-month period.
(c) Cause. The Company may terminate Executive's employment hereunder at
any time for Cause. For purposes of this Agreement, the Company shall have
"Cause" to terminate Executive's employment hereunder upon (i) a material breach
of this Agreement by Executive which breach is not cured within 30 days of
receipt of written notice from the Board, (ii) Executive's willful and repeated
failure to comply with the lawful directives of the Board or his superior
officer(s) consistent with the terms of this Agreement, (iii) gross negligence
or willful misconduct in the performance of Executive's duties under this
Agreement resulting in material injury to Holdings, the Company or their
subsidiaries, (iv) fraud committed by Executive with respect to Holdings, the
Company or their subsidiaries, or (v) indictment for (A) a felony or (B) a crime
involving moral turpitude conviction of which would materially injure
relationships with customers, suppliers or employees or otherwise cause material
injury to Holdings, the Company or their subsidiaries. Executive shall not be
deemed to have been terminated for Cause unless the Company
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shall have given or delivered to Executive (1) reasonable notice setting forth,
in reasonable detail the facts and circumstances, if any, claimed to provide a
basis for termination for Cause, (2) a reasonable opportunity for Executive,
together with his counsel, to be heard before the Board, and (3) after being
given a reasonable opportunity to be heard, a Notice of Termination stating
that, in the good faith opinion of not less than a majority of the entire
membership of the Board, "Cause" exists to terminate Executive under this
Agreement. The Board shall consult with the CEO prior to taking action to
terminate Executive for Cause and shall give the CEO at least 15 business days
prior notice of the first Board meeting at which the existence of Cause for
termination is scheduled to be considered.
For purposes of determining whether Executive was given "reasonable
notice" and "reasonable opportunity to be heard" in connection with any
determination by the Board as to whether Cause exists, 15 business days notice
of the Board meeting shall be deemed to constitute "reasonable notice" (without
prejudice to the determination of whether some other period would also
constitute "reasonable notice") and the opportunity for Executive and his
counsel to present arguments to the Board at such meeting as to why Executive
believes that no Cause exists shall constitute "reasonable opportunity to be
heard" (without prejudice to the determination of whether some other forum or
method would also constitute a "reasonable opportunity to be heard").
In the event that Executive is terminated under clause (v) above but is
not ultimately convicted of the crime for which he was indicted, Executive shall
be eligible to be reinstated in the position he held on the date of his
termination. If Executive is so reinstated, this contract shall become effective
with a term equal to the term remaining on the date of termination.
Notwithstanding the foregoing, the Company at the option of its Chief Executive
Officer may determine that reinstatement is not in the best interests of the
Company, in which event the Executive shall not be reinstated.
(d) Termination by Executive for Good Reason. Executive may voluntarily
terminate his employment hereunder at any time for Good Reason. For purposes of
this Agreement, "Good Reason" shall mean (i) a material breach of this Agreement
which has not been cured within thirty (30) days after the Board's receipt of
written notice of such non-compliance from the Executive; (ii) the assignment to
Executive by the Company of duties inconsistent with Executive's position,
duties or responsibilities as in effect immediately after the date of execution
of this Agreement including, but not limited to, any material reduction in such
position, duties or responsibilities, or a change in Executive's titles or
offices, as then in effect, or any removal of Executive from, or any failure to
reelect Executive to, any of such positions, except in connection with the
termination of his employment pursuant to subsections 5(a), 5(b) or 5(c); (iii)
upon the relocation by the Company of its executive offices to a location
outside a thirty (30) mile radius around its current location or (iv) upon a
sale of the Company to a corporation or other legal entity that is, or is part
of a group of such entities, engaged in operating a material business in
competition with, or similar or related to the business of the Company at the
time of such sale (a "Strategic Sale"). Notwithstanding the foregoing, Executive
shall be entitled to elect to terminate his employment for "Good Reason" only
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if Executive gives the Company a Notice of Termination notifying the Company of
his election to terminate employment for "Good Reason," (A) in the case of
termination pursuant to subsection 5(d)(i), 5(d)(ii) or 5(d)(iii), within 90
days after the occurrence of the event which Executive asserts as the basis for
Executive's right to terminate his employment for "Good Reason," and (B) in the
case of termination pursuant to subsection 5(d)(iv), within twelve months after
the occurrence of the Strategic Sale (and at least 30 days prior to the
termination date).
(e) Retirement. Executive may retire from his employment at any time after
attaining the age of 65 years upon giving thirty days prior written notice to
the Company.
(f) Termination by Company Without Cause. The Company may at any time
terminate the Executive for any reason and, except for the amounts payable
pursuant to subsection 6(a) hereof, Executive shall have no claim against the
Company under this Agreement or otherwise by reason of such termination.
Termination of Executive's employment pursuant to this subsection 5(f) shall be
deemed to be exclusive of termination under any other subsection of this Section
5 and of termination of Executive's employment upon expiration of the Term of
this Agreement.
(g) Resignation following Non-Extension. If the Company gives Executive
timely notice of its election not to extend the Term of this Agreement pursuant
to Section 2 (and Executive has not given the Company notice of his election not
to extend the Term of this Agreement pursuant to Section 2), then at any time
during the last nine months of the Term of this Agreement, Executive may resign
his employment with the Company.
(h) Notice of Termination. Any termination of Executive's employment by
the Company or by Executive (other than termination pursuant to subsection 5(a)
hereof) shall be communicated by written Notice of Termination to the other
party hereto. For purposes of this Agreement, a "Notice of Termination" shall
mean a notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances, if any, claimed to provide a basis for termination of Executive's
employment under the provision so indicated.
6. COMPENSATION UPON TERMINATION
(a) (i) If Executive's employment is terminated by the Company pursuant to
subsection 5(f), or if Executive shall terminate his employment pursuant to
subsection 5(d)(i), 5(d)(ii) or 5(d)(iii), then the Company shall pay to
Executive, within 30 days of such termination (or, if there is a dispute
regarding such termination, within 30 days of the date such dispute is resolved)
the following amounts, and in lieu of any further salary and bonus or other
incentive compensation payments to Executive for periods subsequent to the date
of termination, an amount (the "Severance Payment") equal to the aggregate
salary payments (based on the Base Salary in effect on the termination date)
that would have been paid to Executive from the date of termination to the end
of the Term then in effect, plus the bonus that would have been payable to
Executive for the bonus year
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in which such termination occurs (which shall not be discounted to take into
account present value), and the Executive shall be entitled to continue to
participate in all Company Benefit Plans on the same basis as the Company's
executive employees through the end of the fiscal year in which such termination
occurs; provided, that if (A) (i) the period from the date of Executive's
termination for reasons described in this Section 6(a)(i) to the end of the Term
then in effect (the "Severance Period") is less than two years or (ii) the
Company gives notice under Section 2 that the term will not be beyond the last
year of the term then in effect (the last day of such term is referred to as the
"Nonrenewal Date") and (B) Executive is not engaged in regular employment
(whether as an employee or as a self-employed person) at the end of the
Severance Period or at the Nonrenewal Date, then at the end of the Severance
Period, or on the Nonrenewal Date as the case may be the Company shall begin
making additional monthly severance payments ("Supplemental Severance Payments")
to Executive (based on Executive's Base Salary at the time of termination,
payable in arrears, pro rated for the months in which such payments begin and
end and otherwise calculated and paid in accordance with the Company's payroll
practices for its executive employees) until the earlier of (1) if clause (A)(i)
of this proviso applies, the second anniversary of the date of such Executive's
termination, or if clause (A)(ii) of this proviso applies, the first anniversary
of the Nonrenewal Date and (2) the date that the Executive finds regular
employment, whether as an employee or as a self-employed person, provided that
the Company may at any time, in the discretion of the Company's chief executive
officer, elect not to pay, or elect to discontinue payment of any, Supplemental
Severance Payments, if at the time of such election, Bernard Geller is the Chief
Executive Officer of the Company. If Bernard Geller is not then Chief Executive
Officer, such election shall be made by Prakash A. Melwani so long as Vestar
Equity Partners, L.P., together with its general partner and their respective
affiliates, own, or have the power to vote or direct the voting of, shares of
the capital stock of the Company sufficient to elect a majority of the Company's
Board of Directors. The provision in clause (A)(ii) of the foregoing proviso
relating to continuing payments after the Nonrenewal Date on account of the
Company's failure to extend the Term shall not be applicable if Executive's
employment is terminated prior to the Nonrenewal Date.
(ii) If Executive's employment terminates for any reason other than
pursuant to subparagraph 5(f), 5(d)(i), 5(d)(ii) or 5(d)(iii), Executive shall
receive compensation and benefits through the end of the calendar month in which
termination occurs (or, if earlier, the end of the Term then in effect) and
shall thereafter receive no other compensation or, except as required by law,
any benefits of any kind whatsoever; it being understood that no bonus shall be
payable for the year in which such termination occurs.
(iii) Any sums due pursuant to the provisions of this subsection
6(a) shall be reduced by any sums payable to Executive pursuant to any severance
or termination pay program maintained by the Company.
(b) Executive shall not be required to mitigate the amount of any payment
provided for in this Section 6 by seeking other employment or otherwise.
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7. ARBITRATION; LEGAL FEES; REIMBURSEMENT OF CERTAIN EXPENSES
(a) To the extent that the parties are unable to resolve any disputes
arising under this Agreement, then either party may submit the dispute to
binding arbitration in New York City in accordance with the rules of the
American Arbitration Association then in effect (and the Company will pay all
filing fees for commencing such arbitration). The arbitrator's decision shall be
made in accordance with such rules, shall be delivered in writing to the parties
and shall be conclusive and binding upon the parties. Nothing in this Section
7(a) shall obligate the Company or entitle Executive to submit any claim arising
under Section 10 or 11 of this Agreement to arbitration or otherwise limit the
Company's rights under subsection 11(d).
(b) The Company shall promptly reimburse Executive for the first $100,000
of reasonable legal fees and reasonable expenses incurred by Executive in
connection with obtaining or enforcing in good faith any right or benefit
provided to Executive by the Company pursuant to or in accordance with this
Agreement and for 50% of all such amounts incurred by Executive in excess of
$100,000. In addition, the Company hereby agrees that the amount of any such
legal fees and expenses reimbursed to Executive in connection with obtaining or
enforcing any right or benefit provided to Executive by the Company pursuant to
or in accordance with this Agreement will not be taken into account by the
Company in determining the aggregate compensation paid or payable to Executive
under this Agreement.
8. INDEMNIFICATION
The Company shall indemnify Executive (and his legal representatives or
other successors), unless expressly prohibited by applicable law, against all
losses, claims, damages, liabilities, costs, charges and expenses whatsoever
(including but not limited to all legal fees payable to attorneys reasonably
acceptable to the Company and designated by Executive and any other expenses and
other disbursements incurred in connection with investigating, preparing to
defend or defending any action, suit or proceeding, including any inquiry or
investigation, commenced or threatened, or in preparing to defend any claim or
threatened claim) incurred or sustained by him or his legal representatives in
connection with any action, suit or proceeding to which he (or his legal
representatives or other successors) may be made a party by reason of his being
or having been a director, officer or employee of the Company including payment
of expenses in advance of the final disposition of the proceeding. The Company
further agrees, upon demand by Executive, promptly to reimburse Executive for,
or pay, any loss, claim, damage, liability or expense, unless expressly
prohibited by applicable law, to which the Company has agreed to indemnify
Executive pursuant to Sections 7 and 8 hereof. If any action, suit or proceeding
is brought or threatened against Executive in respect of which indemnity may be
sought against the Company pursuant to the foregoing, Executive shall notify the
Company promptly in writing as soon as practicable of the threat or the
institution of such action, suit or proceeding. Within 30 days of such notice,
the Company shall inform Executive in writing whether it elects to control and
direct the proceedings relating to such action or claim. If it so elects, the
Company shall have the right to direct, control
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<PAGE>
and supervise Executive's defense of such action, suit or proceeding with
counsel of the Company's choosing. Executive may designate separate counsel, at
his own expense, and shall be entitled to participate in all aspects of the
defense of such action, suit or proceeding. If the Company fails to elect to
control the proceeding, Executive shall direct and control the proceeding at
Company's expense and the Company shall have the right to participate in all
aspects of such defense. Neither Executive nor the Company shall settle or
compromise any such action, suit or proceeding without the written consent of
the other party hereto, which consent may not be unreasonably withheld;
notwithstanding the foregoing, the consent of Executive shall not be required if
such settlement or compromise solely involves the payment of money or property
by the Company or otherwise has no adverse effect on Executive.
9. TAXES
The Company shall deduct from all amounts payable under this Agreement all
federal, state, local and other taxes required by law to be withheld with
respect to such payments.
10. CONFIDENTIALITY
Executive acknowledges that the information, observations and data
obtained by him while employed by the Company (including those obtained while
employed by McGregor prior to the date of this Agreement and the acquisition of
Anvil Knitwear division by the Company) concerning the business or affairs of
the Company, Holdings, and their subsidiaries ("Confidential Information") are
the property of the Company, Holdings or such subsidiary. Therefore, Executive
agrees that he shall not disclose to any unauthorized person or use for his own
account any Confidential Information without the prior written consent of the
Board, unless and to the extent that the aforementioned matters become generally
known to and available for use by the public other than as a result of
Executive's acts or omissions to act. Executive shall deliver to the Company at
the termination of employment, or at any other time the Company may request, all
memoranda, notes, plans, records, reports, computer tapes and software and other
documents and data (and copies thereof) relating to the Confidential
Information, work product or the business of the Company, Holdings or any of
their subsidiaries which he may then possess or have under his control.
11. NON-COMPETE, NON-SOLICITATION
(a) Executive agrees that during the Noncompete Period (as defined below),
he shall not directly or indirectly own, manage, control, participate in,
consult with, render services for, or in any manner engage in any business that
competes anywhere in the United States, Canada or anywhere else in the world
with the businesses of Holdings, the Company or their subsidiaries as businesses
exist or are in process on the date of the termination of Executive's
employment. Nothing herein shall prohibit Executive from owning not more than 5%
of the outstanding stock of any class of a corporation which is publicly traded,
so long as Executive has no active participation in the business of such
corporation. For purposes of this Agreement, the term "Noncompete Period" means
the
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<PAGE>
period beginning on the date of this Agreement and ending on the fourth
anniversary of the date of this Agreement; provided, that if and when the Term
of this Agreement is extended beyond the Initial Term pursuant to Section 2
hereof, or if payments are being made pursuant to the last proviso in Section
6(a)(i) the Noncompete Period shall be extended to the end of the Term as so
extended or through the date such payments are actually made, as the case may
be; and, provided, further, that if Executive's employment is terminated by the
Company pursuant to subsection 5(f) or by Executive pursuant to subsection 5(d)
or subsection 5(g), the Noncompete Period shall terminate upon termination of
Executive's employment with the Company.
(b) During his employment with the Company (or such longer period as
Executive is receiving payments under Section 6(a)(i) and for the "Applicable
Period" thereafter, Executive shall not directly or indirectly through another
entity (i) induce or attempt to induce any employee of Holdings, the Company or
their subsidiaries to leave the employ of Holdings, the Company or such
subsidiary, or in any way interfere with the relationship between Holdings, the
Company or their subsidiaries and any employee thereof, (ii) hire any person who
was an employee of Holdings, the Company or their subsidiaries at any time
during Executive's employment with the Company, or (iii) induce or attempt to
induce any customer, supplier, licensee or other business relation of Holdings,
the Company or their subsidiaries to cease doing business with Holdings, the
Company or their subsidiaries, or in any way interfere with the relationship
between any such customer, supplier, licensee or business relation and Holdings,
the Company or their subsidiaries. The Applicable Period for purposes of clause
(i) and (iii) shall be two years and for clause (ii) shall be one year.
(c) If, at the time of enforcement of this Section 11, a court or
arbitrator shall hold that the duration, scope or area restrictions stated
herein are unreasonable under circumstances then existing, the parties agree
that the maximum duration, scope or area reasonable under such circumstances
shall be substituted for the stated duration, scope or area and that the court
or arbitrator shall be allowed to revise the restrictions contained herein to
cover the maximum period, scope and area permitted by law.
(d) In the event of the breach or a threatened breach by Executive, of any
of the provisions of Section 10 or this Section 11, the Company, in addition and
supplementary to other rights and remedies existing in its favor, may apply to
any court of law or equity of competent jurisdiction for specific performance or
injunctive or other relief in order to enforce or prevent any violations of the
provisions hereof (without posting a bond or other security).
12. SUCCESSORS; BINDING AGREEMENT
(a) This Agreement shall be binding upon and inure to the benefit of the
Company and any successor of the Company, including, any corporation acquiring
directly or indirectly all or substantially all of the stock, business or assets
of Holdings or the Company, whether by merger, restructuring, reorganization,
consolidation, sale or otherwise (and such successor shall thereafter be deemed
the "Company" for the purposes of this Agreement). Each of Holdings and its and
the
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<PAGE>
Company's subsidiaries are hereby acknowledged to be third-party beneficiaries
with respect to the provisions of Sections 10 and 11 hereof and shall be
entitled to enforce such provisions as if they were parties hereto.
(b) This Agreement and all rights of Executive hereunder shall inure to
the benefit of and be enforceable by Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If Executive should die while any amounts would be still
payable to him hereunder if he had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to Executive's devisee, legatee, or other beneficiary or, if there be
no such beneficiary, to Executive's estate.
13. NOTICE
For the purposes of this Agreement, notices, demands and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when hand delivered or (unless otherwise
specified) when mailed by United States certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to Executive:
Anthony Corsano
245 East 44th Street, Apt. #15A
New York, New York 10017
If to the Board:
Vestar Capital Partners
245 Park Avenue, 40th Floor
New York, New York 10167
Attention: Prakash A. Melwani,
Chairman of the Board
If to the Company:
Anvil Knitwear, Inc.
228 W. 45th Street
New York, New York 10017
Attention: Chief Executive Officer
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
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<PAGE>
14. SURVIVORSHIP
The respective rights and obligations of the parties hereunder, including
the rights and obligations set forth in Sections 6, 7, 8, 9, 10 and 11 of this
Agreement, shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations.
15. REPRESENTATIONS AND WARRANTIES
The Company represents and warrants that (a) it is fully authorized and
empowered to enter into this Agreement and that the Board has approved the terms
of this Agreement, (b) the execution of this Agreement and the performance of
its obligations under this Agreement will not violate or result in a breach of
the terms of any material agreement to which the Company is a party or by which
it is bound, (c) no approval by any governmental authority or body is required
for it to enter into this Agreement, and (d) the Agreement is valid, binding and
enforceable against the Company in accordance with its terms, except to the
extent affected or limited by applicable bankruptcy laws or other statutes
governing the right of creditors generally and any regulations or
interpretations thereof. Executive represents and warrants that his execution of
this Agreement and his performance of his duties and responsibilities under this
Agreement will not violate or result in a breach of the terms of any material
agreement to which he is a party or by which he is bound.
16. PRIOR AGREEMENT
Executive hereby waives any and all claims he may have against McGregor or
Holdings or the Company, and releases each of them from any liability, under any
contract between McGregor and such Executive or in respect of any facts or
circumstances relating to his employment which arose prior to the closing of the
sale of Anvil Knitwear division to the Company (the "Closing"). The waiver of
claims against McGregor shall be conditioned on payments of all amounts due
Executive through the date of Closing and shall not apply to claims described in
clause (v) of the definition of "Excluded Liabilities" as set forth in the Asset
Purchase Agreement dated as of December 29, 1994 among McGregor, the Company,
Holdings and the other parties thereto.
17. MISCELLANEOUS
The parties hereto agree that this Agreement contains the entire
understanding and agreement between them, and supersedes all prior
understandings and agreements between the parties respecting the employment by
the Company of Executive, and that the provisions of this Agreement may not be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by the parties hereto. No waiver by either party
hereto at any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either
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<PAGE>
party which are not set forth expressly in this Agreement. The validity,
interpretations, construction and performance of this Agreement shall be
governed by the laws of the State of New York without giving effect to the
conflict of laws principles thereof.
18. VALIDITY
The invalidity or unenforceability of any provision or provisions of this
Agreement shall not affect the validity or enforceability of any other provision
or provisions of this Agreement, which shall remain in full force and effect.
19. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original but all of which together will constitute one
and the same instrument.
[END OF PAGE]
[SIGNATURE PAGE FOLLOWS]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and the year first above written.
ANVIL KNITWEAR, INC.
By:
---------------------------
Name:
Title:
--------------------------------
Anthony Corsano
<PAGE>
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT (the "Agreement") is made this 28th day of
January, 1995 (the "Agreement"), by and among Culligan International Company
("Culligan") and Astrum International Corp. ("Astrum") (together, the
"Guarantors") and Anvil Knitwear, Inc. ("Buyer").
W I T N E S S E T H:
WHEREAS, the Buyer has entered into an Asset Purchase Agreement,
dated December 29, 1994, as amended as January 28, 1995 (the "Purchase
Agreement"), among McGregor Corporation and Winston Mills, Inc. (together, the
"Sellers") and the Buyer;
WHEREAS, in consideration of the guaranty provided by Culligan
herein, the Sellers have paid to Culligan the sum of $9,000,000;
WHEREAS, the Sellers are direct and indirect wholly-owned
subsidiaries of Astrum; and
WHEREAS, pursuant to Article 9 of the Purchase Agreement the Sellers
have granted the Buyer certain indemnification rights.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Buyer and the Guarantors agree
as follows:
1. The Guaranty. Subject to the limitations expressly set forth
herein, each of Culligan and Astrum hereby jointly and severally unconditionally
guarantee for the benefit of the Buyer, the prompt payment and performance in
full when due by the Sellers of all of the Sellers' obligations of any kind or
nature under Article 9 of the Purchase Agreement, subject to all of the
conditions and limitations applicable to the Sellers set forth therein;
provided, however, that (a) the Buyer shall have first notified the Sellers that
such payment and performance from the Sellers is due and owing pursuant to the
terms of the Purchase Agreement; and (b) Astrum shall have no obligations or
liability under this Section 1 unless and until either (x) Culligan's
Shareholders' Equity (as defined below) shall be less than $70,000,000 for the
twelve-month period ending on the month ending immediately prior to the date of
determination, or (y) if Culligan asserts or claims at any time that Culligan's
obligations under this Section 1 is unenforceable against it (or any similar
assertion or claim) or that Culligan does not have the financial capability to
perform its obligations under this Section 1 in a timely manner (or any similar
assertion or claim); provided, further, upon the occurrence of any event
referred to in clauses (x) and (y) above, Astrum shall thereafter be
unconditionally obligated to guarantee the obligations of the Sellers to the
extent set forth in this Section 1 (without the benefit of subparagraph (b) of
this Section 1). "Shareholders' Equity" means
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<PAGE>
for the applicable period, the difference between (i) the product of (x) the net
income of Culligan plus any and all interest, taxes, depreciation and
amortization which were deducted in determining the amount of such net income
and (y) 6.5 and (ii) the aggregate amount of indebtedness for money borrowed
(including any and all capitalized lease obligations), all as determined in
accordance with generally accepted accounting principles consistently applied;
provided that if the stock of Culligan is publicly traded, the Shareholders
Equity shall mean the product of multiplying the number of outstanding common
shares of Culligan on the date of determination by the average closing trading
price on the thirty trading days preceding the date of determination.
2. Organization and Good Standing of Guarantors. Each of the
Guarantors is a corporation duly incorporated, validly existing and in good
standing under the laws of the jurisdiction of its organization and (b) is
qualified to do business and is in good standing in all jurisdictions where it
is required to be qualified as a foreign corporation except for such failures to
be so qualified as have not had, and would not be reasonably expected to have, a
material adverse effect on (x) the business, operations, assets, liabilities,
operating results or financial condition of either Guarantor or (y) the ability
of either Guarantor to perform its obligations hereunder (a "Guarantor Material
Adverse Effect").
3. Authority, Approvals and Consents. Each of the Guarantors has the
corporate power and authority to enter, execute, deliver and perform this
Agreement. The execution, delivery and performance of this Agreement have been
duly authorized and approved by the Executive Committee of the Board of
Directors of each Guarantor and no other corporate proceedings on the part of
either Guarantor are necessary to authorize and approve this Agreement. This
Agreement has been duly executed and delivered by each Guarantor and constitutes
a valid and binding obligation of such Guarantor, enforceable against such
Guarantor in accordance with its terms. The execution, delivery and performance
of this Agreement by each Guarantor do not and will not:
(a) contravene or otherwise violate any provisions of the
Certificates of Incorporation or By-laws of either Guarantor;
(b) (after notice or lapse of time or both) conflict with, result
in a breach of any provision of, constitute a default under,
result in the modification or cancellation of, or give rise to
any right of termination in respect of, any contract,
agreement, commitment, understanding or arrangement of any
kind to which either Guarantor is a party except for such
conflicts, breaches, defaults, modifications, cancellations or
terminations as have not had, and would not be reasonably
expected to have, a Guarantor Material Adverse Effect;
(c) violate or conflict with any constitutions, treaties,
statutes, laws, ordinances, codes, rules, regulations,
standards, judgments, decrees, writs, rulings, injunctions,
orders, decisions, injunctions and other legal requirements of
any
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<PAGE>
governmental authority applicable to either Guarantor, except
for such violations or conflicts as have had, or would be
reasonably expected to have, a Guarantor Material Adverse
Effect; or
(d) require the approval of any governmental authority the absence
of which would be reasonably expected to have a Guarantor
Material Adverse Effect.
4. Headings. The section headings herein are for convenience of
reference only, do not constitute part of this Agreement and will not be deemed
to limit or otherwise affect any of the provisions hereof. References to
Sections, unless otherwise indicated, are references to Sections of this
Agreement.
5. Notices. All notices to be given pursuant to this Agreement to
any party must be in writing and will be deemed to have been validly given:
(a) if delivered by hand to an officer or agent of such party at
its address given below;
(b) if delivered by overnight commercial courier (such as Federal
Express); or
(c) if delivered by telecopier transmission, to such party at its
address given below.
The address of each party for the purposes of this Agreement is as
follows:
If to the Guarantors:
Astrum International Corp. and
Culligan International Corp.
c/o Astrum Management Corp.
372 Washington Street, Third Floor
Wellesley, Massachusetts 02181
Attention: Mr. Joseph Dempsey,
Senior Vice President
Facsimile: (212) 431-1007
With a copy to:
Willkie, Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022
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<PAGE>
Attention: Laurence D. Weltman, Esquire
Facsimile: (212) 821-8111
If to the Buyer:
Anvil Knitwear, Inc.
c/o Vestar Capital Partners
245 Park Avenue, 40th Floor
New York, New York 10167
Attention: Prakash A. Melwani,
Managing Director
Facsimile: (212) 808-4922
With a copy to:
Kirkland & Ellis
655 Fifteenth Street, N.W., Suite 1200
Washington, D.C. 20005
Attention: Jack M. Feder, Esquire
Facsimile: (202) 879-5200
Each party shall by notice to the other change its address for
notice whenever its existing address or facsimile number for notice changes.
6. Assignment. This Agreement and all provision hereof will be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns; provided, however, that neither this Agreement
nor any right, interest, or obligation hereunder may be assigned by any party
hereto without the prior written consent of the other party except that Buyer
may, without the consent of the Sellers, assign Buyer's rights and interest
under this Agreement in connection with acquisition financing necessary to
affect the transactions contemplated under the Purchase Agreement, provided
further that no party hereto or successor or assignee has the ability to
subrogate any other Person to any right or obligation under this Agreement.
7. Amendment; Waiver.
(a) This Agreement may only be amended or modified in writing
signed by the party against whom enforcement of any such
amendment or modification is sought.
(b) Any party hereto may, by an instrument in writing, waive
compliance with any term or provision of this Agreement on the
part of such other party hereto.
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<PAGE>
The waiver by any party hereto of a breach of any term or
provision of this Agreement will not be construed as a waiver
of any subsequent breach.
8. Obligations Unconditional. Subject to the limitations set forth
in Section 1, the obligations of the Guarantors under this Agreement are joint
and several, absolute and unconditional, irrespective of the value, genuineness,
validity, regularity or enforceability of the Purchase Agreement, or any other
agreement or instrument referred to therein, or any substitution, release or
exchange of any other guarantee of or security for any of the obligations
hereunder and, to the fullest extent permitted by applicable law, irrespective
of any other circumstances whatsoever which might otherwise constitute a legal
or equitable discharge or defense of a surety or guarantor, it being the intent
of this Section 8 that the obligations of the Guarantors hereunder shall be
absolute and unconditional under any and all circumstances. Without limiting the
generality of the foregoing, it is agreed that the occurrence of any one or more
of the following shall not alter or impair the liability of any Guarantor
hereunder which shall remain absolute and unconditional as described above:
(i) at any time or from time to time, without notice to any
Guarantor, the time for any performance of or compliance with any of
the obligations hereunder shall be extended, or such performance or
compliance shall be waived;
(ii) any of the acts mentioned in any of the provisions of the
Purchase Agreement or any other agreement or instrument referred
therein shall be done or omitted;
(iii) any of the obligations hereunder shall be modified,
supplemented or amended in any respect, or any right under the
Purchase Agreement or any other agreement or instrument referred to
therein shall be waived or any other guarantee of any of the
obligations hereunder or any security therefor shall be released or
exchanged in whole or in part or otherwise dealt with; or
(iv) any of the obligations shall be determined to be void or
voidable (including, without limitation, for the benefit of any
creditor or any Guarantor) or shall be subordinated to the claims of
any person (including, without limitation, any creditor or any
Guarantor).
Subject to the limitations set forth in Section 1, with respect to its
obligations hereunder, each Guarantor hereby expressly waives diligence,
presentment, demand of payment, protest and all notices whatsoever, and any
requirement that the Buyer exhaust any right, power or remedy or proceed against
any person under the Purchase Agreement or any other agreement or instrument
referred to therein, or against any other Person under any other guarantee of,
or security for, any of the obligations hereunder.
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<PAGE>
9. Reinstatement. The obligations of the Guarantors under this
Section 9 shall be automatically reinstated if and to the extent that, for any
reason any payment by or on behalf of any person in respect of the obligations
hereunder is rescinded or must be otherwise restored by any holder of any of the
obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, and each Guarantor agrees that it will indemnify
the Buyer on demand for all reasonable costs and expenses (including, without
limitation, reasonable fees of counsel) incurred by the Buyer in connection with
such rescission or restoration, including any such costs and expenses incurred
in defending against any claim alleging that such payment constituted a
preference, fraudulent transfer or similar payment under any bankruptcy,
insolvency or similar law.
10. Certain Additional Waivers. Each Guarantor further agrees that
it shall have no right of subrogation, reimbursement or indemnity, nor any right
of recourse to security, if any, for the obligations hereunder, so long as any
amounts payable to the Buyer in respect of the obligations hereunder shall
remain outstanding.
11. Continuing Guaranty. The guarantees in this Agreement is a
continuing guaranty, and shall apply to all obligations hereunder whenever
arising.
12. Counterparts. This Agreement may be executed in two or more
counterparts, all of which will be considered one and the same agreement and
each of which will be deemed an original.
13. Governing Law. This Agreement will be governed by the laws of
the State of New York and the laws of the United States applicable therein
(regardless of the laws that might be applicable under principles of conflicts
of law) as to all matters, including but not limited to matters of validity,
construction, effect and performance.
14. Severability. If any one or more of the provisions of this
Agreement is held to be invalid, illegal or unenforceable, the validity,
legality or enforceability or the remaining provisions of this Agreement will
not be affected thereby, and the Guarantors and Buyer will use their reasonable
efforts to substitute one or more valid, legal and enforceable provisions which
insofar as practicable implement the purposes and intent hereof. To the extent
permitted by applicable law, each party waives any provision of law which
renders any provision of this Agreement invalid, illegal or unenforceable in any
respect.
15. Consent to Jurisdiction. Buyer and each Guarantor hereby submit
to the exclusive jurisdiction of the courts of the State of New York solely in
respect of the interpretation and enforcement of the provisions of this
Agreement and any related agreement and hereby waive, and agree not to assert,
as a defense in any action, suit or proceeding for the interpretation or
enforcement of this Agreement any related agreement, that they are not subject
thereto or that such action, suit or proceeding may not be brought or is not
maintainable in such courts or that this Agreement may not be enforced in or by
such courts or that their property is exempt or immune from
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<PAGE>
execution, that the suit, action or proceeding is brought in an inconvenient
forum, or that the venue of the suit, action or proceeding is improper. Service
of process with respect thereto may be made upon the Buyer or the Guarantors by
mailing a copy thereof by registered or certified mail, postage prepaid, to such
party at its address as provided in Section 5 hereof.
16. Third Party Beneficiaries. This Agreement is not intended to
confer upon any other Person any rights or remedies hereunder.
* * * * *
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
ASTRUM INTERNATIONAL CORP.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
CULLIGAN INTERNATIONAL COMPANY
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
ANVIL KNITWEAR, INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
<PAGE>
EXECUTION COPY
ANVIL HOLDINGS, INC.
30,000 Units Consisting of
$30,000,000
13% Senior Exchangeable Preferred Stock due 2009
and
390,000 Shares of Class B Common Stock
PURCHASE AGREEMENT
March 11, 1997
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
277 Park Avenue
New York, New York 10172
Ladies and Gentlemen:
Anvil Holdings, Inc., a Delaware corporation ("Holdings") agrees
with you as follows:
1. The Units Offering and Related Transactions. Holdings proposes to
offer and sell (the "Units Offering") 30,000 Units (the "Units"), consisting of
$30,000,000 aggregate liquidation preference of 13% Series A Senior Exchangeable
Preferred Stock due 2009 (the "Series A Senior Preferred Stock") of Holdings and
390,000 shares of Class B Common Stock, $0.01 par value per share (the "Class B
Common") of Holdings. The Units will be issued pursuant to the Unit Agreement
dated as of March 14, 1997 (the "Unit Agreement") between Holdings and United
States Trust Company of New York, as Unit Agent and Transfer Agent (the "Unit
Agent"), with each Unit comprising 40 shares of Series A Senior Preferred Stock
and 13 shares of Class B Common. The Series A Senior Preferred Stock will be
issued pursuant to the terms of the certificate of designations therefor (the
"Certificate of Designation"). The Senior Preferred Stock (as defined below)
will be exchangeable at Holdings' option, but subject to certain conditions,
pursuant to the terms thereof into 13% Subordinated Exchange Debentures due 2009
(the "Exchange Debentures") of Holdings. Exchange Debentures, if any, will be
issued pursuant to the provisions of an Indenture to be dated as of March 14,
1997 (the "Exchange Debenture Indenture"), between Holdings and United States
Trust Company of New York, as Trustee.
Capitalized terms used but not defined herein shall have the
meanings given to such terms in the Exchange Debenture Indenture unless
otherwise indicated.
Concurrently with the Units Offering, Anvil Knitwear Inc., a
Delaware corporation ("Anvil"), proposes to offer and sell (the "Offering" and,
together with the Units Offering, the "Offerings") $130,000,000 aggregate
principal amount of its 10-7/8% Senior Notes
<PAGE>
due 2007 (the "Series A Senior Notes"). The Series A Senior Notes and the Series
B Senior Notes (as defined in the registration rights agreement relating to the
Series A Senior Notes) will be guaranteed by Holdings, Cottontops, Inc. and the
other Subsidiary Guarantors (as defined in the Senior Indenture). The Senior
Notes are to be issued pursuant to the provisions of an Indenture to be dated as
of March 14, 1997 (the "Senior Indenture"), between Anvil, Holdings, Cottontops,
Inc., the other Subsidiary Guarantors and United States Trust Company of New
York, as Trustee (the "Trustee").
Concurrently with the Offerings, Anvil and Holdings intend to enter
into a $50.0 million amended and restated credit agreement among Anvil,
Holdings, as guarantor, the subsidiary guarantors named therein and NationsBank,
N.A., as agent, to be dated as of March 14, 1997 (the "New Credit Agreement")
and to make an initial borrowing thereunder in the amount of $32.7 million.
Borrowings under the New Credit Agreement will be guaranteed by Holdings. The
proceeds from the Offerings, together with borrowings under the New Credit
Agreement and the Equity Contribution (as defined in the Offering Memorandum),
will be used to: (i) repay all outstanding borrowings under the Old Credit
Agreement (as defined in the Offering Memorandum); (ii) repay the Subordinated
Note (as defined in the Offering Memorandum); (iii) redeem substantially all of
the outstanding shares of the Old Preferred Stock (as defined in the Offering
Memorandum) and pay all accrued dividends thereon; (iv) repurchase all of
Holdings' Common Stock (other than the Retained Shares) (each as defined in the
Offering Memorandum); (v) make payments to Anvil's senior management team
pursuant to Holdings' Phantom Equity Plan (as defined in the Offering
Memorandum); (vi) pay the Management Bonus (as defined in the Offering
Memorandum) and (vii) pay the fees and expenses of the Recapitalization (as
defined in the Offering Memorandum).
The Securities (as defined below) will be offered and sold to the
initial purchasers thereof pursuant to an exemption from the registration
requirements under the Securities Act of 1933, as amended (the "Securities
Act"). Holdings has prepared a preliminary offering memorandum, dated February
25, 1997 (the "Preliminary Offering Memorandum"), and a final offering
memorandum, dated March 11, 1997 (the "Offering Memorandum"), relating to
Holdings and the Securities.
Upon original issuance thereof, and until such time as the same is
no longer required under the applicable requirements of the Securities Act, the
Securities (and all securities issued in exchange therefor or in substitution
thereof) shall bear the following legend:
"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 (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
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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 HOLDINGS THAT (A) SUCH
SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY
(1)(a) TO A PERSON WHO 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, IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144, OR IN ACCORDANCE
WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF HOLDINGS SO
REQUESTS), (b) TO HOLDINGS, (c) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR (d) OUTSIDE THE
UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT, AND (2) 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."
You have advised Holdings that you will make offers (the "Exempt
Resales") of the Units purchased by you hereunder on the terms set forth in the
Offering Memorandum, as amended or supplemented, solely to persons whom you
reasonably believe to be "qualified institutional buyers," as defined in Rule
144A under the Securities Act ("QIBs") and to a limited number of institutional
"accredited investors" referred to in Rule 501(a)(1), (2), (3) or (7) under the
Act (each, an "Accredited Investor"). The QIBs and the Accredited Investors are
sometimes referred to herein as the "Eligible Purchasers." You will offer the
Units purchased by you to such QIBs and Accredited Investors initially at a
price equal to $1,000 (plus accumulated dividends, if any, from the date of
issuance). Such price may be changed by you at any time without notice.
You have advised Holdings that you will act as agent in connection
with certain sales (the "Agent Sales") of Units to be sold by Holdings on the
terms set forth in the Offering Memorandum, as amended or supplemented, to each
person Holdings reasonably believes to be Eligible Purchasers. The Units sold by
Holdings will to offered to such Eligible Purchasers at a price equal to $1,000
(plus accumulated dividends, if any, from the date of issuance). Any purchaser
of Units sold by us through you as agent will execute an accredited investor
letter substantially in the form of Annex A to the Offering Memorandum.
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Holders (including subsequent transferees) of the Senior Preferred
will have the registration rights set forth in the registration rights agreement
relating to the Senior Preferred Stock (the "Registration Rights Agreement"), to
be dated the Closing Date (as defined herein), in substantially the form of
Exhibit A hereto, for so long as such Senior Preferred Stock constitute
"Transfer Restricted Securities" (as defined in the Registration Rights
Agreement). Pursuant to the Registration Rights Agreement, Holdings will agree
to file with the Securities and Exchange Commission (the "Commission"), under
the circumstances set forth therein, (i) a registration statement under the
Securities Act (the "Exchange Offer Registration Statement") relating to a new
issue of Series B Senior Preferred Stock of Holdings with terms substantially
identical to those of the Series A Senior Preferred Stock (the "Series B Senior
Preferred Stock" and, together with the Series A Senior Preferred Stock, the
"Senior Preferred Stock") to be offered in exchange for the Series A Senior
Preferred Stock (the "Exchange Offer"), and (ii) a shelf registration statement
pursuant to Rule 415 under the Securities Act (the "Shelf Registration
Statement") relating to the resale by certain holders of the Senior Preferred
Stock, and to use their best efforts to cause such Registration Statements to be
declared effective. This Purchase Agreement (this "Agreement"), the Senior
Preferred Stock, the Class B Common, the Registration Rights Agreement, the Unit
Agreement, the Certificate of Designation, the Exchange Debenture Indenture, the
New Credit Agreement, the Securityholders Agreement (as defined in the Offering
Memorandum) and the Recapitalization Agreement, as amended, (as defined in the
Offering Memorandum) are hereinafter sometimes referred to collectively as the
"Operative Documents." The Units, the Senior Preferred Stock, the Class B Common
and the Exchange Debentures are sometimes collectively referred to herein as the
"Securities."
2. Agreements to Sell and Purchase. On the basis of the
representations and warranties contained in this Agreement, and subject to its
terms and conditions, Holdings agrees to issue and sell to Donaldson, Lufkin &
Jenrette Securities Corporation (the "Initial Purchaser"), and you agree to
purchase from Holdings, 26,667 Units consisting of $26,667,000 aggregate
liquidation preference of Series A Senior Preferred Stock and 346,671 shares of
Class B Common. The purchase price for the Units shall be $960 per Unit, plus
accumulated dividends, if any, from the date of issuance to the date of payment
and delivery which purchase price includes payment of at least $0.01 per share
of Series A Senior Preferred Stock and at least $0.01 per share of Class B
Common.
In addition, the Initial Purchaser agrees to act as agent in
connection with the sale by Holdings of an additional 3,333 Units consisting of
$3,333,000 aggregate liquidation preference of Series A Senior Preferred Stock
and 43,329 shares of Class B Common. The purchase price for the Units sold by
you as agent shall be $1,000 per Unit, plus accumulated dividends, if any, from
the date of issuance to the date of payment and delivery which purchase price
includes payment of at least $0.01 per share of Series A Senior Preferred Stock
and at least $0.01 per share of Class B Common. You shall be entitled to receive
a commission of $40 per Unit in respect of up to 3,333 Units issued pursuant to
the Units Offering in addition to the Units purchased by you pursuant to the
preceding paragraph.
3. Delivery and Payment. Delivery of, and payment for, the Units
shall be made at 10:00 a.m., New York City time, on March 14, 1997 (the "Closing
Date") at the
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offices of Simpson Thacher & Bartlett, 425 Lexington Avenue, New York, New York
10017, or such other time or place as you and Holdings shall designate.
One or more of the Units in definitive form, registered in the name
of Cede & Co., as nominee of The Depository Trust Company ("DTC"), or such other
names as the Initial Purchaser may request upon at least two business days'
notice to Holdings prior to the Closing Date, in an amount designated by you
(each, a "Global Unit"), and one or more of the Units in definitive form,
registered in such names and denominations as you may request (each, a
"Certificated Unit") shall be delivered by Holdings to you (or as you direct),
against payment by you of the purchase price by wire transfer of immediately
available funds to the order of Holdings. The Global Unit(s) and the
Certificated Unit(s) in definitive form shall be made available to you for
inspection no later than 9:30 a.m. on the business day immediately preceding the
Closing Date.
4. Agreements of Holdings. Holdings agrees with you as follows:
(a) Before completion of the distribution of the Units by you, to
advise you promptly and, if requested by you, confirm such advice in
writing, (i) of the issuance by any state securities commission of any
stop order suspending the qualification or exemption from qualification of
any of the Securities for offering or sale in any jurisdiction, or the
initiation of any proceeding for such purpose by any state securities
commission or other regulatory authority, and (ii) to advise you promptly,
and if requested by you, confirm such advice in writing, of (A) the
happening of any event that makes any statement of a material fact made in
the Offering Memorandum untrue or that requires the making of any
additions to or changes in the Offering Memorandum in order to make the
statements therein, in the light of the circumstances under which they are
made, not misleading and (B) the issuance of any quarterly or annual
financial statements by Holdings or Anvil (copies of which shall be
delivered to you within one business day after issuance). Holdings shall
use its best efforts to prevent the issuance of any stop order or order
suspending the qualification or exemption of any of the Securities under
any state securities or Blue Sky laws, and if at any time any state
securities commission or other regulatory authority shall issue an order
suspending the qualification or exemption of any of the Securities under
any state securities or Blue Sky laws, Holdings shall use its best efforts
to obtain the withdrawal or lifting of such order at the earliest possible
time.
(b) To furnish you, without charge, as many copies of the
Preliminary Offering Memorandum and the Offering Memorandum, and any
amendments or supplements thereto, as you may reasonably request. Holdings
consents to the use of the Preliminary Offering Memorandum and the
Offering Memorandum, and any amendments and supplements thereto, by you in
connection with Exempt Resales and Agent Sales; provided, however, that
the Initial Purchaser shall discontinue using such Preliminary Offering
Memorandum or Offering Memorandum if advised by Holdings that the
Preliminary Offering Memorandum or Offering Memorandum are to be amended
or supplemented until such document is so amended or supplemented.
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(c) Not to amend or supplement the Preliminary Offering Memorandum
or the Offering Memorandum prior to the Closing Date unless you shall
previously have been advised thereof and shall not have objected thereto
in writing within five business days after being furnished a copy thereof.
Holdings shall promptly prepare, upon your request, any amendment or
supplement to the Preliminary Offering Memorandum or the Offering
Memorandum that may be necessary or advisable in connection with Exempt
Resales and Agent Sales.
(d) If, after the date hereof and prior to consummation of any
Exempt Resales or Agent Sales, any event shall occur as a result of which,
in the judgment of Holdings and its counsel or in the reasonable opinion
of your counsel, it becomes necessary to amend or supplement the Offering
Memorandum in order to make the statements therein, in the light of the
circumstances when the Offering Memorandum is delivered to an Eligible
Purchaser which is a prospective purchaser, not misleading, or if it is
necessary to amend or supplement the Offering Memorandum to comply with
applicable law, promptly to prepare an appropriate amendment or supplement
to the Offering Memorandum so that the statements therein as so amended or
supplemented will not, in the light of the circumstances when the Offering
Memorandum is so delivered, be misleading, or so the Offering Memorandum
will comply with applicable law.
(e) To cooperate with you and your counsel in connection with the
qualification of the Securities under the state securities or Blue Sky
laws of such jurisdictions in the United States as you may request and to
continue such qualification in effect so long as required for the Exempt
Resales and Agent Sales; provided, however that Holdings shall not be
required in connection therewith to register or qualify as a foreign
corporation where it is not now so qualified or to take any action that
would subject it to the service of process in suits or taxation, other
than as to matters and transactions relating to the Exempt Resales and
Agent Sales, in any jurisdiction where it is not now so subject. Holdings
will continue such qualification in effect so long as required by law for
distribution of the Securities.
(f) Whether or not the transactions contemplated by this Agreement
are consummated or this Agreement is terminated, to pay all costs,
expenses, fees and taxes incident to and in connection with: (i) the
preparation, printing, processing, distribution and delivery of the
Preliminary Offering Memorandum and the Offering Memorandum (including,
without limitation, financial statements and exhibits) and all amendments
and supplements thereto (but not, however, legal fees and expenses of your
counsel incurred in connection with any of the foregoing), (ii) the
preparation (including, without limitation, word processing and
duplication costs) printing, processing, distribution and delivery of this
Agreement and the other Operative Documents (but not, however, legal fees
and expenses of your counsel incurred in connection with any of the
foregoing), and all preliminary and final Blue Sky memoranda and all other
agreements, memoranda, correspondence and other documents prepared and
delivered in connection herewith and with the Exempt Resales, (iii) the
issuance and delivery by Holdings of the Securities,
(iv) the qualification of the Securities for offer and sale under the
securities or Blue Sky
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laws of the several states (including, without limitation, the reasonable
fees and disbursements of your counsel relating to such registration or
qualification not to exceed $7,500), (v) furnishing such copies of the
Preliminary Offering Memorandum and the Offering Memorandum, and all
amendments and supplements thereto, as may be reasonably requested for use
in connection with Exempt Resales, (vi) the preparation of certificates
for the Securities (including, without limitation, printing and engraving
thereof), (vii) the fees, disbursements and expenses of Holdings' counsel
and accountants, (viii) the fees and expenses of the Trustee and its
counsel under the Exchange Debenture Indenture, (ix) all expenses and
listing fees in connection with the application for designation of the
Senior Preferred Stock in the National Association of Securities Dealers,
Inc. ("NASD") Private Offerings, Resales and Trading through Automated
Linkages ("PORTAL") market, (x) all fees and expenses (including fees and
expenses of counsel) of Holdings in connection with the approval of the
Securities by DTC for "book-entry" transfer, (xi) any fees charged by
rating agencies for rating the Securities, (xii) all "road show" and other
marketing expenses related to the preparation of slides, videotapes and
printed marketing materials, and travel, hotel, food and entertainment
expenses of affiliates of Holdings and (xiii) the performance by Holdings
of its other obligations under this Agreement and the other Operative
Documents.
(g) To use the proceeds from the sale of the Units in the manner
described in the Offering Memorandum under the caption "Use of Proceeds."
(h) Not to voluntarily claim, and to resist actively any attempts to
claim, the benefit of any usury laws against the holders of any
Securities.
(i) To do and perform all things required to be done and performed
under this Agreement by them prior to or after the Closing Date and to
satisfy all conditions precedent on their part to the delivery of the
Units that are within their control.
(j) Not to sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the
Securities Act) that would be integrated with the sale of the Securities
in a manner that would require the registration under the Securities Act
of the sale to you or Eligible Purchasers of the Securities.
(k) For so long as any of the Securities remain outstanding and
during any period in which Holdings is not subject to Section 13 or 15(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
to make available to any QIB or beneficial owner of the Securities in
connection with any sale thereof and any prospective purchaser of such
Securities from such QIB or beneficial owner, the information required by
Rule 144A(d)(4) under the Securities Act.
(l) To cause the Exchange Offer to be made in the appropriate form
to permit registration of the Series B Senior Preferred Stock to be
offered in exchange for the Series A Senior Preferred Stock and to comply
with all applicable federal and state securities laws in connection with
the Exchange Offer.
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(m) To use their best efforts to effect the inclusion of the Senior
Preferred Stock in PORTAL.
(n) During a period of five years following the date of this
Agreement, to deliver to you promptly upon their becoming available,
copies of all current, regular and periodic reports filed by Holdings or
Anvil with the Commission or any securities exchange or with any
governmental authority succeeding to any of the Commission's functions and
such other publicly available information concerning Holdings and Anvil as
the Initial Purchaser shall reasonably request.
(o) Not to, and to use its reasonable best efforts to cause its
affiliates not to, offer, sell, contract to sell or grant any option to
purchase or otherwise transfer or dispose of any preferred stock or debt
security issued or guaranteed by Holdings or Anvil (other than (i) the
Units, the Senior Preferred Stock and the Class B Common comprising the
Units, (ii) the Series A Senior Notes, (iii) the Series B Senior Notes,
(iv) the Series B Senior Preferred Stock and (v) the Exchange Debentures
issuable pursuant to the terms of the Senior Preferred Stock), or any
security convertible into or exchangeable or exercisable for any such
preferred stock or debt security, for a period of 90 days after the
Closing Date, without your prior written consent.
(p) Prior to or concurrently with the Closing, to enter into the
Registration Rights Agreement in substantially the form attached hereto as
Exhibit A in order to permit registration of the Series B Senior Preferred
Stock to be offered in exchange for the Series A Senior Preferred Stock as
contemplated thereby and/or the shelf registration of the Senior Preferred
Stock.
(q) To comply with all agreements set forth in the representation
letter of Holdings to DTC relating to the approval of the Units by DTC for
"book-entry" transfer.
(r) During the two year period following the Closing Date, neither
Holdings nor Anvil will, nor will they permit any of their affiliates (as
defined for the purposes of Rule 144 under the Securities Act) to, resell
any of the Units that may be acquired by any of them other than such Units
as may be acquired by affiliates on the Closing Date.
(s) To cause the Certificate of Designation to be filed with the
appropriate authorities prior to the Closing Date.
5. Representations and Warranties. (a) Holdings represents and
warrants to you that:
(i) The Offering Memorandum does not, and any supplement or
amendment to it will not, contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, except that the representations and
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warranties contained in this paragraph (i) shall not apply to statements
in or omissions from the Offering Memorandum (or any supplement or
amendment thereto) made in reliance upon and in conformity with
information furnished to Holdings in writing by you expressly for use
therein, which information is specified in the second paragraph of Section
6(c). No stop order preventing the use of the Preliminary Offering
Memorandum or the Offering Memorandum, or any amendment or supplement
thereto, or any order asserting that any of the transactions contemplated
by this Agreement are subject to the registration requirements of the
Securities Act, has been issued.
(ii) When the Securities are issued and delivered pursuant to this
Agreement, none of the Securities will be of the same class (within the
meaning of Rule 144A under the Securities Act) as securities of Holdings
or Anvil that are listed on a national securities exchange registered
under Section 6 of the Exchange Act or that are quoted in a United States
automated inter-dealer quotation system.
(iii) Each of Holdings, Anvil and their respective subsidiaries has
been duly organized and is validly existing in good standing under the
laws of its respective jurisdiction of organization. Each of Holdings,
Anvil and their respective subsidiaries has all requisite corporate power,
as applicable, and authority to carry on its business as it is currently
being conducted and as described in the Offering Memorandum and to own,
lease and operate its properties. Each of Holdings, Anvil and their
respective subsidiaries is duly qualified and in good standing as a
foreign entity authorized to do business in each jurisdiction in which the
nature of its business or its ownership or leasing of property requires
such qualification, except where failure to have such qualification would
not have a Material Adverse Effect (as defined below).
(iv) The entities listed on Schedule I hereto are the only
subsidiaries, direct or indirect, of Holdings. Holdings owns, directly or
indirectly through other subsidiaries, the percentage listed in Schedule I
hereto of the outstanding capital stock or other securities evidencing
equity ownership of such subsidiaries, free and clear of any security
interest, claim, lien, limitation on voting rights or encumbrance (except
for those arising under the Credit Agreement or the New Credit Agreement
or pursuant to state and federal securities laws); and all of such
securities have been duly authorized, validly issued, are fully paid and
nonassessable and were not issued in violation of any preemptive or
similar rights. There are no outstanding subscriptions, rights, warrants,
calls, commitments of sale or options to acquire, or instruments
convertible into or exchangeable for, any such shares of capital stock or
other equity interest of such subsidiaries. Neither Holdings nor any of
its subsidiaries has any investments in the securities of other persons
and there are no outstanding subscriptions, rights, warrants, calls,
commitments of sale or options to acquire, or instruments convertible into
or exchangeable for, any such securities of such person.
(v) The shares of issued and outstanding common stock of Holdings
and Anvil have been duly authorized and validly issued and are fully paid
and non-assessable and were not issued in violation of or subject to any
preemptive or similar rights. All of the
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outstanding capital stock of Anvil is owned by Holdings. Except as
disclosed in the Offering Memorandum, there are no outstanding
subscriptions, rights, warrants, calls, commitments of sale or options to
acquire, or instruments convertible into or exchangeable for, any such
shares of capital stock or other equity interest of Holdings or Anvil.
(vi) Each of Holdings and Anvil has all requisite corporate power
and authority to execute, deliver and perform its obligations under the
Operative Documents to which they are parties and to consummate the
transactions contemplated hereby and thereby, including, without
limitation, with respect to Holdings, the corporate power and authority to
issue, sell and deliver the Securities as provided herein and therein.
(vii) This Agreement has been duly and validly authorized, executed
and delivered by Holdings and (assuming the due execution and delivery
thereof by you) is the legally valid and binding agreement of Holdings,
enforceable against Holdings in accordance with its terms (except as such
enforceability may be limited by any exceptions to enforceability of the
type set forth in the legal opinions delivered to you pursuant to Section
7(g) hereof).
(viii) The Certificate of Designation has been duly authorized by
all necessary corporate and stockholder action.
(ix) The Unit Agreement has been duly and validly authorized by
Holdings and, when duly executed and delivered by Holdings (assuming the
due execution and delivery thereof by the Unit Agent), will be the legally
valid and binding obligation of Holdings, enforceable against Holdings in
accordance with its terms (except as such enforceability may be limited by
any exceptions to enforceability of the type set forth in the legal
opinions delivered to you pursuant to Section 7(g) hereof).
(x) The Exchange Debenture Indenture has been duly and validly
authorized by Holdings and, when duly executed and delivered by Holdings
(assuming the due execution and delivery thereof by the Trustee), will be
the legally valid and binding obligation of Holdings, enforceable against
Holdings in accordance with its terms (except as such enforceability may
be limited by any exceptions to enforceability of the type set forth in
the legal opinions delivered to you pursuant to Section 7(g) hereof). The
Exchange Debenture Indenture, when executed and delivered, will conform to
the description thereof in the Offering Memorandum. The Exchange Debenture
Indenture conforms to the requirements of the Trust Indenture Act of 1939,
as amended (the "Trust Indenture Act").
(xi) The Registration Rights Agreement has been duly and validly
authorized by Holdings and, when duly executed and delivered by Holdings
(assuming the due execution and delivery thereof by you), will be the
legally valid and binding obligation of Holdings, enforceable against
Holdings in accordance with its terms (except as such enforceability may
be limited by any exceptions to enforceability of the type set forth in
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the legal opinions delivered to you pursuant to Section 7(g) hereof). The
Registration Rights Agreement, when executed and delivered, will conform
to the description thereof in the Offering Memorandum.
(xii) The Securityholders Agreement has been duly and validly
authorized by Holdings and, when duly executed and delivered by Holdings
(assuming the due execution and delivery thereof by the other parties
thereto), will be the legally valid and binding obligation of Holdings,
enforceable against Holdings in accordance with its terms (except as such
enforceability may be limited by any exceptions to enforceability of the
type set forth in the legal opinions delivered to you pursuant to Section
7(g) hereof). The Securityholders Agreement, when executed and delivered,
will conform to the description thereof in the Offering Memorandum.
(xiii) The Units have been duly and validly authorized for issuance
and sale to you by Holdings pursuant to this Agreement and, when issued
and delivered against payment therefor in accordance with the terms
hereof, will conform to the description thereof in the Offering
Memorandum.
(xiv) The Series A Senior Preferred Stock have been duly and validly
authorized for issuance and sale to you by Holdings pursuant to this
Agreement and, when issued and delivered against payment therefor in
accordance with the terms hereof, the Series A Senior Preferred Stock will
be validly issued, fully paid, non-assessable, will conform to the
description thereof in the Offering Memorandum, and will be entitled to
the rights, privileges and preferences set forth in the Certificate of
Designation, and the issuance of such Series A Senior Preferred Stock will
not be subject to any preemptive or similar rights.
(xv) The Class B Common have been duly and validly authorized for
issuance and sale to you by Holdings pursuant to this Agreement and, when
issued and delivered against payment therefor in accordance with the terms
hereof, the Class B Common will be validly issued, fully paid and
nonassessable and will conform to the description thereof in the Offering
Memorandum, and the issuance of such Class B Common will not be subject to
any preemptive or similar rights.
(xvi) The Series B Senior Preferred Stock have been duly and validly
authorized for issuance by Holdings, and when issued and delivered in
accordance with the terms of the certificate of designations therefor and
the Registration Rights Agreement, will conform to the description thereof
in the Offering Memorandum and will be entitled to the rights, privileges
and preferences set forth in such certificate of designations, and the
issuance of such Series B Senior Preferred Stock will not be subject to
any preemptive or similar rights.
(xvii) The Exchange Debentures have been duly and validly authorized
for issuance by Holdings, and when issued and authenticated in accordance
with the terms of the Exchange Debenture Indenture and delivered in
exchange for the Senior Preferred
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Stock in accordance with the terms of the Certificate of Designation, will
be the legally valid and binding obligations of Holdings, enforceable
against Holdings in accordance with their terms (except as such
enforceability may be limited by any exceptions to enforceability of the
type set forth in the legal opinions delivered to you pursuant to Section
7(g) hereof) and entitled to the benefits of the Exchange Debenture
Indenture. The Exchange Debentures, when issued and delivered, will
conform to the description thereof in the Offering Memorandum.
(xviii) None of Holdings or Anvil or any of their subsidiaries is
(A) in violation of its respective charter or bylaws or other
organizational documents, (B) in default in the performance of any bond,
debenture, note, indenture, mortgage, deed of trust or other agreement or
instrument to which it is a party or by which it is bound or to which any
of its properties is subject, or (C) is in violation of any law, statute,
rule, regulation, judgment or court decree applicable to Holdings or
Anvil, any of their subsidiaries or their assets or properties that in the
case of clauses (A), (B) and (C) above, (y) would reasonably be expected,
individually or in the aggregate, to result in a material adverse effect
on the assets, properties, business, results of operations, condition
(financial or otherwise) or business prospects of Holdings or Anvil and
their subsidiaries, taken as a whole or (z) in any manner draw into
question the validity of this Agreement or any other Operative Document
(any of the events set forth in clauses (y) or (z), a "Material Adverse
Effect"). There exists no condition that, with notice, the passage of time
or otherwise, would constitute a default under any such document or
instrument.
(xix) The execution, delivery and performance by each of Holdings
and Anvil of this Agreement and the other Operative Documents to which it
is a party, the issuance and sale of the Securities, the adoption or
performance of Holdings of its obligations under the Certificate of
Designation, the consummation of the transactions contemplated hereby and
thereby, will not violate, conflict with or constitute a breach of any of
the terms or provisions of, or a default under (or an event that with
notice or the lapse of time, or both, would constitute a default), or
require consent under, or result in the imposition of a lien or
encumbrance on any properties of Holdings or Anvil or any of their
subsidiaries, or an acceleration of indebtedness pursuant to, (i) the
charter or bylaws of Holdings or Anvil or any of their subsidiaries, (ii)
any bond, debenture, note, indenture, mortgage, deed of trust or other
agreement or instrument to which Holdings or Anvil or any of their
subsidiaries is a party or by which any of them or their property is or
may be bound, (iii) any statute, rule or regulation applicable to Holdings
or Anvil, any of their subsidiaries or any of their assets or properties,
or (iv) any judgment, order or decree of any court or governmental agency
or authority having jurisdiction over Holdings or Anvil, any of their
subsidiaries or their assets or properties, except insofar as any of (ii),
(iii) or (iv) above would not reasonably be expected, individually or in
the aggregate, to result in a Material Adverse Effect. No consent,
approval, authorization or order of, or filing, registration,
qualification, license or permit of or with, any court or governmental
agency, body or administrative agency is required for the execution,
delivery and performance of this Agreement and the other Operative
Documents, the issuance and sale of the Securities, the consummation of
the transactions contemplated
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hereby and thereby, except such as have been obtained and made (or, in the
case of the Registration Rights Agreement, will be obtained and made)
under the Securities Act, the Trust Indenture Act and state securities or
Blue Sky laws and regulations or such as may be required by the NASD,
except insofar as the failure to obtain such consent, appraisal,
authorization or order of, or filing, registration, qualification, license
or permit would not reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect.
(xx) No consents or waivers from any other person are required for
the execution, delivery and performance of this Agreement and the other
Operative Documents, the issuance and sale of the Securities and the
consummation of the transactions contemplated hereby and thereby, other
than such consents and waivers as have been obtained (or, in the case of
the Registration Rights Agreement, will be obtained), except where the
failure to have obtained any of the foregoing would not reasonably be
expected to have a Material Adverse Effect.
(xxi) There is (i) no action, suit or proceeding before or by any
court, arbitrator or governmental agency, body or official, domestic or
foreign, now pending or, to the best knowledge of Holdings, Anvil and
their subsidiaries, threatened or contemplated to which Holdings, Anvil or
any of their subsidiaries or any benefit plan maintained thereby is or may
be a party or to which the business or property of Holdings, Anvil or any
of their subsidiaries is or may be subject, (ii) no statute, rule,
regulation or order that has been enacted, adopted or issued by any
governmental agency or that has been proposed by any governmental body,
(iii) no injunction, restraining order or order of any nature by a federal
or state court or foreign court of competent jurisdiction to which
Holdings, Anvil or any of their subsidiaries is or may be subject or to
which the business, assets or property of Holdings, Anvil or their
subsidiaries are or may be subject issued that would, in the case of
clauses (i), (ii) and (iii) above, reasonably be expected to, individually
or in the aggregate, result in a Material Adverse Effect.
(xxii) There is (i) no significant unfair labor practice complaint
pending against Holdings, Anvil or any of their subsidiaries nor, to the
best knowledge of Holdings, Anvil and their subsidiaries, threatened
against any of them, before the National Labor Relations Board, any state
or local labor relations board or any foreign labor relations board, and
no significant grievance or significant arbitration proceeding arising out
of or under any collective bargaining agreement is so pending against
Holdings, Anvil or any of their subsidiaries or, to the best knowledge of
Holdings, Anvil and their subsidiaries, threatened against any of them,
(ii) no significant strike, labor dispute, slowdown or stoppage pending
against Holdings, Anvil or any of their subsidiaries nor, to the best
knowledge of Holdings, Anvil and their subsidiaries, threatened against
Holdings, Anvil or any of their subsidiaries and (iii) to the best
knowledge of Holdings, Anvil and their subsidiaries, no union
representation question exists with respect to the employees of Holdings,
Anvil and their subsidiaries and, to the best knowledge of Holdings, Anvil
and their subsidiaries, no union organizing activities are taking place,
except insofar as any of the foregoing would not reasonably be expected,
either individually or in the
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aggregate, to have a Material Adverse Effect. None of Holdings, Anvil or
any of their subsidiaries has violated any federal, state or local law or
foreign law relating to discrimination in hiring, promotion or pay of
employees, nor any applicable wage or hour laws, nor any provision of the
Employee Retirement Income Security Securities Act of 1974, as amended
("ERISA"), or the rules and regulations thereunder, or analogous foreign
laws and regulations, which would reasonably be expected, either
individually or in the aggregate, to have a Material Adverse Effect.
(xxiii) Each of Holdings, Anvil and their subsidiaries is in
compliance with all applicable existing federal, state, local and foreign
laws and regulations relating to the protection of human health or the
environment or imposing liability or standards of conduct concerning any
Hazardous Material (as defined below) (collectively, "Environmental
Laws"), except for such instances of noncompliance that, either singly or
in the aggregate, would not reasonably be expected to have a Material
Adverse Effect. The term "Hazardous Material" means (i) any "hazardous
substance" as defined by the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, (ii) any "hazardous
waste" as defined by the Resource Conservation and Recovery Act of 1976,
as amended, (iii) any petroleum or petroleum product (iv) any
polychlorinated biphenyl and (v) any pollutant or contaminant or
hazardous, dangerous or toxic chemical, material, waste or substance
regulated under or within the meaning of any other Environmental Law.
There is no alleged liability, or, to the best knowledge of Holdings,
Anvil and their subsidiaries, potential liability (including, without
limitation, alleged or potential liability for investigatory costs,
cleanup costs, governmental response costs, natural resources damages,
property damages, personal injuries, or penalties) of Holdings, Anvil or
any of their subsidiaries arising out of, based on, or resulting from (A)
the presence or release into the environment of any Hazardous Material at
any location currently or previously owned by Holdings, Anvil or any of
their subsidiaries or at any location currently or previously used or
leased by Holdings, Anvil or any of their or (B) any violation or alleged
violation of any Environmental Law, except in each case with respect to
clauses (A) and (B), alleged or potential liabilities that, singly or in
the aggregate, would not reasonably be expected to have a Material Adverse
Effect.
(xxiv) Each of Holdings, Anvil and their subsidiaries has (i) good
and marketable title to all of the properties and assets described in the
Offering Memorandum as owned by it, free and clear of all liens, charges,
encumbrances and restrictions, except such as are described in the
Offering Memorandum or for liens for taxes not yet due and payable or as
would not reasonably be expected, either individually or in the aggregate,
to have a Material Adverse Effect, (ii) peaceful and undisturbed
possession under all leases to which it is party as lessee, except where
the failure to have such possession would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect, (iii)
all licenses, certificates, permits, authorizations, approvals, franchises
and other rights from, and has made all declarations and filings with, all
federal, state, local and foreign authorities, all self-regulatory
authorities and all courts and other tribunals (each an "Authorization")
necessary to engage in the business currently conducted by it in the
manner described in the Offering Memorandum, except where failure to hold
such
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Authorizations would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect and (iv) no reason to believe
that any governmental body or agency is considering limiting, suspending
or revoking any such Authorization. All such Authorizations are valid and
in full force and effect and Holdings, Anvil and their subsidiaries are in
compliance in all material respects with the terms and conditions of all
such Authorizations and with the rules and regulations of the regulatory
authorities having jurisdiction with respect thereto, except insofar as
the failure to have any of the foregoing would not reasonably be expected
either individually or in the aggregate, to have a Material Adverse
Effect. All leases to which Holdings, Anvil or any of their subsidiaries
is a party are valid and binding and to the knowledge of Holdings and
Anvil no material defaults by the landlord are existing under any such
lease.
(xxv) Each of Holdings, Anvil and their subsidiaries owns or
possesses or has the right to use all patents, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information,
systems or procedures), trademarks, service marks and trade names
(collectively, the "Intellectual Property") presently employed by it in
connection with the businesses now operated by them as described in the
Offering Memorandum, except insofar as failure to have any of the
foregoing would not reasonably be expected to have a Material Adverse
Effect, and none of Holdings, Anvil or any of their subsidiaries has
received any notice of infringement of or conflict with asserted rights of
others with respect to any of the foregoing which would have a Material
Adverse Effect. The use of the Intellectual Property in connection with
the business and operations of Holdings and its subsidiaries does not
infringe on the rights of any person, except infringements which would not
reasonably be expected, either individually or in the aggregate, to have a
Material Adverse Effect.
(xxvi) All tax returns required to be filed by Holdings, Anvil or
any of their subsidiaries, in all jurisdictions, have been so filed. All
taxes, including withholding taxes, penalties and interest, assessments,
fees and other charges due or claimed to be due from such entities or that
are due and payable have been paid, other than those being contested in
good faith and for which adequate reserves have been provided or those
currently payable without penalty or interest. None of Holdings, Anvil or
any of their subsidiaries knows of any material proposed additional tax
assessments against it or any of its subsidiaries or the assets or
property of Holdings or any of its subsidiaries.
(xxvii) None of Holdings, Anvil or any of its subsidiaries is (i) an
"investment company" or a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940, as amended (the
"Investment Company Act"), or analogous foreign laws and regulations, or
(ii) a "holding company" or a "subsidiary company" or an "affiliate" of a
holding company within the meaning of the Public Utility Holding Company
Act of 1935, as amended (the "Public Utility Holding Company Act"), or
analogous foreign laws and regulations.
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(xxviii) There are no holders of securities of Holdings, Anvil or
any of their subsidiaries who, by reason of the execution by Holdings and
Anvil of this Agreement or any other Operative Document to which it is a
party or the consummation of the transactions contemplated hereby and
thereby, have the right to request or demand that Holdings or Anvil
register under the Securities Act or analogous foreign laws and
regulations securities held by them.
(xxix) Each certificate signed by any officer of Holdings and
delivered to the Initial Purchaser or counsel for the Initial Purchaser
shall be deemed to be a representation and warranty by Holdings to the
Initial Purchaser as to the matters covered thereby.
(xxx) Holdings and each of its subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable assurance
that: (i) transactions are executed in accordance with management's
general or specific authorizations; (ii) transactions are recorded as
necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain accountability
for assets; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect thereto.
(xxxi) Holdings and each of its subsidiaries maintains insurance
covering their properties, operations, personnel and businesses. Such
insurance insures against such losses and risks as are believed by them to
be adequate in accordance with customary industry practice to protect
Holdings and its subsidiaries and their businesses. None of Holdings,
Anvil nor any of their subsidiaries has received notice from any insurer
or agent of such insurer that substantial capital improvements or other
expenditures will have to be made in order to continue such insurance. All
such insurance is outstanding and, to the best of the knowledge of
Holdings and Anvil duly in force on the date hereof and will be
outstanding and duly in force on the Closing Date.
(xxxii) Neither Anvil nor Holdings has (i) taken (or will take),
directly or indirectly, any action designed to, or that might reasonably
be expected to, cause or result in stabilization or manipulation of the
price of any security of Holdings or Anvil to facilitate the sale or
resale of the Securities or (ii) since the date of the Preliminary
Offering Memorandum (A) sold, bid for, purchased or paid any person other
than the Initial Purchaser any compensation for soliciting purchases of,
the Securities or (B) paid or agreed to pay to any person any compensation
for soliciting another to purchase any other securities of Holdings or
Anvil.
(xxxiii) No registration under the Securities Act of the Securities
is required for the sale of the Units to the Initial Purchaser as
contemplated hereby or for the Exempt Resales and the Agent Sales assuming
(i) that the purchasers who buy the Securities in the Exempt Resales and
the Agent Sales are either QIBs or Accredited Investors and
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(ii) the accuracy of the Initial Purchaser's representations in Section
5(b) hereof. No form of general solicitation or general advertising was
used by Holdings, Anvil or any of their representatives in connection with
the offer and sale of any of the Securities or in connection with Exempt
Resales or the Agent Sales, including, but not limited to, articles,
notices or other communications published in any newspaper, magazine, or
similar medium or broadcast over television or radio, or any seminar or
meeting whose attendees have been invited by any general solicitation or
general advertising. No securities of the same class or series as the
Securities have been issued and sold by Holdings or Anvil within the
six-month period immediately prior to the date hereof. Holdings will not
sell any Securities pursuant to Agency Sales without having received prior
to or concurrent with any such sale a letter containing representations
and agreements in the form attached as Annex A to the Offering Memorandum.
Neither Anvil nor Holdings have entered into any contractual arrangement
with respect to the distribution of the Securities except for this
Agreement.
(xxxiv) The execution and delivery of this Agreement, the other
Operative Documents and the sale of the Securities to be purchased by the
Eligible Purchasers will not involve any prohibited transaction within the
meaning of Section 406 of ERISA or Section 4975 of the Internal Revenue
Code of 1986. The representation made by Holdings and Anvil in the
preceding sentence is made in reliance upon and subject to the accuracy
of, and compliance with, the representations and covenants made or deemed
made by the Eligible Purchasers as set forth in the Offering Memorandum
under the Section entitled "Notice to Investors."
(xxxv) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its date, and each amendment or supplement thereto, as
of its date, contains all the information specified in, and meets the
requirements of, Rule 144A(d)(4) under the Securities Act.
(xxxvi) Subsequent to the respective dates as of which information
is given in the Offering Memorandum and up to the Closing Date, except as
set forth in the Offering Memorandum, none of Holdings, Anvil and their
subsidiaries has incurred any liabilities or obligations, direct or
contingent, which are material to Holdings and its subsidiaries taken as a
whole, nor entered into any transaction not in the ordinary course of
business, nor has there been, singly or in the aggregate, any material
adverse change, or any development which would reasonably be expected to
involve a material adverse change, in the assets, properties, business,
results of operations, condition (financial or otherwise), affairs or
prospects of Holdings and its subsidiaries, taken as a whole (a "Material
Adverse Change") and there have not been dividends or distributions (other
than to Anvil) of any kind declared, paid or made by Holdings or any of
its subsidiaries on any class of its capital stock.
(xxxvii) None of Holdings or Anvil or, to the best of their
knowledge, any agent thereof acting on behalf of Holdings or Anvil has
taken, and none of them will take, any action that would reasonably expect
to cause this Agreement or the issuance or sale of
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the Securities to violate Regulation G (12 C.F.R. Part 207), Regulation T
(12 C.F.R. Part 220), Regulation U (12 C.F.R. Part 221) or Regulation X
(12 C.F.R. Part 224) of the Board of Governors of the Federal Reserve
System or analogous foreign laws and regulations.
(xxxviii) The accountants who have certified or shall certify the
financial statements and supporting schedules included or to be included
as part of the Offering Memorandum are independent accountants under Rule
101 of AICPA's Code of Professional Conduct and its interpretations and
rulings. The consolidated historical statements fairly present the
consolidated financial condition and results of operations of Holdings and
its subsidiaries at the respective dates and for the respective periods
indicated, in accordance with generally accepted accounting principles
consistently applied throughout such periods, except as stated therein.
The pro forma financial statements including in the Offering Memorandum
have been prepared on a basis consistent with such historical statements,
except for the pro forma adjustments specified therein, and give effect to
assumptions made on a reasonable basis and present fairly the historical
and proposed transactions contemplated by this Agreement and the other
Operative Documents. Other financial and statistical information and data
included in the Offering Memorandum, historical and pro forma, are
accurately presented and prepared on a basis consistent with such
financial statements and the books and records of Holdings and its
subsidiaries.
(xxxix) Neither Holdings nor Anvil intends to, nor does it believe
that it will, incur debts beyond its ability to pay such debts as they
mature. Upon the completion of the Recapitalization as described in "The
Recapitalization" in the Offering Memorandum, Holdings and Anvil believe
that the present fair saleable value of the assets of each of Holdings and
Anvil will exceed the amount that will be required to be paid on or in
respect of the existing debts and other liabilities (including contingent
liabilities) of such person as they become absolute and matured. The
assets of each of Holdings and Anvil, upon the completion of the
Recapitalization, will not constitute unreasonably small capital to carry
out their respective businesses as now conducted, including the capital
needs of each of Holdings and Anvil, taking into account their respective
projected capital requirements and capital availability. Each of Holdings
and Anvil currently believe it is, and immediately after the Closing Time
(after giving effect to the Recapitalization) will be, Solvent. As used
herein, the term "Solvent" means, with respect to a person on a particular
date, that on such date (A) the fair market value of the assets of such
person is greater than the total amount of liabilities (including
contingent liabilities) of such person, (B) the present fair saleable
value of the assets of such person is greater than the amount that will be
required to pay the probable liabilities of such person on its debts as
they become absolute and matured, (C) such person is able to realize upon
its assets and pay its debts and other liabilities, including contingent
obligations, as they mature and (D) such person does not have an
unreasonably small capital.
(xl) There are no contracts, agreements or understandings between
Holdings or Anvil or any of their subsidiaries and any person that would
give rise to a valid claim against Holdings or Anvil, its subsidiaries or
the Initial Purchaser for a brokerage
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<PAGE>
commission, finder's fee or like payment in connection with the issuance,
purchase and sale of the Securities.
(xli) Prior to the Exchange Offer or the effectiveness of the Shelf
Registration Statement, the Exchange Debenture Indenture is not required
to be qualified under the Trust Indenture Act.
(xlii) Holdings has delivered to the Initial Purchaser true and
correct copies of the Credit Agreement and the New Credit Agreement, as
the case may be, and all amendments, alterations, modifications, or
waivers thereto or in the exhibits or schedules thereto through the date
hereof.
Holdings acknowledges that the Initial Purchaser and, for purposes
of the opinions to be delivered to the Initial Purchaser pursuant to Section 7
hereof, counsel to Holdings and counsel to the Initial Purchaser, will rely upon
the accuracy and truth of the foregoing representations and hereby consent to
such reliance.
(b) The Initial Purchaser represents and warrants to Holdings and
agrees that:
(i) The Initial Purchaser is a QIB, with such knowledge and
experience in financial and business matters as are necessary in order to
evaluate the merits and risks of an investment in the Securities and
acknowledges that the Securities have not been registered under the
Securities Act and that such securities may not be offered or sold within
the United States or to, or for the account or benefit of, U.S. persons
(as defined in Regulation S under the Securities Act) except in pursuant
to an exemption from the registration requirements of the Securities Act.
(ii) The Initial Purchaser (A) is not acquiring the Securities with
a view to any distribution thereof that would violate the Securities Act
or the securities laws of any state of the United States or any other
applicable jurisdiction and (B) will be reoffering and reselling the
Securities purchased by it only to QIBs in reliance on the exemption from
the registration requirements of the Securities Act provided by Rule 144A
and to Accredited Investors that execute and deliver a letter containing
representations and agreements in the form attached as Annex A to the
Offering Memorandum in a private placement exempt from the registration
requirements of the Securities Act.
(iii) The Initial Purchaser will offer the Securities as agent
pursuant hereto only to persons who it reasonably believes to be Eligible
Purchasers.
(iv) No form of general solicitation or general advertising has been
or will be used by the Initial Purchaser or any of its representatives in
connection with the offer and sale of any of the Securities, including,
but not limited to, articles, notices or other communications published in
any newspaper, magazine, or similar medium or broadcast over television or
radio, or any seminar or meeting whose attendees have been invited by any
general solicitation or general advertising.
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(v) The Initial Purchaser agrees that, in connection with the Exempt
Resales, it will solicit offers to buy the Securities only from, and will
offer to sell the Securities only to, QIBs and Accredited Investors. The
Initial Purchaser further agrees (A) that it will offer to sell the
Securities only to, and will solicit offers to buy the Securities only
from (l) QIBs who in purchasing such Securities will be deemed to have
represented and agreed that they are purchasing the Securities for its own
accounts or accounts with respect to which they exercise sole investment
discretion and that they or such accounts are QIBs and (2) Accredited
Investors who make the representations contained in, and execute and
return to the Initial Purchaser, a certificate in the form of Annex A
attached to the Offering Memorandum and (B) that, in the case of such QIBs
and Accredited Investors, acknowledges and agrees that such Securities
will not have been registered under the Securities Act and may be resold,
pledged or otherwise transferred only (x)(I) to a person who the seller
reasonably believes is a QIB in a transaction meeting the requirements of
Rule 144A, (II) in a transaction meeting the requirements of Rule 144,
(III) to a foreign person in a transaction meeting the requirements of
Rule 904 under the Securities Act or (IV) in accordance with another
exemption from the registration requirements of the Securities Act (and
based upon an opinion of counsel if Holdings so requests), (y) to Anvil,
or (z) pursuant to an effective registration statement under the
Securities Act and, in each case, in accordance with any applicable
securities laws of any state of the United States or any other applicable
jurisdiction and (C) that the holder will, and each subsequent holder is
required to, notify any purchaser from it of the security evidenced
thereby of the resale restrictions set forth in (B) above.
(vi) The Initial Purchaser will have provided each Eligible
Purchaser with a copy of the Offering Memorandum prior to or concurrent
with settlement of each initial resale pursuant to Rule 144A, either with
the confirmation of such initial resale or otherwise.
(vii) The Initial Purchaser (A) has not solicited, and will not
solicit, offers to purchase any of the Securities from, (B) it has not
sold, and will not sell, any of the Securities to, and (C) it has not
distributed and will not distribute, the Offering Memorandum to, any
person or entity in any jurisdiction outside of the United States except,
in each case, in compliance in all material respect with all applicable
laws.
(viii) The Initial Purchaser also understands that Holdings and, for
purposes of the opinions to be delivered to you pursuant to Section 7
hereof, counsel to Holdings and counsel to the Initial Purchaser, will
rely upon the accuracy and truth of the foregoing representations and
hereby consents to such reliance.
6. Indemnification.
(a) Holdings agrees to indemnify and hold harmless the Initial
Purchaser and each person, if any, who controls (within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act) the Initial
Purchaser (any of such persons hereinafter referred to as a "controlling
person"), and the respective officers, directors, partners, employees,
representatives
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and agents of the Initial Purchaser or any controlling person (each such entity
or person an "Indemnified Person") to the fullest extent lawful, from and
against any and all losses, claims, damages, assessments, judgments, actions and
other liabilities (collectively, "Liabilities"), and will reimburse each
Indemnified Person for all fees and expenses (including without limitation, the
reasonable fees and expenses of counsel to any Indemnified Person)
(collectively, "Expenses") as they are incurred in investigating, preparing,
pursuing or defending any claim or action, or any investigation or proceeding by
any governmental agency or body, whether or not in connection with pending or
threatened litigation and whether or not any Indemnified Person is a party
(collectively, "Securities Actions"), directly or indirectly caused by, related
to, based upon, arising out of or in connection with any untrue statement or
alleged untrue statement of a material fact contained in the Preliminary
Offering Memorandum or the Offering Memorandum (or any amendment or supplement
thereto), or 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 the light of the circumstances under which they were made, not misleading,
except insofar as such Liabilities or Expenses are caused by an untrue statement
or omission or alleged untrue statement or omission (i) that is made in reliance
upon and in conformity with information furnished in writing to Holdings by the
Initial Purchaser expressly for use therein, which information is specified in
the second paragraph of Section 6(c) or (ii) that is made in any Preliminary
Offering Memorandum if a copy of the Offering Memorandum (as then amended or
supplemented) was not sent or given by or on behalf of the Initial Purchaser to
the person asserting any such loss, claim, damage, liability or expense at or
prior to the written confirmation of the sale of the Units and the Offering
Memorandum (as then amended or supplemented) would have corrected each untrue
statement or omission. Holdings will also reimburse each Indemnified Person for
all Expenses as incurred in connection with enforcing such Indemnified Person's
rights under this Agreement; provided, that if Holdings reimburses the Initial
Purchaser hereunder for any Expenses, the Initial Purchaser hereby agrees to
refund such reimbursement of Expenses to the extent that the Initial Purchaser
is not entitled to be indemnified hereunder. Holdings shall notify the Initial
Purchaser promptly of the institution, threat or assertion of any Securities
Action in connection with the matters addressed by this Agreement which involves
Holdings or an Indemnified Person.
(b) Upon receipt by an Indemnified Person of notice of an Securities
Action against such Indemnified Person with respect to which indemnity may be
sought under Section 6(a), such Indemnified Person shall promptly notify
Holdings in writing, provided that the failure to so notify Holdings shall not
relieve Holdings from any liability which Holdings may have on account of this
indemnity or otherwise, except to the extent Holdings shall have been materially
prejudiced by such failure. Holdings shall, if requested by such Indemnified
Person, assume the defense of any such Securities Action including the
employment of counsel reasonably satisfactory to such Indemnified Person. Any
Indemnified Person shall have the right to employ separate counsel in any such
action and participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Person, unless: (i) Holdings
has failed promptly to assume the defense and employ counsel reasonably
satisfactory to such indemnified party, (ii) the indemnifying party has
authorized the employment of counsel for the indemnified party at the expense of
the indemnifying party or (iii) the named parties to any such Securities Action
(including any impleaded parties) include such Indemnified Person
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and Holdings, and such Indemnified Person shall have been advised by counsel
that there may be one or more legal defenses available to it which are different
from or in addition to those available to Holdings, provided that Holdings,
shall not in such event be responsible hereunder for the fees and expenses of
more than one firm of separate counsel in connection with any Securities Action
in the same jurisdiction, in addition to any local counsel. Holdings shall not
be liable for any settlement of any Securities Action effected without written
consent of Holdings (which shall not be unreasonably withheld) and Holdings
agrees to indemnify and hold harmless any Indemnified Person from and against
any Liability or Expense by reason of any settlement of any Securities Action
effected with the written consent of Holdings. Notwithstanding the immediately
preceding sentence, if at any time an Indemnified Person shall have requested
Holdings to reimburse the Indemnified Person for fees and expenses of counsel as
contemplated by the third sentence of this paragraph, Holdings 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 sixty (60)
business days after receipt by Holdings of the aforesaid request and (ii)
Holdings shall not have reimbursed the Indemnified Person in accordance with
such request prior to the date of such settlement. In addition, Holdings will
not, without the prior written consent of each Indemnified Person, settle any
pending or threatened Securities Action in respect of which indemnification or
contribution may be sought hereunder (whether or not any Indemnified Person is a
party thereto), unless such settlement includes an unconditional release of each
Indemnified Person from all Liabilities on claims that are the subject matter of
such proceedings.
(c) The Initial Purchaser agrees to indemnify and hold harmless
Holdings and its directors, officers and any person controlling (within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act)
Holdings and the officers, directors, partners, employees, representatives and
agents of each such person, to the same extent as the foregoing indemnity from
Holdings to each of the Indemnified Persons, but only with respect to
Liabilities and Expenses incurred in investigating, preparing, pursuing or
defending Securities Actions directly or indirectly caused by, related to, based
upon, arising out of or in connection with any untrue statement or omission or
alleged untrue statement or omission of a material fact contained in the
Preliminary Offering Memorandum or the Offering Memorandum that was made in
reliance upon and in conformity with information relating to the Initial
Purchaser furnished in writing by or on behalf of the Initial Purchaser to
Holdings expressly for use in the Preliminary Offering Memorandum, the Offering
Memorandum or any amendment or supplement thereto, which information is
specified in the second paragraph of this Section 6(c). In case any Securities
Action shall be brought against Holdings or their directors or officers or any
such controlling person in respect of which indemnity may be sought against a
Initial Purchaser, such Initial Purchaser shall have the rights and duties given
Holdings, and Holdings or its directors or officers or such controlling person
shall have the rights and duties given to the Initial Purchaser by the preceding
paragraph. In no event shall the liability of the Initial Purchaser hereunder be
greater, in the aggregate, than the amount by which the total discounts and
commissions received by the Initial Purchaser with respect to the Units exceeds
the amount of any damages which the Initial Purchaser has otherwise been
required to pay by reason of a claim or action based on such information.
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The statements in the Preliminary Offering Memorandum and the
Offering Memorandum set forth in the last paragraph on the cover page, the first
and second full paragraphs on page (iii), the first paragraph, the third
paragraph (other than the final sentence thereof) and the second and third
sentences of the fifth paragraph under "Plan of Distribution" constitute the
only information heretofore furnished to Holdings in writing by the Initial
Purchaser expressly for use in the Preliminary Offering Memorandum or the
Offering Memorandum, or any amendment or supplement thereto.
(d) If the indemnification provided for in this Section 6 is
unavailable to an indemnified party under Section 6(a), (b) and (c) hereof
(other than by reason of exceptions provided in those Sections) in respect of
any Liabilities or Expenses referred to therein, then each indemnifying party,
in lieu of indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such Liabilities and
Expenses (i) in such proportion as is appropriate to reflect the relative
benefits received by the indemnifying party on the one hand and the indemnified
party on the other hand from the offering of the Units or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the indemnifying party and
the indemnified party, as well as any other relevant equitable considerations.
The relative benefits received by Holdings on the one hand and the Initial
Purchaser on the other hand, shall be in the same proportion as the total
proceeds from the sale of the Units (net of discounts and commissions but before
deducting expenses) received by Holdings on the one hand and the total discounts
and commissions received by the Initial Purchaser on the other hand, bear to the
total price of the Units, in each case, as set forth in the table on the
covering page of the Offering Memorandum. The relative fault of the indemnifying
party on the one hand and of the indemnified party 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 indemnifying party or by
the indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
Holdings and the Initial Purchaser agree that it would not be just
and equitable if contribution pursuant to this Section 6(d) were determined by
pro rata allocation (even if the Initial Purchaser were treated as one entity
for such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of the
Liabilities or Expenses referred to in the immediately preceding paragraph shall
be deemed to include, subject to the limitations set forth above, any legal or
other fees or expenses reasonably incurred by such indemnified party in
connection with investigating or defending any Securities Action.
Notwithstanding the provisions of this Section 6, the Initial Purchaser (nor
their related Indemnified Persons) shall not be required to contribute, in the
aggregate, any amount in excess of the amount by which the total discounts and
commissions received by such Initial Purchaser with respect to the Units,
exceeds the amount of any damages which such Initial Purchaser 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
23
<PAGE>
(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.
7. Conditions of Initial Purchaser's Obligations. The obligations of
the Initial Purchaser under this Agreement are subject to the satisfaction of
each of the following conditions:
(a) All of the representations and warranties of Holdings contained
in this Agreement shall be true and correct on the date hereof and on the
Closing Date with the same force and effect as if made on and as of the
date hereof and the Closing Date, respectively. Holdings shall have
performed or complied with all of the agreements herein contained and
required to be performed or complied with by them at or prior to the
Closing Date.
(b) The Offering Memorandum shall have been printed and copies
distributed to the Initial Purchaser not later than 10:00 a.m., New York
City time, on the date of this Agreement or at such later date and time as
to which you may agree.
(c) No stop order suspending the qualification or exemption from
qualification of any of the Securities in any jurisdiction referred to in
Section 4(e) shall have been issued and no proceeding for that purpose
shall have been commenced or shall be pending or threatened.
(d) No action shall have been taken and no statute, rule, regulation
or order shall have been enacted, adopted or issued by any governmental
agency which would, as of the Closing Date, prevent the issuance or sale
of any of the Securities; no action, suit or proceeding shall be pending
against or affecting or, to the knowledge of Holdings, threatened against,
Holdings, Anvil or any of their respective subsidiaries before any court
or arbitrator or any governmental body, agency or official that, if
adversely determined, would have a Material Adverse Effect; and no stop
order preventing the use of the Offering Memorandum, or any amendment or
supplement thereto, or any order asserting that any of the transactions
contemplated by this Agreement are subject to the registration
requirements of the Securities Act shall have been issued.
(e) Since the dates as of which information is given in the Offering
Memorandum, (i) there shall not have been any material change, or any
development that is reasonably likely to result in a material change, in
the capital stock, or material increase in the short-term debt or the
long-term debt, of Holdings, Anvil or any of their subsidiaries from that
set forth in the Offering Memorandum and (ii) no dividend or distribution
of any kind shall have been declared, paid or made by Holdings, Anvil or
any of their subsidiaries on any class of its capital stock. Since the
date hereof and since the dates as of which information is given in the
Offering Memorandum, there shall not have been any Material Adverse
Change.
24
<PAGE>
(f) You shall have received certificates, dated the Closing Date,
signed by (i) the President and (ii) any Vice President or a principal
financial or accounting officer of Holdings, as of the Closing Date,
confirming the matters set forth in paragraphs (a), (c) (d) and (e) of
this Section 7.
(g) You shall have received on the Closing Date an opinion
(satisfactory to you and your counsel), dated the Closing Date, of
Kirkland & Ellis, counsel for Holdings and Anvil, to the effect set forth
in Exhibit B hereto.
(h) You shall have received on the Closing Date an opinion
(satisfactory to you and your counsel), dated the Closing Date, of Jacob
Hollander, Vice President, Secretary and General Counsel of Holdings, to
the effect set forth in Exhibit C hereto.
(i) Counsel for Holdings and Anvil shall have delivered to you
copies of all opinions issued by them in connection with the New Credit
Agreement and the transactions contemplated thereby.
(j) You shall have received an opinion, dated the Closing Date, of
Simpson Thacher & Bartlett, your counsel, in form and substance reasonably
satisfactory to you, covering such matters as are customarily covered in
such opinions.
(k) You shall have received a solvency opinion, dated the Closing
Date, of Murray Devine, addressed to the Initial Purchaser and otherwise
in form and substance reasonably satisfactory to you.
(l) At the time this Agreement is executed and delivered by Holdings
and on the Closing Date, you shall have received letters, substantially in
the form previously approved by you, from Deloitte & Touche LLP and KPMG
Peat Marwick LLP, independent public accountants, with respect to the
financial statements and certain financial information contained in the
Offering Memorandum.
(m) Subsequent to the execution and delivery of this Agreement,
there shall not have been any downgrading, nor shall have any notice have
been given of any intended or potential downgrading or of any review for a
possible change that does not indicate the direction of the possible
change, in the rating accorded to any securities of Holdings or Anvil by
any "nationally recognized statistical rating organization," as such term
is defined for the purposes of Rule 436(g)(2) under the Securities Act.
(n) Simpson Thacher & Bartlett shall have been furnished with such
documents and opinions, in addition to those set forth above, as they may
reasonably require for the purpose of enabling them to review or pass upon
the matters referred to in this Section 7 and in order to evidence the
accuracy, completeness or satisfaction in all material respects of any of
the representations, warranties or conditions herein contained.
25
<PAGE>
(o) Prior to the Closing Date, Holdings shall have furnished to you
such further information, certificates and documents as you may reasonably
request.
(p) Holdings and the Trustee shall have entered into the Exchange
Debenture Indenture and Holdings and the Unit Agent shall have entered
into the Unit Agreement and you shall have received counterparts,
conformed as executed, thereof.
(q) Holdings, Anvil and the Initial Purchaser shall have entered
into the Registration Rights Agreement and the parties to the
Securityholders Agreement shall have entered into such agreement and you
shall have received counterparts, conformed as executed, thereof.
(r) Prior to the Closing Date, Holdings shall have filed the
Certificate of Designation with the Secretary of State of the State of
Delaware and you shall have received evidence thereof satisfactory to you.
(s) At or prior to the Closing Date, the Recapitalization shall have
been consummated on terms that conform in all material respects to the
Recapitalization Agreement, as amended, (in the form delivered to the
Initial Purchasers prior to the date hereof) and the description thereof
in the Offering Memorandum and you shall have received true and correct
copies of all documents pertaining thereto and evidence satisfactory to
you of the consummation thereof.
(t) At or prior to the Closing Date, the closing under the New
Credit Agreement shall have been consummated on terms that conform in all
material respects to the New Credit Agreement (in the form delivered to
the Initial Purchaser prior to the date hereof) and the description
thereof in the Offering Memorandum and you shall have received evidence
satisfactory to you of the consummation thereof.
(u) At or prior to the Closing Date, the Offering shall have been
consummated on terms that conform in all material respects to the
description thereof contained in the Offering Memorandum and you shall
have received evidence satisfactory to you of the consummation thereof.
(v) Prior to the Closing Date, Holdings, Anvil and their
subsidiaries shall have furnished to you such further information,
certificates and documents as you may reasonable request, including any
such information, certificates and documents required in connection with
the legal opinions to be furnished by your counsel as set forth above.
All opinions, certificates, letters and other documents required by
this Section 7 to be delivered by Holdings and Anvil will be in compliance with
the provisions hereof only if they are reasonably satisfactory in form and
substance to you. Holdings will furnish the Initial Purchaser with such
conformed copies of such opinions, certificates, letters and other documents as
they shall reasonably request.
26
<PAGE>
8. Conditions to the Obligations of Holdings. All of the
representations and warranties of the Initial Purchaser contained in this
Agreement shall be true and correct as of the Closing Date with the same force
and effect as if made on and as of the Closing Date.
9. Effective Date of Agreement and Termination. This Agreement shall
become effective upon the execution hereof.
This Agreement may be terminated at any time on or prior to the
Closing Date by you by notice to Anvil if any of the following has occurred: (i)
subsequent to the date information is provided in the Offering Memorandum, any
Material Adverse Change which, in your judgment, materially impairs the
investment quality of any of the Securities, (ii) any outbreak or escalation of
hostilities or other national or international calamity or crisis or material
adverse change in the financial markets of the United States or elsewhere, or
any other substantial national or international calamity or emergency if the
effect of such outbreak, escalation, calamity, crisis, material adverse change
or emergency would, in your judgment, make it impracticable or inadvisable to
market any of the Securities or to enforce contracts for the sale of any of the
Securities, (iii) any suspension or limitation of trading generally in
securities on the New York Stock Exchange or in the Nasdaq National Market
System or any setting of minimum prices for trading on such exchange or markets,
(iv) any declaration of a general banking moratorium by either federal or New
York authorities, (v) the taking of any action by any federal, state or local
government or agency in respect of its monetary or fiscal affairs that in your
judgment has a material adverse effect on the financial markets in the United
States, and would, in your judgment, make it impracticable or inadvisable to
market any of the Securities or to enforce contracts for the sale of any of the
Securities or (vi) the enactment, publication, decree, or other promulgation of
any federal or state statute, regulation, rule or order of any court or other
governmental authority which, in your judgment, would have a Material Adverse
Effect.
The indemnities and contribution provisions and the other
agreements, representations and warranties of Holdings, their respective
officers and directors and of the Initial Purchaser set forth in or made
pursuant to this Agreement shall remain operative and in full force and effect,
and will survive delivery of and payment for the Units regardless, of (i) any
investigation, or statement as to the results thereof, made by or on behalf of
either of the Initial Purchaser or by or on behalf of Holdings, the officers or
directors of Holdings or the controlling person of Holdings, (ii) acceptance of
the Units and payment for them hereunder and (iii) termination of this
Agreement.
If this Agreement shall be terminated by the Initial Purchaser
pursuant to clause (i) of the second paragraph of this Section 9 or because of
the failure or refusal on the part of Holdings or Anvil to comply with the terms
or to fulfill any of the conditions of this Agreement, Anvil agrees to reimburse
you for all out-of-pocket expenses (including the fees and disbursements of
counsel) incurred by you. Notwithstanding any termination of this Agreement,
Anvil shall be liable for all expenses which it has agreed to pay pursuant to
Section 4(f) hereof. If the transactions contemplated hereby are consummated,
each of the parties shall pay its own
27
<PAGE>
expenses in connection with the offering and sale of the Units, including the
costs and expenses of its counsel, except as otherwise provided in Section 4(f)
hereof.
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon Holdings, the Initial
Purchaser, any Indemnified Person referred to herein and their respective
successors and assigns, all as and to the extent provided in this Agreement, and
no other person shall acquire or have any right under or by virtue of this
Agreement. The terms "successors and assigns" shall not include a purchaser of
any of the Units from the Initial Purchaser merely because of such purchase.
10. Miscellaneous. Notices given pursuant to any provision of this
Agreement shall be addressed as follows:
(i) if to Holdings:
Anvil Holdings, Inc.
228 East 45th Street
New York, New York 10017
Attention: Jacob Hollander
Telecopier: 212-885-9411
with copies to:
399 Venture Partners, Inc.
399 Park Avenue, 14th Floor
New York, New York 10043
Attention: David F. Thomas
Telecopier: 212-888-2940
and
Bruckmann, Rosser, Sherrill & Co., Inc.
126 East 56th Street, 29th Floor
New York, New York 10022
Attention: Stephen F. Edwards
Telecopier: 212-521-3799
and copy to:
Kirkland & Ellis
Citicorp Center
153 East 53rd Street
New York, New York 10022
Attention: Lance C. Balk
Telecopier: 212-446-4900
28
<PAGE>
(ii) if to the Initial Purchaser:
Donaldson, Lufkin & Jenrette
Securities Corporation
277 Park Avenue
New York, New York 10172
Attention: Tom McGonagle
Telecopier: 212-892-7509
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: John D. Lobrano
Telecopier: 212-455-2502
(iv) or in any case to such other address as the person to be
notified may have requested in writing.
This Agreement shall be governed and construed in accordance with
the internal laws of the State of New York as applied to contracts made and
performed entirely within the State of New York, without regard to the conflicts
of laws and principles thereof. This Agreement may be signed in various
counterparts which together shall constitute one and the same instrument.
29
<PAGE>
Please confirm that the foregoing correctly sets forth the Agreement
between Holdings and the Initial Purchaser.
Very truly yours,
ANVIL HOLDINGS, INC.
By:
--------------------------------------
Name:
Title:
Accepted and agreed to as of
the date first above written:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By:
---------------------------------
Name:
Title:
<PAGE>
Schedule I
DIRECT AND INDIRECT SUBSIDIARIES
OF ANVIL HOLDINGS, INC.
1. Anvil Knitwear, Inc., a Delaware corporation ("Anvil"). Anvil is
authorized to issue 1,000 shares of common stock, par value $.01 per share
of which all 1,000 shares are issued and outstanding. Holdings is the
record and beneficial owner of all 1,000 shares of the common stock of
Anvil.
2. Anvil (Czech), Inc., a Delaware corporation ("Czech"). Czech is authorized
to issue 1,000 shares of common stock, par value $.01 per share of which
all 1,000 shares are issued and outstanding. Anvil is the record and
beneficial owner of all 1,000 shares of the common stock of Czech.
3. Anvil SRO, a Czech Republic membership association ("SRO"). SRO is a
wholly owned subsidiary of Czech.
4 A.K.H., S.A., a Honduran limited liability company ("Honduras"). Honduras
is authorized to issue 250 membership interests of which 250 are issued
and outstanding. Anvil is the record and beneficial owner of 246
membership interests. The remaining 4 membership interests are held 1 each
by Mario Mejia Cobos, Jesse Ivy Beall Caballero, Jose Angel Mejia, and
Julio Herra Montes.
5. Cottontops, Inc., a Delaware corporation ("Cottontops DE"). Cottontops DE
is authorized to issue 100 shares of common stock, par value $.01 of which
all 100 shares are issued and outstanding. Anvil is the record and
beneficial owner of all 100 shares of the common stock of Cottontops DE.
<PAGE>
Exhibit A
[Form of Registration Rights Agreement]
<PAGE>
Exhibit B
[Form of Opinion of Kirkland & Ellis]
<PAGE>
Exhibit C
[Form of Opinion of the General Counsel]
<PAGE>
UNIT AGREEMENT dated as of March 14, 1997 between Anvil Holdings,
Inc., a Delaware corporation, ("Holdings"), and United States Trust Company of
New York, as Unit Agent (the "Unit Agent") and United States Trust Company of
New York, as Transfer Agent (the "Transfer Agent").
WHEREAS, Holdings proposes to issue 30,000 Units (the "Units"), each
initially consisting of 40 shares of 13% Senior Exchangeable Preferred Stock due
2009 with an aggregate liquidation preference of $30,000,000 (the "Senior
Preferred Stock") and 13 shares of Class B Common Stock, $0.01 par value per
share (the "Class B Common").
WHEREAS, Holdings desires to appoint United States Trust Company of
New York to act as its agent for the purpose of issuing certificates ("Unit
Certificates") representing the Units and for the registration of transfers and
exchanges thereof. United States Trust Company of New York in such capacity is
referred to herein as the "Unit Agent."
WHEREAS, the Senior Preferred Stock and the Class B Common
comprising each Unit will not be separately tradable until the earliest to occur
of (i) such date which is 90 days from the date of issuance of Senior Preferred
Stock, (ii) such earlier date as may be determined by Donaldson, Lufkin &
Jenrette Securities Corporation, (iii) in the event of a Change of Control (as
defined in the Certificate of Designations pursuant to which the Senior
Preferred Stock will be issued), the date on which Holdings mails notice thereof
to holders of the Senior Preferred Stock, (iv) in the event that Holdings elects
to exchange the Senior Preferred Stock for Holdings' 13% Subordinated Exchange
Debentures due 2009 (the "Exchange Debentures"), the date on which Holdings
mails notice thereof to holders of the Senior Preferred Stock, (v) in the event
that Holdings elects to redeem the Senior Preferred Stock with the proceeds of a
public equity offering of Holdings' capital stock, the date on which Holdings
mails notice thereof to holders of the Senior Preferred Stock, and (vi) the date
upon which a registration statement under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to a registered exchange offer for the
Senior Preferred Stock is declared effective under the Securities Act (such
earliest date being the "Separation Date").
NOW THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
SECTION 1. Appointment of Unit Agent. (a) Holdings hereby appoints
the Unit Agent to act as agent for Holdings in accordance with the instructions
set forth hereinafter in this Agreement, and the Unit Agent hereby accepts such
appointment.
(b) Holdings hereby appoints the Transfer Agent to act as agent for
Holdings in accordance with the instructions set forth hereinafter in this
Agreement, and the Transfer Agent hereby accepts such appointment. All the
covenants and provisions of this Agreement by or for the benefit of the Unit
Agent shall bind and inure to the benefit of the Transfer Agent.
SECTION 2. Unit Certificates. The Units will initially be issued
either in global form (the "Global Units"), substantially in the form of Exhibit
A, or in registered
<PAGE>
2
form as definitive Unit certificates ("Definitive Units"). Any certificates
evidencing the Global Units or the Definitive Units to be delivered pursuant to
this Agreement shall be substantially in the form set forth in Exhibit A
attached hereto, and if Global Units, shall bear the legend set forth in Exhibit
B attached hereto. Such Global Units shall represent such of the outstanding
Units as shall be specified therein and each shall provide that it shall
represent the aggregate Units from time to time endorsed thereon and that the
aggregate amount of outstanding Units represented thereby may from time to time
be reduced or increased, as appropriate. Any endorsement of a Global Unit to
reflect the amount of any increase or decrease in the amount of outstanding
Units represented thereby shall be made by the Unit Agent and Depositary (as
defined below) in accordance with instructions given by the holder thereof. The
Depository Trust Company shall act as the Depositary (the "Depositary") with
respect to the Global Units until a successor shall be appointed by Holdings and
the Unit Agent. Upon written request, a Unit holder may receive from the
Depositary and Unit Agent Definitive Units as set forth in Section 5 below.
SECTION 3. Execution of Unit Certificates. Unit Certificates shall
be signed on behalf of Holdings by Holdings' Chairman of the Board or a
President or a Vice President and by a Secretary or an Assistant Secretary under
Holdings' corporate seal. Each such signature upon the Unit Certificates may be
in the form of a facsimile signature of the present or any future Chairman of
the Board, President, Vice President, Treasurer, Secretary or Assistant
Secretary and may be imprinted or otherwise reproduced on the Unit Certificates
and for that purpose Holdings may adopt and use the facsimile signature of any
person who shall have been Chairman of the Board, President, Vice President,
Treasurer, Secretary or Assistant Secretary, notwithstanding the fact that at
the time the Unit Certificates shall be authenticated and delivered or disposed
of he or she shall have ceased to hold such office. The seal of Holdings may be
in the form of a facsimile thereof and may be impressed, affixed, imprinted or
otherwise reproduced on the Unit Certificates.
In case any officer of Holdings who shall have signed any of the
Unit Certificates shall cease to be such officer before the Unit Certificates so
signed shall have been authenticated by the Unit Agent, or disposed of by
Holdings, such Unit Certificates nevertheless may be authenticated and delivered
or disposed of as though such person had not ceased to be such officer of
Holdings.
Unit Certificates shall be dated the date of authentication by the
Unit Agent.
SECTION 4. Registration and Authentication. The Unit Agent, on
behalf of Holdings, shall number and register the Unit Certificates in a
register as they are issued by Holdings.
Unit Certificates shall be manually authenticated by the Unit Agent
and shall not be valid for any purpose unless so authenticated. The Unit Agent
shall, upon the written order, set forth in an Officers' Certificate, of the
Chairman of the Board, the President, a Vice President, the Treasurer, Secretary
or an Assistant Secretary of Holdings, specifying the amount of Units to be
authenticated, whether the Units are to be Global Units or Definitive Units, the
date of such Units, and such other information as the Unit Agent may request,
<PAGE>
3
initially authenticate and deliver not more than 35,000 Units and shall
thereafter authenticate and deliver Units as otherwise provided in this
Agreement.
Holdings and the Unit Agent may deem and treat the registered
holder(s) of the Unit Certificates as the absolute owner(s) thereof
(notwithstanding any notation of ownership or other writing thereon made by
anyone) for all purposes, and neither Holdings nor the Unit Agent shall be
affected by any notice to the contrary.
SECTION 5. Registration of Transfers and Exchanges.
(a) Transfer and Exchange of Definitive Units. Prior to the
Separation Date, when Definitive Units are presented to the Unit Agent with a
request:
(i) to register the transfer of the Definitive Units; or
(ii) to exchange such Definitive Units for an equal number of
Definitive Units of other authorized denominations,
the Unit Agent shall register the transfer or make the exchange as requested if
the requirements under this Agreement as set forth in this Section 5 for such
transactions are met; provided, however, that the Definitive Units presented or
surrendered for registration of transfer or exchange:
(x) shall be duly endorsed or accompanied by a written
instruction of transfer in form satisfactory to the Unit
Agent, duly executed by the holder thereof or by his
attorney, duly authorized in writing; and
(y) in the case of Units the offer and sale of which have
not been registered under the Securities Act and are
presented for transfer or exchange prior to (x) the date
which is two years after the later of the date of
original issue and the last date on which Holdings or
any affiliate of Holdings was the owner of such Unit, or
any predecessor thereto, and (y) such later date, if
any, as may be required by any subsequent change in
applicable law (the "Resale Restriction Separation
Date"), such Units shall be accompanied, in the sole
discretion of Holdings, by the following additional
information and documents, as applicable, however, it
being understood that the Unit Agent need not determine
which clause (A) through (D) below is applicable:
(A) if such Unit is being delivered to the Unit Agent
by a holder for registration in the name of such
holder, without transfer, a certification from
such holder to that effect (in substantially the
form of Exhibit C hereto); or
<PAGE>
4
(B) if such Unit is being transferred to a qualified
institutional buyer (as defined in Rule 144A under
the Securities Act) in accordance with Rule 144A
under the Securities Act or pursuant to an
exemption from registration in accordance with
Rule 144 or Regulation S under the Securities Act
or pursuant to an effective registration statement
under the Securities Act, a cer tification to that
effect (in substantially the form of Exhibit C
hereto); or
(C) if such Unit is being transferred to an
institutional "accredited investor" within the
meaning of subparagraph (a)(1), (a)(2), (a)(3) or
(a)(7) of Rule 501 under the Securities Act,
delivery of a Certificate of Transfer in the form
of Exhibit D hereto and an opinion of counsel
and/or other information satisfactory to Holdings
to the effect that such transfer is in compliance
with the Securities Act; or
(D) if such Unit is being transferred in reliance on
another exemption from the registration
requirements of the Securities Act, a
certification to that effect (in substantially the
form of Exhibit C hereto) and an opinion of
counsel reasonably acceptable to Holdings to the
effect that such transfer is in compliance with
the Securities Act.
(b) Restrictions on Transfer of a Definitive Unit for a Beneficial
Interest in a Global Unit. A Definitive Unit may not be exchanged for a
beneficial interest in a Global Unit except upon satisfaction of the
requirements set forth below. Upon receipt by the Unit Agent of a Definitive
Unit, duly endorsed or accompanied by appropriate instruments of transfer, in
form satisfactory to the Unit Agent, together with:
(i) certification, substantially in the form of Exhibit C hereto,
that such Definitive Unit is being transferred to a qualified
institutional buyer (as defined in Rule 144A under the
Securities Act) in accordance with Rule 144A under the
Securities Act, or delivery of a Certificate of Transfer in
the form of Exhibit D hereto if such Definitive Unit is being
transferred to an accredited investor within the meaning of
subparagraph (a)(1), (a)(2), (a)(3) or (a)(7) of Rule 501
under the Securities Act; and
(ii) written instructions directing the Unit Agent to make, or to
direct the Depositary to make, an endorsement on the Global
Unit to reflect an increase in the aggregate amount of the
Units represented by the Global Unit,
<PAGE>
5
then the Unit Agent shall cancel such Definitive Unit and cause, or direct the
Depositary to cause, in accordance with the standing instructions and procedures
existing between the Depositary and the Unit Agent, the number of Units
represented by the Global Unit to be increased accordingly. If no Global Unit is
then outstanding, Holdings shall issue and the Unit Agent shall authenticate a
new Global Unit in the appropriate amount.
(c) Transfer and Exchange of Global Units. The transfer and exchange
of Global Units or beneficial interests therein shall be effected through the
Depositary, in accordance with this Unit Agreement (including the restrictions
on transfer set forth herein) and the procedures of the Depositary therefor.
(d) Transfer of a Beneficial Interest in a Global Unit for a
Definitive Unit.
(i) Prior to the Separation Date, any person having a beneficial
interest in a Global Unit may upon request exchange such
beneficial interest for a Definitive Unit. Upon receipt by the
Unit Agent of written instructions or such other form of
instructions as is customary for the Depositary from the
Depositary or its nominee on behalf of any person having a
beneficial interest in a Global Unit and upon receipt by the
Unit Agent of a written order or such other form of
instructions as is customary for the Depositary or the person
designated by the Depositary as having such a beneficial
interest containing registration instructions and, in the case
of any such transfer or exchange prior to the Resale
Restriction Separation Date, the following additional
information and documents, however, it being understood that
the Unit Agent need not determine which clause (A) through (D)
below is applicable:
(A) If such beneficial interest is being transferred to the
person designated by the Depositary as being the
beneficial owner, a certification from such person to
that effect (in substantially the form of Exhibit C
hereto); or
(B) if such beneficial interest is being transferred to a
qualified institutional buyer (as defined in Rule 144A
under the Securities Act) in accordance with Rule 144A
under the Securities Act or pursuant to an exemption
from registration in accordance with Rule 144 or
Regulation S under the Securities Act or pursuant to an
effective registration statement under the Securities
Act, a certification to that effect from the transferee
or transferor (in substantially the form of Exhibit C
hereto); or
(C) if such beneficial interest is being transferred to an
institutional "accredited investor" within the meaning
of subparagraph (a)(1), (a)(2), (a)(3) or (a)(7) of Rule
501 under the Securities Act, delivery of a Certificate
of Transfer in the form of Exhibit D hereto and an
opinion of counsel and/or other information
<PAGE>
6
satisfactory to Holdings to the effect that such
transfer is in compliance with the Securities Act; or
(D) if such beneficial interest is being transferred in
reliance on another exemption from the registration
requirements of the Securities Act, a certification to
that effect from the transferee or transferor (in
substantially the form of Exhibit C hereto) and an
opinion of counsel from the transferee or transferor
reasonably acceptable to Holdings to the effect that
such transfer is in compliance with the Securities Act,
then the Unit Agent will cause, in accordance with the standing
instructions and procedures existing between the Depositary and the
Unit Agent, the aggregate amount of the Global Unit to be reduced
and, following such reduction, Holdings will execute and, upon
receipt of an authentication order in the form of an Officers'
Certificate (as defined in Section 5(f) below), the Unit Agent will
authenticate and deliver to the transferee a Definitive Unit.
(ii) Definitive Units issued in exchange for a beneficial interest
in a Global Unit pursuant to this Section 5(d) shall be
registered in such names and in such authorized denominations
as the Depositary, pursuant to instructions from its direct or
indirect participants or otherwise, shall instruct the Unit
Agent in writing. The Unit Agent shall deliver such Definitive
Units to the persons in whose names such Units are so
registered.
(e) Restrictions on Transfer and Exchange of Global Units.
Notwithstanding any other provisions of this Agreement (other than the
provisions set forth in subsection (f) of this Section 5), a Global Unit may not
be transferred as a whole except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
(f) Authentication of Definitive Units in Absence of Depositary. If
at any time:
(i) the Depositary for the Units notifies Holdings that the
Depositary is unwilling or unable to continue as Depositary
for the Global Unit and a successor Depositary for the Global
Unit is not appointed by Holdings within 90 days after
delivery of such notice; or
(ii) Holdings, in its sole discretion, notifies the Unit Agent in
writing that it elects to cause the issuance of Definitive
Units in place of the Global Unit under this Unit Agreement,
then Holdings will execute, and the Unit Agent, upon receipt of an officers'
certificate signed by two officers of Holdings (one of whom must be the
principal executive officer, principal
<PAGE>
7
financial officer or principal accounting officer) (an "Officers' Certificate")
requesting the authentication and delivery of Definitive Units, will
authenticate and deliver Definitive Units, in an aggregate number equal to the
aggregate number of Units represented by the Global Unit, in exchange for such
Global Unit.
(g) Legends.
(i) Except as permitted by the following paragraph (ii), and
unless specified in an Officer's Certificate delivered to the
Unit Agent and Registrar, each Unit Certificate evidencing the
Global Units and the Definitive Units (and all Units issued in
exchange therefor or substitution thereof) shall bear a legend
substantially to the following effect:
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 PROVIDED BY RULE 144A UNDER THE
SECURITIES ACT. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES
FOR THE BENEFIT OF HOLDINGS THAT (A) SUCH SECURITY MAY BE RESOLD,
PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) (a) TO A PERSON WHO 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, (c) OUTSIDE
THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR (d) IN
ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF
HOLDINGS SO REQUESTS), (2) TO HOLDINGS OR (3) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE
WITH THE 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 OF
THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH
IN (A) ABOVE.
<PAGE>
8
THESE SECURITIES HAVE BEEN OFFERED AS PART OF A UNIT. EACH OF THE
UNITS CONSISTS OF 40 SHARES OF 13% SENIOR EXCHANGEABLE PREFERRED
STOCK DUE 2009 (THE "SENIOR PREFERRED STOCK") OF ANVIL HOLDINGS,
INC. AND 13 SHARES OF CLASS B COMMON STOCK OF ANVIL HOLDINGS, INC.
(THE "CLASS B COMMON"). THE SENIOR PREFERRED STOCK AND CLASS B
COMMON WILL NOT BE TRANSFERABLE BY A HOLDER THEREOF SEPARATELY FROM
EACH OTHER UNTIL THE "SEPARATION DATE," WHICH SHALL BE THE EARLIEST
OF (I) SUCH DATE WHICH IS 90 DAYS FROM THE DATE OF ISSUANCE OF THE
SENIOR PREFERRED STOCK, (II) SUCH EARLIER DATE AS MAY BE DETERMINED
BY DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION, (III) IN THE
EVENT OF A CHANGE OF CONTROL, THE DATE ON WHICH HOLDINGS MAILS
NOTICE THEREOF TO HOLDERS OF THE SENIOR PREFERRED STOCK, (IV) IN THE
EVENT THAT HOLDINGS ELECTS TO EXCHANGE THE SENIOR PREFERRED STOCK
FOR EXCHANGE DEBENTURES, THE DATE ON WHICH HOLDINGS MAILS NOTICE
THEREOF TO HOLDERS OF THE SENIOR PREFERRED STOCK, (V) IN THE EVENT
THAT HOLDINGS ELECTS TO REDEEM THE SENIOR PREFERRED STOCK WITH THE
PROCEEDS OF A PUBLIC EQUITY OFFERING OF HOLDINGS' CAPITAL STOCK, THE
DATE ON WHICH HOLDINGS MAILS NOTICE THEREOF TO HOLDERS OF THE SENIOR
PREFERRED STOCK, AND (VI) THE DATE UPON WHICH A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT, WITH RESPECT TO A REGISTERED
EXCHANGE OFFER FOR THE SENIOR PREFERRED STOCK IS DECLARED EFFECTIVE
UNDER THE SECURITIES ACT.
(ii) Upon any sale or transfer of a Unit pursuant to Rule 144 under
the Securities Act or an effective registration statement
under the Securities Act:
(A) in the case of any Unit that is a Definitive Unit, the
Unit Agent shall permit the holder thereof to exchange
such Unit for a Definitive Unit that does not bear the
first two paragraphs of the legend set forth above and
rescind any related restriction on the transfer of such
Unit; and
(B) any such Unit represented by a Global Unit shall not be
subject to the provisions set forth in (i) above (such
sales or transfers being subject only to the provisions
of Section 5(c) hereof); provided, however, that with
respect to any request for an exchange of a Unit that is
represented by a Global Unit for a Definitive Unit that
does not bear the first two paragraphs of the legend set
forth above, which request is made in reliance upon Rule
144 under the Securities Act, the holder thereof shall
<PAGE>
9
certify in writing to the Unit Agent that such request
is being made pursuant to Rule 144 under the Securities
Act (such certification to be substantially in the form
of Exhibit C hereto).
(h) Cancellation and/or Adjustment of a Global Unit. At such time as
all beneficial interests in a Global Unit have either been exchanged for
Definitive Units, redeemed, repurchased or cancelled, such Global Unit shall be
returned to or retained and cancelled by the Unit Agent. At any time prior to
such cancellation, if any beneficial interest in a Global Unit is exchanged for
Definitive Units, redeemed, repurchased or cancelled, the number of Units
represented by such Global Unit shall be reduced and an endorsement shall be
made on such Global Unit, by the Unit Agent to reflect such reduction.
(i) Obligations with Respect to Transfers and Exchanges of
Definitive Units.
(i) Prior to the Separation Date, to permit registrations of
transfers and exchanges, Holdings shall deliver to the Unit Agent, upon
execution of this Agreement, and from time to time thereafter, sufficient
inventory of executed Definitive Units and Global Units.
(ii) All Definitive Units and Global Units issued upon any
registration, transfer or exchange of Definitive Units or
Global Units shall be the valid obligations of Holdings,
entitled to the same benefits under this Unit Agreement as the
Definitive Units or Global Units surrendered upon the
registration of transfer or exchange.
(iii) Prior to due presentment for registration of transfer of any
Unit, the Unit Agent and Holdings may deem and treat the
person in whose name any Unit is registered as the absolute
owner of such Unit, and neither the Unit Agent nor Holdings
shall be affected by notice to the contrary.
(j) The Unit Agent shall be under no duty to monitor compliance with
any federal, state or other securities laws.
SECTION 6. Separation of the Senior Preferred Stock and the Class B
Common. After the Separation Date, the Senior Preferred Stock and the Class B
Common represented by the Units shall be separately transferable. Upon
presentation after the Separation Date of any Unit Certificate for exchange for
Senior Preferred Stock and Class B Common or for registration of transfer or
otherwise, (i) the Unit Agent shall notify the Transfer Agent of the number of
Units so presented, the registered owner thereof, such owner's registered
address, the nature of any legends or restrictive endorsements set forth on such
Unit Certificate and any other information provided by the holder thereof in
connection therewith, (ii) the Transfer Agent, if the requirements of the
Certificate of Designations for such transaction are met, shall promptly
register, authenticate and deliver a new Senior Preferred Stock certificate
equal in liquidation preference to the Senior Preferred Stock represented by
such Unit Certificate in accordance with the direction of such holder and (iii)
<PAGE>
10
the Transfer Agent, if its requirements for such transactions are met, shall
promptly countersign, register and deliver a new Class B Common Stock
certificate for the number of shares of Class B Common previously represented by
such Unit Certificate in accordance with the directions of such holder. The
Transfer Agent will notify the Unit Agent of any additional requirements in
connection with a particular transfer or exchange.
Following the Separation Date, no Unit Certificates shall be issued
upon transfer, or exchange of Unit Certificates, or otherwise.
SECTION 7. Rights of Unit Holders. The registered owner of a Unit
Certificate shall have all the rights and privileges of a registered owner of
the Senior Preferred Stock of Holdings represented thereby and the number of
shares of Class B Common of Holdings represented thereby and shall be treated as
the registered owner thereof for all purposes.
SECTION 8. Unit Agent. The Unit Agent undertakes the duties and
obligations imposed by this Agreement upon the following terms and conditions,
by which Holdings and the holders of Units, by their acceptance thereof, shall
be bound:
(a) The statements contained herein and in the Unit Certificates
shall be taken as statements of Holdings, and the Unit Agent assumes no
responsibility for the correctness of any of the same. The Unit Agent assumes no
responsibility with respect to the distribution of the Unit Certificates except
as herein otherwise specifically provided.
(b) The Unit Agent shall not be responsible for and shall incur no
liability or responsibility to Holdings or any holder of a Unit Certificate for
any failure of Holdings to comply with any of the covenants in this Agreement,
Unit Certificates or the Certificate of Designations.
(c) The Unit Agent may consult at any time with counsel satisfactory
to it (who may be counsel for Holdings) and the Unit Agent shall incur no
liability or responsibility to Holdings or to any holder of any Unit Certificate
in respect of any action taken, suffered or omitted by it hereunder in good
faith and in accordance with the opinion or the advice of such counsel.
(d) The Unit Agent shall incur no liability or responsibility to
Holdings or to any holder of any Unit Certificate for any action taken in
reliance on any Unit Certificate, 2 certificate of shares, notice, resolution,
waiver, consent, order, certificate, or other paper, document or instrument
believed by the Unit Agent to be genuine and to have been signed, sent or
presented by the proper party or parties.
(e) Holdings agrees to pay to the Unit Agent reasonable
compensation, as agreed in writing from time to time, for all services rendered
by the Unit Agent in connection with this Agreement, to reimburse the Unit Agent
for all expenses, taxes and governmental charges and other charges of any kind
and nature reasonably incurred by the Unit Agent in connection with this
Agreement (including, without limitation, reasonable fees
<PAGE>
11
and expenses of counsel) and to indemnify the Unit Agent and its agents,
employees, directors, officers and affiliates and save it and them harmless
against any and all losses, liabilities and expenses of any nature whatsoever,
including, without limitation, judgments, costs and counsel fees and actual
expenses, for any action taken or omitted by the Unit Agent or arising in
connection with this Agreement and the exercise by the Unit Agent of its rights
hereunder and the performance by the Unit Agent of any of its obligations
hereunder except as a result of the Unit Agent's gross negligence or bad faith
or willful misconduct.
(f) The Unit Agent, and any stockholder, director, officer,
affiliate or employee ("Related Parties") of it, may buy, sell or deal in any of
the Units, Senior Preferred Stock, Class B Common, other Common Stock or other
securities of Holdings or become pecuniarily interested in any transaction in
which Holdings may be interested, or contract with or lend money to Holdings or
otherwise act as fully and freely as though it were not Unit Agent under this
Agreement. Nothing herein shall preclude the Unit Agent or such Related Parties
from acting in any other capacity for Holdings or for any other legal entity.
(g) The Unit Agent shall act hereunder solely as agent for Holdings
and its duties shall be determined solely by the provisions hereof. The Unit
Agent shall not be liable for anything which it may do or refrain from doing in
connection with this Agreement except for its own gross negligence or bad faith
or willful misconduct.
(h) No provision of this Agreement shall require the Unit Agent 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 reasonably assured to it.
(i) Before the Unit Agent acts or refrains from acting with respect
to any matter contemplated by this Unit Agreement, it may require from Holdings:
(1) an Officers' Certificate of Holdings stating that, in the
opinion of the signers, all conditions precedent, if any, provided
for in this Unit Agreement relating to the proposed action have been
complied with; and
(2) an opinion of counsel for Holdings stating that, in the
opinion of such counsel, all such conditions precedent have been
complied with.
Each Officers' Certificate or opinion of counsel with respect to
compliance with a condition or covenant provided for in this Unit
Agreement shall include:
(1) a statement that the person making such certificate or
opinion has read such covenant or condition;
<PAGE>
12
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certifi cate or opinion are based;
(3) a statement that, in the opinion of such person, he or she
has made such examination or investigation as is necessary to enable
him or her 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 or not, in the opinion of such
person, such condition or covenant has been complied with.
The Unit Agent shall not be liable for any action it takes or omits
to take in good faith in reliance on any such certificate or
opinion.
(j) In the absence of bad faith on its part, the Unit Agent may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the Unit
Agent and conforming to the requirements of this Unit Agreement. However, the
Unit Agent shall examine the certificates and opinions to determine whether or
not they conform to the requirements of this Unit Agreement.
(k) The Unit Agent may rely and shall be fully protected in relying
upon any document believed by it to be genuine and to have been signed or
presented by the proper person. The Unit Agent need not investigate any fact or
matter stated in the document.
(l) The Unit Agent may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
SECTION 9. Replacement of Unit Agent. The Unit Agent may resign by
providing Holdings not less than 30 days' prior written notice thereof. The
Holders of a majority in principal amount of the outstanding Units may remove
the Unit Agent by so notifying Holdings and the Unit Agent and may appoint a
successor Unit Agent. Holdings may remove the Unit Agent if:
(a) the Unit Agent is adjudged bankrupt or insolvent;
(b) a receiver or other public officer takes charge of the Unit
Agent or its property; or
(c) the Unit Agent becomes incapable of acting.
If the Unit Agent resigns or is removed or if a vacancy exists in
the office of the Unit Agent for any reason, Holdings shall notify each holder
of such event and shall promptly appoint a successor Unit Agent. Notwithstanding
any resignation or removal of the Unit Agent or the cancellation of the Unit
Certificates, Holdings' obligations under Section 8(e) shall survive for the
benefit of the retiring Unit Agent.
<PAGE>
13
SECTION 10. Successor Unit Agent by Merger, Etc. If the Unit Agent
consolidates with, merges or converts into, or transfers all or substantially
all of its corporate trust business to, another corporation, the resulting,
surviving or transferee corporation without any further act shall, if such
resulting, surviving or transferee corporation is otherwise eligible hereunder,
be the successor Unit Agent.
SECTION 11. Notices to Holdings, Unit Agent and Transfer Agent. Any
notice or demand authorized by this Agreement to be given or made shall be
sufficiently given or made (i) five business days after deposited in the mail,
first class or registered, postage paid, (ii) one business day after being
timely delivered to a next-day air courier or (iii) when receipt is acknowledged
by the addressee, if telecopied, addressed as follows:
If to Holdings:
Anvil Holdings, Inc.
228 E. 45th Street
New York, N.Y. 10017
Attention: Jacob Hollander
Telecopier: (212)
If to the Unit Agent or the Transfer Agent:
United States Trust Company of New York
114 West 47th Street, 25th Floor
New York, New York 10036
Attention: Corporate Trust Administration
Telephone No.: (212) 852-1676
Telecopier No.: (212) 852-1626
The parties hereto by notice to the other parties may designate
additional or different addresses for subsequent communications or notice.
Any notice to be mailed to a holder of Units shall be mailed to him
at his address as it appears on the register of Units maintained by the Unit
Agent. Copies of any such communication shall also be mailed to the Unit Agent
and Transfer Agent. The Unit Agent shall furnish Holdings or the Transfer Agent
promptly when requested with a list of registered holders of Units for the
purpose of mailing any notice or communication to the holders of the Senior
Preferred Stock or Class B Common and at such other times as may be reasonably
requested.
SECTION 12. Supplements and Amendments. Holdings, the Unit Agent and
the Transfer Agent may from time to time supplement or amend this Agreement
without the approval of any holders of Unit Certificates in order to cure any
ambiguity or to correct or supplement any provision contained herein which may
be defective or inconsistent with any other provision herein, or to make any
other provisions in regard to matters or questions arising hereunder which
Holdings, the Transfer Agent and the Unit Agent may deem
<PAGE>
14
necessary or desirable and which shall not in any way adversely affect the
interests of the holders of Unit Certificates. Any amendment or supplement to
this Agreement that has a material adverse effect on the interests of Unit
holders shall require the written consent of registered holders of the then
outstanding Units representing not less than a majority in principal amount of
the then outstanding Units.
SECTION 13. Successors. All the covenants and provisions of this
Agreement by or for the benefit of Holdings, the Transfer Agent or the Unit
Agent shall bind and inure to the benefit of their respective successors and
assigns hereunder.
SECTION 14. Governing Law. THIS AGREEMENT AND EACH UNIT CERTIFICATE
ISSUED HEREUNDER SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE
STATE OF NEW YORK AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF SAID STATE, WITHOUT REGARD TO THE CONFLICT OF LAW RULES THEREOF.
SECTION 15. Benefits of This Agreement. Nothing in this Agreement
shall be construed to give to any person or corporation other than Holdings, the
Transfer Agent, the Unit Agent and the registered holders of the Unit
Certificates any legal or equitable right, remedy or claim under this Agreement;
but this Agreement shall be for the sole and exclusive benefit of Holdings, the
Transfer Agent, the Unit Agent and the registered holders of the Unit
Certificates.
SECTION 16. Entire Agreement. This 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.
Such agreements supersede all prior agreements and understandings between the
parties with respect to such subject matter.
SECTION 17. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.
ANVIL HOLDINGS, INC.
By: ---------------------------------
Name:
Title:
UNITED STATES TRUST COMPANY
OF NEW YORK
as Unit Agent
By: ---------------------------------
Name:
Title:
UNITED STATES TRUST COMPANY
OF NEW YORK
as Transfer Agent
By: ---------------------------------
Name:
Title:
<PAGE>
EXHIBIT A
[FORM OF UNIT CERTIFICATE]
________ Units
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 PROVIDED BY RULE 144A UNDER THE SECURITIES ACT.
THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF HOLDINGS
THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)
(a) TO A PERSON WHO 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, (c) OUTSIDE THE UNITED STATES
TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER
THE SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF
COUNSEL IF HOLDINGS SO REQUESTS), (2) TO HOLDINGS OR (3) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE
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 OF THE SECURITY EVIDENCED HEREBY OF THE RESALE
RESTRICTIONS SET FORTH IN (1) ABOVE.
A-16
<PAGE>
ANVIL HOLDINGS, INC.
Units each Consisting of 40 Shares of
13% Senior Exchangeable Preferred Stock due 2009
and 13 Shares of Class B
Common Stock of Anvil Holdings, Inc.
No. ________ CUSIP No. ___________
Anvil Holdings, Inc., a Delaware corporation (the "Company"), which
term includes any successor corporation), hereby certifies that [ ] is the owner
of [ ] Units as described above, transferable only on the books of Holdings by
the holder thereof in person or by his or her duly authorized attorney, on
surrender of the Certificate properly endorsed.
Each Unit consists of 40 shares of 13% Senior Exchangeable Preferred
Stock due 2009 of Holdings (the "Senior Preferred Stock") and 13 shares of Class
B Common Stock, par value $0.01 per share, of Holdings (the "Class B Common").
This Unit is issued pursuant to the Unit Agreement (the "Unit Agreement") dated
as of March 14, 1997 among Holdings, United States Trust Company of New York, as
Unit Agent (the "Unit Agent") and as Transfer Agent (the "Transfer Agent"), and
is subject to the terms and provisions contained therein, all of which terms and
provisions the holder of this Unit Certificate consents to by acceptance hereof.
The terms of the Senior Preferred Stock are governed by a Certificate of
Designations (the "Certificate of Designations") dated as of March 13, 1997, and
are subject to the terms and provisions contained therein, to which all of such
terms and provisions the holder of this Unit Certificate consents by acceptance
hereof.
Reference is made to the further provisions of this Unit Certificate
contained on the reverse hereof, which will for all purposes have the same
effect as if set forth at this place. Copies of the Unit Agreement and
Certificate of Designations are on file at the office of Anvil Holdings, Inc.
228 E. 45th Street, New York, New York 10017, Attention: Jacob Hollander, and
are available to any holder on written request and without cost.
The Senior Preferred Stock and the Class B Common comprising each
Unit will not be separately tradable until the earliest to occur of (i) such
date which is 90 days from the date of issuance of the Senior Preferred Stock,
(ii) such earlier date as may be determined by Donaldson, Lufkin & Jenrette
Securities Corporation, (iii) in the event of a Change of Control, the date on
which Holdings mails notice thereof to holders of the Senior Preferred Stock,
(iv) in the event that Holdings elects to exchange the Senior Preferred Stock
for Exchange Debentures, the date on which Holdings mails notice thereof to
holders of the Senior Preferred Stock, (v) in the event that Holdings elects to
redeem the Senior Preferred Stock with the proceeds of a public equity offering
of Holdings' capital stock, the date on which Holdings mails notice thereof to
holders of the Senior Preferred Stock, and (vi) the date upon which a
registration statement under the Securities Act of 1933, as amended (the
A-17
<PAGE>
"Securities Act"), with respect to a registered exchange offer for the Senior
Preferred Stock is declared effective under the Securities Act.
Capitalized terms used but not otherwise defined in this Unit
Certificate shall have the meanings given thereto in the Certificate of
Designations.
Dated:
ANVIL HOLDINGS, INC.
By:--------------------------
Name:
Title:
By:--------------------------
Name:
Title:
Certificate of Authentication:
This is one of the Units
referred to in the within
mentioned Unit Agreement.
UNITED STATES TRUST COMPANY OF NEW YORK,
as Unit Agent
By:---------------------------
Authorized Signatory
A-18
<PAGE>
[FORM OF REVERSE OF UNIT CERTIFICATE]
ANVIL HOLDINGS, INC.
Units Each Consisting of 40 Shares
of 13% Senior Exchangeable
Preferred Stock due 2009 and
13 Shares of Class B Common Stock
of Anvil Holdings, Inc.
I. PROVISIONS RELATING TO THE 13%
SENIOR EXCHANGEABLE PREFERRED STOCK DUE 2009
1. Dividends. Holders of 13% Senior Exchangeable Preferred Stock
(the "Senior Preferred Stock") issued by Holdings pursuant to a Certificate of
Designations dated March 13, 1997 (the "Certificate of Designations") will be
entitled to receive, when, as and if declared by the Board of Directors of
Holdings, out of funds legally available therefor, dividends on the Senior
Preferred Stock at a rate per annum equal to 13% of the liquidation preference
per share of Senior Preferred Stock. All dividends will be cumulative whether or
not earned or declared on a daily basis from the date of issuance of the Senior
Preferred Stock and will be payable quarterly in arrears on March 15, June 15,
September 15 and December 15 of each year. On or before March 15, 2002 Holdings
may, at its option, pay dividends in cash or in additional fully paid and
non-assessable shares of Senior Preferred Stock having an aggregate liquidation
preference equal to the amount of such dividends. After March 15, 2002,
dividends may be paid only in cash. It is not expected that Holdings will pay
any dividends in cash for any period ending on or prior to March 15, 2002.
Notwithstanding the foregoing, during the pendency of a Registration Default (as
defined in the Registration Rights Agreement), then as liquidated damages, the
dividend rate borne by the Senior Preferred Stock, with respect to the first
90-day period immediately following the occurrence of such Registration Default
will increase by an amount equal to $.05 per week per $1,000 liquidation
preference of Senior Preferred Stock held by such Holder and the dividend rate
borne by the Senior Preferred Stock will increase by an additional $.05 per week
per $1,000 liquidation preference of Senior Preferred Stock with respect to each
subsequent 90-day period until all Registration Defaults have been cured, up to
a maximum increase in the dividend rate of $.30 per week per $1,000 liquidation
preference of Senior Preferred Stock and following the cure of all Registration
Defaults, the accrual of dividends at the increased rates specified by this
sentence will cease.
2. Method of Payment. Each distribution in the form of a dividend
(whether in cash or in additional shares of Senior Preferred Stock) shall be
payable to Holders of
A-19
<PAGE>
record as they appear on the stock register of Holdings on such record dates,
not less than 10 nor more than 60 days preceding the related Dividend Payment
Date, as shall be fixed by the Board of Directors. Dividends shall cease to
accumulate in respect of shares of the Senior Preferred Stock on the Exchange
Date (as defined in the Certificate of Designations) or on the date of their
earlier redemption unless Holdings shall have failed to issue the appropriate
aggregate principal amount of Exchange Debentures (as defined below) in respect
of the Senior Preferred Stock on the Exchange Date or shall have failed to pay
the relevant redemption price on the date filed for redemption.
3. Certificate of Designations. The Senior Preferred Stock is issued
by Holdings pursuant to the Certificate of Designations. The number of shares
constituting such series shall be 2,300,000 shares of Senior Preferred Stock,
consisting of an initial issuance of 1,200,000 shares of Senior Preferred Stock
plus additional shares of Senior Preferred Stock which may be issued to pay
dividends on the Senior Preferred Stock if Holdings elects to pay dividends in
additional shares of Senior Preferred Stock. The liquidation preference of the
Senior Preferred Stock shall be $25.00 per share.
4. Rank. The Senior Preferred Stock shall, with respect to dividend
distributions and distributions upon the liquidation, winding-up and dissolution
of Holdings, (i) rank senior to all classes of common stock of Holdings and each
other class of capital stock or series of Preferred Stock of Holdings hereafter
created by the Board of Directors the terms of which do not expressly provide
that it ranks on a parity with the Senior Preferred Stock as to dividend
distributions and distributions upon the liquidation, winding-up and dissolution
of Holdings (collectively referred to with the Common Stock of Holdings as
"Junior Securities") and (ii) rank on a parity with each series of Preferred
Stock existing on the date hereof the terms of which do not expressly provide
that it ranks junior to any senior Preferred Stock as to dividend distributions
and distributions upon the liquidation, winding-up and dissolution of Holdings
and any class of capital stock or series of Preferred Stock hereafter created by
the Board of Directors, the terms of which expressly provide that such class or
series shall rank on a parity with the Senior Preferred Stock as to dividend
distributions and distributions upon the liquidation, winding-up and dissolution
of Holdings (collectively referred to as "Parity Securities").
5. Optional Redemption. (a) Holdings may (subject to contractual and
other restrictions with respect thereto and the legal availability of funds
therefor), at the option of the Board of Directors, redeem at any time on or
after March 15, 2002, from any source of funds legally available therefor, in
whole or in part, in the manner set forth in the Certificate of Designations,
any or all of the shares of the Senior Preferred Stock, at the redemption prices
(expressed as a percentage of the liquidation preference thereof) set forth
below plus, without duplication, an amount in cash equal to all accumulated and
unpaid dividends per share (including an amount in cash equal to a prorated
dividend for the period from the
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<PAGE>
Dividend Payment Date immediately prior to the Redemption Date to the Redemption
Date), if redeemed during the 12-month period beginning on March 15 of each of
the calendar years indicated below:
Year Percentage
2002......................................................106.500%
2003......................................................104.333%
2004......................................................102.167%
2005 and thereafter ......................................100.000%
(b) In addition, at any time, Holdings any redeem, subject to
certain restrictions in the Certificate of Designations, shares of the Senior
Preferred Stock, in whole or in part, at the option of Holdings, at a redemption
price equal to 113% of the liquidation preference thereof, plus an amount in
cash equal to all accumulated and unpaid dividends per share (including an
amount in cash equal to a prorated dividend for the period from the Dividend
Payment Date immediately prior to the Redemption Date to the Redemption Date),
with the proceeds of a Public Equity Offering (as defined in the Certificate of
Designations), provided that such redemption occurs within 60 days after
consummation of such Public Equity Offering.
6. Mandatory Redemption. On March 15, 2009, Holdings shall redeem
(subject to the legal availability of funds therefor) from any source of funds
legally available therefor, in the manner provided in the Certificate of
Designations, all of the shares of the Senior Preferred Stock then outstanding
at a redemption price equal to 100% of the liquidation preference per share,
plus an amount in cash equal to all accumulated and unpaid dividends per share
(including an amount equal to a prorated dividend for the period from the
Redemption Date immediately prior to the Redemption Date to the Redemption
Date).
7. Exchange. Holdings may at its option exchange all, but not less
than all, of the then outstanding shares of Senior Preferred Stock into
Holdings' 13% Subordinated Exchange Debentures due 2009 (the "Exchange
Debentures") on any Dividend Payment Date, pursuant to and in accordance with
the provisions of the Certificate of Designations and, provided that on the date
of such exchange: (1) there shall be no contractual impediments to such
exchange; (2) there shall be legally available funds sufficient therefor
(including, without limitation, legally available funds sufficient therefor
under Sections 160 and 170 (or any successor provisions) of the Delaware General
Corporation Law); (3) either (a) a registration statement relating to the
Exchange Debentures shall have been declared effective under the Securities Act
of 1933, as amended (the "Securities Act"), prior to such exchange and shall
continue to be in effect on the date of such exchange or (b)(i) Holdings shall
have obtained a written opinion of counsel that an exemption from the
registration requirements of the Securities Act is available for such exchange
and that upon receipt of such Exchange Debentures pursuant to such exchange made
in accordance with such exemption, the holders (assuming such holder is not an
Affiliate of Holdings) thereof shall not be subject to any restrictions imposed
by the Securities Act upon the resale thereof and
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<PAGE>
(ii) such exemption is relied upon by Holdings for such exchange; (4) the
indenture for the Exchange Debentures (the "Exchange Debenture Indenture") and
the Trustee shall have been qualified under the Trust Indenture Act of 1939, as
amended; (5) immediately after giving effect to such exchange, no Default or
Event of Default (each as defined in the Exchange Debenture Indenture) would
exist under the Exchange Debenture Indenture; and (6) Holdings shall have
delivered to the Trustee a written opinion of counsel, dated the date of
exchange, regarding the satisfaction of the conditions set forth in clauses (1),
(2), (3), (4) and (5). In the event that the issuance of the Exchange Debentures
is not permitted on the date of exchange or any of the conditions set forth in
clauses (1) through (6) of the preceding sentence are not satisfied on the date
of exchange, Holdings shall use its best efforts to satisfy such conditions and
effect such exchange as soon as practicable.
8. Voting Rights. The Holders of shares of the Senior Preferred
Stock, except as otherwise required under the laws of the State of Delaware or
as set forth below or as set forth in the Certificate of Designations, shall not
be entitled or permitted to vote on any matter required or permitted to be voted
upon by the stockholders of Holdings.
9. Default. If (1) dividends on the Senior Preferred Stock are in
arrears and unpaid (and, in the case of dividends payable after March 15, 2002,
are not paid in cash) for four consecutive quarterly periods (a "Dividend
Default"); (2) Holdings fails to discharge any redemption obligation of the
Senior Preferred Stock when required (a "Redemption Default"), whether or not
Holdings is permitted to do so by the terms of any indenture, the credit
agreement or any other obligations of Holdings; (3) Holdings fails to make an
offer to purchase all outstanding shares of Senior Preferred Stock following a
Change of Control (as defined in the Certificate of Designations) if such offer
to purchase is required to be made pursuant to the Certificate of Designations
or fails to purchase shares of Senior Preferred Stock from holders who elect to
have such shares purchased pursuant to such Change of Control offer (a "Change
of Control Default"), whether or not Holdings is permitted to do so by the terms
of any indenture, the credit agreement or any other obligation of Holdings; (4)
Holdings breaches or violates one of the provisions set forth in paragraph (m)
the Certificate of Designations and the breach or violation continues for a
period of 30 days or more (a "Restriction Default"); or (5) a default occurs on
the obligations to pay principal of, interest on or any other payment obligation
when due (a "Payment Default") at final maturity on one or more classes of
Indebtedness of Holdings or any Subsidiary of Holdings, whether such
Indebtedness exists on the Senior Preferred Stock Issue Date or is incurred
thereafter, having individually or in the aggregate, an outstanding principal
amount of $25,000,000 or more, or any other Payment Default occurs on one or
more such classes of Indebtedness and such class or classes of Indebtedness are
declared due and payable prior to their respective maturities, then, in any such
case, the number of directors constituting the Board of Directors shall be
adjusted as set forth in the Certificate of Incorporation to permit the Holders
of the majority of the then outstanding Senior Preferred Stock, voting
separately as one class, to elect two directors. Subject to certain conditions,
Holders of a majority of the issued and outstanding shares of the Senior
Preferred Stock, voting separately as one class, shall have the exclusive right
to elect two directors at a meeting therefor called upon occurrence of such
Dividend Default, Redemption Default, Change of Control Default,
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<PAGE>
Restriction Default or Payment Default, as the case may be, and at every
subsequent meeting at which the terms of office of the directors so elected by
the Holders of the Senior Preferred Stock expire. Each such event described in
clauses (1), (2), (3), (4) and (5) is a "Voting Rights Triggering Event."
10. Registration Rights. Pursuant to a Preferred Stock Registration
Rights Agreement (the "Preferred Stock Registration Rights Agreement") between
the Initial Purchaser and Holdings, Holdings agree to: (i) file with the
Commission within 60 days of the consummation of the Unit Offering a
registration statement (the "Preferred Stock Exchange Offer Registration") with
respect to an offer to exchange the Senior Preferred Stock for a new issue of
preferred stock of Holdings (the "New Senior Preferred Stock") registered under
the Securities Act, with terms substantially identical to those of the Senior
Preferred Stock (the "Preferred Stock Exchange Offer"); (ii) use their best
efforts to cause such registration statement to become effective within 120 days
of the consummation of the Units Offering; and (iii) cause the Preferred Stock
Exchange Offer to be consummated within 150 days of the consummation of the
Units Offering. If: (i) the Preferred Stock Exchange Offer is not permitted by
applicable law or (ii) any holder of Transfer Restricted Securities (as defined
in the Offering Memorandum) notifies Holdings (A) that it is prohibited by law
or Commission policy from participating in the Preferred Stock Exchange Offer,
(B) that it may not resell the New Senior Preferred Stock acquired by it in the
Preferred Stock Exchange Offer to the public without delivering a prospectus and
the prospectus contained in the Preferred Stock Exchange Offer Registration
Statement is not appropriate or available for such resales or (C) that it is a
broker-dealer and holds Senior Preferred Stock acquired directly from Holdings
or an affiliate of Holdings, Holdings will be required to provide a shelf
registration statement to cover resales of the Senior Preferred Stock by the
holders thereof. If Holdings fails to satisfy these registration obligations, it
will be required to pay Liquidated Damages to the holders of the Senior
Preferred Stock under certain circumstances.
11. Change of Control. Upon the occurrence of a Change of Control,
each Holder of Senior Preferred Stock shall have the right to require Holdings
to purchase all or any part of such Holder's Senior Preferred Stock at a
purchase price in cash equal to 101% of the aggregate liquidation preference
thereof plus, without duplication, an amount in cash equal to all accumulated
and unpaid dividends per share pursuant to and in accordance with the
Certificate of Designations.
12. Restrictive Covenants. The Certificate of Designations contains
certain covenants that limit the ability of Holdings to redeem or repurchase
Junior Securities or Parity Securities and pay dividends thereon, to merge or
consolidate with any other entity, to sell assets and to enter into transactions
with affiliates. The Certificate of Designations also requires Holdings to
deliver certain reports and information to the holders of the Senior Preferred
Stock.
13. Authentication. The Units shall not be valid until the Unit
Agent or Authentication Agent manually signs the certificate of authentication
on the Units.
A-23
<PAGE>
14. Abbreviations and Defined Terms. Customary abbreviations may be
used in the name of a Holder of shares of Senior Preferred Stock 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).
15. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, Holdings has caused
CUSIP numbers to be printed on the Global Unit as a convenience to the Holders
of the Global Unit. No representation is made as to the accuracy of such numbers
as printed on the Global Unit and reliance may be placed only on the other
identification numbers printed hereon.
Holdings will furnish to any Holder of a share of Senior Preferred
Stock upon written request and without charge a copy of the Certificate of
Designations, which has the text of this share of Senior Preferred Stock in
larger type. Requests may be made to: Anvil Holdings, Inc., 228 E. 45th Street,
New York, New York, 10017, Attn: Jacob Hollander.
A-24
<PAGE>
II. PROVISIONS RELATING TO THE CLASS B COMMON STOCK
ANVIL HOLDINGS, INC.
The Second Amended and Restated Certificate of Incorporation (the
"Restated Certificate") of Anvil Holdings, Inc. ("Holdings") provides for the
authorization of three classes of Common Stock: Class A Common Stock, Class B
Common Stock and Class C Common Stock (collectively, the "Common Stock").
Holders of Class B Common Stock are entitled to one vote per share
on all matters to be voted on by stockholders while holders of Class A Common
Stock and Class C Common Stock have no right to vote on amy matters except in
special circumstances as specified in the Restated Certificate. Subject to the
rights of the holders of preferred stock and the restrictions, if any, imposed
by indebtedness outstanding from time to time, the holders of Class B Common
Stock are entitled to dividends and other distributions, as and when declared or
paid, whether in cash, property or securities of Holdings by the Board of
Directors of holdings out of assets legally available therefore. Holders of
Common Stock are entitled to share in such dividends or distributions on a pro
rata basis, except that the holders of Class A Common Stock are entitled to a
priority on all such dividends in an amount equal to the then outstanding Class
A Preference (as defined below). The holders of Common Stock do not have
preemptive, subscription, redemption or sinking fund rights under the terms of
the Restated Certificate.
Upon any voluntary or involuntary liquidation, dissolution or
winding up of Holdings, holders of Class A Common Stock are entitled to be paid
out of the assets of Holdings then available for distribution, a preference (the
"Class A Preference") of $100 per share before any distribution is paid on any
other shares of Common Stock. The Class A Preference accrue at a rate of 12.5%
per annum. After satisfaction of all its liabilities, the payment of the
liquidation preference of any outstanding shares of preferred stock and the
payment of the Class A Preference, the holders of shares of Common Stock are
entitled to share ratably in the distribution of all of Holdings' assets
remaining available for distribution. If Holdings in any manner subdivides or
combines the outstanding shares of any class of Common Stock, the outstanding
shares of all other classes of Common Stock will be proportionately subdivided.
Shares of Class A Common Stock and Class B Common Stock are not
convertible. Shares of Class C Common Stock are convertible at the option of the
holders representing a majority of the outstanding Class C Common Stock, into an
equal number of shares of Class B Common Stock.
Holdings is party to a Registration Rights and Securityholders
Agreement pursuant to which it has certain registration obligations with respect
to the Class B Common Stock.
A-25
<PAGE>
ASSIGNMENT FORM
If you the Holder want to assign this Unit, fill in the form below
and have your signature guaranteed:
I or we assign and transfer this Unit 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 Unit on the books of Holdings. The agent may substitute another to
act for him.
Dated: _____________ Signed:
-----------------------------------------------
(Sign exactly as your name appears
on the other side of this Unit)
A-26
<PAGE>
SCHEDULE OF INCREASES OR DECREASES OF UNITS(1)
The following increases or decreases in this Global Unit have been made:
Date of Amount of Amount of Number of Signature of
Exchange decrease in increase in Units of authorized
Number of Number of this Global signatory of
Units of this Units of this Unit Unit Agent
Global Unit Global Unit following
such decrease
or increase
- --------------------------------------------------------------------------------
- ----------
(1) This is to be included only if the Unit is in global form.
A-27
<PAGE>
EXHIBIT B
FORM OF LEGEND FOR GLOBAL UNITS
Any Global Unit authenticated and delivered hereunder shall bear a
legend (which would be in addition to any other legends required in the case of
a Restricted Security) in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE UNIT
AGREEMENT HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A
DEPOSITARY OR A NOMINEE OF A DEPOSITARY OR A SUCCESSOR DEPOSITARY. THIS
SECURITY IS NOT EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A
PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE UNIT AGREEMENT, AND NO TRANSFER OF THIS
SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE
DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE
REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE UNIT
AGREEMENT.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO
HOLDINGS OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT 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.
B-1
<PAGE>
EXHIBIT C
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF UNITS
Re: Units (the "Units") each consisting of 40 Shares of 13% Senior
Exchangeable Preferred Stock due 2009 of Anvil Holdings, Inc. and 13
shares of Class B Common Stock of Anvil Holdings, Inc.
This Certificate relates to _____ Units held in* ____ book-entry or*
_______ certificated form by ______ (the "Transferor").
The Transferor:*
has requested the Unit Agent by written order to deliver in
exchange for its beneficial interest in the Global Unit held by the depositary a
Unit or Units in definitive, registered form of authorized denominations and an
aggregate number equal to its beneficial interest in such Global Unit (or the
portion thereof indicated above); or
has requested the Unit Agent by written order to exchange or
register the transfer of a Unit or Units.
In connection with such request and in respect of each such Unit,
the Transferor does hereby certify that the Transferor is familiar with the Unit
Agreement relating to the above captioned Units and the restrictions on
transfers thereof as provided in Section 5 of such Unit Agreement, and that the
transfer of this Unit does not require registration under the Securities Act of
1933, as amended (the "Securities Act"), because[*]:
Such Unit is being acquired for the Transferor's own
account, without transfer (in satisfaction of Section 5(a)(y)(A) or Section
5(d)(i)(A) of the Unit Agreement).
Such Unit is being transferred to a qualified institutional
buyer (as defined in Rule 144A under the Securities Act) in reliance on Rule
144A or in accordance with Regulation S under the Securities Act.
Such Unit is being transferred in accordance with Rule 144
under the Securities Act.
Such Unit is being transferred in reliance on and in
compliance with an exemption from the registration requirements of the
Securities Act, other than Rule 144A or Rule 144 or Regulation S under the
Securities Act. An opinion of counsel to the effect that
C-2
<PAGE>
such transfer does not require registration under the Securities Act accompanies
this Certificate.
__________________________
[INSERT NAME OF TRANSFEROR]
By:
-----------------------------
Date:__________________________
*Check applicable box.
C-3
<PAGE>
EXHIBIT D
FORM OF LETTER TO BE DELIVERED BY ACCREDITED INSTITUTIONS
We are delivering this letter in connection with an offering of
30,000 Units (the "Units"), each consisting of 40 shares of 13% of Senior
Exchangeable Preferred Stock due 2009 (the "Senior Preferred Stock") of Anvil
Holdings, Inc., a Delaware corporation ("Holdings"), and 13 shares of Class B
Common Stock, $0.01 par value per share (the "Class B Common"), all as described
in the Offering Memorandum (the "Offering Memorandum") relating to such
offering. The Units, the Senior Preferred Stock and the Class B Common are
sometimes referred to herein as the "Securities."
We hereby confirm that:
(i) we are an "accredited investor" with the meaning of Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended
(the "Securities Act"), or an entity in which all of the equity owners are
accredited investors within the meaning of Rule 501(a)(1), (2), (3) or (7)
under the Securities Act (an "Institutional Accredited Investor");
(ii) any purchase of Securities by us will be for our own account or
for the account of one or more other Institutional Accredited Investors;
(iii) in the event that we purchase any Securities, we will acquire
Securities having a minimum purchase price of at least $100,000 for our
own account and for each separate account for which we are acting;
(iv) we have such knowledge and experience in financial and business
matters that we are capable of evaluating the merits and risks of
purchasing Securities;
(v) we are not acquiring Securities with a view to any distribution
thereof in a transaction that would violate the Securities Act or the
securities laws of any State of the United States or any other applicable
jurisdiction; provided that the disposition of our property and the
property of any accounts for which we are acting as fiduciary shall remain
at all times within our control; and
(vi) we have received a copy of the Offering Memorandum and
acknowledge that we have had access to such financial and other
information, and have been afforded the opportunity to ask such questions
of representatives of Holdings and receive answers thereto, as we deem
necessary in connection with our decision to purchase Securities.
We understand that the Securities are being offered in a transaction
not involving any public offering within the meaning of the Securities Act and
that the Securities
D-1
<PAGE>
have not been registered under the Securities Act, and we agree, on our own
behalf and on behalf of each account for which we acquire any notes, that such
Securities may be offered, resold, pledged or otherwise transferred only (i) to
a person whom we reasonably believe to be a "qualified institutional buyer" (as
defined in Rule 144A under the Securities Act) 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. in a transaction meeting the
requirements of Rule 904 under the Securities Act (and base upon an opinion of
counsel if Holdings so requests), (ii) to Holdings or (iii) pursuant to an
effective registration statement, and, in each case, in accordance with any
applicable securities laws of any State of United States or any other applicable
jurisdiction. We understand that the registrar and transfer agent will not be
required to accept for registration of transfer any Securities, except upon
presentation of evidence satisfactory to Holdings that the foregoing
restrictions on transfer have been complied with. We further understand that the
Securities purchased by us will bear a legend reflecting the substance of this
paragraph.
We acknowledge that you, Holdings and others will rely upon our
confirmations, acknowledgments and agreements set forth herein, and we agree to
notify you promptly in writing if any of our representations or warranties
herein ceases to be accurate and complete.
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
--------------------------------
(Name of Purchaser)
By:
-----------------------------
Name:
Title:
Address:
D-2
<PAGE>
EXECUTION COPY
================================================================================
UNIT AGREEMENT
Between
ANVIL HOLDINGS, INC.
and
UNITED STATES TRUST COMPANY
OF NEW YORK,
as Unit Agent and Transfer Agent
Dated as of March 14, 1997
================================================================================
<PAGE>
INDENTURE, dated as of March 14, 1997, between Anvil Holdings, Inc.,
a Delaware corporation ("Holdings") and United States Trust Company of New York,
as trustee (the "Trustee").
Each party agrees as follows for the benefit of each other and for
the equal and ratable benefit of the Holders of the 13% Subordinated Exchange
Debentures due 2009 (the "Exchange Debentures"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.1 DEFINITIONS
"Acquired Indebtedness" means, with respect to any specified Person,
(i) Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary or is designated a Restricted
Subsidiary of such specified Person, including, without limitation, Indebtedness
incurred in connection with, or in contemplation of, such other Person merging
with or into or becoming a Subsidiary or Restricted Subsidiary of such specified
Person, and (ii) Indebtedness secured by a Lien encumbering any asset acquired
by such specified Person.
"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 purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Asset Sale" means (i) the sale, lease, conveyance or other
disposition of any assets (including, without limitation, by way of a sale and
leaseback, including any disposition by means of a merger, consolidation or
similar transaction and including the issuance, sale or other transfer of any of
the capital stock of any Restricted Subsidiary of such Person) other than to
Holdings or to any of its Wholly Owned Subsidiaries (including the receipt of
proceeds of insurance paid on account of the loss of or damage to any asset and
awards of compensation for any asset taken by condemnation, eminent domain or
similar proceeding, and including the receipt of proceeds of business
interruption insurance); and (ii) the issuance of Equity Interests in any
Restricted Subsidiaries or the sale of any Equity Interests in any Restricted
Subsidiaries, in each case, in one or a series of related transactions,
provided, that notwithstanding the foregoing, the term "Asset Sale" shall not
include: (a) the sale, lease, conveyance, disposition or other transfer of all
or substantially all
<PAGE>
2
of the assets of Holdings, as permitted pursuant to Section 5.1, (b) the sale or
lease of equipment, inventory, accounts receivable or other assets in the
ordinary course of business consistent with past practice, (c) a transfer of
assets by Holdings to a Wholly Owned Subsidiary or by a Wholly Owned Subsidiary
to Holdings or to another Wholly Owned Subsidiary, (d) an issuance of Equity
Interests by a Wholly Owned Subsidiary to Holdings or to another Wholly Owned
Subsidiary, (e) the surrender or waiver of contract rights or the settlement,
release or surrender of contract, tort or other claims of any kind, (f) the
grant in the ordinary course of business of any non-exclusive license of
patents, trademarks, registrations therefor and other similar intellectual
property, (g) Permitted Investments or (h) any cash dividend, distribution,
Investment or payment made pursuant to the first or second paragraph of Section
4.9.
"Attributable Debt" in respect of a sale and leaseback transaction
means, at the time of determination, the present value (discounted at the rate
of interest implicit in such transaction, determined in accordance with GAAP) of
the obligation of the lessee for net rental payments during the remaining term
of the lease included in such sale and leaseback transaction (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended).
"Board of Directors" means the Board of Directors of Holdings, or
any authorized committee of the Board of Directors.
"Borrowing Base" means, as of any date, an amount equal to the sum
of (i) 85% of all Eligible Receivables, (ii) 60% of all Eligible Raw Materials
Inventory, (iii) 50% of Eligible Finished Goods Inventory and (iv) 50% of the
fair market value or, if acquired after the date of this Indenture, the
acquisition cost, of appraised equipment and real property owned by Holdings and
its Restricted Subsidiaries, or such lesser amount as may then constitute the
"Borrowing Base" under the New Credit Agreement.
"BRS" means Bruckmann, Rosser, Sherrill & Co., L.P., a limited
partnership formed under the laws of the State of Delaware and its successors.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital lease
that would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership, partnership
interests (whether general or limited) and (iv) any other interest or
participation that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, the issuing Person.
<PAGE>
3
"Cash Equivalents" means (a) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States is pledged in support thereof) having maturities no more than twelve
months from the date of acquisition, (b) U.S. dollar denominated (or foreign
currency fully hedged) time deposits, certificates of deposit, Eurodollar time
deposits or Eurodollar certificates of deposit of (i) any domestic commercial
bank of recognized standing having capital and surplus in excess of $100.0
million or (ii) any bank whose short-term commercial paper rating from S&P is at
least A-1 or the equivalent thereof or from Moody's is at least P-1 or the
equivalent thereof (any such bank being an "Approved Lender"), in each case with
maturities of not more than twelve months from the date of acquisition, (c)
commercial paper and variable or fixed rate notes issued by any Approved Lender
(or by the parent company thereof) or any variable rate notes issued by, or
guaranteed by, any domestic corporation rated A-2 (or the equivalent thereof) or
better by S&P or P-2 (or the equivalent thereof) or better by Moody's and
maturing within twelve months of the date of acquisition, (d) repurchase
agreements with a bank or trust company or recognized securities dealer having
capital and surplus in excess of $100.0 million for direct obligations issued by
or fully guaranteed by the United States of America in which Holdings shall have
a perfected first priority security interest (subject to no other Liens) and
having, on the date of purchase thereof, a fair market value of at least 100% of
the amount of repurchase obligations, and (e) interests in money market mutual
funds which invest solely in assets or securities of the type described in
subparagraphs (a), (b), (c) or (d) hereof.
"Certificate of Designation" means the certificate of designations
of Holdings dated March 13, 1997 relating to the Senior Preferred Stock.
"Change of Control" means such time as (i) prior to the initial
public offering by Holdings or any direct or indirect parent of Holdings of its
common stock (other than a public offering pursuant to a registration statement
on Form S-8), Permitted Holders cease to have, directly or indirectly, in the
aggregate at least 51% of the voting power of the voting stock of Anvil or
Holdings or any other direct or indirect parent of Holdings ceases to own,
directly or indirectly, 100% of the voting power of the voting stock of Anvil
(other than by reason of a merger of Holdings and Anvil) or (ii) after the
initial public offering by Holdings or any direct or indirect parent of Anvil of
its common stock (other than a public offering pursuant to a registration
statement on Form S-8), (A) any Schedule 13D, Form 13F or Schedule 13G under the
Exchange Act, or any amendment to such Schedule or Form, is received by Anvil or
Holdings which indicates that, or Anvil or Holdings otherwise becomes aware
that, a "person" or "group" (within the meaning of Sections 13(d) and 14(d)(2)
of the Exchange Act) has become, directly or indirectly, the "beneficial owner,"
by way of merger, consolidation or otherwise, of 40% or more of the voting power
of the voting stock of Anvil or Holdings on a fully-diluted basis after giving
effect to the conversion and exercise of all outstanding warrants, options and
other securities of Anvil or Holdings, as the case may be (whether or not such
securities are then currently convertible or exercisable) and (B) such person or
group has become, directly or indirectly, the beneficial owner of a greater
percentage of the voting capital stock of Anvil, calculated on such fully
diluted basis, than beneficially owned by the Permitted Holders, or (iii) the
sale, lease or transfer of all or substantially all of the assets of Holdings to
any person or group (other than the Permitted
<PAGE>
4
Holders), or (iv) during any period of two consecutive calendar years,
individuals who at the beginning of such period constituted the Board of
Directors of Anvil or Holdings (together with any new directors whose election
by the Board of Directors of Anvil or Holdings or whose nomination for election
by the shareholders of Anvil or Holdings, as the case may be, was approved by a
vote of a majority of the directors then still in office who either were
directors at the beginning of such period or whose election or nomination for
election was previously so approved or was approved by the Permitted Holders)
cease for any reason to constitute a majority of the directors of Anvil or
Holdings, as the case may be, then in office.
"Commission" means the Securities and Exchange Commission.
"Company Order" means a written order or request signed in the name
of an Officer and delivered to the Trustee.
"Consolidated EBITDA" means, with respect to Holdings and its
Restricted Subsidiaries for any period, the sum of, without duplication, (i) the
Consolidated Net Income for such period, plus (ii) to the extent deducted from
Consolidated Net Income for such period, (x) the Fixed Charges for such period,
plus (y) non-cash dividends on Holdings' preferred stock, plus (iii) provision
for taxes based on income or profits for such period (to the extent such income
or profits were included in computing Consolidated Net Income for such period),
plus (iv) consolidated depreciation, amortization and other non-cash charges of
Holdings and its Restricted Subsidiaries required to be reflected as expenses on
the books and records of Holdings, minus (v) cash payments with respect to any
nonrecurring, non-cash charges previously added back pursuant to clause (iv),
and (vi) excluding the impact of foreign currency translations. Notwithstanding
the foregoing, the provision for taxes based on the income or profits of, and
the depreciation and amortization and other non-cash charges of, a Restricted
Subsidiary of a Person shall be added to Consolidated Net Income to compute
Consolidated EBITDA only to the extent that the Net Income of such Restricted
Subsidiary was included in calculating the Consolidated Net Income of such
Person and only if a corresponding amount would be permitted at the date of
determination to be dividended to Holdings by such Restricted Subsidiary without
prior approval (that has not been obtained), pursuant to the terms of its
charter and all agreements, instruments, judgments, decrees, orders, statutes,
rules and governmental regulations applicable to that Restricted Subsidiary or
its stockholders.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that (i) the Net Income (but not loss) of any Person that is
not a Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid in cash to the referent Person or a Wholly Owned Subsidiary
thereof, (ii) the Net Income of, or any dividends or other distributions from,
any Unrestricted Subsidiary, to the extent otherwise included, shall be
excluded, whether or not distributed to Holdings or one of its Restricted
Subsidiaries, (iii) the Net Income of any Restricted Subsidiary shall be
excluded to the extent that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of that Net Income is not at
<PAGE>
5
the date of determination permitted without any prior governmental approval
(which has not been obtained) or, directly or indirectly, by operation of the
terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that Restricted
Subsidiary or its stockholders, (iv) the Net Income of any Person acquired in a
pooling of interests transaction for any period prior to the date of such
acquisition shall be excluded, (v) the cumulative effect of a change in
accounting principles shall be excluded, (vi) income or loss attributable to
discontinued operations shall be excluded; (vii) any increase in cost of sales
or other write-offs resulting from the purchase accounting treatment of any
acquisitions shall be excluded; and (viii) all other extraordinary, unusual or
nonrecurring gains or losses shall be excluded.
"Consolidated Net Worth" of a Person at any date means the amount
by which the assets of such Person and its consolidated Restricted Subsidiaries
(less any revaluation or other write-up subsequent to the date of this Indenture
in any such assets (other than write-ups resulting from foreign currency
translations and write-ups of tangible assets of a going concern business made
within twelve months after the acquisition of such business)) exceed the sum of
(a) the total liabilities of such Person and its consolidated Restricted
Subsidiaries, plus (b) any Disqualified Stock of such Person or any consolidated
Restricted Subsidiaries of such Person issued to any Person other than such
Person or a Wholly Owned Subsidiary of such Person, in each case determined in
accordance with GAAP.
"Corporate Trust Office of the Trustee" shall be at the address of
the Trustee specified in Section 11.2 hereof or such other address as to which
the Trustee may give notice to Holdings.
"Debenture Custodian" means the Trustee, as custodian with respect
to Global Debentures, or any successor entity thereto.
"Default" means any event that is or with the passage of time or
the giving of notice or both would be an Event of Default.
"Definitive Exchange Debentures" means Exchange Debentures that are
in the form of the Exchange Debenture attached hereto as Exhibit A, that do not
include the information called for by footnote 1 thereof.
"Depositary" means, with respect to the Exchange Debentures issuable
or issued in whole or in part in global form, the Person specified in Section
2.3 hereof as the Depositary with respect to the Exchange Debentures, until a
successor shall have been appointed and become such Depositary pursuant to the
applicable provision of this Indenture, and, thereafter, "Depositary" shall mean
or include such successor.
"Designated Senior Debt" means (a) Holdings' guarantee of the Senior
Notes and the Senior Indenture, (b) Holdings' guarantee of Indebtedness under
the New Credit Agreement and (c) any other Senior Indebtedness permitted to be
incurred pursuant to this
<PAGE>
6
Indenture in a principal amount of not less than $20.0 million designated by
Holdings as Designated Senior Debt.
"Disqualified Stock" means any Capital Stock that, 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 redeemable at
the option of the Holder thereof, in whole or in part, on or prior to the date
which is 91 days after the date that the Exchange Debentures mature.
"Eligible Finished Goods Inventory" means, as of any date of
determination, the gross dollar value (valued at the lower of cost or fair
market value (on a first-in, first-out basis)) of all finished goods inventory
(including for purposes hereof, finished goods inventory which is in transit
back to Holdings or any Restricted Subsidiary) of Holdings or any Restricted
Subsidiary less appropriate reserves determined in accordance with GAAP applied
on a consistent basis but excluding in any event and without duplication, to the
extent not treated accordingly by GAAP, (i) inventory subject to any Lien (other
than a Permitted Lien), (ii) inventory which fails to meet standards for sale or
use imposed by governmental agencies, departments or divisions having regulatory
authority over such goods, (iii) inventory which is not useable or saleable at
prices approximating their cost (after taking into account, without duplication,
the amount of any reserves for obsolescence, unsaleability or decline in value),
(iv) inventory located outside of the United States (unless in transit back to
Holdings or any Restricted Subsidiary), (v) inventory in the possession of
domestic contractors (other than Holdings or any Restricted Subsidiary) or other
third parties, and (vi) all work in process.
"Eligible Raw Materials Inventory" means, as of any date of
determination, the gross dollar value (valued at the lower of cost or fair
market value (on a first-in, first-out basis)) of all raw materials (including
for purposes hereof, uncut dyed or greige cloth) of Holdings or any Restricted
Subsidiary less appropriate reserves determined in accordance with GAAP applied
on a consistent basis but excluding in any event, to the extent not treated
accordingly by GAAP and without duplication, (i) inventory subject to any Lien
(other than a Permitted Lien), (ii) inventory which fails to meet standards for
sale or use imposed by governmental agencies, departments or divisions having
regulatory authority over such goods, (iii) inventory which is not useable or
saleable at prices approximating their cost (after taking into account, without
duplication, the amount of any reserves for obsolescence, unsaleability or
decline in value), (iv) inventory located outside of the United States (unless
in transit back to Holdings or any Restricted Subsidiary), (v) inventory in the
possession of domestic contractors (other than Holdings or any Restricted
Subsidiary) or other third parties, and (vi) all work in process (except uncut
dyed or greige cloth).
"Eligible Receivables" means, as of any date of determination, the
aggregate gross amount of all accounts receivable, receivables and obligations
for payment created or arising from the sale of inventory or the rendering of
services in the ordinary course of business, owned by or owing to Holdings or
any Restricted Subsidiary, net of allowances and reserves for doubtful or
uncollectible accounts and sales adjustments consistent with
<PAGE>
7
Holdings' internal policies and in any event in accordance with GAAP applied on
a consistent basis, (hereinafter sometimes referred to collectively as
"Receivables"), but excluding, without duplications in any event (i) Receivables
subject to a Lien (other than a Permitted Lien), (ii) Receivables which are
outstanding more than 90 days from the due date of the original invoice or more
than 180 days from the date of shipment, (iii) Receivables evidenced by notes,
chattel paper or other instruments, unless such notes, chattel paper or
instruments have been delivered to and are in the possession of such parties as
may be specified in the New Credit Agreement, (iv) Receivables with respect to
which the account debtor is not solvent or is the subject of a bankruptcy or
insolvency proceedings of any kind, (v) Receivables owing by an account debtor
located outside of the United States (unless payment for the goods shipped is
secured by an irrevocable letter of credit in a form and from an institution
acceptable to such parties as may be specified in the New Credit Agreement),
(vi) Receivables which are contingent or subject to offset, deduction,
counterclaim, dispute or other defense to payment, in each case to the extent of
such offset, deduction, counterclaim dispute or other defense, and (vii)
Receivables arising out of transactions with Subsidiaries or Affiliates of
Holdings.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Existing Indebtedness" means the Indebtedness of Holdings and its
Restricted Subsidiaries (other than Indebtedness under the New Credit Agreement)
in existence on the date of this Indenture, until such amounts are repaid.
"Fixed Charges" means, with respect to any Person for any period,
the sum, without duplication, of (i) the consolidated interest expense of such
Person and its Restricted Subsidiaries for such period, whether paid or accrued
(including, without limitation, amortization of original issue discount,
non-cash interest payments, the interest component of any deferred payment
obligations, the interest component of all payments associated with Capital
Lease Obligations, commissions, discounts and other fees and charges incurred in
respect of letter of credit or bankers' acceptance financings, and net payments
(if any) pursuant to Hedging Obligations), and (ii) the consolidated interest
expense of such Person and its Restricted Subsidiaries that was capitalized
during such period, and (iii) any interest expense on Indebtedness of another
Person that is guaranteed by such Person or one of its Restricted Subsidiaries
or secured by a Lien on assets of such Person or one of its Restricted
Subsidiaries (whether or not such guarantee or Lien is called upon), and (iv)
the product of (a) all cash dividend payments (and non-cash dividend payments in
the case of a Person that is a Restricted Subsidiary) on any series of preferred
stock of such Person payable to a party other than Holdings or a Wholly Owned
Subsidiary, times (b) a fraction, the numerator of which is one and the
denominator of which is one minus the then current combined federal, state and
local statutory tax rate of such Person, expressed as a decimal, on a
consolidated basis and in accordance with GAAP, but excluding from the
calculation of fixed charges
<PAGE>
8
amortization of financing costs (except to the extent referred to in the
parenthetical in clause (i) of this definition).
"Fixed Charge Coverage Ratio" means with respect to any Person for
any period, the ratio of the Consolidated EBITDA of such Person and its
Restricted Subsidiaries for such period to the Fixed Charges of such Person and
its Restricted Subsidiaries for such period. In the event that Holdings or any
of its Restricted Subsidiaries incurs, assumes, guarantees or repays any
Indebtedness (other than the incurrence or repayment of revolving credit
borrowings used for working capital, except to the extent that a repayment is
accompanied by a permanent reduction in revolving credit commitments) or issues
preferred stock subsequent to the commencement of the four-quarter reference
period for which the Fixed Charge Coverage Ratio is being calculated but prior
to the date on which the event for which the calculation of the Fixed Charge
Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge Coverage
Ratio shall be calculated giving pro forma effect to such incurrence,
assumption, guarantee or redemption of Indebtedness, or such issuance or
redemption of preferred stock, as if the same had occurred at the beginning of
the applicable four-quarter reference period. For purposes of making the
computation referred to above, (i) acquisitions that have been made by Holdings
or any of its Restricted Subsidiaries, including through mergers or
consolidations and including any related financing transactions, during the
four-quarter reference period or subsequent to such reference period and on or
prior to the Calculation Date shall be deemed to have occurred on the first day
of the four-quarter reference period and shall give pro forma effect to the
Consolidated EBITDA and Indebtedness of the Person which is the subject of any
such acquisition, and (ii) the Consolidated EBITDA attributable to discontinued
operations, as determined in accordance with GAAP, and operations or businesses
disposed of prior to the Calculation Date, shall be excluded, and (iii) the
Fixed Charges attributable to discontinued operations, as determined in
accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded, but only to the extent that the obligations
giving rise to such Fixed Charges will not be obligations of the referent Person
or any of its Restricted Subsidiaries following the Calculation Date.
"GAAP" means generally accepted accounting principles 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 have been approved by a significant segment
of the accounting profession, which are in effect on the date of this Indenture.
"Global Exchange Debenture" means an Exchange Debenture that
contains the paragraph referred to in footnote 1 to the form of the Exchange
Debenture attached hereto as Exhibit A.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States is pledged.
<PAGE>
9
"guarantee" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, letters of
credit and reimbursement agreements in respect thereof), of all or any part of
any Indebtedness.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates.
"Holder" means a Person in whose name an Exchange Debenture is
registered on the Registrar's books.
"Indebtedness" means, with respect to any Person, any indebtedness
of such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or banker's acceptances
or representing Capital Lease Obligations or the balance deferred and unpaid of
the purchase price of any property or representing any Hedging Obligations,
except any such balance that constitutes an accrued expense or trade payable, if
and to the extent any of the foregoing indebtedness (other than letters of
credit and Hedging Obligations) would appear as a liability upon a balance sheet
of such Person prepared in accordance with GAAP, as well as all indebtedness of
others secured by a Lien on any asset of such Person (whether or not such
indebtedness is assumed by such Person), the maximum fixed repurchase price of
Disqualified Stock issued by such Person in each case, if held by any Person
other than Holdings or a Wholly Owned Subsidiary of Holdings, and, to the extent
not otherwise included, the guarantee by such Person of any indebtedness of any
other Person.
"Indenture" means this Indenture, as amended or supplemented from
time to time.
"Investments" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances (other than advances to customers in the ordinary course of business
that are recorded as accounts receivable on the books of such Person) or capital
contributions (excluding commission, travel, relocation and similar advances to
officers and employees made in the ordinary course of business), purchases or
other acquisitions for consideration of Indebtedness, Equity Interests or other
securities and all other items that are or would be classified as investments on
a balance sheet prepared in accordance with GAAP; provided that an acquisition
of assets, Equity Interests or other securities by Holdings for consideration
consisting of common equity securities of Holdings or of any direct or indirect
parent of Holdings shall not be deemed to be an Investment.
"Legal Holiday" means a Saturday, a Sunday or a day on which federal
offices or banking institutions in the City of New York, in the city of the
Corporate Trust Office of
<PAGE>
10
the Trustee, or at a place of payment are authorized by law, regulation or
executive order to remain closed. If a payment date is a Legal Holiday, payment
may be made on the next succeeding day that is not a Legal Holiday, and no
interest shall accrue for the intervening period.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Maturity Date" means March 15, 2007.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Income" means, with respect to any Person, the net income
(loss) of such Person, determined in accordance with GAAP, and before reduction
for non-cash preferred stock dividends, excluding, however, (i) any gain (but
not loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (b) the
disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries, and (ii) any extraordinary or nonrecurring gain
(but not loss), together with any related provision for taxes on such
extraordinary or nonrecurring gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received by
Holdings or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of
the direct costs relating to such Asset Sale (including, without limitation,
legal, accounting and investment banking fees, and sales commissions) and any
relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), and any reserve for adjustment in
respect of the sale price of such asset or assets established in accordance with
GAAP and net of any Purchase Money Obligations relating to the assets comprising
such Asset Sale.
"New Credit Agreement" means, collectively, (i) that certain
Amended and Restated Credit Agreement, as in effect on the date of this
Indenture, by and among Anvil, Holdings, the lenders that may be from time to
time parties thereto and NationsBank, N.A., as administrative agent, as the
foregoing may from time to time be amended, renewed, supplemented or otherwise
modified at the option of the parties thereto, including increases in the
principal amount thereof (subject to such increases otherwise being in
conformity with the terms of this Indenture); and (ii) after NationsBank, N.A.,
as administrative agent, has acknowledged in writing that the Credit Agreement
described in clause (i) above has been terminated and all then outstanding
Indebtedness thereunder or with respect thereto have been
<PAGE>
11
repaid in full in cash and discharged, any successors to or replacements of (as
designated by the Board of Directors of Holdings in its sole judgment, and
evidenced by a resolution) such Credit Agreement, as such successors or
replacements may from time to time be amended, renewed, supplemented, modified
or replaced, including increases in the principal amount thereof (subject to
such increases otherwise being in conformity with the terms of this Indenture).
"New Stock Option Plan" means Holdings' 1997 Stock Option Plan to be
approved by the Board of Directors of Holdings providing for the issuance of
options to purchase Common Stock to directors and employees of Holdings, Anvil
or its Restricted Subsidiaries which may provide for the grant of options in
respect of up to 5% of the fully diluted common stock of Holdings at exercise
prices equal to the fair market value thereof on the date of grant or any
successor plan thereto.
"Non-Recourse Debt" means Indebtedness (i) as to which neither
Holdings nor any of its Restricted Subsidiaries (a) provides credit support of
any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness), (b) is directly or indirectly liable (as a guarantor
or otherwise), or (c) constitutes the lender; and (ii) no default with respect
to which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of Holdings
or any of its Restricted Subsidiaries to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its stated maturity; and (iii) as to which the lenders have been notified in
writing that they will not have any recourse to the stock or assets of Holdings
or any of its Restricted Subsidiaries.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating Officer,
the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, the Secretary or any Vice President of such Person.
"Officers' Certificate" means a certificate signed on behalf of
Holdings by two Officers of Holdings, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of Holdings, that meets the requirements of Section
11.5 hereof.
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
11.5 hereof. The counsel may be an employee of or counsel to Holdings, any
Subsidiary of Holdings or the Trustee.
"Permitted Holders" means, collectively, (i) BRS and its Affiliates,
and their respective employees and directors, (ii) 399 Venture and its
Affiliates, and their respective
<PAGE>
12
employees and directors, (iii) all full-time executive officers of Holdings and
its Subsidiaries who acquire Capital Stock of Holdings, and (iv) with respect to
any natural persons described in the foregoing clauses (i) through (iii), (A)
any spouse, lineal descendant (including by adoption and stepchildren), or
sibling of such natural persons and (B) any trust, corporation, limited
liability company or partnership, the beneficiaries, members, stockholders or
partners of which consist entirely of such natural persons or the individuals
described in clause (A) above.
"Permitted Investments" means (a) any Investments in Holdings or in
a Wholly Owned Subsidiary of Holdings and that is engaged in the same or a
similar line of business as Holdings and its Restricted Subsidiaries were
engaged in on the date of this Indenture and reasonable extensions or expansions
thereof; (b) any Investments in Cash Equivalents; (c) Investments by Holdings or
any Restricted Subsidiary of Holdings in a Person if as a result of such
Investment (i) such Person becomes a Wholly Owned Subsidiary of Holdings that is
engaged in the same or a similar line of business as Holdings and its Restricted
Subsidiaries were engaged in on the date of this Indenture and reasonable
extensions or expansions thereof or (ii) such Person is merged, consolidated or
amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, Holdings or a Wholly Owned Subsidiary of
Holdings that is engaged in the same or a similar line of business as Holdings
and its Restricted Subsidiaries were engaged in on the date of this Indenture
and reasonable extensions or expansions thereof; (d) Investments made as a
result of the receipt of non-cash consideration from an Asset Sale that was made
pursuant to and in compliance with Section 4.8 hereof; (e) Investments by
Holdings or any Restricted Subsidiary in cash in an aggregate amount not to
exceed $10.0 million outstanding at any one time; (f) stock, obligations or
securities received in settlement of debts created in the ordinary course of
business and owing to Anvil or any Subsidiary or in satisfaction of judgments or
pursuant to any plan of reorganization or similar arrangement upon the
bankruptcy or insolvency of Anvil's trade creditors or customers; (g) the
contribution of shares of stock or other equity securities of an Unrestricted
Subsidiary to another Subsidiary; (h) loans and advances to employees and
officers of Anvil and its Restricted Subsidiaries in the ordinary course of
business not to exceed an aggregate of $750,000 at any one time outstanding; (i)
accounts receivable created or acquired in the ordinary course of business; (j)
currency agreements and interest swap obligations entered into in the ordinary
course of Anvil's or its Restricted Subsidiaries' businesses and otherwise in
compliance with this Indenture; and (k) any Investment by Anvil or a Wholly
Owned Subsidiary of Anvil in a Securitization Entity or any Investment by a
Securitization Entity in any other Person in connection with a Qualified
Securitization Transaction; provided that any Investment in a Securitization
Entity is in the form of a Purchase Money Note or an Equity Interest.
"Permitted Liens" means (i) Liens securing (a) Indebtedness
permitted by the first paragraph of Section 4.10 hereof and Indebtedness
permitted by clause (i), (ii), (iv) or clause (viii) under Section 4.10 hereof
and (b) related Hedging Obligations; (ii) Liens in favor of Holdings or any
Wholly Owned Subsidiary; (iii) Liens on property of a Person existing at the
time such Person is merged into or consolidated with Holdings or any Restricted
Subsidiary of Holdings; provided that such Liens were in existence prior to the
contemplation of such merger or consolidation and do not extend to any assets
other than
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13
those of the Person merged into or consolidated with Holdings; (iv) Liens on
property of a Person existing at the time such Person becomes a Restricted
Subsidiary of Holdings; (v) Liens on property existing at the time of
acquisition thereof by Holdings or any Restricted Subsidiary of Holdings,
provided that such Liens were in existence prior to the contemplation of such
acquisition; (vi) Liens to secure the performance of statutory obligations,
surety or appeal bonds, performance bonds or other obligations of a like nature
incurred in the ordinary course of business; (vii) Liens existing on the date of
this Indenture; (viii) Liens for taxes, assessments or governmental charges or
claims that are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded, provided
that any reserve or other appropriate provision as shall be required in
conformity with GAAP shall have been made therefor; (ix) carriers',
warehousemen's, mechanics', materialmen's, repairmen's, or other similar Liens
arising in the ordinary course of business which are not overdue for a period of
more than 60 days or which are being contested in good faith by appropriate
proceedings diligently conducted; (x) statutory Liens of landlords or of
mortgagees of landlords arising by operation of law, provided that the rental
payments secured thereby are not yet due and payable; (xi) Liens incurred in the
ordinary course of business of Holdings or any Restricted Subsidiary of Holdings
with respect to obligations that do not exceed $2.5 million at any one time
outstanding and that (a) are not incurred in connection with the borrowing of
money or the obtaining of advances or credit (other than trade credit in the
ordinary course of business) and (b) do not in the aggregate materially detract
from the value of the property or materially impair the use thereof in the
operation of business by Holdings or such Restricted Subsidiary; (xii)
nonconsensual Liens incurred in the ordinary course of business of any foreign
subsidiary that is a Restricted Subsidiary that (a) are not incurred in
connection with the borrowing of money or the obtaining of advances of credit
(other than trade credit in the ordinary course of business) and (b) do not in
the aggregate materially detract from the value of the property or materially
impair the use thereof in the operation of business by such Restricted
Subsidiary; (xiii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance and
other types of social security; (xiv) easements, rights-of-way, restrictions,
minor defects or irregularities in title and other similar charges or
encumbrances not interfering in any material respect with the business of
Holdings or any of its Restricted Subsidiaries; (xv) Purchase Money Liens
(including extensions and renewals thereof); (xvi) judgment and attachment Liens
not giving rise to an Event of Default; (xvii) Liens arising out of consignment
or similar arrangements for the sale of goods; (xviii) any interest or title of
a lessor in property subject to any capital lease obligation or operating lease;
(xix) Liens arising from filing Uniform Commercial Code financing statements
regarding leases; (xx) Liens encumbering deposits made to secure obligations
arising from statutory or regulatory requirements of Holdings or any of its
Restricted Subsidiaries, including rights of offset and set-off, arising in the
ordinary course of business; (xxi) Liens on assets transferred to a
Securitization Entity or on assets of a Securitization Entity, in either case
incurred in connection with a Qualified Securitization Transaction; and (xxii)
Liens in favor of customs and revenue authorities arising as a matter of law to
secure payment of custom duties in connection with the importation of goods.
"Permitted Refinancing Indebtedness" means any Indebtedness of
Holdings or any of its Restricted Subsidiaries issued in exchange for, or the
net proceeds of which are
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14
used to extend, refinance, renew, replace, defease or refund other Indebtedness
of Holdings or any of its Restricted Subsidiaries; provided that: (i) the
principal amount of such Permitted Refinancing Indebtedness does not exceed the
principal amount of the Indebtedness so extended, refinanced, renewed, replaced,
defeased or refunded (plus the amount of reasonable expenses incurred in
connection therewith); (ii) such Permitted Refinancing Indebtedness has a final
maturity date at least as late as the final maturity date of, and has a Weighted
Average Life to Maturity equal to or greater than the Weighted Average Life to
Maturity of, the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; (iii) if the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded is subordinated in right of payment to
the Exchange Debentures, such Permitted Refinancing Indebtedness has a final
maturity date later than the final maturity date of, and is subordinated in
right of payment to, the Exchange Debentures on terms at least as favorable to
the Holders of Exchange Debentures as those contained in the documentation
governing the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; and (iv) such Indebtedness is incurred either by Holdings
or by the Restricted Subsidiary who is the obligor on the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
limited liability company or other business entity or government or agency or
political subdivision thereof (including any subdivision or ongoing business of
any such entity or substantially all of the assets of any such entity,
subdivision or business).
"Public Equity Offering" means an underwritten public offering
pursuant to a registration statement filed with the Commission in accordance
with the Securities Act of (i) Equity Interests other than Disqualified Stock of
Holdings or any successor by merger to Holdings or (ii) of Equity Interests
other than Disqualified Stock of Holdings' parent or indirect parent corporation
to the extent that the cash proceeds therefrom are contributed to the equity
capital of Holdings or are used to purchase Equity Interests (other than
Disqualified Stock) of Holdings.
"Purchase Money Lien" means a Lien granted on an asset or property
to secure a Purchase Money Obligation permitted to be incurred under this
Indenture and incurred solely to finance the purchase, or the cost of
construction or improvement, of such asset or property; provided however, that
such Lien encumbers only such asset or property and is granted within 180 days
of such acquisition.
"Purchase Money Note" means a promissory note of a Securitization
Entity evidencing a line of credit, which may be irrevocable, from Holdings or
any Subsidiary of Holdings in connection with a Qualified Securitization
Transaction to a Securitization Entity, which note shall be repaid from cash
available to the Securitization Entity, other than amounts required to be
established as reserves pursuant to agreements, amounts paid to investors in
respect of interest, principal and other amounts owing to such investors and
amounts owing to such investors and amounts paid in connection with the purchase
of newly generated receivables.
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15
"Purchase Money Obligations" of any Person means any obligations of
such Person to any seller or any other Person incurred or assumed to finance the
purchase, or the cost of construction or improvement, of real or personal
property to be used in the business of such Person or any of its Restricted
Subsidiaries in an amount that is not more than 100% of the cost, or fair market
value, as appropriate, of such property, and incurred within 180 days after the
date of such acquisition (excluding accounts payable to trade creditors incurred
in the ordinary course of business).
"Qualified Institutional Buyer" or "QIB" shall have the meaning
specified in Rule 144A.
"Qualified Securitization Transaction" means any transaction or
series of transactions that may be entered into by Holdings or any of its
Subsidiaries pursuant to which Holdings or any or its Subsidiaries may sell,
convey or otherwise transfer to (a) a Securitization Entity (in the case of a
transfer by Holdings or any of its Subsidiaries) and (b) any other Person (in
the case of a transfer by a Securitization Entity), or may grant a security
interest in, any accounts receivable or equipment (whether now existing or
arising or acquired in the future) of Holdings or any of its Subsidiaries, and
any assets related thereto including, without limitation, all collateral
securing such accounts receivable and equipment, all contracts and contract
rights and all guarantees or other obligations in respect of such accounts
receivable and equipment, proceeds of such accounts receivable and equipment and
other assets (including contract rights) which are customarily transferred or in
respect of which security interests are customarily granted in connection with
asset securitization transactions involving accounts receivable and equipment;
provided that such transaction or transactions are otherwise permitted by the
terms of this Indenture including the provisions set forth in Section 4.8
hereof.
"Recapitalization" means the series of transactions set forth under
"The Recapitalization" in the Offering Memorandum.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the date of this Indenture, by and among Holdings and the
other parties named on the signature pages thereof, as such agreement may be
amended, modified or supplemented from time to time.
"Responsible Officer," when used with respect to the Trustee, means
any officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) 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 of his knowledge of
and familiarity with the particular subject.
"Restricted Investment" means an Investment other than a Permitted
Investment.
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"Restricted Subsidiary" of a Person means any Subsidiary of the
referent Person that is not an Unrestricted Subsidiary.
"S&P" means Standard & Poor's Ratings Service, a division of The
McGraw- Hill Companies, Inc., and its successors.
"Securities Act" means the Securities Act of 1933, as amended.
"Securitization Entity" means a Wholly Owned Subsidiary of Holdings
(or another Person in which Holdings or any Subsidiary of Holdings makes an
Investment and to which Holdings or any Subsidiary of Holdings transfers
accounts receivable or equipment and related assets) which engages in no
activities other than in connection with the financing of accounts receivable or
equipment and which is designated by the Board of Directors of Holdings (as
provided below) as a Securitization Entity (a) no portion of the Indebtedness or
any other obligations (contingent or otherwise) of which (i) is guaranteed by
Holdings or any Subsidiary of Holdings (excluding guarantees of obligations
(other than the principal of, and interest on, Indebtedness) pursuant to
Standard Securitization Undertakings), (ii) is recourse to or obligates Holdings
or any Subsidiary of Holdings in any way other than pursuant to Standard
Securitization Undertakings, or (iii) subjects any property or asset of Holdings
or any Subsidiary of Holdings, directly or indirectly, contingently or
otherwise, to the satisfaction thereof other than pursuant to Standard
Securitization Undertakings, (b) with which neither Holdings nor any Subsidiary
of Holdings has any material contract, agreement, arrangement or understanding
other than on terms no less favorable to Holdings or such Subsidiary than those
that might be obtained at the time from Persons that are not Affiliates of
Holdings, other than fees payable in the ordinary course of business in
connection with servicing receivables of such entity, and (c) to which neither
Holdings nor any Subsidiary of Holdings has any obligation to maintain or
preserve such entity's financial condition or cause such entity to achieve
certain levels of operating results. Any such designation by the Board of
Directors of Holdings shall be evidenced to the Trustee by filing with the
Trustee a certified copy of the resolution of the Board of Directors of Holdings
giving effect to such designation and an officers' certificate certifying that
such designation complied with the foregoing conditions.
"Senior Indebtedness" means (i) all Obligations (including any
interest accruing subsequent to the filing of a petition of bankruptcy at the
rate provided for in the documentation with respect thereto, whether or not such
interest is an allowed claim under applicable law) on any Indebtedness of
Holdings, whether outstanding on the date of issuance of the Exchange Debentures
or thereafter created, incurred or assumed, of the following types: (A) all
Indebtedness of Holdings (including, without limitation, the Senior Notes and
borrowings under the New Credit Agreement) for money borrowed, and (B) all
Indebtedness evidenced by notes, debentures, bonds or other similar instruments
for the payment of which Holdings is responsible or liable; (ii) all capitalized
lease obligations of Holdings; (iii) all Obligations of Holdings: (A) for the
reimbursement of any obligor on any letter of credit, banker's acceptance or
similar credit transaction, including, without limitation, any such transaction
made pursuant to the New Credit Agreement, (B) constituting Hedging Obligations,
or (C) issued as the deferred purchase price of property and all conditional
sale
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17
Obligations of Holdings and all Obligations of Holdings under any title
retention agreement; (iv) all guarantees of Holdings with respect to Obligations
of other persons of the type referred to in clauses (ii) and (iii) and with
respect to the payment of dividends of other persons; and (v) all Obligations of
Holdings consisting of modifications, renewals, extensions, replacements and
refundings of any Obligations described in clauses (i), (ii), (iii) or (iv)
unless, in the instrument creating or evidencing the same or pursuant to which
the same is outstanding, it is expressly provided that such Obligations are
subordinated or junior in right of payment to the Exchange Debentures; provided,
however, that Senior Indebtedness shall not be deemed to include: (1) any
Obligation of Holdings to any Subsidiary, (2) any liability for federal, state,
local or other taxes owed or owing by Holdings, (3) any accounts payable or
other liability to trade creditors arising in the ordinary course of business
(including guarantees thereof or instruments evidencing such liabilities), (4)
any Indebtedness, guarantee or Obligation of Holdings that is contractually
subordinated or junior in any respect to any other Indebtedness, guarantee or
Obligation of Holdings, or (5) any Indebtedness to the extent the same is
incurred in violation of the Indenture. Senior Indebtedness shall include all
Obligations in respect of Holdings' guarantee of the Senior Notes and the Senior
Indenture.
"Senior Indenture" means the indenture dated as of March 14, 1997 by
and among Anvil, Holdings, Cottontops, Inc., the other Subsidiary Guarantors (as
defined therein) and United States Trust Company of New York, as trustee, as
amended or supplemented from time to time.
"Senior Notes" means the Senior Notes issued by Anvil pursuant to
the Senior Indenture.
"Senior Preferred Stock" means Holdings' 13% Senior Exchangeable
Preferred Stock due 2009 issued pursuant to the Certificate of Designation.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Exchange Act, as such Regulation is in effect on the
date hereof.
"Standard Securitization Undertakings" means representations,
warranties, covenants and indemnities entered into by Anvil or any Subsidiary of
Anvil which are reasonably customary in an accounts receivable or equipment
transaction.
"Subordinated Indebtedness" means all Obligations of the type
referred to in clauses (i) through (v) of the definition of Senior Indebtedness,
if the instrument creating or evidencing the same, or pursuant to which the same
is outstanding, designates such Obligations as subordinated or junior in right
of payment to Senior Indebtedness.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled,
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18
directly or indirectly, by such Person or one or more of the other Subsidiaries
of that Person (or a combination thereof) and (ii) any partnership (a) the sole
general partner or the managing general partner of which is such Person or a
Subsidiary of such Person or (b) the only general partners of which are such
Person or one or more Subsidiaries of such Person (or any combination thereof).
"399 Venture" means 399 Venture Partners, Inc., a Delaware
corporation, and its successors.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939
(15 U.S.C. ss.ss. 77aaa-77bbbb) as in effect on the date on which this Indenture
is qualified under the Trust Indenture Act.
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"Unrestricted Subsidiary" means (i) any Subsidiary that is
designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a
Board Resolution; but only to the extent that such Subsidiary: (a) has no
Indebtedness other than Non-Recourse Debt; (b) is not party to any agreement,
contract, arrangement or understanding with Holdings or any Restricted
Subsidiary of Holdings unless the terms of any such agreement, contract,
arrangement or understanding are no less favorable to Holdings or such
Restricted Subsidiary than those that might be obtained at the time from Persons
who are not Affiliates of Holdings; (c) is a Person with respect to which
neither Holdings nor any of its Restricted Subsidiaries has any direct or
indirect obligation (x) to subscribe for additional Equity Interests or (y) to
maintain or preserve such Person's financial condition or to cause such Person
to achieve any specified levels of operating results; and (d) has not guaranteed
or otherwise directly or indirectly provided credit support for any Indebtedness
of Holdings or any of its Restricted Subsidiaries. Any such designation by the
Board of Directors shall be evidenced to the Trustee by filing with the Trustee
a certified copy of the Board Resolution giving effect to such designation and
an Officers' Certificate certifying that such designation complied with the
foregoing conditions and was permitted by Section 4.9. If, at any time, any
Unrestricted Subsidiary would fail to meet the foregoing requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of this Indenture and any Indebtedness of such
Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of Holdings
as of such date (and, if such Indebtedness is not permitted to be incurred as of
such date under Section 4.10, Holdings shall be in default of such covenant).
The Board of Directors of Holdings may at any time designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; provided that such designation shall
be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of
Holdings of any outstanding Indebtedness of such Unrestricted Subsidiary and
such designation shall only be permitted if (i) such Indebtedness is permitted
under Section 4.10 and (ii) no Default or Event of Default would be in existence
following such designation.
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"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that shall elapse
between such date and the making of such payment, by (ii) the then outstanding
principal amount of such Indebtedness.
"Wholly Owned Subsidiary" of any Person means a Restricted
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. Unrestricted Subsidiaries shall not be included in the definition
of Wholly Owned Subsidiary for any purposes of this Indenture.
SECTION 1.2 OTHER DEFINITIONS
Defined
Term in Section
---- ----------
"Affiliate Transaction" 4.14
"Agent Members" 2.13
"Asset Sale Offer" 4.8
"Asset Sale Offer Period" 4.8
"Asset Sale Offer Amount" 4.8
"Asset Sale Purchase Date" 4.8
"Bankruptcy Law" 6.1
"Benefitted Party" 11.1
"Change of Control Offer" 4.7
"Change of Control Offer Period" 4.7
"Change of Control Payment" 4.7
"Change of Control Purchase Date" 4.7
"Covenant Defeasance" 8.3
"Custodian" 6.1
"Event of Default" 6.1
"Excess Proceeds" 4.8
"incur" 4.10
"Interest" 2.13
"Legal Defeasance" 8.2
"Notice of Default" 6.1
"Paying Agent" 2.3
"Payment Blockage Notice" 10.3
"Payment Default" 6.1
"Registrar" 2.3
"Representative" 10.3
"Restricted Payments" 4.9
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SECTION 1.3 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT
Whenever this Indenture refers to a provision of the Trust Indenture
Act, the provision is incorporated by reference in and made a part of this
Indenture.
The following Trust Indenture Act terms used in this Indenture have
the following meanings:
"indenture securities" means the Exchange Debentures;
"indenture security Holder" means a Holder of an Exchange Debenture;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
"obligor" on the Exchange Debentures means Holdings and any
successor thereto.
All other terms used in this Indenture that are defined by the Trust
Indenture Act, defined by the Trust Indenture Act reference to another statute
or defined by Commission rule under the Trust Indenture Act have the meanings so
assigned to them.
SECTION 1.4 RULES OF CONSTRUCTION
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural
include the singular;
(5) provisions apply to successive events and transactions; and
(6) references to sections of or rules under the Securities Act
shall be deemed to include substitute, replacement of successor sections
or rules adopted by the Commission from time to time.
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21
ARTICLE 2
THE EXCHANGE DEBENTURES
SECTION 2.1 FORM AND DATING
The Exchange Debentures and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit A hereto. The
Exchange Debentures may have notations, legends or endorsements required by law,
stock exchange rule or usage. Each Exchange Debenture shall be dated the date of
its authentication. The Exchange Debentures shall be in denominations of $1,000
and integral multiples thereof.
The terms and provisions contained in the Exchange Debentures shall
constitute, and are hereby expressly made, a part of this Indenture and Holdings
and the Trustee, by their execution and delivery of this Indenture, expressly
agree to such terms and provisions and to be bound thereby.
Exchange Debentures shall be issued initially in the form of one or
more permanent Global Exchange Debentures in registered form, substantially in
the form set forth in Exhibit A (including the text referred to in footnote 1
thereto), deposited with, or on behalf of, The Depositary Trust Company (the
"Depositary") and registered in the name of Cede & Co. or such other nominee, as
nominee of the Depositary. The aggregate principal amount of any Global Exchange
Debenture may from time to time be increased or decreased by adjustments made on
the records of the Registrar and the Depositary.
SECTION 2.2 EXECUTION AND AUTHENTICATION
Two Officers shall sign the Exchange Debentures for Holdings by
manual or facsimile signature. Holdings' seal shall be reproduced on the
Exchange Debentures and may be in facsimile form.
If an Officer whose signature is on an Exchange Debenture no longer
holds that office at the time an Exchange Debenture is authenticated, the
Exchange Debenture shall nevertheless be valid.
An Exchange Debenture shall not be valid until authenticated by the
manual signature of the Trustee. The signature shall be conclusive evidence that
the Exchange Debenture has been authenticated under this Indenture.
The Trustee shall, upon a written order of Holdings signed by two
Officers, authenticate Exchange Debentures for original issue up to the
aggregate principal amount stated in paragraph 4 of the Exchange Debentures. The
aggregate principal amount of Exchange Debentures outstanding at any time may
not exceed such amount except as provided in Section 2.7 hereof. The
authentication order shall specify which series of Exchange Debentures shall be
authenticated and issued.
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The Trustee may appoint an authenticating agent acceptable to
Holdings to authenticate Exchange Debentures. An authenticating agent may
authenticate Exchange Debentures whenever the Trustee may do so. Each reference
in this Indenture to authentication by the Trustee includes authentication by
such agent. An authenticating agent has the same rights as an Agent to deal with
Holdings or an Affiliate of Holdings.
SECTION 2.3 REGISTRAR AND PAYING AGENT
Holdings shall maintain an office or agency where Exchange
Debentures may be presented for registration of transfer or for exchange
("Registrar") and an office or agency where Exchange Debentures may be presented
for payment ("Paying Agent"). The Registrar shall keep a register of the
Exchange Debentures and of their transfer and exchange. Holdings may appoint one
or more co-registrars and one or more additional paying agents. The term
"Registrar" includes any co-registrar and the term "Paying Agent" includes any
additional paying agent. Holdings may change any Paying Agent or Registrar
without notice to any Holder. Holdings shall notify the Trustee in writing of
the name and address of any Agent not a party to this Indenture. If Holdings
fails to appoint or maintain another entity as Registrar or Paying Agent, the
Trustee shall act as such. Holdings or any of its Subsidiaries may act as Paying
Agent or Registrar.
Holdings initially appoints the Trustee to act as the Registrar and
Paying Agent and to act as Debenture Custodian with respect to the Global
Exchange Debentures.
SECTION 2.4 PAYING AGENT TO HOLD MONEY IN TRUST
Holdings shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium, if any, or interest on the Exchange Debentures, and shall
notify the Trustee of any default by Holdings in making any such payment. While
any such default continues, the Trustee may require a Paying Agent to pay all
money held by it to the Trustee. Holdings at any time may require a Paying Agent
to pay all money held by it to the Trustee. Upon payment over to the Trustee,
the Paying Agent (if other than Holdings or a Subsidiary) shall have no further
liability for the money. If Holdings or a Subsidiary acts as Paying Agent, it
shall segregate and hold in a separate trust fund for the benefit of the Holders
all money held by it as Paying Agent. Upon any bankruptcy or reorganization
proceedings relating to Holdings, the Trustee shall serve as Paying Agent for
the Exchange Debentures.
SECTION 2.5 HOLDER 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
all Holders and shall otherwise comply with TIA ss. 312(a). If the Trustee is
not the Registrar, Holdings shall furnish to the Trustee at least seven 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
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23
Trustee may reasonably require of the names and addresses of the Holders of
Exchange Debentures, and Holdings shall otherwise comply with TIA ss. 312(a).
SECTION 2.6 TRANSFER AND EXCHANGE
(a) Subject to the provisions of Sections 2.13, when Exchange
Debentures are presented to the Registrar with a request to register the
transfer of such Exchange Debentures or to exchange such Exchange Debentures for
an equal principal amount of Exchange Debentures of other authorized
denominations, the Registrar shall register the transfer or make the exchange as
requested if the requirements for such transaction are met; provided, however,
that the Exchange Debentures surrendered for transfer or exchange shall be duly
endorsed or accompanied by a written instrument of transfer in form satisfactory
to Holdings and the Registrar, duly executed by the Holder thereof or his
attorney duly authorized in writing. To permit registrations of transfers and
exchanges, Holdings shall execute and the Trustee shall authenticate Exchange
Debentures at the Registrar's written request. No service charge shall be made
for any registration of transfer or exchange, but Holdings may require payment
of a sum sufficient to cover any transfer tax or similar governmental charge
payable in connection therewith (other than any such transfer taxes or other
governmental charge payable upon exchanges or transfers pursuant to Section 2.10
or 9.5).
Any Holder of the Global Exchange Debenture shall, by acceptance of
such Global Exchange Debenture, agree that transfers of beneficial interests in
such Global Exchange Debenture may be effected only through a book-entry system
maintained by the Holder of such Global Exchange Debenture (or its agent), and
that ownership of a beneficial interest in the Global Exchange Debenture shall
be required to be reflected in a book-entry system.
SECTION 2.7 REPLACEMENT EXCHANGE DEBENTURES
If any mutilated Exchange Debenture is surrendered to the Trustee,
or Holdings and the Trustee receives evidence to its satisfaction of the
destruction, loss or theft of any Exchange Debenture, Holdings shall issue and
the Trustee, upon the written order of Holdings signed by two Officers of
Holdings, shall authenticate a replacement Exchange Debenture if the Trustee's
requirements are met. If required by the Trustee or Holdings, an indemnity bond
must be supplied by the Holder that is sufficient in the judgment of the Trustee
and Holdings to protect Holdings, the Trustee, any Agent and any authenticating
agent from any loss that any of them may suffer if an Exchange Debenture is
replaced. Holdings may charge for its expenses in replacing an Exchange
Debenture.
Every replacement Exchange Debenture is an additional obligation of
Holdings and shall be entitled to all of the benefits of this Indenture equally
and proportionately with all other Exchange Debentures duly issued hereunder.
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SECTION 2.8 OUTSTANDING EXCHANGE DEBENTURES
The Exchange Debentures outstanding at any time are all the Exchange
Debentures authenticated by the Trustee except for those cancelled by it, those
delivered to it for cancellation, those reductions in the interest in a Global
Exchange Debenture effected by the Trustee in accordance with the provisions
hereof, and those described in this Section as not outstanding. Except as set
forth in Section 2.9 hereof, an Exchange Debenture does not cease to be
outstanding because Holdings or an Affiliate of Holdings holds the Exchange
Debenture.
If an Exchange Debenture is replaced pursuant to Section 2.7 hereof,
it ceases to be outstanding unless the Trustee receives proof satisfactory to it
that the replaced Exchange Debenture is held by a bona fide purchaser.
If the principal amount of any Exchange Debenture is considered paid
under Section 4.1 hereof, it ceases to be outstanding and interest on it ceases
to accrue.
If the Paying Agent (other than Holdings, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Exchange Debentures payable on that date, then on and after
that date such Exchange Debentures shall be deemed to be no longer outstanding
and shall cease to accrue interest.
SECTION 2.9 TREASURY EXCHANGE DEBENTURES
In determining whether the Holders of the required principal amount
of Exchange Debentures have concurred in any direction, waiver or consent,
Exchange Debentures owned by Holdings, or by any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
Holdings, shall be considered as though not outstanding, except that for the
purposes of determining whether the Trustee shall be protected in relying on any
such direction, waiver or consent, only Exchange Debentures that a Trustee knows
are so owned shall be so disregarded.
SECTION 2.10 TEMPORARY EXCHANGE DEBENTURES
Until definitive Exchange Debentures are ready for delivery,
Holdings may prepare and the Trustee shall authenticate temporary Exchange
Debentures upon a written order of Holdings signed by two Officers of Holdings.
Temporary Exchange Debentures shall be substantially in the form of definitive
Exchange Debentures but may have variations that Holdings considers appropriate
for temporary Exchange Debentures and as shall be reasonably acceptable to the
Trustee. Without unreasonable delay, Holdings shall prepare and the Trustee
shall authenticate definitive Exchange Debentures in exchange for temporary
Exchange Debentures.
Holders of temporary Exchange Debentures shall be entitled to all of
the benefits of this Indenture.
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SECTION 2.11 CANCELLATION
Holdings at any time may deliver Exchange Debentures to the Trustee
for cancellation. The Registrar and Paying Agent shall forward to the Trustee
any Exchange Debentures surrendered to them for registration of transfer,
exchange or payment. The Trustee and no one else shall cancel all Exchange
Debentures surrendered for registration of transfer, exchange, payment,
replacement or cancellation and shall destroy cancelled Exchange Debentures
(subject to the record retention requirement of the Exchange Act). Certification
of the destruction of all cancelled Exchange Debentures shall be delivered to
Holdings. Holdings may not issue new Exchange Debentures to replace Exchange
Debentures that it has paid or that have been delivered to the Trustee for
cancellation.
SECTION 2.12 DEFAULTED INTEREST
If Holdings defaults in a payment of interest on the Exchange
Debentures, it shall pay the defaulted interest in any lawful manner plus, to
the extent lawful, interest payable on the defaulted interest, to the Persons
who are Holders on a subsequent special record date, in each case at the rate
provided in the Exchange Debentures and in Section 4.1 hereof. Holdings shall
notify the Trustee in writing of the amount of defaulted interest proposed to be
paid on each Exchange Debenture and the date of the proposed payment. Holdings
shall fix or cause to be fixed each such special record date and payment date,
provided that no such special record date shall be less than 10 days prior to
the related payment date for such defaulted interest. At least 15 days before
the special record date, Holdings (or, upon the written request of Holdings, the
Trustee in the name and at the expense of Holdings) shall mail or cause to be
mailed to Holders a notice that states the special record date, the related
payment date and the amount of such interest to be paid.
SECTION 2.13 BOOK-ENTRY PROVISIONS FOR GLOBAL EXCHANGE DEBENTURES
(a) The Global Exchange Debentures initially shall (i) be registered
in the name of Cede & Co., as the nominee of the Depositary.
Members of, or participants in, the Depositary ("Agent Members")
shall have no rights under this Indenture with respect to any Global Exchange
Debenture held on their behalf by the Depositary, or the Trustee as the
Debenture Custodian, or under the Global Exchange Debenture, and the Depositary
may be treated by Holdings, the Trustee and any agent of Holdings or the Trustee
as the absolute owner of the Global Exchange Debenture for all purposes
whatsoever. Notwithstanding the foregoing, nothing herein shall prevent
Holdings, the Trustee or any agent of Holdings or the Trustee from giving effect
to any written certification, proxy or other authorization furnished by the
Depositary or impair, as between the Depositary and its Agent Members, the
operation of customary practices governing the exercise of the rights of a
Holder of any Exchange Debenture.
(b) Transfers of Global Exchange Debentures shall be limited to
transfers in whole, but not in part, to the Depositary, its successors or their
respective nominees.
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Interests of beneficial owners in the Global Exchange Debentures (each an
"Interest") may be transferred to one beneficial owner to another Agent Member
or exchanged for Definitive Exchange Debentures in accordance with the rules and
procedures of the Depositary and the provisions of this Indenture. In addition,
Definitive Exchange Debentures shall be transferred to all beneficial owners in
exchange for their beneficial interests in Global Exchange Debentures if (i) the
Depositary for the Exchange Debentures notifies Holdings that the Depositary is
unwilling or unable to continue as Depositary for the Global Exchange Debentures
and a successor Depositary for the Global Exchange Debentures is not appointed
by Holdings within 90 days after delivery of such notice; or (ii) Holdings, at
its sole discretion, notifies the Trustee in writing that it elects to cause the
issuance of Definitive Exchange Debentures under this Indenture, then Holdings
shall execute, and the Trustee shall, upon receipt of an authentication order in
accordance with Section 2.2 hereof, authenticate and deliver, Definitive
Exchange Debentures in an aggregate principal amount equal to the principal
amount of the Global Exchange Debentures in exchange for such Global Exchange
Debentures.
(c) In connection with any transfer or exchange of a portion of the
beneficial interest in any Global Exchange Debenture to beneficial owners taking
a Definitive Exchange Debenture pursuant to paragraph (b), the Registrar shall
reflect on its books and records the date and a decrease in the principal amount
of the Global Exchange Debenture in an amount equal to the principal amount of
the beneficial interest in the Global Exchange Debenture to be transferred, and
Holdings shall execute, and the Trustee shall authenticate and deliver, one or
more Definitive Exchange Debentures of like tenor and amount.
(d) In connection with the transfer of any Interest from one
beneficial owner to another Agent Member not taking a Definitive Exchange
Debenture, but an Interest, pursuant to paragraph (b), the Depositary shall
reflect on its books and records the date, the name of the transferor and
transferee, and the amount of the Interest transferred.
(e) In connection with the transfer of Global Exchange Debentures as
an entirety to beneficial owners pursuant to the second sentence of paragraph
(b), the Global Exchange Debentures shall be deemed to be surrendered to the
Trustee for cancellation, and Holdings shall execute, and the Trustee shall
authenticate and deliver, to each beneficial owner identified by the Depositary
in exchange for its beneficial interest in the Global Exchange Debentures, an
equal aggregate principal amount of Definitive Exchange Debentures of authorized
denominations.
(f) The Holder of any Global Exchange Debenture may grant proxies
and otherwise authorize any person, including Agent Members and persons that may
hold interests through Agent Members, to take any action which a Holder is
entitled to take under this Indenture or the Exchange Debentures.
<PAGE>
27
ARTICLE 3
REDEMPTION AND PREPAYMENT
SECTION 3.1 NOTICES TO TRUSTEE
If Holdings elects to redeem Exchange Debentures pursuant to the
optional redemption provisions of Section 3.7 hereof, it shall furnish to the
Trustee, at least 45 days (unless a shorter period is acceptable to the Trustee)
but not more than 60 days before a redemption date, an Officers' Certificate
setting forth (i) the clause of this Indenture pursuant to which the redemption
shall occur, (ii) the redemption date, (iii) the principal amount of Exchange
Debentures to be redeemed and (iv) the redemption price.
SECTION 3.2 SELECTION OF EXCHANGE DEBENTURES TO BE REDEEMED
If less than all of the Exchange Debentures are to be redeemed at
any time, selection of the Exchange Debentures for redemption will be made by
the Trustee in compliance with the requirements of the principal national
securities exchange, if any, on which the Exchange Debentures are listed or, if
the Exchange Debentures are not so listed, on a pro rata basis, by lot or by
such method as the Trustee considers fair and appropriate. In the event of
partial redemption by lot, the particular Exchange Debentures to be redeemed
shall be selected, unless otherwise provided herein, not less than 30 nor more
than 60 days prior to the redemption date by the Trustee from the outstanding
Exchange Debentures not previously called for redemption.
The Trustee shall promptly notify Holdings in writing of the
Exchange Debentures selected for redemption and, in the case of any Exchange
Debenture selected for partial redemption, the portion of the principal amount
thereof to be redeemed. Exchange Debentures and portions of Exchange Debentures
selected shall be in amounts of $1,000 or integral multiples of $1,000; except
that if all of the Exchange Debentures of a Holder are to be redeemed, the
entire outstanding amount of Exchange Debentures held by such Holder, even if
not an integral multiple of $1,000, shall be redeemed. Except as provided in the
preceding sentence, provisions of this Indenture that apply to Exchange
Debentures called for redemption also apply to portions of Exchange Debentures
called for redemption.
SECTION 3.3 NOTICE OF REDEMPTION
At least 30 days but not more than 60 days before a redemption date,
Holdings shall mail or cause to be mailed, by first class mail, a notice of
redemption to each Holder whose Exchange Debentures are to be redeemed at its
registered address.
The notice shall identify the Exchange Debentures to be redeemed and
shall state:
(a) the redemption date;
(b) the redemption price;
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(c) if any Exchange Debenture is being redeemed in part, the portion
of the principal amount of such Exchange Debenture to be redeemed and that,
after the redemption date upon surrender of such Exchange Debenture, a new
Exchange Debenture or Exchange Debentures in principal amount equal to the
unredeemed portion shall be issued upon cancellation of the original Exchange
Debenture;
(d) the name and address of the Paying Agent;
(e) that Exchange Debentures called for redemption (other than a
Global Exchange Debenture) must be surrendered to the Paying Agent to collect
the redemption price;
(f) that, unless Holdings defaults in making such redemption
payment, interest on Exchange Debentures called for redemption ceases to accrue
on and after the redemption date;
(g) the paragraph of the Exchange Debentures and/or Section of this
Indenture pursuant to which the Exchange Debentures called for redemption are
being redeemed; and
(h) that no representation is made as to the correctness or accuracy
of the CUSIP number, if any, listed in such notice or printed on the Exchange
Debentures.
At Holdings' request, the Trustee shall give the notice of
redemption in Holdings' name and at its expense; provided, however, that
Holdings shall have delivered to the Trustee, at least 45 days prior to the
redemption date (unless a shorter time is acceptable to the Trustee), an
Officers' Certificate requesting that the Trustee give such notice and setting
forth the information to be stated in such notice as provided in the preceding
paragraph.
SECTION 3.4 EFFECT OF NOTICE OF REDEMPTION
Once notice of redemption is mailed in accordance with Section 3.3
hereof, Exchange Debentures called for redemption become irrevocably due and
payable on the redemption date at the redemption price. A notice of redemption
may not be conditional.
SECTION 3.5 DEPOSIT OF REDEMPTION PRICE
One Business Day prior to the redemption date, Holdings shall
deposit with the Trustee or with the Paying Agent immediately available funds
sufficient to pay the redemption price of and accrued interest on all Exchange
Debentures to be redeemed on that date. The Trustee or the Paying Agent shall
promptly return to Holdings any money deposited with the Trustee or the Paying
Agent by Holdings in excess of the amounts necessary to pay the redemption price
of, and accrued interest on, all Exchange Debentures to be redeemed.
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If Holdings complies with the provisions of the preceding paragraph,
on and after the redemption date, interest shall cease to accrue on the Exchange
Debentures or the portions of Exchange Debentures called for redemption. If an
Exchange Debenture is redeemed on or after an interest record date but on or
prior to the related interest payment date, then any accrued and unpaid interest
shall be paid to the Person in whose name such Exchange Debenture was registered
at the close of business on such record date. If any Exchange Debenture called
for redemption shall not be so paid upon surrender for redemption because of the
failure of Holdings to comply with the preceding paragraph, interest shall be
paid on the unpaid principal, from the redemption date until such principal is
paid, and to the extent lawful on any interest not paid on such unpaid
principal, in each case at the rate provided in the Exchange Debentures and in
Section 4.1 hereof.
SECTION 3.6 EXCHANGE DEBENTURES REDEEMED IN PART
Upon surrender of an Exchange Debenture that is redeemed in part,
Holdings shall issue and, upon Holdings' written request, the Trustee shall
authenticate for the Holder at the expense of Holdings a new Exchange Debenture
equal in principal amount to the unredeemed portion of the Exchange Debenture
surrendered. The records of the Registrar and the Depositary shall reflect any
partial redemption of any Global Exchange Debenture.
SECTION 3.7 OPTIONAL REDEMPTION
(a) Except as set forth in clause (b) of this Section 3.7, the
Exchange Debentures shall not be redeemable at Holdings' option prior to March
15, 2002. Thereafter, the Exchange Debentures shall be subject to redemption for
cash at the option of Holdings, in whole or in part, upon not less than 30 nor
more than 60 days' notice to each holder of Exchange Debentures to be redeemed
at the following redemption prices (expressed as percentages of principal amount
thereof) if redeemed during the twelve-month period beginning on March 15 of
each of the years indicated below, in each case together with any accrued and
unpaid interest thereon to the applicable redemption date:
Year Percentage
2002..............................
106.500%
2003..............................
104.333%
2004..............................
102.167%
2005 and thereafter............... 100.000%
(b) Notwithstanding the provisions of clause (a) of this Section
3.7, Holdings may at any time (but shall not have the obligation to) redeem the
Exchange Debentures, in whole or in part, at a redemption price of 113% of the
principal amount thereof, plus an amount in cash equal to all accrued and unpaid
interest thereon to the redemption date, with
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the net proceeds of a Public Equity Offering; provided that such redemption
shall occur within 60 days of the date of the closing of such Public Equity
Offering.
(c) Any redemption pursuant to this Section 3.7 shall be made
pursuant to the provisions of Section 3.1 through 3.6 hereof.
SECTION 3.8 NO MANDATORY REDEMPTION
Except as set forth in Section 4.7, Holdings shall not be
required to make any mandatory redemption, purchase or sinking fund payments
with respect to the Exchange Debentures prior to the Maturity Date.
ARTICLE 4
COVENANTS
SECTION 4.1 PAYMENT OF EXCHANGE DEBENTURES
Holdings shall pay or cause to be paid the principal of, premium, if
any, and interest on the Exchange Debentures on the dates and in the manner
provided in the Exchange Debentures. Principal, premium, if any, and interest
shall be considered paid on the date due if the Paying Agent, if other than
Holdings or a Subsidiary thereof, holds as of 10:00 a.m. Eastern Time on the due
date money deposited by Holdings in immediately available funds and designated
for and sufficient to pay all principal, premium, if any, and interest then due.
Holdings shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at the rate equal to
1% per annum in excess of the then applicable interest rate on the Exchange
Debentures to the extent lawful; it shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue installments of
interest (without regard to any applicable grace period) at the same rate to the
extent lawful.
SECTION 4.2 MAINTENANCE OF OFFICE OR AGENCY
Holdings shall maintain in the Borough of Manhattan, the City of New
York, an office or agency (which may be an office of the Trustee or an affiliate
of the Trustee, Registrar or co-registrar) where Exchange Debentures may be
surrendered for registration of transfer or for exchange and where notices and
demands to or upon Holdings in respect of the Exchange Debentures and this
Indenture may be served. Holdings shall 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 Holdings 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
Corporate Trust Office of the Trustee.
Holdings may also from time to time designate one or more other
offices or agencies where the Exchange Debentures may be presented or
surrendered for any or all such
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31
purposes and may from time to time rescind such designations; provided, however,
that no such designation or rescission shall in any manner relieve Holdings of
its obligation to maintain an office or agency in the Borough of Manhattan, the
City of New York for such purposes. Holdings shall 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.
Holdings hereby designates the Corporate Trust Office of the Trustee
as one such office or agency of Holdings in accordance with Section 2.3 hereof.
SECTION 4.3 REPORTS
(a) Whether or not required by the rules and regulations of the
Commission, so long as any Exchange Debentures are outstanding, Holdings shall
furnish to all Holders of Exchange Debentures within 15 days after it is or
would have been required to file such with the Commission, (i) all quarterly and
annual financial information that would be required to be contained in a filing
with the Commission on Forms 10-Q and 10-K if Holdings was required to file such
Forms, including a "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and, with respect to the annual information only, a
report thereon by the certified independent accountants of Holdings and (ii) all
current reports that would be required to be filed with the Commission on Form
8-K if Holdings was required to file such reports. In addition, whether or not
required by the rules and regulations of the Commission, Holdings shall file a
copy of all such information and reports with the Commission for public
availability (unless the Commission will not accept such a filing) and shall
promptly make such information available to securities analysts and prospective
investors upon request.
(b) For so long as any Exchange Debentures remain outstanding,
Holdings shall furnish to all Holders and to securities analysts and prospective
investors, upon their request, the information required to be delivered pursuant
to Rule 144A(d)(4) under the Securities Act.
SECTION 4.4 COMPLIANCE CERTIFICATE
(a) Holdings shall deliver to the Trustee, within 90 days after the
end of each fiscal year, an Officers' Certificate stating that a review of the
activities of Holdings and its Subsidiaries during the preceding fiscal year has
been made under the supervision of the signing Officers with a view to
determining whether Holdings 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 or her knowledge Holdings has
kept, observed, performed and fulfilled each and every covenant contained in
this Indenture and is not in default in the performance or observance of any of
the terms, provisions and conditions of this Indenture (or, if a Default or
Event of Default shall have occurred, describing all such Defaults or Events of
Default of which he or she may have knowledge and what action Holdings is taking
or proposes to take with respect thereto) and that to the best of his or her
knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest, if any, on the Exchange
Debentures is prohibited or if such event has occurred, a description of the
event and what action Holdings is taking or proposes to take with respect
thereto.
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(b) So long as not contrary to the then current recommendations of
the American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.3(a) hereof shall be accompanied by a
written statement of the independent public accountants of Holdings (who shall
be a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that Holdings have violated any
provisions of Article Four or Article Five hereof or, if any such violation has
occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
(c) Holdings shall, so long as any of the Exchange Debentures are
outstanding, deliver to the Trustee, forthwith upon any Officer becoming aware
of any Default or Event of Default, an Officers' Certificate specifying such
Default or Event of Default and what action Holdings is taking or proposes to
take with respect thereto.
SECTION 4.5 TAXES
Holdings shall pay, and shall cause each of its Restricted
Subsidiaries to pay, prior to delinquency, all material taxes, assessments, and
governmental levies except such as are contested in good faith and by
appropriate proceedings or where the failure to effect such payment is not
adverse in any material respect to the Holders of the Exchange Debentures.
SECTION 4.6 STAY, EXTENSION AND USURY LAWS
Holdings covenants (to the extent that it may lawfully do so) that
it shall not at any time insist upon, plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, that may affect the covenants or
the performance of this Indenture; and Holdings (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it shall not, by resort to any such law, hinder, delay
or impede the execution of any power herein granted to the Trustee, but shall
suffer and permit the execution of every such power as though no such law has
been enacted.
SECTION 4.7 CHANGE OF CONTROL
Upon the occurrence of a Change of Control, each Holder of Exchange
Debentures shall have the right to require Holdings to repurchase all or any
part (equal to $1,000 or an integral multiple thereof) of such Holder's Exchange
Debentures pursuant to the offer described below (the "Change of Control Offer")
at an offer price in cash equal to 101% of the aggregate principal amount
thereof plus an amount in cash equal to accrued and unpaid interest thereon to
the date of purchase (the "Change of Control Payment"). Within 30 days following
any Change of Control, Holdings shall mail a notice to each Holder describing
the transaction or transactions that constitute the Change of Control and
offering to repurchase Exchange Debentures pursuant to the procedures required
by this Indenture and described in such notice. Holdings shall comply with the
requirements of Rule 14e-1 under the Exchange
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33
Act and any other securities laws and regulations thereunder to the extent such
laws and regulations are applicable in connection with the repurchase of the
Exchange Debentures as a result of a Change of Control.
The Change of Control Offer shall remain open for a period of 20
Business Days following its commencement and no longer, except to the extent
that a longer period is required by applicable law (the "Change of Control Offer
Period"). No later than five Business Days after the termination of the Offer
Period (the "Change of Control Purchase Date"), Holdings shall purchase all
Exchange Debentures validly tendered and not properly withdrawn pursuant to the
Change of Control Offer. Payment for any Exchange Debentures so purchased shall
be made in the same manner as interest payments are made on the Exchange
Debentures.
If the Change of Control Purchase Date is on or after an interest
record date and on or before the related interest payment date, any accrued and
unpaid interest shall be paid to the Person in whose name an Exchange Debenture
is registered at the close of business on such record date, and no additional
interest shall be payable to Holders who tender Exchange Debentures pursuant to
the Change of Control Offer.
Upon the commencement of a Change of Control Offer, Holdings shall
send, by first class mail, a notice to each of the Holders, with a copy of each
such notice to the Trustee. The notice shall contain all instructions and
materials necessary to enable such Holders to tender Exchange Debentures
pursuant to the Change of Control Offer. The Change of Control Offer shall be
made to all Holders. The notice, which shall govern the terms of the Change of
Control Offer, shall state:
(a) that the Change of Control Offer is being made pursuant to
this covenant and the length of time the Change of Control Offer shall
remain open;
(b) the purchase price and the Change of Control Purchase
Date;
(c) that any Exchange Debenture not tendered or accepted for
payment shall continue to accrete or accrue interest;
(d) that, unless Holdings defaults in making such payment, any
Exchange Debenture accepted for payment pursuant to the Change of Control
Offer shall cease to accrete or accrue interest after the Change of
Control Purchase Date;
(e) that Holders electing to have an Exchange Debenture
purchased pursuant to any Change of Control Offer shall be required to
surrender the Exchange Debenture, with the form entitled "Option of Holder
to Elect Purchase" on the reverse of the Exchange Debenture completed, or
transfer by book-entry transfer, to Holdings, a depositary, if appointed
by Holdings, or a Paying Agent at the address specified in the notice at
least three days before the Change of Control Purchase Date; and
(f) that Holders shall be entitled to withdraw their election
if Holdings, the depositary or the Paying Agent, as the case may be,
receives, not later than the
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expiration of the Change of Control Offer Period, a telegram, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Exchange Debenture the Holder delivered for purchase and a
statement that such Holder is withdrawing his election to have such
Exchange Debenture purchased.
On the Change of Control Purchase Date, Holdings shall, to the
extent lawful, (1) accept for payment all Exchange Debentures or portions
thereof properly tendered pursuant to the Change of Control Offer, (2) deposit
with the Paying Agent an amount equal to the Change of Control Payment in
respect of all Exchange Debentures or portions thereof so tendered and (3)
deliver or cause to be delivered to the Trustee the Exchange Debentures so
accepted together with an Officers' Certificate stating the aggregate principal
amount of Exchange Debentures or portions thereof being purchased by Holdings.
The Paying Agent shall promptly mail to each Holder of Exchange Debentures so
tendered the Change of Control Payment for such Exchange Debentures, and the
Trustee shall promptly authenticate and mail (or cause to be transferred by book
entry) to each Holder a new Exchange Debenture equal in principal amount to any
unpurchased portion of the Exchange Debentures surrendered, if any; provided
that each such new Exchange Debenture shall be in a principal amount of $1,000
or an integral multiple thereof. Holdings will publicly announce the results of
the Change of Control Offer on the Change of Control Purchase Date.
SECTION 4.8 ASSET SALES
Holdings shall not, and shall not permit any of its Restricted
Subsidiaries to, engage in an Asset Sale in excess of $2.0 million unless (i)
Holdings (or the Restricted Subsidiary, as the case may be) receives
consideration at the time of such Asset Sale at least equal to the fair market
value, and in the case of a lease of assets, a lease providing for rent and
other conditions which are no less favorable to Holdings (or the Restricted
Subsidiary, as the case may be) in any material respect than the then prevailing
market conditions (evidenced in each case by a resolution of the Board of
Directors of such entity set forth in an Officers' Certificate delivered to the
Trustee) of the assets or Equity Interests sold or otherwise disposed of, and
(ii) at least 75% (100% in the case of lease payments) of the consideration
therefor received by Holdings or such Restricted Subsidiary is in the form of
cash or Cash Equivalents; provided that the amount of (x) any liabilities (as
shown on Holdings' or such Restricted Subsidiary's most recent balance sheet or
in the notes thereto, excluding contingent liabilities and trade payables), of
Holdings or any Restricted Subsidiary (other than liabilities that are by their
terms subordinated to the Exchange Debentures, or any guarantee thereof) that
are assumed by the transferee of any such assets and (y) any notes or other
obligations received by Holdings or any such Restricted Subsidiary from such
transferee that are promptly, but in no event more than 30 days after receipt,
converted by Holdings or such Subsidiary into cash (to the extent of the cash
received), shall be deemed to be cash for purposes of this provision.
Within 365 days after the receipt of any Net Proceeds from an Asset
Sale, Holdings may apply such Net Proceeds (a) to reduce permanently long-term
Indebtedness of a Restricted Subsidiary, (b) to reduce permanently Indebtedness
(and, in the case of revolving Indebtedness, to reduce permanently the
commitments) under the New Credit Agreement, or (c) to an investment in another
business, the making of a capital expenditure or the acquisition
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of other tangible assets, in each case, in the same or a similar line of
business as Holdings was engaged in on the date of this Indenture. Any Net
Proceeds from Asset Sales that are not applied or invested as provided in the
preceding sentence of this paragraph shall be deemed to constitute "Excess
Proceeds." On the earlier of (i) the 366th day after an Asset Sale or (ii) such
date as the Board of Holdings or the Restricted Subsidiary determines not to
apply the Net Proceeds relating to such Asset Sale in the manner set forth in
(a), (b) or (c), if the aggregate amount of Excess Proceeds exceeds $7.5
million, Holdings will be required to make an offer to all Holders of Exchange
Debentures (an "Asset Sale Offer") to purchase the maximum principal amount of
Exchange Debentures that may be purchased out of the Excess Proceeds, at an
offer price in cash in an amount equal to 100% of the principal amount thereof
plus accrued and unpaid interest thereon to the date of purchase, in accordance
with the procedures set forth in this Indenture. To the extent that the
aggregate amount of Exchange Debentures tendered pursuant to an Asset Sale Offer
is less than the Excess Proceeds, Holdings may use any remaining Excess Proceeds
for general corporate purposes. If the aggregate principal amount of Exchange
Debentures surrendered by Holders thereof exceeds the amount of Excess Proceeds,
the Trustee shall select the Exchange Debentures to be purchased on a pro rata
basis. Upon completion of such Asset Sale Offer, the amount of Excess Proceeds
shall be reset at zero.
The Asset Sale Offer shall remain open for a period of 20 Business
Days following its commencement and no longer, except to the extent that a
longer period is required by applicable law (the "Asset Sale Offer Period"). No
later than five Business Days after the termination of the Asset Sale Offer
Period (the "Asset Sale Purchase Date"), Holdings shall purchase the principal
amount of Exchange Debentures required to be purchased pursuant to this covenant
(the "Asset Sale Offer Amount") or, if less than the Asset Sale Offer Amount has
been tendered, all Exchange Debentures tendered in response to the Asset Sale
Offer. Payment for any Exchange Debentures so purchased shall be made in the
same manner as interest payments are made on the Exchange Debentures.
If the Asset Sale Purchase Date is on or after an interest record
date and on or before the related interest payment date, any accrued and unpaid
interest shall be paid to the Person in whose name an Exchange Debenture is
registered at the close of business on such record date, and no additional
interest shall be payable to Holders who tender Exchange Debentures pursuant to
the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, Holdings shall send,
by first class mail, a notice to the Trustee and each of the Holders, with a
copy to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Exchange Debentures pursuant to the
Asset Sale Offer. The Asset Sale Offer shall be made to all Holders. The notice,
which shall govern the terms of the Asset Sale Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this
covenant and the length of time the Asset Sale Offer shall remain open;
(b) the Asset Sale Offer Amount, the purchase price and the Asset
Sale Purchase Date;
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36
(c) that any Exchange Debenture not tendered or accepted for payment
shall continue to accrete or accrue interest;
(d) that, unless Holdings defaults in making such payment, any
Exchange Debenture accepted for payment pursuant to the Asset Sale Offer
shall cease to accrete or accrue interest after the Asset Sale Purchase
Date;
(e) that Holders electing to have an Exchange Debenture purchased
pursuant to any Asset Sale Offer shall be required to surrender the
Exchange Debenture, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Exchange Debenture completed, or transfer
by book-entry transfer, to Holdings, a depositary, if appointed by
Holdings, or a Paying Agent at the address specified in the notice at
least three days before the Asset Sale Purchase Date;
(f) that Holders shall be entitled to withdraw their election if
Holdings, the Depositary or the Paying Agent, as the case may be,
receives, not later than the expiration of the Offer Period, a telegram,
facsimile transmission or letter setting forth the name of the Holder, the
principal amount of the Exchange Debenture the Holder delivered for
purchase and a statement that such Holder is withdrawing his election to
have such Exchange Debenture purchased;
(g) that, if the aggregate principal amount of Exchange Debentures
surrendered by Holders exceeds the Asset Sale Offer Amount, Holdings shall
select the Exchange Debentures to be purchased on a pro rata basis (with
such adjustments as may be deemed appropriate by Holdings so that only
Exchange Debentures in denominations of $1,000, or integral multiples
thereof, shall be purchased); and
(h) that Holders whose Exchange Debentures were purchased only in
part shall be issued new Exchange Debentures equal in principal amount to
the unpurchased portion of the Exchange Debentures surrendered (or
transferred by book-entry transfer).
On or before the Asset Sale Purchase Date, Holdings shall, to the
extent lawful, accept for payment, on a pro rata basis to the extent necessary,
the Asset Sale Offer Amount of Exchange Debentures or portions thereof tendered
pursuant to the Asset Sale Offer, or if less than the Asset Sale Offer Amount
has been tendered, all Exchange Debentures tendered, and shall deliver to the
Trustee an Officers' Certificate stating that such Exchange Debentures or
portions thereof were accepted for payment by Holdings in accordance with the
terms of this covenant. Holdings, the Depositary or the Paying Agent, as the
case may be, shall promptly (but in any case not later than five days after the
Asset Sale Purchase Date) mail or deliver to each tendering Holder an amount
equal to the purchase price of the Exchange Debentures tendered by such Holder
and accepted by Holdings for purchase, and Holdings shall promptly issue a new
Exchange Debenture, and the Trustee, upon delivery of an Officers' Certificate
from Holdings, shall authenticate and mail or deliver such new Exchange
Debenture to such Holder, in a principal amount equal to any unpurchased portion
of the Exchange Debenture surrendered. Any Exchange Debenture not so accepted
shall be promptly
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37
mailed or delivered by Holdings to the Holder thereof. Holdings shall publicly
announce the results of the Asset Sale Offer on the Asset Sale Purchase Date.
Holdings will comply with the requirements of Rule 14e-1 under the Exchange Act
and any other securities laws and regulations thereunder to the extent such laws
and regulations are applicable in connection with the repurchase of Exchange
Debentures pursuant to any Asset Sale Offer.
SECTION 4.9 RESTRICTED PAYMENTS
Holdings shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make
any distribution on account of Holdings' or any of its Restricted Subsidiaries'
Equity Interests (including, without limitation, any payment in connection with
any merger or consolidation involving Holdings) (other than dividends or
distributions payable in Equity Interests (other than Disqualified Stock) of
Holdings or dividends or distributions payable to Holdings or any Wholly Owned
Subsidiary of Holdings); (ii) purchase, redeem or otherwise acquire or retire
for value any Equity Interests of Holdings or any direct or indirect parent of
Holdings or other Affiliate or Restricted Subsidiary of Holdings; (iii) make any
principal payment on, or purchase, redeem, defease or otherwise acquire or
retire for value any Indebtedness that is subordinated to the Exchange
Debentures, except in accordance with the scheduled mandatory redemption or
repayment provisions set forth in the original documentation governing such
Indebtedness (but not pursuant to any mandatory offer to repurchase upon the
occurrence of any event); or (iv) make any Restricted
Investment (all such payments and other actions set forth in clauses (i) through
(iv) above being collectively referred to as "Restricted Payments"), unless, at
the time of and after giving effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof;
(b) Holdings would, at the time of such Restricted Payment and after
giving pro forma effect thereto as if such Restricted Payment had been
made at the beginning of the applicable four-quarter period, have been
permitted to incur at least $1.00 of additional Indebtedness pursuant to
the Fixed Charge Coverage Ratio test set forth in the first paragraph of
Section 4.10; and
(c) such Restricted Payment, together with the aggregate of all
other Restricted Payments made by Holdings and its Restricted Subsidiaries
after the date of this Indenture, is less than the sum of, without
duplication, (i) 50% of the Consolidated Net Income of Holdings for the
period (taken as one accounting period) from the beginning of the first
fiscal quarter commencing after the date of this Indenture to the end of
Holdings' most recently ended fiscal quarter for which internal financial
statements are available at the time of such Restricted Payment (or, if
such Consolidated Net Income for such period is a deficit, less 100% of
such deficit), plus (ii) to the extent not included in the amount
described in clause (i) above, 100% of the aggregate net cash proceeds
received after the date of this Indenture by Holdings from the issue or
sale of, or from additional capital contributions in respect of, Equity
Interests of Holdings or of debt securities of Holdings that have been
converted into, or cancelled in exchange for,
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38
Equity Interests of Holdings (other than Equity Interests (or convertible
debt securities) sold to a Restricted Subsidiary or an Unrestricted
Subsidiary of Holdings and other than Disqualified Stock or debt
securities that have been converted into Disqualified Stock and less the
amount of any loans made pursuant to clause (vi) of the next succeeding
paragraph), plus (iii) 100% of any cash dividends received by Holdings or
a Wholly Owned Subsidiary after the date of the Indenture from an
Unrestricted Subsidiary of Holdings, plus (iv) 100% of the cash proceeds
realized upon the sale of any Unrestricted Subsidiary (less the amount of
any reserve established for purchase price adjustments and less the
maximum amount of any indemnification or similar contingent obligation for
the benefit of the purchaser, any of its Affiliates or any other third
party in such sale, in each case as adjusted for any permanent reduction
in any such amount on or after the date of such sale, other than by virtue
of a payment made to such Person) following the date of this Indenture,
plus (v) to the extent that any Restricted Investment that was made after
the date of this Indenture is sold to an unaffiliated purchaser for cash
or otherwise liquidated or repaid for cash, the cash proceeds realized
with respect to such Restricted Investment (less the cost of disposition,
if any).
The foregoing provisions shall not prohibit (i) the payment of any
dividend within 60 days after the date of declaration thereof, if at said date
of declaration such payment would have complied with the provisions of this
Indenture; (ii) the making of any Restricted Investment in exchange for, or out
of the proceeds of, the substantially concurrent sale (other than to a
Subsidiary of Holdings) of, or from substantially concurrent additional capital
contributions in respect of, Equity Interests of Holdings (other than
Disqualified Stock); (iii) the redemption, repurchase, retirement or other
acquisition of any Equity Interests of Holdings in exchange for, or out of the
proceeds of, the substantially concurrent sale (other than to a Subsidiary of
Holdings) of, or from substantially concurrent additional capital contributions
in respect of, other Equity Interests of Holdings (other than any Disqualified
Stock); (iv) the defeasance, redemption or repurchase of subordinated
Indebtedness with the net cash proceeds from (X) an incurrence of Permitted
Refinancing Indebtedness or (Y) the substantially concurrent sale (other than to
a Subsidiary of Holdings) of, or from substantially concurrent additional
capital contributions in respect of, Equity Interests of Holdings (other than
Disqualified Stock); (v) the declaration or payment of any dividend to Holdings
for, or the direct repurchase, redemption or other acquisition or retirement for
value of any Equity Interests of Holdings or any Restricted Subsidiary of
Holdings held by any member of Holdings' (or any of its Restricted
Subsidiaries') management pursuant to any management agreement, stock option
agreement or plan or stockholders agreement; provided that (X) the aggregate
price paid for all such repurchased, redeemed, acquired or retired Equity
Interests shall not exceed $2.0 million in any fiscal year (plus any amount
available for such payments hereunder since the date of this Indenture which
have not been used for such purpose) or (Y) $8.0 million in the aggregate (in
each case, net of the cash proceeds received by Holdings from subsequent
reissuances of such Equity Interests to new members of management); (vi) loans
to members of management of Holdings or any Restricted Subsidiary the proceeds
of which are used for a concurrent purchase of Equity Interests of Holdings and
a capital contribution in an amount equal to such proceeds to Holdings; (vii)
payments in connection with the application of the net proceeds of the
Recapitalization as set forth under "Use of Proceeds" in the Offering
Memorandum; (viii) payments to Holdings in respect of accounting,
<PAGE>
39
legal or other administrative expenses incurred by Holdings relating to the
operations of Holdings in the ordinary course of business and in respect of fees
and related expenses associated with registration statements filed with the
Commission and subsequent ongoing public reporting requirements arising from the
issuance of the Holdings' guarantee of the Senior Notes, the Senior Preferred
Stock and the Exchange Debentures; provided that the aggregate amount of such
payments does not exceed $500,000 in any fiscal year; (ix) so long as Holdings
files consolidated income tax returns which include Anvil, payments to Holdings
in an amount equal to the amount of income tax that Anvil would have paid if it
had filed consolidated tax returns on a separate-company basis; (x) payments of
director's fees and the reasonable expenses of its directors in an aggregate
amount not to exceed $125,000 per year (including indemnification obligations
and professional fees and expenses) by Holdings and payments to Holdings in
respect thereof; (xi) payments to Holdings in an amount not to exceed $200,000
in aggregate to enable Holdings to make payments to holders of its Capital Stock
in lieu of issuing fractional shares thereof; (xii) any payments on the Senior
Preferred Stock in connection with the exchange thereof into Exchange
Debentures; (xiii) the acquisition and issuance of Senior Preferred Stock by
Holdings in connection with the exchange offer contemplated by the Registration
Rights Agreement; (xiv) the making of any principal payment on, or purchase,
redeem, defease or otherwise acquire or retire for value any Indebtedness that
is subordinated to the Exchange Debentures out of Excess Proceeds available for
general corporate purposes after consummation of purchases of Exchange
Debentures pursuant to an Asset Sale Offer; (xv) the declaration and payment of
any dividend or the making of any other distribution for the purpose of funding
any payment in respect of or repurchase or redemption of the Senior Preferred
Stock or the Exchange Debentures; and (xvi) the repurchase of the Senior
Preferred Stock or the Exchange Debentures in connection with an offer required
to be made therefor in connection with a Change of Control provided that Anvil
has previously paid all amounts required to be paid in connection with any
Change of Control Offer for the Senior Notes; provided however that in the case
of any transaction described in clauses (i), (ii), (iii), (iv) and (v) no
Default or Event of Default will have occurred and be continuing immediately
after such transaction. In determining the aggregate amount of Restricted
Payments made after the date of hereof, 100% of the amounts expended pursuant to
the foregoing clauses (ii), (iii), (iv)(Y), (v) and (vi) shall be included in
such calculation and none of the amounts expended pursuant to the foregoing
clauses (i), (iv)(X), (vii), (viii), (ix), (x), (xi), (xii), (xiii), (xiv), (xv)
and (xvi) shall be included in such calculation.
As of the date of this Indenture, all of Holdings' Subsidiaries were
Restricted Subsidiaries. The Board of Directors may designate any Subsidiary to
be an Unrestricted Subsidiary if such designation would not cause a Default. For
purposes of making such determination, all outstanding Investments by Holdings
and its Restricted Subsidiaries (except to the extent repaid in cash) in the
Subsidiary so designated shall be deemed to be Restricted Payments at the time
of such designation and shall reduce the amount available for Restricted
Payments under the first paragraph of this covenant. Such designation shall only
be permitted if such Restricted Payment would be permitted at such time and if
such Subsidiary otherwise meets the definition of an Unrestricted Subsidiary.
The amount of all Restricted Payments (other than cash) shall be the
greater of (i) book value and (ii) fair market value (evidenced by a resolution
of the Board of Directors
<PAGE>
40
set forth in an Officers' Certificate delivered to the Trustee) on the date of
the Restricted Payment of the asset(s) proposed to be transferred by Holdings or
such Restricted Subsidiary, as the case may be, pursuant to the Restricted
Payment. Not later than the date of making any Restricted Payment, Holdings
shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculation required by this covenant were computed, which calculations may be
based upon Holdings' latest available financial statements.
SECTION 4.10 INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK
Holdings shall not, and shall not permit any of its Restricted
Subsidiaries and Unrestricted Subsidiaries to, directly or indirectly, create,
incur, issue, assume, guarantee or otherwise become directly or indirectly
liable, contingently or otherwise, with respect to (collectively, "incur") any
Indebtedness (including Acquired Indebtedness) and that Holdings shall not issue
any Disqualified Stock and shall not permit any of its Restricted Subsidiaries
to issue any shares of preferred stock; provided, however, that Holdings and its
Restricted Subsidiaries may incur Indebtedness (including Acquired Indebtedness)
or issue shares of Disqualified Stock if: (i) the Fixed Charge Coverage Ratio
for Holdings' most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date on which such
additional Indebtedness is incurred or such Disqualified Stock is issued would
have been (A) at any time prior to March 15, 1999, at least 2.00 to 1 and (B) at
any time thereafter, at least 2.25 to 1, in each case determined on a pro forma
basis (including a pro forma application of the net proceeds therefrom), as if
the additional Indebtedness had been incurred, or the Disqualified Stock had
been issued, as the case may be, at the beginning of such four-quarter period;
and (ii) no Default or Event of Default shall have occurred and be continuing or
would occur as a consequence thereof; provided, that no guarantee may be
incurred pursuant to this paragraph unless the guaranteed Indebtedness is
incurred by Holdings or a Restricted Subsidiary pursuant to this paragraph.
The foregoing provisions shall not apply to:
(i) the incurrence by Holdings and its Restricted Subsidiaries of
Indebtedness and letters of credit pursuant to the New Credit Agreement
(with letters of credit being deemed to have a principal amount equal to
the maximum potential liability of Holdings or the relevant Restricted
Subsidiary thereunder) in a maximum principal amount outstanding at any
one time not to exceed $55.0 million (or in the event of any refinancing
of the Indebtedness under the New Credit Agreement, the greater of $55.0
million or the Borrowing Base) (1) less the amount of all mandatory
principal payments actually made by Holdings in respect of term loans
thereunder (excluding any such payments to the extent refinanced at the
time of payment under a replaced credit agreement) and (2) in the case of
the revolving credit facility, reduced by any required permanent
repayments (which are accompanied by a corresponding permanent commitment
reduction) thereunder;
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41
(ii) the incurrence by Holdings and its Restricted Subsidiaries of
the Existing Indebtedness;
(iii) the incurrence by Anvil and Holdings of Indebtedness
represented by the Senior Notes and Holdings' guarantee thereof and the
incurrence by Holdings of the Indebtedness represented by the Exchange
Debentures;
(iv) the incurrence by Holdings or any of its Restricted
Subsidiaries of Indebtedness represented by Capital Lease Obligations,
mortgage financings or Purchase Money Obligations, in each case incurred
for the purpose of financing all or any part of the purchase price or cost
of construction or improvement of property used in the business of
Holdings or such Restricted Subsidiary, in an aggregate principal amount
not to exceed $7.5 million at any time outstanding;
(v) the incurrence by Holdings or any of its Restricted Subsidiaries
of Permitted Refinancing Indebtedness in exchange for, or the net proceeds
of which are used to extend, refinance, renew, replace, defease or refund,
Indebtedness that was permitted by this Indenture to be incurred;
(vi) the incurrence by Holdings or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among Holdings and
any of its Wholly Owned Subsidiaries or between or among any Wholly Owned
Subsidiaries; provided, however, that (i) any subsequent issuance or
transfer of Equity Interests that results in any such Indebtedness being
held by a Person other than a Wholly Owned Subsidiary and (ii) any sale or
other transfer of any such Indebtedness to a Person that is not either
Holdings or a Wholly Owned Subsidiary shall be deemed, in each case, to
constitute an incurrence of such Indebtedness by Holdings or such
Subsidiary, as the case may be;
(vii) the incurrence by Holdings or any of its Restricted
Subsidiaries of Hedging Obligations that are incurred for the purpose of
fixing or hedging interest rate risk with respect to any floating rate
Indebtedness that is permitted by this Indenture to be incurred;
(viii) the incurrence by Holdings and its Restricted Subsidiaries of
Indebtedness (in addition to Indebtedness permitted by any other clause of
this paragraph) in an aggregate principal amount at any time outstanding
not to exceed $20.0 million; provided that such Indebtedness incurred by
foreign subsidiaries that are Restricted Subsidiaries shall not exceed an
aggregate principal amount at any time outstanding of $7.5 million.
(ix) the incurrence by Holdings' Unrestricted Subsidiaries of
Non-Recourse Debt, provided, however, that if any such Indebtedness ceases
to be Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be
deemed to constitute an incurrence of Indebtedness by a Restricted
Subsidiary of Holdings;
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42
(x) Indebtedness incurred by Holdings or any of its Restricted
Subsidiaries arising from agreements providing for indemnification,
adjustment of purchase price or similar obligations, or from guarantees or
letters of credit, surety bonds or performance bonds securing the
performance of Holdings or any of its Restricted Subsidiaries pursuant to
such agreements, in connection with the disposition of any business,
assets or Restricted Subsidiary of Holdings (other than guarantees or
similar credit support by Holdings or any of its Restricted Subsidiaries
of Indebtedness incurred by any Person acquiring all or any portion of
such business, assets or Restricted Subsidiary for the purpose of
financing such acquisition), in a principal amount not to exceed 25% of
the gross proceeds (with proceeds other than cash or Cash Equivalents
being valued at the fair market value thereof as determined by the Board
of Directors of Holdings in good faith) actually received by Holdings or
any of its Restricted Subsidiaries in connection with such disposition;
and
(xi) the incurrence by a Securitization Entity of Indebtedness in a
Qualified Securitization Transaction that is non-recourse to Holdings or
any Subsidiary of Holdings (except Standard Securitization Undertakings);
provided, however, that the amount of Indebtedness outstanding under
clause (i) above and this clause (xi) shall not in the aggregate exceed
$55.0 million at any time outstanding (or in the event of a refinancing of
the Indebtedness under the New Credit Agreement, the greater of $55.0
million or the Borrowing Base).
Notwithstanding any other provision of this covenant, a guarantee
of Indebtedness permitted by the terms of this Indenture at the time such
Indebtedness was incurred shall not constitute a separate incurrence of
Indebtedness.
SECTION 4.11 SALE AND LEASEBACK TRANSACTIONS
Holdings shall not, and shall not permit any of its Restricted
Subsidiaries to, enter into any sale and leaseback transaction; provided that
Holdings or any Restricted Subsidiary may enter into a sale and leaseback
transaction if (i) Holdings or such Restricted Subsidiary could have (a)
incurred Indebtedness in an amount equal to the Attributable Debt relating to
such sale and leaseback transaction pursuant to the Fixed Charge Coverage Ratio
test set forth in the first paragraph of Section 4.10 hereof and (b) incurred a
Lien to secure such Indebtedness pursuant to Section 4.12 hereof, (ii) the net
cash proceeds of such sale and leaseback transaction are at least equal to the
fair market value (as determined in good faith by the Board of Directors and set
forth in an Officers' Certificate delivered to the Trustee) of the property that
is the subject of such sale and leaseback transaction and (iii) the transfer of
assets in such sale and leaseback transaction is permitted by, and the proceeds
of such transaction are applied in compliance with, Section 4.8 hereof.
SECTION 4.12 LIENS
Holdings shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien on any asset now owned or hereafter acquired, or any income or
profits therefrom or assign or convey any right
<PAGE>
43
to receive income therefrom, except Permitted Liens. In addition, Holdings will
not, and will not permit any of its Restricted Subsidiaries to, directly or
indirectly create, incur, assume or suffer to exist any Lien that secures
obligations under any Subordinated Indebtedness on any asset or property of
Holdings or such Restricted Subsidiary, or any income or profits therefrom, or
assign or convey any right to receive income therefrom, unless the Exchange
Debentures are equally and ratably secured with the obligations so secured or
until such time as such obligations are no longer secured by a Lien.
SECTION 4.13 DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED
SUBSIDIARIES
Holdings shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to (i) (a) pay dividends or make any other distributions
to Holdings or any of its Restricted Subsidiaries (1) on its Capital Stock or
(2) with respect to any other interest or participation in, or measured by, its
profits, or (b) pay any Indebtedness owed to Holdings or any of its Restricted
Subsidiaries, (ii) make loans or advances to Holdings or any of its Restricted
Subsidiaries or (iii) transfer any of its properties or assets to Holdings or
any of its Restricted Subsidiaries, except for such encumbrances or restrictions
existing under or by reason of (a) Existing Indebtedness as in effect on the
date of this Indenture, (b) the New Credit Agreement as in effect as of the date
of this Indenture, and any amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings thereof;
provided, that such amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings are no more
restrictive with respect to such dividend and other payment restrictions than
those contained in the New Credit Agreement as in effect on the date of this
Indenture, (c) the Senior Preferred Stock, the Certificate of Designations, the
Exchange Debentures and this Indenture, (d) applicable law, (e) any instrument
governing Acquired Indebtedness or Capital Stock of a Person acquired by
Holdings or any of its Restricted Subsidiaries as in effect at the time of such
acquisition (except to the extent such Acquired Indebtedness was incurred in
connection with or in contemplation of such acquisition), which encumbrance or
restriction is not applicable to any Person, or the properties or assets of any
Person, other than the Person, or the property or assets of the Person, so
acquired; provided, that the Consolidated EBITDA of such Person is not taken
into account in determining whether such acquisition was permitted by the terms
of this Indenture, (f) by reason of customary non-assignment provisions in
leases and licenses entered into in the ordinary course of business and
consistent with past practices, (g) purchase money obligations for property
acquired in the ordinary course of business that impose restrictions of the
nature described in clause (iii) above on the property so acquired, (h)
agreements relating to the financing of the acquisition of real or tangible
personal property acquired after the date of this Indenture; provided, that such
encumbrance or restriction relates only to the property which is acquired and in
the case of any encumbrance or restriction that constitutes a Lien, such Lien
constitutes a Purchase Money Lien, (i) any restriction or encumbrance contained
in contracts for sale of assets permitted by this Indenture in respect of the
assets being sold pursuant to such contract or (j) Indebtedness or other
contractual requirements of a Securitization Entity in connection with a
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Qualified Securitization Transaction; provided that such restrictions apply only
to such Securitization Entity.
SECTION 4.14 TRANSACTIONS WITH AFFILIATES
Holdings shall not, and shall not permit any of its Restricted
Subsidiaries to, sell, lease, transfer or otherwise dispose of any of its
properties or assets to, or purchase any property or assets from, or enter into
or make any contract, agreement, understanding, loan, advance or guarantee with,
or for the benefit of, any Affiliate (each of the foregoing, an "Affiliate
Transaction"), unless (i) such Affiliate Transaction is on terms that are no
less favorable to Holdings or the relevant Restricted Subsidiary than those that
would have been obtained in a comparable transaction by Holdings or such
Restricted Subsidiary with an unrelated Person and (ii) Holdings delivers to the
Trustee (a) with respect to any Affiliate Transaction entered into after the
date of this Indenture involving aggregate consideration in excess of $2.0
million, a resolution of the Board of Directors set forth in an Officers'
Certificate certifying that such Affiliate Transaction complies with clause (i)
above and that such Affiliate Transaction has been approved by a majority of the
disinterested members of the Board of Directors and (b) with respect to any
Affiliate Transaction involving aggregate consideration in excess of $7.5
million, an opinion as to the fairness to Holdings or such Restricted Subsidiary
of such Affiliate Transaction from a financial point of view issued by an
investment banking firm of national standing; provided that the following shall
not be deemed to be Affiliate Transactions: (o) reasonable fees and compensation
paid to, and indemnity provided on behalf of, officers and directors of Holdings
or any Restricted Subsidiary as determined in good faith by the appropriate
Board of Directors or senior management; (p) the provision of administrative or
management services by Holdings or any of its officers to Holdings or any of its
Restricted Subsidiaries in the ordinary course of business consistent with past
practice; (q) transactions between Holdings or one or more of its Restricted
Subsidiaries and the relevant Securitization Entity effected as part of a
Qualified Securitization Transaction; (r) any agreement as in effect as of the
date of this Indenture (including, without limitation, the New Credit Agreement)
or any amendment thereto or any transactions contemplated thereby (including
pursuant to any amendment thereto) and any replacement agreement thereto so long
as any such amendment or replacement agreement is not more disadvantageous to
the Holders of Exchange Debentures in any material respect than the original
agreement as in effect on the date of this Indenture; (s) payments or loans to
employees or consultants which are approved by the Board of Directors of
Holdings in good faith; (t) the existence of, or the performance by Holdings or
any of its Restricted Subsidiaries of its obligations under the terms of, any
stockholders agreement (including any registration rights agreement or purchase
agreement related thereto) to which it is a party as of the date of this
Indenture and any similar agreement which it may enter into thereafter;
provided, however, that the existence of, or the performance by Holdings or any
of its Restricted Subsidiaries of obligations under any similar agreement
entered into after the date of this Indenture shall only be permitted by this
clause (t) to the extent that the terms of any such new agreement are not
otherwise disadvantageous to the Holders of the Exchange Debentures in any
material respect; (u) transactions with customers, clients, suppliers, joint
venture partners or purchasers or sellers of goods or services, in each case in
the ordinary course of business (including, without limitation, pursuant to
joint venture agreements) and otherwise in
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compliance with the terms of this Indenture which are at least as favorable as
might reasonably have been obtained at such time from an unaffiliated party; (v)
any employment agreement entered into by Holdings or any of its Restricted
Subsidiaries in the ordinary course of business and consistent with the past
practice of Holdings or such Restricted Subsidiary (including, without
limitation, any such employment agreements entered into prior to the date of
this Indenture), (w) the granting of stock options to employees and directors of
Holdings and its Restricted Subsidiaries in accordance with the New Stock Option
Plan at exercise prices equal to the fair market value of the Common Stock and
the issuance of Common Stock upon the exercise of such options; (x) transactions
between or among Holdings and/or its Wholly Owned Subsidiaries, (y) (i) the
payment of customary management, consulting and advisory fees and related
expenses to 399 Venture and BRS and their Affiliates not to exceed an aggregate
of $750,000 per year and (ii) payments by Anvil or any of its Restricted
Subsidiaries to 399 Venture and BRS and their Affiliates made pursuant to any
financial advisory, financing, underwriting or placement agreement or in respect
of other investment banking activities, including, without limitation, in
connection with acquisitions or divestitures which are approved by the Board of
Directors of Anvil, Holdings or such Restricted Subsidiary in good faith not to
exceed an aggregate of $750,000 per year; and (z) transactions permitted by
Section 4.9.
SECTION 4.15 LINE OF BUSINESS
Holdings shall not, and shall not permit any Restricted Subsidiary
to, engage in any line of business which is not the same, similar, ancillary,
complementary or related to the businesses in which Holdings is engaged on the
date of this Indenture.
SECTION 4.16 CORPORATE EXISTENCE
Subject to Article 5 hereof, Holdings shall do or cause to be done
all things necessary to preserve and keep in full force and effect (i) its
corporate existence, and the corporate, partnership or other existence of each
of its Subsidiaries, in accordance with the respective organizational documents
(as the same may be amended from time to time) of Holdings or any such
Subsidiary and (ii) the rights (charter and statutory), licenses and franchises
of Holdings and its Subsidiaries; provided, however, that Holdings shall not be
required to preserve any such right, license or franchise, or the corporate,
partnership or other existence of any of their Subsidiaries, if the Board of
Directors shall determine that the preservation thereof is no longer desirable
in the conduct of the business of Holdings and its Subsidiaries, taken as a
whole, and that the loss thereof is not adverse in any material respect to the
Holders of the Exchange Debentures.
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ARTICLE 5
SUCCESSORS
SECTION 5.1 MERGER, CONSOLIDATION OR SALE OF ASSETS
Holdings shall not, in a single transaction or series of related
transactions, consolidate or merge with or into (whether or not Holdings is the
surviving corporation), or directly and/or indirectly through its Restricted
Subsidiaries sell, assign, transfer, lease, convey or otherwise dispose of all
or substantially all of its properties or assets determined on a consolidated
basis for Holdings and its Restricted Subsidiaries taken as a whole in one or
more related transactions, to another corporation, Person or entity unless (i)
Holdings is the surviving corporation or the entity or the Person formed by or
surviving any such consolidation or merger (if other than Holdings) or to which
such sale, assignment, transfer, lease, conveyance or other disposition shall
have been made is a corporation organized or existing under the laws of the
United States, any state thereof or the District of Columbia; (ii) the entity or
Person formed by or surviving any such consolidation or merger (if other than
Holdings) or the entity or Person to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made assumes all the
obligations of Holdings, under the Exchange Debentures and this Indenture
pursuant to a supplemental indenture in a form reasonably satisfactory to the
Trustee; (iii) immediately after such transaction no Default or Event of Default
exists; (iv) Holdings or the entity or Person formed by or surviving any such
consolidation or merger (if other than Holdings), or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made (A) shall have Consolidated Net Worth immediately after the transaction
equal to or greater than the Consolidated Net Worth of Holdings immediately
preceding the transaction and (B) shall, at the time of such transaction and
after giving pro forma effect thereto as if such transaction had occurred at the
beginning of the applicable four-quarter period, be permitted to incur at least
$1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio
test set forth in the first paragraph of Section 4.10; and (v) Holdings shall
have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel
addressed to the Trustee with respect to the foregoing matters; provided,
however, that the requirement set forth in clause (iv) above shall not apply to
a merger between Holdings and any Wholly Owned Subsidiary or to any merger
between Wholly Owned Subsidiaries.
SECTION 5.2 SUCCESSOR CORPORATION SUBSTITUTED
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of Holdings in accordance with Section 5.1 hereof, the successor corporation
formed by such consolidation or into or with which Holdings is merged or to
which such sale, assignment, transfer, lease, conveyance or other disposition is
made shall succeed to, and be substituted for (so that from and after the date
of such consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Indenture referring to "Holdings" shall refer instead to the
successor corporation and not to Holdings), and may exercise every right and
power of Holdings under this Indenture with the same effect as if such successor
Person had been named as Holdings herein; provided, however, that the
predecessor of Holdings shall not be relieved from the
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obligation to pay the principal of and interest on the Exchange Debentures
except in the case of a sale of all of Holdings' assets that meets the
requirements of Section 5.1 hereof.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.1 EVENTS OF DEFAULT
An "Event of Default" occurs if:
(1) Holdings defaults in the payment of interest on any Exchange
Debenture when the same becomes due and payable and the Default continues
for a period of 30 days;
(2) Holdings defaults in the payment of the principal of or premium,
if any, on any Exchange Debenture when the same becomes due and payable at
maturity, upon redemption or otherwise;
(3) Holdings fails to observe or perform any covenant, condition or
agreement on the part of Holdings to be observed or performed pursuant to
Sections 4.7, 4.8, 4.9, 4.10, 4.11 or 5.1 hereof;
(4) Holdings fails to comply with any of its other agreements or
covenants in, or provisions of, the Exchange Debentures or this Indenture
and the Default continues for the period and after the notice specified
below;
(5) a default occurs under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by Holdings or any of its
Restricted Subsidiaries or Holdings (or the payment of which is guaranteed
by Holdings or any of its Restricted Subsidiaries or Holdings), whether
such Indebtedness or guarantee now exists or shall be created hereafter,
which default (a) is caused by a failure to pay principal of or premium,
if any, or interest on such Indebtedness prior to the expiration of the
grace period provided in such Indebtedness on the date of such default (a
"Payment Default") or (b) results in the acceleration of any other such
Indebtedness prior to its express maturity and, in each case, the
principal amount of any other such Indebtedness, together with the
principal amount of any other Indebtedness as to which there has been a
Payment Default or the maturity of which has been so accelerated,
aggregates $7.5 million or more;
(6) a final judgment or final judgments for the payment of money
(not fully covered by insurance) are entered by a court or courts of
competent jurisdiction against Holdings or any of its Restricted
Subsidiaries or Holdings and such judgment or judgments remain
undischarged and unpaid for a period (during which execution shall
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not be effectively stayed) of 60 days, provided that the aggregate of all
such undischarged and unpaid judgments exceeds $4.0 million;
(7) Holdings or any of its Significant Subsidiaries pursuant to or
within the meaning of any Bankruptcy Law:
(a) commences a voluntary case,
(b) consents to the entry of an order for relief against it in
an involuntary case,
(c) consents to the appointment of a Custodian of it or for
all or substantially all of its property,
(d) makes a general assignment for the benefit of its
creditors, or
(e) generally is not paying its debts as they become due; or
(8) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(a) is for relief against Holdings or any Subsidiary in an
involuntary case, or
(b) appoints a Custodian of Holdings or any Subsidiary or for
all or substantially all of the property of Holdings or any
Subsidiary, or
(c) orders the liquidation of Holdings or any Subsidiary,
(d) and in each case the order or decree remains unstayed and
in effect for 60 consecutive days.
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar
federal or state law for the relief of debtors. The term "Custodian" means any
receiver, trustee, assignee, liquidator or similar official under any Bankruptcy
Law.
An Event of Default shall not be deemed to have occurred under
clause (3), (5) or (6) until the Trustee shall have received written notice from
Holdings or any of the Holders or unless a Responsible Officer shall have
obtained actual knowledge of such Event of Default. A Default under clause (4)
is not an Event of Default until the Trustee notifies Holdings, or the Holders
of at least 25% in principal amount of the then outstanding Exchange Debentures
notify Holdings and the Trustee, of the Default and Holdings does not cure the
Default within 60 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."
SECTION 6.2 ACCELERATION
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If an Event of Default (other than an Event of Default specified in
clauses (7) and (8) of Section 6.1 relating to Holdings, any Significant
Subsidiary or any group of Subsidiaries that, taken together, would constitute a
Significant Subsidiary) occurs and is continuing, the Trustee by notice to
Holdings, or the Holders of at least 25% in principal amount of the then
outstanding Exchange Debentures by written notice to Holdings and the Trustee
may declare the unpaid principal of and any accrued interest on all the Exchange
Debentures to be due and payable. Upon such declaration the principal and
interest shall be due and payable immediately (together with the premium
referred to in Section 6.1, if applicable). If an Event of Default specified in
clause (7) or (8) of Section 6.1 relating to Holdings, any Significant
Subsidiary or any group of Subsidiaries that, taken together, would constitute a
Significant Subsidiary occurs, such an amount shall ipso facto become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any Holder. The Holders of a majority in principal amount of the
then outstanding Exchange Debentures by written notice to the Trustee may
rescind an acceleration and its consequences if the rescission would not
conflict with any judgment or decree and if all existing Events of Default
(except nonpayment of principal or interest that has become due solely because
of the acceleration) have been cured or waived. The Trustee may withhold from
Holders of the Exchange Debentures notice of any continuing Default or Event of
Default (except a Default or Event of Default relating to the payment of
principal or interest) if it determines that withholding notice is in their
interest.
SECTION 6.3 OTHER REMEDIES
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal, premium, if
any, and interest on the Exchange Debentures or to enforce the performance of
any provision of the Exchange Debentures or this Indenture.
The Trustee may maintain a proceeding even if it does not possess
any of the Exchange Debentures or does not produce any of them in the
proceeding. A delay or omission by the Trustee or any Holder of an Exchange
Debenture in exercising any right or remedy accruing upon an Event of Default
shall not impair the right or remedy or constitute a waiver of or acquiescence
in the Event of Default. All remedies are cumulative to the extent permitted by
law.
SECTION 6.4 WAIVER OF PAST DEFAULTS
Holders of not less than a majority in aggregate principal amount of
the then outstanding Exchange Debentures by notice to the Trustee may on behalf
of the Holders of all of the Exchange Debentures waive an existing Default or
Event of Default and its consequences hereunder, except a continuing Default or
Event of Default in the payment of the principal of, premium, if any, or
interest on, the Exchange Debentures (including in connection with an offer to
purchase)(provided, however, that the Holders of a majority in aggregate
principal amount of the then outstanding Exchange Debentures may rescind an
acceleration and its consequences, including any related payment default that
resulted from such acceleration). Upon any such waiver, such Default shall cease
to exist, and any Event of
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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 6.5 CONTROL BY MAJORITY
Holders of a majority in principal amount of the then outstanding
Exchange Debentures may direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee or exercising any
trust or power conferred on it. However, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture or that the Trustee
determines may be unduly prejudicial to the rights of other Holders of Exchange
Debentures or that may involve the Trustee in personal liability.
SECTION 6.6 LIMITATION ON SUITS
A Holder of an Exchange Debenture may pursue a remedy with respect
to this Indenture or the Exchange Debentures only if:
(a) the Holder of an Exchange Debenture gives to the Trustee written
notice of a continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the then
outstanding Exchange Debentures make a written request to the Trustee to
pursue the remedy;
(c) such Holder of an Exchange Debenture or Holders of Exchange
Debentures offer and, if requested, provide to the Trustee indemnity
satisfactory to the Trustee against any loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer and, if requested, the
provision of indemnity; and
(e) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Exchange Debentures do not give the Trustee
a direction inconsistent with the request.
A Holder of an Exchange Debenture may not use this Indenture to prejudice the
rights of another Holder of an Exchange Debenture or to obtain a preference or
priority over another Holder of an Exchange Debenture.
SECTION 6.7 RIGHTS OF HOLDERS OF EXCHANGE DEBENTURES TO RECEIVE PAYMENT
Notwithstanding any other provision of this Indenture, the right of
any Holder of an Exchange Debenture to receive payment of principal, premium, if
any, and interest on the Exchange Debenture, on or after the respective due
dates expressed in the Exchange Debenture (including in connection with an offer
to purchase), or to bring suit
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for the enforcement of any such payment on or after such respective dates, shall
not be impaired or affected without the consent of such Holder.
SECTION 6.8 COLLECTION SUIT BY TRUSTEE
If an Event of Default specified in Section 6.1(1) or (2) occurs and
is continuing, the Trustee is authorized to recover judgment in its own name and
as trustee of an express trust against Holdings for the whole amount of
principal of, premium, if any, and interest remaining unpaid on the Exchange
Debentures and interest on overdue principal and, to the extent lawful, interest
and 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.
SECTION 6.9 TRUSTEE MAY FILE PROOFS OF CLAIM
The Trustee is authorized to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the claims
of the Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Exchange Debentures allowed in any judicial proceedings relative
to Holdings (or any other obligor upon the Exchange Debentures), its creditors
or its property and shall be entitled and empowered to collect, receive and
distribute any money or other property payable or deliverable on any such claims
and any custodian 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 to 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 7.7 hereof. To the extent that the payment
of any such compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, and any other amounts due the Trustee under Section 7.7
hereof out of the estate in any such proceeding, shall be denied for any reason,
payment of the same shall be secured by a Lien on, and shall be paid out of, any
and all distributions, dividends, money, securities and other properties that
the Holders may be entitled to receive in such proceeding whether in liquidation
or under any plan of reorganization or arrangement or otherwise. Nothing herein
contained 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 Exchange Debentures or the rights of any
Holder, or to authorize the Trustee to vote in respect of the claim of any
Holder in any such proceeding.
SECTION 6.10 PRIORITIES
If the Trustee collects any money pursuant to this Article, it shall
pay out the money in the following order:
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First: to the Trustee, its agents and attorneys for amounts due
under Section 7.7 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
Second: to Holders of Exchange Debentures for amounts due and unpaid
on the Exchange Debentures for principal and interest, ratably, without
preference or priority of any kind, according to the amounts due and payable on
the Exchange Debentures for principal, premium, if any and interest,
respectively; and
Third: to Holdings or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment
to Holders of Exchange Debentures pursuant to this Section 6.10.
SECTION 6.11 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 or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder of an
Exchange Debenture pursuant to Section 6.7 hereof, or a suit by Holders of more
than 10% in principal amount of the then outstanding Exchange Debentures.
ARTICLE 7
TRUSTEE
SECTION 7.1 DUTIES OF TRUSTEE
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in its exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by
the express provisions of this Indenture and the Trustee need
perform only those duties that are specifically set forth in this
Indenture and no others, and no implied covenants or obligations
shall be read into this Indenture against the Trustee; and
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(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements
of this Indenture. However, the Trustee shall examine the
certificates and opinions to determine whether or not they conform
to the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b)
of this Section;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it is proved
that the Trustee was negligent in ascertaining the pertinent facts;
and
(iii) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.5 hereof.
(d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or incur any liability. The Trustee shall be under
no obligation to exercise any of its rights and powers under this Indenture at
the request of any Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with Holdings. Money
held in trust by the Trustee need not be segregated from other funds except to
the extent required by law.
SECTION 7.2 RIGHTS OF TRUSTEE
(a) The Trustee may conclusively rely upon any document believed by
it to be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. 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 from liability in
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54
respect of any action taken, suffered or omitted by it hereunder in good faith
and in reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent appointed with
due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture and
subject to Section 7.2(b), any demand, request, direction or notice from
Holdings shall be sufficient if signed by an Officer of Holdings.
(f) 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 unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
that might be incurred by it in compliance with such request or direction.
(g) Except with respect to Section 4.1 hereof, the Trustee shall
have no duty to inquire as to the performance of Holdings' covenants in Article
4 hereof. In addition, the Trustee shall not be deemed to have knowledge of any
Default or Event of Default except (i) any Event of Default occurring pursuant
to Sections 6.1(1), 6.1(2) and 4.1 or (ii) any Default or Event of Default of
which a Responsible Officer of the Trustee shall have received written
notification or obtained actual knowledge.
(h) 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 may, in its discretion, 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 Holdings personally or by agent or attorney.
SECTION 7.3 INDIVIDUAL RIGHTS OF TRUSTEE
The Trustee in its individual or any other capacity may become the
owner or pledgee of Exchange Debentures and may otherwise deal with Holdings or
any Affiliate of Holdings with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest (as defined in the Trust Indenture Act) it must eliminate such conflict
within 90 days, apply to the Commission for permission to continue as trustee or
resign. Any Agent may do the same with like rights and duties. The Trustee is
also subject to Sections 7.10 and 7.11 hereof.
SECTION 7.4 TRUSTEE'S DISCLAIMER
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The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture or the Exchange Debentures, it
shall not be accountable for Holdings' use of the proceeds from the Exchange
Debentures or any money paid to Holdings or upon Holdings' direction under any
provision of this Indenture, it shall not be responsible for the use or
application of any money received by any Paying Agent other than the Trustee,
and it shall not be responsible for any statement or recital herein or any
statement in the Exchange Debentures or any other document in connection with
the sale of the Exchange Debentures or pursuant to this Indenture other than its
certificate of authentication.
SECTION 7.5 NOTICE OF DEFAULTS
If a Default or Event of Default occurs and is continuing and if it
is known to the Trustee, the Trustee shall mail to Holders of Exchange
Debentures a notice of the Default or Event of Default within 90 days after it
occurs. Except in the case of a Default or Event of Default in payment of
principal of, premium, if any, or interest on any Exchange Debenture, 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
interests of the Holders of the Exchange Debentures.
SECTION 7.6 REPORTS BY TRUSTEE TO HOLDERS OF THE EXCHANGE DEBENTURES
Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, and for so long as Exchange Debentures remain
outstanding, the Trustee shall mail to the Holders of the Exchange Debentures a
brief report dated as of such reporting date that complies with TIA ss. 313(a)
(but if no event described in TIA ss. 313(a) has occurred within the twelve
months preceding the reporting date, no report need be transmitted). The Trustee
also shall comply with TIA ss. 313(b)(2). The Trustee shall also transmit by
mail all reports as required by TIA ss. 313(c).
A copy of each report at the time of its mailing to the Holders of
Exchange Debentures shall be mailed to Holdings and filed with the Commission
and each stock exchange on which the Exchange Debentures are listed in
accordance with TIA ss. 313(d). Holdings shall promptly notify the Trustee when
the Exchange Debentures are listed on any stock exchange.
SECTION 7.7 COMPENSATION AND INDEMNITY
Holdings shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. Holdings shall reimburse the Trustee promptly upon
request for all reasonable disbursements, advances and expenses incurred or made
by it in addition to the compensation for its services. Such expenses shall
include the reasonable compensation, disbursements and expenses of the Trustee's
agents and counsel.
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56
Holdings shall indemnify the Trustee against any and all losses,
liabilities or expenses (including reasonable attorneys' fees) incurred by it
arising out of or in connection with the acceptance or administration of its
duties under this Indenture, including the costs and expenses of enforcing this
Indenture against Holdings (including this Section 7.7) and defending itself
against any claim (whether asserted by Holdings or any Holder or any other
Person) or liability in connection with the exercise or performance of any of
its powers or duties hereunder, except to the extent any such loss, liability or
expense may be attributable to its negligence or bad faith. The Trustee shall
notify Holdings promptly of any claim for which it may seek indemnity. Failure
by the Trustee to so notify Holdings shall not relieve Holdings of its
obligations hereunder. Holdings shall defend the claim and the Trustee shall
cooperate in the defense. The Trustee may have separate counsel and Holdings
shall pay the reasonable fees and expenses of such counsel. Holdings need not
pay for any settlement made without its consent, which consent shall not be
unreasonably withheld.
The obligations of Holdings under this Section 7.7 shall survive the
satisfaction and discharge of this Indenture.
To secure Holdings' payment obligations in this Section, the Trustee
shall have a Lien prior to the Exchange Debentures on all money or property held
or collected by the Trustee, except that held in trust to pay principal and
interest on particular Exchange Debentures. Such Lien shall survive the
satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event
of Default specified in Sections 6.1(9) or 6.1(10) hereof occurs, the expenses
and the compensation for the services (including the fees and expenses of its
agents and counsel) are intended to constitute expenses of administration under
any Bankruptcy Law.
The Trustee shall comply with the provisions of TIA ss. 313(b)(2) to
the extent applicable.
SECTION 7.8 REPLACEMENT OF TRUSTEE
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying Holdings. The Holders of Exchange
Debentures of a majority in principal amount of the then outstanding Exchange
Debentures may remove the Trustee by so notifying the Trustee and Holdings in
writing. Holdings may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order
for relief is entered with respect to the Trustee under any Bankruptcy
Law;
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(c) a Custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, Holdings shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Exchange Debentures
may appoint a successor Trustee to replace the successor Trustee appointed by
Holdings.
If a successor Trustee does not take office within 60 days after the
retiring Trustee notifies Holdings of its resignation or is removed, the
retiring Trustee, Holdings, or the Holders of Exchange Debentures of at least
10% in principal amount of the then outstanding Exchange Debentures may petition
any court of competent jurisdiction for the appointment of a successor Trustee.
If the Trustee, after written request by any Holder of an Exchange
Debenture who has been a Holder of an Exchange Debenture for at least six
months, fails to comply with Section 7.10, such Holder of an Exchange Debenture
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to Holdings. Thereupon, the resignation
or removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. The successor Trustee shall mail a notice of its succession to
Holders of the Exchange Debentures. The retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee, provided all sums
owing to the Trustee hereunder have been paid and subject to the Lien provided
for in Section 7.7 hereof. Notwithstanding replacement of the Trustee pursuant
to this Section 7.8, Holdings' obligations under Section 7.7 hereof shall
continue for the benefit of the retiring Trustee.
SECTION 7.9 SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or transfers
all or substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall be the
successor Trustee.
SECTION 7.10 ELIGIBILITY; DISQUALIFICATION
There shall at all times be a Trustee hereunder that is a
corporation organized and doing business under the laws of the United States of
America or of any state thereof that is authorized under such laws to exercise
corporate trustee power, that is subject to supervision or examination by
federal or state authorities and that has a combined capital and surplus of at
least $50.0 million as set forth in its most recent published annual report of
condition.
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This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss. 310(a)(1), (2) and (5). The Trustee is subject to TIA
ss. 310(b).
SECTION 7.11 PREFERENTIAL COLLECTION OF CLAIMS AGAINST HOLDINGS
The Trustee is subject to TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.1 OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE
Holdings may, at the option of its Board of Directors evidenced by a
resolution set forth in an Officers' Certificate, at any time, elect to have
either Section 8.2 or 8.3 hereof be applied to all outstanding Exchange
Debentures upon compliance with the conditions set forth below in this Article
Eight.
SECTION 8.2 LEGAL DEFEASANCE AND DISCHARGE
Upon Holdings' exercise under Section 8.1 hereof of the option
applicable to this Section 8.2, Holdings shall, subject to the satisfaction of
the conditions set forth in Section 8.4 hereof, be deemed to have been
discharged from its obligations with respect to all outstanding Exchange
Debentures on the date the conditions set forth below are satisfied
(hereinafter, "Legal Defeasance"). For this purpose, Legal Defeasance means that
Holdings shall be deemed to have paid and discharged the entire Indebtedness
represented by the outstanding Exchange Debentures, which shall thereafter be
deemed to be "outstanding" only for the purposes of Section 8.5 hereof and the
other Sections of this Indenture referred to in (a) and (b) below, and to have
satisfied all its other obligations under such Exchange Debentures and this
Indenture (and the Trustee, on demand of and at the expense of Holdings, shall
execute proper instruments acknowledging the same), except for the following
provisions which shall survive until otherwise terminated or discharged
hereunder: (a) the rights of Holders of outstanding Exchange Debentures to
receive solely from the trust fund described in Section 8.4 hereof, and as more
fully set forth in such Section, payments in respect of the principal of,
premium, if any, and interest on such Exchange Debentures when such payments are
due, (b) Holdings' obligations with respect to such Exchange Debentures under
Article 2 and Section 4.2 hereof, (c) the rights, powers, trusts, duties and
immunities of the Trustee hereunder and Holdings' obligations in connection
therewith and (d) this Article Eight. Subject to compliance with this Article
Eight, Holdings may exercise its option under this Section 8.2 notwithstanding
the prior exercise of its option under Section 8.3 hereof.
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SECTION 8.3 COVENANT DEFEASANCE
Upon Holdings' exercise under Section 8.1 hereof of the option
applicable to this Section 8.3, Holdings shall, subject to the satisfaction of
the conditions set forth in Section 8.4 hereof, be released from its obligations
under the covenants contained in Sections 4.7, 4.8, 4.9, 4.10, 4.11, 4.12, 4.13,
4.14 and 4.15 hereof with respect to the outstanding Exchange Debentures on and
after the date the conditions set forth below are satisfied (hereinafter,
"Covenant Defeasance"), and the Exchange Debentures shall thereafter be deemed
not "outstanding" for the purposes of any direction, waiver, consent or
declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed "outstanding"
for all other purposes hereunder (it being understood that such Exchange
Debentures shall not be deemed outstanding for accounting purposes). For this
purpose, Covenant Defeasance means that, with respect to the outstanding
Exchange Debentures, Holdings may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document and such omission to
comply shall not constitute a Default or an Event of Default under Section 6.1
hereof, but, except as specified above, the remainder of this Indenture and such
Exchange Debentures shall be unaffected thereby. In addition, upon Holdings'
exercise under Section 8.1 hereof of the option applicable to this Section 8.3
hereof, subject to the satisfaction of the conditions set forth in Section 8.4
hereof, Sections 6.1(5) and 6.1(6) hereof shall not constitute Events of
Default.
SECTION 8.4 CONDITIONS TO LEGAL OR COVENANT DEFEASANCE
The following shall be the conditions to the application of either
Section 8.2 or 8.3 hereof to the outstanding Exchange Debentures:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) Holdings must irrevocably deposit with the Trustee, in trust,
for the benefit of the Holders, cash in United States dollars,
non-callable Government Securities, or a combination thereof, in such
amounts as will be sufficient, in the opinion of a nationally recognized
firm of independent public accountants, to pay the principal of, premium,
if any, and interest on the outstanding Exchange Debentures on the stated
maturity date for payment thereof or on the applicable redemption date, as
the case may be, and Holdings must specify whether the Exchange Debentures
are being defeased to maturity or to a particular redemption date;
(b) in the case of an election under Section 8.2 hereof, Holdings
shall have delivered to the Trustee an Opinion of Counsel in the United
States reasonably acceptable to the Trustee confirming that (A) Holdings
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 tax law, in either case to the
effect that, and based thereon such Opinion of Counsel shall confirm that,
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the Holders of the outstanding Exchange Debentures will not recognize
income, gain or loss for federal income tax purposes as a result of such
Legal 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 Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.3 hereof, Holdings
shall have delivered to the Trustee an Opinion of Counsel in the United
States reasonably acceptable to the Trustee confirming that the Holders of
the outstanding Exchange Debentures 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;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of
Default resulting from the incurrence of Indebtedness all or a portion of
the proceeds of which will be used to defease the Exchange Debentures
pursuant to this Article Eight concurrently with such incurrence) or
insofar as Sections 6.1(7) or 6.1(8) hereof is concerned, at any time in
the period ending on the 91st day after the date of deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not result in
a breach or violation of, or constitute a default under, any material
agreement or instrument (other than this Indenture) to which Holdings or
any of its Subsidiaries is a party or by which Holdings or any of its
Subsidiaries is bound, including, without limitation, the New Credit
Agreement;
(f) Holdings shall have delivered to the Trustee an Opinion of
Counsel to the effect that on the 91st day following the deposit, the
trust funds will not be subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally;
(g) Holdings shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by Holdings with the
intent of preferring the Holders over any other creditors of Holdings or
with the intent of defeating, hindering, delaying or defrauding any other
creditors of Holdings; and
(h) Holdings shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.
SECTION 8.5 DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS
Subject to Section 8.6 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.5, the
"Trustee") pursuant to Section 8.4 hereof in
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respect of the outstanding Exchange Debentures shall be held in trust and
applied by the Trustee, in accordance with the provisions of such Exchange
Debentures and this Indenture, to the payment, either directly or through any
Paying Agent (including Holdings acting as Paying Agent) as the Trustee may
determine, to the Holders of such Exchange Debentures of all sums due and to
become due thereon in respect of principal, premium, if any, and interest, but
such money need not be segregated from other funds except to the extent required
by law.
Holdings shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the cash or non-callable Government
Securities deposited pursuant to Section 8.4 hereof or the principal and
interest received in respect thereof.
Anything in this Article Eight to the contrary notwithstanding, the
Trustee shall deliver or pay to Holdings from time to time upon the request of
Holdings any money or non-callable Government Securities held by it as provided
in Section 8.4 hereof which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee (which may be the opinion delivered under Section
8.4(a) hereof), are in excess of the amount thereof that would then be required
to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.
SECTION 8.6 REPAYMENT TO HOLDINGS
Any money deposited with the Trustee or any Paying Agent, or then
held by Holdings, in trust for the payment of the principal of, premium, if any,
or interest on any Exchange Debenture and remaining unclaimed for two years
after such principal, and premium, if any, or interest has become due and
payable shall be paid to Holdings on its request or (if then held by Holdings)
shall be discharged from such trust; and the Holder of such Exchange
Debenture shall thereafter, as a creditor, look only to Holdings for payment
thereof, and all liability of the Trustee or such Paying Agent with respect to
such trust money, and all liability of Holdings as trustee thereof, shall
thereupon cease; provided, however, that the Trustee or such Paying Agent,
before being required to make any such repayment, may at the expense of Holdings
cause to be published once, in the New York Times and The Wall Street Journal
(national edition), 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 notification or publication, any unclaimed balance of such money then
remaining will be repaid to Holdings.
SECTION 8.7 REINSTATEMENT
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.2 or
8.3 hereof, as the case may be, by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then Holdings' obligations under this Indenture and the Exchange
Debentures shall be revived and reinstated as though no deposit had occurred
pursuant to Section 8.2 or 8.3 hereof until such time as the Trustee or Paying
Agent is permitted to apply all such money in accordance with Section 8.2 or 8.3
hereof, as
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the case may be; provided, however, that, if Holdings makes any payment of
principal of, premium, if any, or interest on any Exchange Debenture following
the reinstatement of its obligations, Holdings shall be subrogated to the rights
of the Holders of such Exchange Debentures to receive such payment from the
money held by the Trustee or Paying Agent.
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.1 WITHOUT CONSENT OF HOLDERS OF EXCHANGE DEBENTURES
Notwithstanding Section 9.2 of this Indenture, Holdings and the
Trustee may amend or supplement this Indenture or the Exchange Debentures
without the consent of any Holder of an Exchange Debenture:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Exchange Debentures in addition to
or in place of certificated Exchange Debentures;
(c) to provide for the assumption of Holdings' obligations to the
Holders of the Exchange Debentures in the case of a merger or
consolidation pursuant to Article Five hereof;
(d) to make any change that would provide any additional rights or
benefits to the Holders of the Exchange Debentures or that does not
adversely affect the legal rights hereunder of any Holder of the Exchange
Debentures; or
(e) to comply with requirements of the Commission in order to effect
or maintain the qualification of this Indenture under the Trust Indenture
Act.
Upon the request of Holdings accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of the documents described in Section
7.2 hereof, the Trustee shall join with Holdings in the execution of any amended
or supplemental Indenture authorized or permitted by the terms of this Indenture
and to make any further appropriate agreements and stipulations that may be
therein contained, but the Trustee shall not be obligated to enter into such
amended or supplemental Indenture that affects its own rights, duties or
immunities under this Indenture or otherwise.
SECTION 9.2 WITH CONSENT OF HOLDERS OF EXCHANGE DEBENTURES
Except as provided below in this Section 9.2, Holdings and the
Trustee may amend or supplement this Indenture (including Sections 4.7 and 4.8
hereof) and the Exchange Debentures may be amended or supplemented with the
consent of the Holders of at least a majority in principal amount of the
Exchange Debentures then outstanding (including consents
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obtained in connection with a tender offer or exchange offer for the Exchange
Debentures), and, subject to Sections 6.4 and 6.7 hereof, any existing Default
or Event of Default (other than a Default or Event of Default in the payment of
the principal of, premium, if any, or interest on the Exchange Debentures,
except a payment default resulting from an acceleration that has been rescinded)
or compliance with any provision of this Indenture or the Exchange Debentures
may be waived with the consent of the Holders of a majority in principal amount
of the then outstanding Exchange Debentures (including consents obtained in
connection with a tender offer or exchange offer for the Exchange Debentures).
Upon the request of Holdings accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Exchange Debentures as aforesaid, and
upon receipt by the Trustee of the documents described in Section 7.2 hereof,
the Trustee shall join with Holdings in the execution of such amended or
supplemental Indenture unless such amended or supplemental Indenture affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise, in
which case the Trustee may in its discretion, but shall not be obligated to,
enter into such amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders of Exchange
Debentures under this Section 9.2 to approve the particular form of any proposed
amendment or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section becomes
effective, Holdings shall mail to the Holders of Exchange Debentures affected
thereby a notice briefly describing the amendment, supplement or waiver. Any
failure of Holdings to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such
amended or supplemental Indenture or waiver. Subject to Sections 6.4 and 6.7
hereof, the Holders of a majority in aggregate principal amount of the Exchange
Debentures then outstanding may waive compliance in a particular instance by
Holdings with any provision of this Indenture or the Exchange Debentures.
However, without the consent of each Holder affected, an amendment or waiver may
not (with respect to any Exchange Debentures held by a non-consenting Holder):
(a) reduce the principal amount of Exchange Debentures whose Holders
must consent to an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any
Exchange Debenture or alter or waive any of the provisions with respect to
the redemption of the Exchange Debentures, except as provided above with
respect to Sections 4.7 and 4.8 hereof;
(c) reduce the rate of or change the time for payment of interest,
including default interest, on any Exchange Debenture;
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(d) waive a Default or Event of Default in the payment of principal
of or premium, if any, or interest on the Exchange Debentures (except a
rescission of acceleration of the Exchange Debentures by the Holders of at
least a majority in aggregate principal amount of the then outstanding
Exchange Debentures and a waiver of the payment default that resulted from
such acceleration);
(e) make any Exchange Debenture payable in money other than that
stated in the Exchange Debentures;
(f) make any change in the provisions of this Indenture relating to
waivers of past Defaults or the rights of Holders of Exchange Debentures
to receive payments of principal of, premium, if any, or interest on the
Exchange Debentures;
(g) waive a redemption payment with respect to any Exchange
Debenture;
(h) make any change in Section 6.4 or 6.7 hereof or in the foregoing
amendment and waiver provisions; or
(i) make any change to Article 10 which would adversely affect the
Holders of the Exchange Debentures.
Notwithstanding anything to the contrary contained herein, the
provisions of Article 10 may not be amended or modified without the prior
consent, authorization or approval by all holders of Designated Senior Debt.
SECTION 9.3 COMPLIANCE WITH TRUST INDENTURE ACT
Every amendment or supplement to this Indenture or the Exchange
Debentures shall be set forth in an amended or supplemental Indenture that
complies with the Trust Indenture Act as then in effect.
SECTION 9.4 REVOCATION AND EFFECT OF CONSENTS
Until an amendment, supplement or waiver becomes effective, a
consent to it by a Holder of an Exchange Debenture is a continuing consent by
the Holder of an Exchange Debenture and every subsequent Holder of an Exchange
Debenture or portion of an Exchange Debenture that evidences the same debt as
the consenting Holder's Exchange Debenture, even if notation of the consent is
not made on any Exchange Debenture. However, any such Holder of an Exchange
Debenture or subsequent Holder of an Exchange Debenture may revoke the consent
as to its Exchange Debenture if the Trustee receives written notice of
revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
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SECTION 9.5 NOTATION ON OR EXCHANGE OF EXCHANGE DEBENTURES
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Exchange Debenture thereafter authenticated.
Holdings in exchange for all Exchange Debentures may issue and the Trustee shall
authenticate new Exchange Debentures that reflect the amendment, supplement or
waiver.
Failure to make the appropriate notation or issue a new Exchange
Debenture shall not affect the validity and effect of such amendment, supplement
or waiver.
SECTION 9.6 TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental Indenture
authorized pursuant to this Article Nine if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
Holdings may not sign an amendment or supplemental Indenture until the Board of
Directors approves it. In executing any amended or supplemental indenture, the
Trustee shall be entitled to receive indemnity reasonably satisfactory to it and
to receive and (subject to Section 7.1) shall be fully protected in relying
upon, an Officer's Certificate and an Opinion of Counsel stating that the
execution of such amended or supplemental indenture is authorized or permitted
by this Indenture.
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ARTICLE 10
SUBORDINATION
SECTION 10.1 AGREEMENT TO SUBORDINATE
Holdings agrees, and each Holder by accepting an Exchange Debenture
agrees, that the Indebtedness evidenced by, and all other obligations in respect
of, each Exchange Debenture is subordinated in right of payment, to the extent
and in the manner provided herein, to the prior payment in full of all existing
and future Senior Indebtedness (where outstanding on the date hereof or
hereafter created, incurred, assumed or guaranteed) of Holdings, and that the
subordination is for the benefit of the holders of such Senior Indebtedness.
SECTION 10.2 LIQUIDATION; DISSOLUTION; BANKRUPTCY
Upon (a) any distribution to creditors of Holdings in a liquidation
or dissolution of Holdings or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to Holdings or its property or (b)
an assignment for the benefit of creditors or any marshalling of Holdings'
assets and liabilities:
(i) the holders of Senior Indebtedness shall be entitled to
receive payment in full of all Obligations due in respect of such
Senior Indebtedness (including interest after the commencement of
any such proceeding at the rate specified in the applicable Senior
Indebtedness) before Holders of the Exchange Debentures shall be
entitled to receive any payment with respect to the Exchange
Debentures (except that Holders of the Exchange Debentures may
receive securities that are subordinated, at least to the same
extent as the Exchange Debentures, to (A) Senior Indebtedness and
(B) any securities issued in exchange for Senior Indebtedness); and
(ii) until all Obligations with respect to Senior Indebtedness
(as provided in clause (i) above) are paid in full, any distribution
to which Holders of the Exchange Debentures would be entitled but
for this Article 10 shall be made to holders of Senior Indebtedness
(except that holders of the Exchange Debentures may receive
securities that are subordinated, at least to the same extent as the
Exchange Debentures, to (A) Senior Indebtedness and (B) any
securities issued in exchange for Senior Indebtedness), as their
interest may appear.
SECTION 10.3 DEFAULT ON DESIGNATED SENIOR INDEBTEDNESS
Holdings shall not make any payment or distribution to the Trustee
or any Holder of Exchange Debentures upon or in respect of Obligations with
respect to the Exchange Debentures and may not acquire from the Trustee or any
Holder of Exchange Debentures any Exchange Debentures for cash or property
(other than securities that are subordinated, at least to the same extent as the
Exchange Debentures, to (A) Senior Indebtedness and (B) any
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securities issued in exchange for Senior Indebtedness) until all principal and
other Obligations with respect to the Senior Indebtedness have been paid in full
if:
(a) a default in the payment of any principal, premium, if
any, interest or other Obligations with respect to any Designated
Senior Debt occurs and is continuing beyond any applicable grace
period in the agreement, indenture or other document governing such
Designated Senior Debt (whether upon maturity, as a result of
acceleration or otherwise); or
(b) any other default occurs and is continuing with respect to
any Designated Senior Debt that permits holders of such Designated
Senior Debt to accelerate its maturity, and Holdings and the Trustee
receive a notice of such default (a "Payment Blockage Notice") from
the holders, or from the trustee, agent or other representative (the
"Representative") of the holders, of any such Designated Senior
Debt. If the Trustee receives any such notice, a subsequent notice
received within 360 days thereafter shall not be effective for
purposes of this Section 10.3. No nonpayment default that existed or
was continuing on the date of delivery of any Payment Blockage
Notice to the Trustee shall be, or be made, the basis for a
subsequent Payment Blockage Notice unless such default shall have
been cured or waived for a period of not less than 180 days.
Holdings may and shall resume payments on and distributions in
respect of the Exchange Debentures and may acquire them upon the earlier of:
(i) the date upon which the default is cured or waived, or
(ii) in the case of a default referred to in clause (b) of
this Section 10.03. 179 days after the date on which the applicable
Payment Blockage Notice is received, unless the maturity of any
Designated Senior Debt has been accelerated,
if this Article 10 otherwise permits such payment, distribution or acquisition
at the time of such payment or acquisition.
SECTION 10.4 ACCELERATION OF SECURITIES
If payment of the Exchange Debentures is accelerated because of an
Event of Default, Holdings shall promptly notify holders of Senior Indebtedness
of such acceleration.
SECTION 10.5 WHEN DISTRIBUTION MUST BE PAID OVER
In the event that the Trustee or any Holder of Exchange Debentures
receives any payment of any Obligations with respect to the Exchange Debentures
at a time when a Trust Officer of the Trustee has actual knowledge that such
payment is prohibited by Section 10.03 hereof, such payment shall be held by the
Trustee or such Holder of Exchange Debentures in trust for the benefit of, and
shall be paid forthwith over and delivered upon
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written request to, the holders of Senior Indebtedness (or their Representative
under the indenture or other agreement (if any) pursuant to which Senior
Indebtedness may have been issued), as their respective interests may appear,
for applications to the payment of all Obligations with respect to Senior
Indebtedness remaining unpaid to the extent necessary to pay such Obligations in
full in accordance with their terms, after giving effect to any concurrent
payment or distribution to or for the holders of Senior Indebtedness.
If a distribution is made to the Trustee or any Holder of Exchange
Debentures that because of this Article 10 should not have been made to it, the
Trustee or such Holder of Exchange Debentures who receives the distribution
shall hold it in trust for the benefit of, and upon written request pay it over
to, the holders of Senior Indebtedness (or their Representative under the
indenture or other agreement (if any) pursuant to which Senior Indebtedness may
have been issued), as their respective interests may appear, for application to
the payment of all Obligations with respect to Senior Indebtedness remaining
unpaid to the extent necessary to pay such Obligations in full in accordance
with their terms, after giving effect to any concurrent payment or distribution
to or for the holders of Senior Indebtedness.
With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform only such obligations on the part of the Trustee as are
specifically set forth in this Article 10, and no implied covenants or
obligations with respect to the holders of senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Indebtedness, and shall not be
liable to any such holders if the Trustee shall pay over or distribute to or on
behalf of Holders of Exchange Debentures or Holdings or any other Person money
or assets to which any holders of Senior Indebtedness shall be entitled by
virtue of this Article 10, except if such payment is made as a result of the
willful misconduct or gross negligence of the Trustee.
SECTION 10.6 NOTICE BY HOLDINGS
Holdings shall promptly notify the Trustee and the Paying Agent of
any facts known to Holdings that would cause a payment of any Obligations with
respect to the Exchange Debentures to violate this Article 10, but failure to
give such notice shall not affect the subordination of the Exchange Debentures
to Senior Indebtedness as provided in this Article 10.
SECTION 10.7 SUBROGATION
After all Senior Indebtedness is paid in full and until the Exchange
Debentures are paid in full, Holders of the Exchange Debentures shall be
subrogated (equally and ratably with all other indebtedness pari passu with the
Exchange Debentures) to the rights of holders of Senior Indebtedness to receive
distributions applicable to Senior Indebtedness to the extent that distributions
otherwise payable to the Holders of the Exchange Debentures have been applied to
the payment of Senior Indebtedness. A distribution made under this Article 10 to
holders of Senior Indebtedness that otherwise would have been made to Holders of
the Exchange Debentures is not, as between Holdings and Holders of the Exchange
Debentures, a payment by Holdings on the Exchange Debentures.
<PAGE>
69
SECTION 10.8 RELATIVE RIGHTS
This Article 10 defines the relative rights of Holders of the
Exchange Debentures and holders of Senior Indebtedness.
Nothing in this Indenture shall:
(a) impair, as between Holdings and Holders of the Exchange
Debentures, the obligation of Holdings, which is absolute and
unconditional, to pay principal of and interest on the Exchange
Debentures in accordance with their terms;
(b) affect the relative rights of Holders of the Exchange
Debentures and creditors of Holdings other than their rights in
relation to holders of Senior Indebtedness; or
(c) prevent the Trustee or any Holder of Exchange Debentures
from exercising its available remedies upon a Default or Event of
Default, subject to the rights of holders and owners of Senior
Indebtedness to receive distributions and payments otherwise payable
to Holders of the Exchange Debentures.
If Holdings fails because of this Article 10 to pay principal of or
interest on Exchange Debenture on the due date, such failure shall still
constitute a Default or Event of Default.
SECTION 10.9 SUBORDINATION MAY NOT BE IMPAIRED BY HOLDINGS
No right of any holder of Senior Indebtedness to enforce the
subordination of the Indebtedness evidenced by the Exchange Debentures shall be
impaired by any act or failure to act by Holdings or any Holder of the Exchange
Debentures or by the failure of Holdings any Holder of the Exchange Debentures
to comply with this Indenture.
SECTION 10.10 DISTRIBUTION OR NOTICE TO REPRESENTATIVE
Whenever a distribution is to be made or a notice given to holders
of Senior Indebtedness, the distribution may be made and the notice given to
their Representative.
Upon any payment or distribution of assets of Holdings referred to
in this Article 10, the Trustee and the Holders of the Exchange Debentures shall
be entitled to rely upon any order or decree made by any court of competent
jurisdiction or upon any certificate of such Representative or of the
liquidating trustee or agent or other Person making any distribution to the
Trustee or to the Holders of the Exchange Debentures for the purpose of
ascertaining the Persons entitled to participate in such distribution, the
holders of the Senior Indebtedness and other Indebtedness of Holdings, the
amount thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Article 10.
<PAGE>
70
SECTION 10.11 RIGHTS OF TRUSTEE AND PAYING AGENT
Notwithstanding the provisions of this Article 10 or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payment son the Exchange Debentures, unless the Trustee shall have
received, at least five Business Days prior to the date of such payment, written
notice of facts that would cause the payment of any Obligations with respect to
the Exchange Debentures to violate this Article 10. Only Holdings or a
Representative may give the notice. Nothing in this Article 10 shall impair the
claims of, or payments to, the Trustee under or pursuant to Section 7.7 hereof.
The Trustee in its individual or any other capacity may hold Senior
Indebtedness with the same rights it would have if it were not Trustee. Any
Agent may do the same with like rights.
SECTION 10.12 AUTHORIZATION TO EFFECT SUBORDINATION
Each Holder of Exchange Debentures by such Holder's acceptance
thereof authorizes and directs the Trustee on such Holder's behalf to take such
action as may be necessary or appropriate to effectuate the subordination as
provided in this Article 10, and appoints the Trustee such Holder's
attorney-in-fact for any and all such purposes. If the Trustee does not file a
proper proof of claim or proof of debt in the form required in any proceeding
referred to in Section 6.9 hereof at least 30 days before the expiration of the
time to file such claim, the Representatives are hereby authorized to file an
appropriate claim for and on behalf of the Holders of the Exchange Debentures.
SECTION 10.13 AMENDMENTS
The provisions of this Article 10 (including the related
definitions) shall not be amended or modified without the written consent of the
holders of all Senior Indebtedness.
ARTICLE 11
MISCELLANEOUS
SECTION 11.1 TRUST INDENTURE ACT CONTROLS
If any provision of this Indenture limits, qualifies or conflicts
with the duties imposed by TIA ss. 318(c), the imposed duties shall control.
SECTION 11.2 NOTICES
Any notice or communication by Holdings or the Trustee to the others
is duly given if in writing and delivered in Person or mailed by first class
mail (registered or
<PAGE>
71
certified, return receipt requested), telecopier or overnight air courier
guaranteeing next day delivery, to the others' address:
If to Holdings:
Anvil Knitwear, Inc.
228 East 45th Street
New York, New York 10017
Attention: Jacob Hollander
Telephone No.: (212) 476-0352
Telecopier No.: (212) 885-9411
If to the Trustee:
United States Trust Company of New York
114 West 47th Street, 25th Floor
New York, New York 10036
Attention: Corporate Trust Administration
Telephone No.: (212) 852-1676
Telecopier No.: (212) 852-1626
Holdings or the Trustee, by notice to the others may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; when receipt acknowledged, if telecopied; and the next
Business Day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first
class mail, certified or registered, return receipt requested, or by overnight
air courier guaranteeing next day delivery to its address shown on the register
kept by the Registrar. Any notice or communication shall also be so mailed to
any Person described in TIA ss. 313(c), to the extent required by the Trust
Indenture Act. Failure to mail a notice or communication to a Holder or any
defect in it shall not affect its sufficiency with respect to other Holders.
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.
If Holdings mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
<PAGE>
72
SECTION 11.3 COMMUNICATION BY HOLDERS OF EXCHANGE DEBENTURES WITH OTHER HOLDERS
OF EXCHANGE DEBENTURES
Holders may communicate pursuant to TIA ss. 312(b) with other
Holders with respect to their rights under this Indenture or the Exchange
Debentures. Holdings, the Trustee, the Registrar and anyone else shall have the
protection of TIA ss. 312(c).
SECTION 11.4 CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT
Upon any request or application by Holdings to the Trustee to take
any action under this Indenture, Holdings, upon request, shall furnish to the
Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth
in Section 11.5 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth
in Section 11.5 hereof) stating that, in the opinion of such counsel, all
such conditions precedent and covenants have been satisfied.
SECTION 11.5 STATEMENTS REQUIRED IN CERTIFICATE OR OPINION
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA ss. 314(a)(4)) shall comply with the provisions of TIA
ss. 314(e) and shall include:
(a) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(b) 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;
(c) a statement that, in the opinion of such Person, he or she 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 satisfied; and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been satisfied.
<PAGE>
73
SECTION 11.6 RULES BY TRUSTEE AND AGENTS
The Trustee may make reasonable rules for action by or at a meeting
of Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable N requirements for its functions.
SECTION 11.7 NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS
No past, present or future director, officer, employee, incorporator
or stockholder of Holdings, as such, shall have any liability for any
obligations of Holdings under the Exchange Debentures, this Indenture or for any
claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder by accepting an Exchange Debenture waives and releases all
such liability. The waiver and release are part of the consideration for
issuance of the Exchange Debentures.
SECTION 11.8 GOVERNING LAW
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED
TO CONSTRUE THIS INDENTURE AND THE EXCHANGE DEBENTURES, WITHOUT REGARD TO THE
CONFLICTS OF LAWS PRINCIPLES THEREOF.
SECTION 11.9 NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS
This Indenture may not be used to interpret any other indenture,
loan or debt agreement of Holdings or its Subsidiaries or of any other Person.
Any such indenture, loan or debt agreement may not be used to interpret this
Indenture.
SECTION 11.10 SUCCESSORS
All agreements of Holdings in this Indenture and the Exchange
Debentures shall bind its successors. All agreements of the Trustee in this
Indenture shall bind its successors.
SECTION 11.11 SEVERABILITY
In case any provision in this Indenture or in the Exchange
Debentures 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 11.12 COUNTERPART ORIGINALS
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
<PAGE>
74
SECTION 11.13 TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, and their respective corporate seals to be hereunto affixed,
as of the date first written above.
ANVIL HOLDINGS, INC.
By:
--------------------------------------
Name:
Title:
UNITED STATES TRUST COMPANY
OF NEW YORK
By:
--------------------------------------
Name:
Title:
<PAGE>
Exhibit A
(Face of Exchange Debenture)
13% Subordinated Exchange Debentures due 2009
ANVIL HOLDINGS, INC.
CUSIP No.
No. $___________
ANVIL HOLDINGS, INC. promises to pay to _______________________ or
registered assigns, the principal sum of _______________________________ Dollars
on March 15, 2009.
Interest Payment Dates: March 15 and September 15
Record Dates: March 1 and September 1
Reference is hereby made to the further provisions of this Senior
Note set forth on the reverse hereof, which further provisons shall for all
purposes have the same effect as if set forth at this place.
Dated:
ANVIL HOLDINGS, INC.
By:
--------------------------------------
Name:
Title:
By:
--------------------------------------
Name:
Title:
Certificate of Authentication:
This is one of the Exchange Debentures
referred to in the within-mentioned Indenture:
UNITED STATES TRUST COMPANY
OF NEW YORK, as Trustee
By:
-----------------------------------
Authorized Signatory
Dated:
A-1
<PAGE>
[Unless and until it is exchanged in whole or in part for Exchange
Debentures in definitive form, this Exchange Debenture may not be transferred
except as a whole by the Depositary to a nominee of the Depositary or by a
nominee of the Depositary to the Depositary or another nominee of the Depositary
or by the Depositary or any such nominee to a successor Depositary or a nominee
of such successor Depositary. Unless this certificate is presented by an
authorized representative of [The Depository Trust Company (55 Water Street, New
York, New York) ("DTC")], to the issuer 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 may be requested by an authorized
representative of DTC (and any payment is made to [Cede & Co.] or such other
entity as may be 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.](1)
(Back of Exchange Debenture)
13% Subordinated Exchange Debentures due 2009
Capitalized terms used herein shall have the meanings assigned to
them in the Indenture referred to below unless otherwise indicated.
1. Interest. Anvil Holdings, Inc., a Delaware corporation
("Holdings") promises to pay interest on the principal amount of this Exchange
Debenture at 13% per annum from date of issue until maturity. Holdings will pay
interest semi-annually in arrears on March 15 and September 15 of each year, or
if any such day is not a Business Day, on the next succeeding Business Day (each
an "Interest Payment Date"). Interest on the Exchange Debentures will accrue
from the most recent date to which interest has been paid or, if no interest has
been paid, from the date of issuance; provided that if there is no existing
Default in the payment of interest, and if this Exchange Debenture is
authenticated between a record date referred to on the face hereof and the next
succeeding Interest Payment Date, interest shall accrue from such next
succeeding Interest Payment Date. Holdings shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
principal and premium, if any, from time to time on demand at a rate that is 1%
per annum in excess of the rate then in effect; it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest (without regard to any applicable grace periods) from
time to time on demand at the same rate to the extent lawful. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.
- ----------
(1) This paragraph should be included only if the Senior Note is issued in
global form.
A-2
<PAGE>
2. Method of Payment. Holdings will pay interest on the Exchange
Debentures (except defaulted interest) to the Persons who are registered Holders
of Exchange Debentures at the close of business on the March 1 or September next
preceding the Interest Payment Date, even if such Exchange Debentures are
cancelled after such record date and on or before such Interest Payment Date,
except as provided in Section 2.12 of the Indenture with respect to defaulted
interest. The Exchange Debentures will be payable as to principal, premium and
interest at the office or agency of Holdings maintained for such purpose within
the City and State of New York, or, at the option of Holdings, payment of
interest may be made by check mailed to the Holders at their addresses set forth
in the register of Holders, provided that payment by wire transfer of
immediately available funds will be required with respect to principal of and
interest and premium, if any, on, all Global Exchange Debentures and all other
Exchange Debentures the Holders of which shall have provided wire transfer
instructions to Holdings or the Paying Agent. Such payment shall be 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.
3. Paying Agent and Registrar. Initially, the Trustee under the
Indenture, will act as Paying Agent and Registrar. Holdings may change any
Paying Agent or Registrar without notice to any Holder. Holdings or any of its
Subsidiaries may act in any such capacity.
4. Indenture. Holdings issued the Exchange Debentures under an
Indenture dated as of March 14, 1997 ("Indenture") among Holdings and the
Trustee. The terms of the Exchange Debentures include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (15 U.S. Code ss.ss. 77aaa-77bbbb). The
Exchange Debentures are subject to all such terms, and Holders are referred to
the Indenture and such Act for a statement of such terms. The Exchange
Debentures are unsecured obligations of Holdings limited to $57.5 million in
aggregate principal amount.
5. Optional Redemption.
(a) Except as set forth in clause 5(b) of this Exchange Debenture,
the Exchange Debentures will not be redeemable at Holdings' option prior to
March 15, 2002. Thereafter, the Exchange Debentures will be subject to
redemption for cash at the option of Holdings, in whole or in part, upon not
less than 30 nor more than 60 days' notice, to each holder of Exchange
Debentures to be redeemed at the following redemption prices (expressed as
percentages of principal amount thereof), if redeemed during the twelve-month
period beginning on March 15 of each of the years indicated below, in each case
together with any accrued and unpaid interest thereon to the applicable
redemption date:
A-3
<PAGE>
Year Percentage
2002.................................. 106.500%
2003.................................. 104.333%
2004 ................................. 102.167%
2005 and thereafter................... 100.000%
(b) Notwithstanding the provisions of clause 5(a) of this Exchange
Debenture, Holdings may at any time (but shall not have the obligation to)
redeem the Exchange Debentures, in whole or in part, at a redemption price of
113% of the principal amount thereof, plus an amount in cash equal to all
accrued and unpaid interest thereon to the redemption date, with the net
proceeds of a Public Equity Offering; provided that such redemption shall occur
within 60 days of the date of the closing of such Public Equity Offering.
(c) Notices of redemption will be mailed by first class mail at
least 30 days but not more than 60 days before the redemption date to each
Holder whose Exchange Debentures are to be redeemed at its registered address.
Exchange Debentures in denominations larger than $1,000 may be redeemed in part
but only in integral multiples of $1,000, unless all of the Exchange Debentures
held by a Holder are to be redeemed. Unless Holdings defaults in making such
redemption payment, on and after the redemption date interest ceases to accrue
on Exchange Debentures or portions thereof called for redemption.
6. Mandatory Redemption.
Holdings shall not be required to make any mandatory redemption,
purchase or sinking fund payments with respect to the Exchange Debentures prior
to the maturity date.
7. Repurchase at Option of Holder.
(a) Upon the occurrence of a Change of Control, each Holder of
Exchange Debentures will have the right to require Holdings to repurchase all or
any part (equal to $1,000 or an integral multiple thereof) of such Holder's
Exchange Debentures pursuant to the offer described below (the "Change of
Control Offer") at an offer price in cash equal to 101% of the aggregate
principal amount thereof plus an amount in cash equal to all accrued and unpaid
interest thereon to the date of purchase (the "Change of Control Payment").
Within 30 days following any Change of Control, Holdings will mail a notice to
each Holder describing the transaction or transactions that constitute the
Change of Control and offering to repurchase Exchange Debentures pursuant to the
procedures required by the Indenture and described in such notice. Holdings will
comply with the requirements of Rule 14e-1 under the Exchange Act and any other
securities laws and regulations thereunder to the extent such laws and
A-4
<PAGE>
regulations are applicable in connection with the repurchase of the Exchange
Debentures as a result of a Change of Control. On the Change of Control Purchase
Date, Holdings will, to the extent lawful, (1) accept for payment all Exchange
Debentures or portions thereof properly tendered pursuant to the Change of
Control Offer, (2) deposit with the Paying Agent an amount equal to the Change
of Control Payment in respect of all Exchange Debentures or portions thereof so
tendered and (3) deliver or cause to be delivered to the Trustee the Exchange
Debentures so accepted together with an Officers' Certificate stating the
aggregate principal amount of Exchange Debentures or portions thereof being
purchased by Holdings. The Paying Agent will promptly mail to each Holder of
Exchange Debentures so tendered the Change of Control Payment for such Exchange
Debentures, and the Trustee will promptly authenticate and mail (or cause to be
transferred by book entry) to each Holder a new Exchange Debenture equal in
principal amount to any unpurchased portion of the Exchange Debentures
surrendered, if any; provided that each such new Exchange Debenture will be in a
principal amount of $1,000 or an integral multiple thereof. Holdings will
publicly announce the results of the Change of Control Offer on the Change of
Control Purchase Date.
(b) Holdings will not, and will not permit any of its Restricted
Subsidiaries to, engage in an Asset Sale in excess of $2.0 million unless (i)
Holdings (or the Restricted Subsidiary, as the case may be) receives
consideration at the time of such Asset Sale at least equal to the fair market
value, and in the case of a lease of assets, a lease providing for rent and
other conditions which are no less favorable to Holdings (or the Restricted
Subsidiary, as the case may be) in any material respect than the then prevailing
market conditions (evidenced in each case by a resolution of the Board of
Directors of such entity set forth in an Officers' Certificate delivered to the
Trustee) of the assets or Equity Interests sold or otherwise disposed of, and
(ii) at least 75% (100% in the case of lease payments) of the consideration
therefor received by Holdings or such Restricted Subsidiary is in the form of
cash or Cash Equivalents; provided that the amount of (x) any liabilities (as
shown on Holdings' or such Restricted Subsidiary's most recent balance sheet or
in the notes thereto, excluding contingent liabilities and trade payables), of
Holdings or any Restricted Subsidiary (other than liabilities that are by their
terms subordinated to the Exchange Debentures, or any guarantee thereof) that
are assumed by the transferee of any such assets and (y) any notes or other
obligations received by Holdings or any such Restricted Subsidiary from such
transferee that are promptly, but in no event more than 30 days after receipt,
converted by Holdings or such Subsidiary into cash (to the extent of the cash
received), shall be deemed to be cash for purposes of this provision.
Within 365 days after the receipt of any Net Proceeds from an Asset
Sale, Holdings may apply such Net Proceeds (a) to reduce permanently long-term
Indebtedness of a Restricted Subsidiary, (b) to reduce permanently Indebtedness
(and, in the case of revolving Indebtedness, to reduce permanently the
commitments) under the New Credit Agreement, or (c) to an investment in another
business, the making of a capital expenditure or the acquisition of other
tangible assets, in each case, in the same or a similar line of business as
Holdings was engaged in on the date of the Indenture. Any Net Proceeds from
Asset Sales that are not
A-5
<PAGE>
applied or invested as provided in the preceding sentence of this paragraph will
be deemed to constitute "Excess Proceeds." On the earlier of (i) the 366th day
after an Asset Sale or (ii) such date as the Board of Holdings or the Restricted
Subsidiary determines not to apply the Net Proceeds relating to such Asset Sale
in the manner set forth in (a), (b) or (c), if the aggregate amount of Excess
Proceeds exceeds $7.5 million, Holdings will be required to make an offer to all
Holders of Exchange Debentures (an "Asset Sale Offer") to purchase the maximum
principal amount of Exchange Debentures that may be purchased out of the Excess
Proceeds, at an offer price in cash in an amount equal to 100% of the principal
amount thereof plus accrued and unpaid interest thereon to the date of purchase,
in accordance with the procedures set forth in the Indenture. To the extent that
the aggregate amount of Exchange Debentures tendered pursuant to an Asset Sale
Offer is less than the Excess Proceeds, Holdings may use any remaining Excess
Proceeds for general corporate purposes. If the aggregate principal amount of
Exchange Debentures surrendered by Holders thereof exceeds the amount of Excess
Proceeds, the Trustee shall select the Exchange Debentures to be purchased on a
pro rata basis. Upon completion of such Asset Sale Offer, the amount of Excess
Proceeds shall be reset at zero.
8. Denominations, Transfer, Exchange. The Exchange Debentures are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Exchange Debentures may be registered and
Exchange Debentures may be exchanged as provided in the Indenture. The Registrar
and the Trustee may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and Holdings may require a Holder to pay any
taxes and fees required by law or permitted by the Indenture. Holdings need not
exchange or register the transfer of any Exchange Debenture or portion of an
Exchange Debenture selected for redemption, except for the unredeemed portion of
any Exchange Debenture being redeemed in part. Also, it need not exchange or
register the transfer of any Exchange Debentures for a period of 15 days before
a selection of Exchange Debentures to be redeemed or during the period between a
record date and the corresponding Interest Payment Date.
9. Persons Deemed Owners. The registered Holder of an Exchange
Debenture may be treated as its owner for all purposes.
10. Amendment, Supplement and Waiver. Subject to certain exceptions,
the Indenture or the Exchange Debentures may be amended or supplemented with the
consent of the Holders of at least a majority in principal amount of the
Exchange Debentures then outstanding (including consents obtained in connection
with a tender offer or exchange offer for Exchange Debentures), and any existing
default or compliance with any provision of the Indenture or the Exchange
Debentures may be waived with the consent of the Holders of a majority in
principal amount of the then outstanding Exchange Debentures. Without the
consent of any Holder of an Exchange Debenture, the Indenture or the Exchange
Debentures may be amended or supplemented to cure any ambiguity, defect or
inconsistency, to provide for uncertificated Exchange Debentures in addition to
or in place of certificated Exchange Debentures, to provide for the assumption
of Holdings' obligations to Holders of the Exchange Debentures in case of a
merger or consolidation, to make any change that would provide any additional
rights or benefits to the Holders of the Exchange
A-6
<PAGE>
Debentures or that does not adversely affect the legal rights under the
Indenture of any such Holder, or to comply with the requirements of the
Commission in order to effect or maintain the qualification of the Indenture
under the Trust Indenture Act. Notwithstanding anything to the contrary
contained herein or in the Indenture, the subordination provisions relating to
this Exchange Debenture may not be amended or modified without the prior
consent, authorization or approval by all holders of Designated Senior Debt.
11. Defaults and Remedies. Events of Default include: (i) default
for 30 days in the payment when due of interest on the Exchange Debentures; (ii)
default in payment when due of the principal of or premium, if any, on the
Exchange Debentures; (iii) failure by Holdings to comply with Section 4.7, 4.8,
4.9, 4.10, 4.11 or 5.1 of the Indenture; (iv) failure by Holdings for 60 days
after notice to comply with any of its other agreements in the Indenture or the
Exchange Debentures; (v) default under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or evidenced
any Indebtedness for money borrowed by Holdings or any of its Restricted
Subsidiaries or Holdings (or the payment of which is guaranteed by Holdings or
any of its Restricted Subsidiaries or Holdings) whether such Indebtedness or
guarantee now exists, or is created after the date of the Indenture, which
default (a) is caused by a failure to pay principal of or premium, if any, or
interest on such Indebtedness prior to the expiration of the grace period
provided in such Indebtedness on the date of such default (a "Payment Default")
or (b) results in the acceleration of such Indebtedness prior to its express
maturity and, in each case, the principal amount of any such Indebtedness,
together with the principal amount of any other such Indebtedness under which
there has been a Payment Default or the maturity of which has been so
accelerated, aggregates $7.5 million or more; (vi) failure by Holdings or any of
its Restricted Subsidiaries or Holdings to pay final judgments aggregating in
excess of $4.0 million, which judgments are not paid, discharged or stayed for a
period of 60 days; and (vii) certain events of bankruptcy or insolvency with
respect to Holdings or any of its Significant Subsidiaries or group of
Restricted Subsidiaries that, together, would constitute a Significant
Subsidiary. If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Exchange
Debentures may declare all the Exchange Debentures to be due and payable
immediately. Notwithstanding the foregoing, in the case of an Event of Default
arising from certain events of bankruptcy or insolvency with respect to
Holdings, any Significant Subsidiary or any group of Subsidiaries that, taken
together, would constitute a Significant Subsidiary, all outstanding Exchange
Debentures will become due and payable without further action or notice. Holders
of the Exchange Debentures may not enforce the Indenture or the Exchange
Debentures except as provided in the Indenture. Subject to certain limitations,
Holders of a majority in principal amount of the then outstanding Exchange
Debentures may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Holders of the Exchange Debentures notice of any
continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal or interest) if it determines that
withholding notice is in their interest. The Holders of a majority in aggregate
principal amount of the Exchange Debentures then outstanding by
A-7
<PAGE>
notice to the Trustee may on behalf of the Holders of all of the Exchange
Debentures waive any existing Default or Event of Default and its consequences
under the Indenture except a continuing Default or Event of Default in the
payment of interest on, or the principal of and premium, if any, on the Exchange
Debentures. Holdings is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and Holdings is required upon becoming
aware of any Default or Event of Default, to deliver to the Trustee a statement
specifying such Default or Event of Default.
12. Trustee Dealings with Holdings. The Trustee, in its individual
or any other capacity, may make loans to, accept deposits from, and perform
services for Holdings or its Affiliates, and may otherwise deal with Holdings or
its Affiliates, as if it were not the Trustee.
13. No Recourse Against Others. A director, officer, employee,
incorporator or stockholder, of Holdings, as such, shall not have any liability
for any obligations of Holdings under the Exchange Debentures or the Indenture
or for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder by accepting an Exchange Debenture waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Exchange Debentures.
14. Subordination. Each Holder by accepting an Exchange Debenture
agrees that the Indebtedness evidenced by such Exchange Debenture is
subordinated in right of payment, to the extent and in the manner provided in
the Indenture, to the prior payment in full of the principal of, and premium if
any, and accrued and unpaid interest on, all existing and future Senior
Indebtedness (whether outstanding on the date of the Indenture or thereafter
created, incurred, assumed or guaranteed), and that the subordination is for the
benefit of the holders of Senior Indebtedness.
15. GOVERNING LAW. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL
GOVERN AND BE USED TO CONSTRUE THIS EXCHANGE DEBENTURE, WITHOUT REGARD TO THE
CONFLICTS OF LAWS PRINCIPLES THEREOF.
16. Authentication. This Exchange Debenture shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.
17. Abbreviations. 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).
18. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, Holdings has caused
CUSIP numbers to be printed on the Exchange Debentures and the Trustee may 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 Exchange Debentures or as contained in any
A-8
<PAGE>
notice of redemption and reliance may be placed only on the other identification
numbers placed thereon.
A-9
<PAGE>
Holdings will furnish to any Holder upon written request and without
charge a copy of the Indenture. Requests may be made to:
Anvil Holdings, Inc.
228 East 45th Street
New York, New York 10017
Attention: Jacob Hollander
Telephone No.: (212) 476-0352
Telecopier No.: (212) 885-9411
A-10
<PAGE>
SCHEDULE OF CHANGES IN PRINCIPAL AMOUNT
OF GLOBAL EXCHANGE DEBENTURE
The following changes in the principal amount of this Global
Exchange Debenture have been recorded:
<TABLE>
<CAPTION>
Principal Amount of this
Amount of decrease in Amount of increase in Global Security Signature of
Principal Amount of Principal Amount of following such decrease authorized officer of
Date of Transaction this Global Security this Global Security (or increase) Trustee
- ------------------- -------------------- -------------------- ------------------------- -------
<S> <C> <C> <C> <C>
</TABLE>
A-11
<PAGE>
ASSIGNMENT FORM
For value received, I or we assign and transfer this Exchange Debenture to
_______________________________________________________________
_______________________________________________________________
(Print or type name, address and zip code of assignee)
_______________________________________________________________
(Insert Social Security or other identifying number of assignee)
and irrevocably appoint ________________________ agent to transfer this Exchange
Debenture on the books of Holdings. The agent may substitute another to act for
him.
A-12
<PAGE>
Option of Holder to Elect Purchase
If you want to elect to have this Exchange Debenture purchased by Holdings
pursuant to Section 4.7 or 4.8 of the Indenture, check the box below:
Section 4.7 Section 4.8
If you want to elect to have only part of the Exchange Debenture purchased
by Holdings pursuant to Section 4.7 or Section 4.8 of the Indenture, state the
amount you elect to have purchased: $__________________
Date:____________________ Your Signature:_____________________________________
(Sign exactly as your name appears on the Exchange
Debenture)
Tax Identification No.:___________________________________
Signature Guarantee.
A-13
<PAGE>
CROSS-REFERENCE TABLE*
Trust Indenture
Act Section Indenture Section
- --------------- -----------------
310(a)(1) ................................................ 7.10
(a)(2) ................................................ 7.10
(a)(3) ................................................ N.A.
(a)(4) ................................................ N.A.
(b) ................................................ 7.8; 7.10; 11.2
(c) ................................................ N.A.
311(a) ................................................ 7.11
(b) ................................................ 7.11
(c) ................................................ N.A.
312(a) ................................................ 2.5
(b) ................................................ 11.3
(c) ................................................ 11.3
313(a) ................................................ 7.6
(b)(1) ................................................ N.A.
(b)(2) ................................................ 7.6
(c) ................................................ 7.6; 11.2
(d) ................................................ 7.6
314(a) .................................................4.9; 11.2
(b) ................................................ N.A.
(c)(1) ................................................ 11.4
(c)(2) ................................................ 7.2; 11.4
(c)(3) ................................................ N.A.
(d) ................................................ N.A.
(e) ................................................ 11.5
(f) ................................................ N.A.
315(a) ................................................ 7.1(2)
(b) ................................................ 7.5; 11.2
(c) ................................................ 7.1(1)
(d) ................................................ 7.1(3)
(e) ................................................ 6.11
316(a)(last sentence) ...................................... 2.9
(a)(1)(A) ............................................... 6.5
(a)(1)(B) ............................................... 6.4
(a)(2) ................................................ N.A.
(b) ................................................ 6.7
317(a)(1) ................................................ 6.8
(a)(2) ................................................ 6.9
(b) ................................................ 2.4
318(a) ................................................ 11.1
- ----------
N.A. means not applicable.
* This Cross-Reference is not part of the Indenture.
<PAGE>
EXECUTION COPY
================================================================================
ANVIL HOLDINGS, INC.,
as Issuer
$57,500,000
13% Subordinated Exchange Debentures due 2009
---------------
INDENTURE
Dated as of March 14, 1997
---------------
UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE.............................. 1
SECTION 1.1 DEFINITIONS............................................. 1
SECTION 1.2 OTHER DEFINITIONS....................................... 19
SECTION 1.3 INCORPORATION BY REFERENCE OF TRUST
INDENTURE ACT........................................ 20
SECTION 1.4 RULES OF CONSTRUCTION................................... 20
ARTICLE 2
THE EXCHANGE DEBENTURES........................ 21
SECTION 2.1 FORM AND DATING......................................... 21
SECTION 2.2 EXECUTION AND AUTHENTICATION............................ 21
SECTION 2.3 REGISTRAR AND PAYING AGENT.............................. 22
SECTION 2.4 PAYING AGENT TO HOLD MONEY IN TRUST..................... 22
SECTION 2.5 HOLDER LISTS............................................ 22
SECTION 2.6 TRANSFER AND EXCHANGE................................... 23
SECTION 2.7 REPLACEMENT EXCHANGE DEBENTURES......................... 23
SECTION 2.8 OUTSTANDING EXCHANGE DEBENTURES......................... 24
SECTION 2.9 TREASURY EXCHANGE DEBENTURES............................ 24
SECTION 2.10 TEMPORARY EXCHANGE DEBENTURES........................... 24
SECTION 2.11 CANCELLATION............................................ 25
SECTION 2.12 DEFAULTED INTEREST...................................... 25
SECTION 2.13 BOOK-ENTRY PROVISIONS FOR GLOBAL EXCHANGE
DEBENTURES............................................ 25
ARTICLE 3
REDEMPTION AND PREPAYMENT....................... 27
SECTION 3.1 NOTICES TO TRUSTEE...................................... 27
SECTION 3.2 SELECTION OF EXCHANGE DEBENTURES TO BE
REDEEMED............................................. 27
SECTION 3.3 NOTICE OF REDEMPTION.................................... 27
SECTION 3.4 EFFECT OF NOTICE OF REDEMPTION.......................... 28
SECTION 3.5 DEPOSIT OF REDEMPTION PRICE............................. 28
SECTION 3.6 EXCHANGE DEBENTURES REDEEMED IN PART.................... 29
SECTION 3.7 OPTIONAL REDEMPTION..................................... 29
SECTION 3.8 NO MANDATORY REDEMPTION................................. 30
ARTICLE 4
COVENANTS............................... 30
SECTION 4.1 PAYMENT OF EXCHANGE DEBENTURES.......................... 30
SECTION 4.2 MAINTENANCE OF OFFICE OR AGENCY......................... 30
SECTION 4.3 REPORTS ............................................... 31
<PAGE>
Page
----
SECTION 4.4 COMPLIANCE CERTIFICATE.................................. 31
SECTION 4.5 TAXES................................................... 32
SECTION 4.6 STAY, EXTENSION AND USURY LAWS.......................... 32
SECTION 4.7 CHANGE OF CONTROL....................................... 32
SECTION 4.8 ASSET SALES............................................. 34
SECTION 4.9 RESTRICTED PAYMENTS..................................... 37
SECTION 4.10 INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF
PREFERRED STOCK....................................... 40
SECTION 4.11 SALE AND LEASEBACK TRANSACTIONS......................... 42
SECTION 4.12 LIENS................................................... 42
SECTION 4.13 DIVIDEND AND OTHER PAYMENT RESTRICTIONS
AFFECTING RESTRICTED SUBSIDIARIES..................... 43
SECTION 4.14 TRANSACTIONS WITH AFFILIATES............................ 44
SECTION 4.15 LINE OF BUSINESS........................................ 45
SECTION 4.16 CORPORATE EXISTENCE .................................... 45
ARTICLE 5
SUCCESSORS............................... 46
SECTION 5.1 MERGER, CONSOLIDATION OR SALE OF ASSETS................. 46
SECTION 5.2 SUCCESSOR CORPORATION SUBSTITUTED....................... 46
ARTICLE 6
DEFAULTS AND REMEDIES......................... 47
SECTION 6.1 EVENTS OF DEFAULT....................................... 47
SECTION 6.2 ACCELERATION............................................ 48
SECTION 6.3 OTHER REMEDIES.......................................... 49
SECTION 6.4 WAIVER OF PAST DEFAULTS................................. 49
SECTION 6.5 CONTROL BY MAJORITY..................................... 50
SECTION 6.6 LIMITATION ON SUITS..................................... 50
SECTION 6.7 RIGHTS OF HOLDERS OF EXCHANGE DEBENTURES TO
RECEIVE PAYMENT...................................... 50
SECTION 6.8 COLLECTION SUIT BY TRUSTEE.............................. 51
SECTION 6.9 TRUSTEE MAY FILE PROOFS OF CLAIM........................ 51
SECTION 6.10 PRIORITIES.............................................. 51
SECTION 6.11 UNDERTAKING FOR COSTS................................... 52
ARTICLE 7
TRUSTEE................................ 52
SECTION 7.1 DUTIES OF TRUSTEE....................................... 52
SECTION 7.2 RIGHTS OF TRUSTEE....................................... 53
SECTION 7.3 INDIVIDUAL RIGHTS OF TRUSTEE............................ 54
SECTION 7.4 TRUSTEE'S DISCLAIMER.................................... 54
SECTION 7.5 NOTICE OF DEFAULTS...................................... 55
- ii -
<PAGE>
Page
----
SECTION 7.6 REPORTS BY TRUSTEE TO HOLDERS OF THE
EXCHANGE DEBENTURES.................................. 55
SECTION 7.7 COMPENSATION AND INDEMNITY.............................. 55
SECTION 7.8 REPLACEMENT OF TRUSTEE.................................. 56
SECTION 7.9 SUCCESSOR TRUSTEE BY MERGER, ETC........................ 57
SECTION 7.10 ELIGIBILITY; DISQUALIFICATION........................... 57
SECTION 7.11 PREFERENTIAL COLLECTION OF CLAIMS
AGAINST HOLDINGS..................................... 58
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE................ 58
SECTION 8.1 OPTION TO EFFECT LEGAL DEFEASANCE
OR COVENANT DEFEASANCE............................... 58
SECTION 8.2 LEGAL DEFEASANCE AND DISCHARGE.......................... 58
SECTION 8.3 COVENANT DEFEASANCE..................................... 59
SECTION 8.4 CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.............. 59
SECTION 8.5 DEPOSITED MONEY AND GOVERNMENT SECURITIES
TO BE HELD IN TRUST; OTHER MISCELLANEOUS
PROVISIONS........................................... 60
SECTION 8.6 REPAYMENT TO HOLDINGS................................... 61
SECTION 8.7 REINSTATEMENT........................................... 61
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER.................... 61
SECTION 9.1 WITHOUT CONSENT OF HOLDERS OF EXCHANGE
DEBENTURES........................................... 61
SECTION 9.2 WITH CONSENT OF HOLDERS OF EXCHANGE
DEBENTURES........................................... 61
SECTION 9.3 COMPLIANCE WITH TRUST INDENTURE ACT..................... 64
SECTION 9.4 REVOCATION AND EFFECT OF CONSENTS....................... 64
SECTION 9.5 NOTATION ON OR EXCHANGE OF EXCHANGE
DEBENTURES........................................... 65
SECTION 9.6 TRUSTEE TO SIGN AMENDMENTS, ETC......................... 65
ARTICLE 10
SUBORDINATION............................. 66
SECTION 10.1 AGREEMENT TO SUBORDINATE................................ 66
SECTION 10.2 LIQUIDATION; DISSOLUTION; BANKRUPTCY.................... 66
SECTION 10.3 DEFAULT ON DESIGNATED SENIOR INDEBTEDNESS............... 66
SECTION 10.4 ACCELERATION OF SECURITIES.............................. 67
SECTION 10.5 WHEN DISTRIBUTION MUST BE PAID OVER..................... 67
SECTION 10.6 NOTICE BY HOLDINGS...................................... 68
SECTION 10.7 SUBROGATION............................................. 68
SECTION 10.8 RELATIVE RIGHTS......................................... 69
- iii -
<PAGE>
Page
----
SECTION 10.9 SUBORDINATION MAY NOT BE IMPAIRED BY
HOLDINGS............................................. 69
SECTION 10.10 DISTRIBUTION OR NOTICE TO REPRESENTATIVE............... 69
SECTION 10.11 RIGHTS OF TRUSTEE AND PAYING AGENT..................... 70
SECTION 10.12 AUTHORIZATION TO EFFECT SUBORDINATION.................. 70
SECTION 10.13 AMENDMENTS............................................. 70
ARTICLE 11
MISCELLANEOUS............................. 70
SECTION 11.1 TRUST INDENTURE ACT CONTROLS........................... 70
SECTION 11.2 NOTICES................................................ 70
SECTION 11.3 COMMUNICATION BY HOLDERS OF EXCHANGE
DEBENTURES WITH OTHER HOLDERS OF..................... 72
SECTION 11.4 CERTIFICATE AND OPINION AS TO CONDITIONS
PRECEDENT............................................ 72
SECTION 11.5 STATEMENTS REQUIRED IN CERTIFICATE OR
OPINION.............................................. 72
SECTION 11.6 RULES BY TRUSTEE AND AGENTS............................ 73
SECTION 11.7 NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS,
EMPLOYEES AND STOCKHOLDERS........................... 73
SECTION 11.8 GOVERNING LAW.......................................... 73
SECTION 11.9 NO ADVERSE INTERPRETATION OF OTHER
AGREEMENTS........................................... 73
SECTION 11.10 SUCCESSORS............................................. 73
SECTION 11.11 SEVERABILITY........................................... 73
SECTION 11.12 COUNTERPART ORIGINALS.................................. 73
SECTION 11.13 TABLE OF CONTENTS, HEADINGS, ETC....................... 74
EXHIBITS
EXHIBIT A FORM OF EXCHANGE DEBENTURE
- iv -
<PAGE>
================================================================================
REGISTRATION RIGHTS AGREEMENT
Dated as of March 14, 1997
by and between
Anvil Holdings, Inc.
and
Donaldson, Lufkin & Jenrette Securities Corporation
(the "Initial Purchaser")
================================================================================
<PAGE>
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and entered
into as of March 14, 1997 by and between Anvil Holdings, Inc., a Delaware
corporation ("Holdings") and Donaldson, Lufkin & Jenrette Securities Corporation
(the "Initial Purchaser"), who has agreed to purchase Holdings' 13% Senior
Exchangeable Preferred Stock due 2009 (including all shares of such stock issued
substantially concurrent with the purchase by the Initial Purchaser, the "Series
A Senior Preferred Stock") pursuant to the Purchase Agreement (as defined
below).
This Agreement is made pursuant to the Purchase Agreement, dated March 11,
1997 (the "Purchase Agreement"), by and between Holdings and the Initial
Purchaser. In order to induce the Initial Purchaser to purchase the Units (as
defined in the Purchase Agreement), Holdings has agreed to provide the
registration rights set forth in this Agreement. The execution and delivery of
this Agreement is a condition to the obligations of the Initial Purchaser set
forth in Section 4(p) of the Purchase Agreement.
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have the
following meanings:
Broker-Dealer: Any broker or dealer registered under the Exchange Act.
Business Day: Any day other than a Legal Holiday.
Certificate of Designation: The Certificate(s) of Designations of Holdings
pursuant to which the Securities are to be issued, as such Certificate(s) of
Designations is amended or supplemented from time to time in accordance with the
terms thereof.
Closing Date: The date of this Agreement.
Commission: The Securities and Exchange Commission.
Consummate: A Registered Exchange Offer shall be deemed "Consummated" for
purposes of this Agreement upon the occurrence of (i) the filing and
effectiveness under the Securities Act of the Exchange Offer Registration
Statement relating to the Series B Senior Preferred Stock to be issued in the
Exchange Offer, (ii) the maintenance of such Registration Statement as
continuously effective and the keeping open of the Exchange Offer for a period
not less than the minimum period required pursuant to Section 3(b) hereof and
(iii) the delivery, by Holdings to the transfer agent and registrar, of Series B
Senior Preferred Stock in the same aggregate liquidation preference as the
aggregate liquidation preference of Series A Senior Preferred Stock tendered by
the Holders thereof pursuant to the Exchange Offer.
<PAGE>
Damages Payment Date: With respect to the Securities each Dividend Payment
Date.
Dividend Payment Date: As defined in the Certificate of Designation.
Effectiveness Target Date: As defined in Section 5.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Exchange Offer: The registration by Holdings under the Securities Act of
the Series B Senior Preferred Stock pursuant to a Registration Statement
pursuant to which Holdings offers the Holders of all outstanding Transfer
Restricted Securities the opportunity to exchange all such outstanding Transfer
Restricted Securities held by such Holders for Series B Senior Preferred Stock
in an aggregate liquidation preference equal to the aggregate liquidation
preference of Transfer Restricted Securities tendered by such Holders in
response to such exchange offer.
Exchange Offer Registration Statement: The Registration Statement relating
to the Exchange Offer, including the related Prospectus.
Exempt Resales: The transactions in which the Initial Purchaser proposes
to sell the Series A Senior Preferred Stock to certain "qualified institutional
buyers," as such term is defined in Rule 144A under the Securities Act, and to
certain institutional "accredited investors," as such term is defined in Rule
501(1), (2), (3) and (7) of Regulation D under the Act.
Holders: As defined in Section 2(b) hereof.
Indemnified Holder: As defined in Section 8(a) hereof.
Initial Purchaser: As defined in the preamble hereto.
Legal Holiday: A Saturday, a Sunday or a day on which federal offices or
banking institutions in the City of New York or at a place of payment are
authorized by law, regulation or executive order to remain closed. If a payment
date is a Legal Holiday, payment may be made on the next succeeding day that is
not a Legal Holiday, and no dividends shall accrue for the intervening period.
NASD: National Association of Securities Dealers, Inc.
Person: An individual, partnership, corporation, trust or unincorporated
organization, or a government or agency or political subdivision thereof.
Prospectus: The prospectus included in a Registration Statement, as
amended or supplemented by any prospectus supplement and by all other amendments
thereto, including post-effective amendments, and all material incorporated by
reference into such Prospectus.
2
<PAGE>
Record Holder: With respect to any Damages Payment Date relating to
Securities, each Person who is a Holder of Securities on the record date with
respect to the Dividend Payment Date on which such Damages Payment Date shall
occur.
Registration Default: As defined in Section 5 hereof.
Registration Statement: Any registration statement of Holdings relating to
(a) an offering of Series B Senior Preferred Stock to an Exchange Offer or (b)
the registration for resale of Transfer Restricted Securities pursuant to the
Shelf Registration Statement, which is filed pursuant to the provisions of this
Agreement, in each case, including the Prospectus included therein, all
amendments and supplements thereto (including post-effective amendments) and all
exhibits and material incorporated by reference therein.
Securities Act: The Securities Act of 1933, as amended.
Securities: The Series A Senior Preferred Stock and the Series B Senior
Preferred Stock.
Series B Senior Preferred Stock: Holdings' new issue of 13% Senior
Exchangeable Preferred Stock due 2009 which is to be issued in the Exchange
Offer and which is to substantially identical to the Series A Senior Preferred
Stock.
Shelf Filing Deadline: As defined in Section 4 hereof.
Shelf Registration Statement: As defined in Section 4 hereof.
Transfer Restricted Securities: Each Security, until the earliest to occur
of (a) the date on which such Security is exchanged in the Exchange Offer by a
Person other than a Broker-Dealer for shares of the Series B Senior Preferred
Stock and is entitled to be resold to the public by the Holder thereof without
complying with the prospectus delivery requirements of the Securities Act, (b)
following the exchange by a Broker-Dealer in the Exchange Offer of a Security
for shares of the Series B Senior Preferred Stock, the date on which such shares
of the Series B Senior Preferred Stock are sold to a purchaser who receives from
such Broker-Dealer on or prior to the date of such sale a copy of the prospectus
contained in the Exchange Offer Registration Statement, (c) the date on which
such Security effectively has been registered under the Securities Act and
disposed of in accordance with the Shelf Registration Statement or (iv) the date
on which such Security is distributed to the public pursuant to Rule 144 under
the Securities Act.
Underwritten Registration or Underwritten Offering: A registration in
which securities of Holdings are sold to an underwriter for reoffering to the
public.
SECTION 2. SECURITIES SUBJECT TO THIS AGREEMENT
(a) Transfer Restricted Securities. The securities entitled to the
benefits of this Agreement are the Transfer Restricted Securities.
3
<PAGE>
(b) Holders of Transfer Restricted Securities. A Person is deemed to be a
holder of Transfer Restricted Securities (each, a "Holder") whenever such Person
owns Transfer Restricted Securities.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permissible under applicable
law or Commission policy (after the procedures set forth in Section 6(a) below
have been complied with), Holdings shall (i) cause to be filed under the
Securities Act with the Commission as soon as practicable after the Closing
Date, but in no event later than 60 days after the Closing Date, an Exchange
Offer Registration Statement relating to the Series B Senior Preferred Stock and
the Exchange Offer, (ii) use its best efforts to cause such Exchange Offer
Registration Statement to become effective at the earliest possible time, but in
no event later than 120 days after the Closing Date, (iii) in connection with
the foregoing, file (A) all pre-effective amendments to such Exchange Offer
Registration Statement as may be necessary in order to cause such Exchange Offer
Registration Statement to become effective, (B) if applicable, a post-effective
amendment to such Exchange Offer Registration Statement pursuant to Rule 430A
under the Securities Act and (C) all filings in connection with the registration
and qualification of the Series B Senior Preferred Stock as are necessary under
the Blue Sky laws of such jurisdictions in order to permit Consummation of the
Exchange Offer, and (iv) upon the effectiveness of such Registration Statement,
use its best efforts to issue on or prior to 150 days after the Closing Date
(the "Exchange Offer Effectiveness Date") Series B Senior Preferred Stock in
exchange for all Series A Senior Preferred Stock tendered prior thereto in the
Exchange Offer. The Exchange Offer shall be on the appropriate form permitting
registration of the Series B Senior Preferred Stock to be offered in exchange
for the Transfer Restricted Securities and to permit resales of Securities held
by Broker-Dealers as contemplated by Section 3(c) below.
(b) Holdings shall cause the Exchange Offer Registration Statement to be
effective continuously and shall keep the Exchange Offer open for a period of
not less than the minimum period required under applicable federal and state
securities laws to Consummate the Exchange Offer; provided, however, that in no
event shall such period be less than 20 Business Days. Holdings shall cause the
Exchange Offer to comply with all applicable federal and state securities laws.
No securities other than the Series B Senior Preferred Stock shall be included
in the Exchange Offer Registration Statement. Holdings shall use its best
efforts to cause the Exchange Offer to be Consummated on the earliest
practicable date after the Exchange Offer Registration Statement has become
effective, but in no event later than 30 Business Days thereafter.
(c) Holdings shall indicate in a "Plan of Distribution" section contained
in the Prospectus contained in the Exchange Offer Registration Statement that
any Broker-Dealer who holds Series A Senior Preferred Stock that are Transfer
Restricted Securities and that were acquired for its own account as a result of
market-making activities or other trading activities (other than Transfer
Restricted Securities acquired directly from Holdings), may exchange such Series
A Senior Preferred Stock pursuant to the Exchange Offer; however, such
Broker-Dealer may be deemed to be an "underwriter" within the meaning of the
Securities Act and, consequently, must deliver a prospectus meeting the
requirements of the Securities Act in connection with any resales of the
Series B Senior Preferred Stock received by such Broker-Dealer in the Exchange
4
<PAGE>
Offer, which prospectus delivery requirement may be satisfied by the delivery by
such Broker-Dealer of the Prospectus contained in the Exchange Offer
Registration Statement. Such "Plan of Distribution" section shall also contain
all other information with respect to such resales by Broker-Dealers that the
Commission may require in order to permit such resales pursuant thereto, but
such "Plan of Distribution" shall not name any such Broker-Dealer or disclose
the amount of Securities held by any such Broker-Dealer except to the extent
required by the Commission as a result of a change in policy after the date of
this Agreement.
Holdings shall use its reasonable best efforts to keep the Exchange Offer
Registration Statement continuously effective, supplemented and amended as
required by the provisions of Section 6(c) below to the extent necessary to
ensure that it is available for resales of Securities acquired by Broker-Dealers
for their own accounts as a result of market-making activities or other trading
activities, and to ensure that such Exchange Offer Registration Statement
conforms with the requirements of this Agreement, the Securities Act and the
policies, rules and regulations of the Commission as announced from time to
time, for a period equal to the shorter of (A) one hundred and eighty (180)
consecutive days after the date the Exchange Offer is Consummated (subject to
the provisions of Section 6(c)(i) below) and (B) the date on which all Transfer
Restricted Securities acquired in the Exchange Offer by Restricted
Broker-Dealers have been sold to the public by such Restricted Broker-Dealers.
In order to facilitate such resales, at any time during such 180-day period
Holdings shall provide to Broker-Dealers, promptly upon request, and in no event
more than five Business Days after any such request, sufficient copies of the
latest version of such Prospectus.
SECTION 4. SHELF REGISTRATION
(a) Shelf Registration. If (i) Holdings is not required to file an
Exchange Offer Registration Statement with respect to the Series B Senior
Preferred Stock or permitted to consummate the Exchange Offer because the
Exchange Offer is not permitted by applicable law (after the procedures set
forth in Section 6(a) below have been complied with) or Commission policy or
(ii) if any Holder of Transfer Restricted Securities shall notify Holdings
within 10 Business Days following Consummation of the Exchange Offer that (A)
such Holder was prohibited by law or Commission policy from participating in the
Exchange Offer, (B) such Holder may not resell the Series B Senior Preferred
Stock acquired by it in the Exchange Offer to the public without delivering a
prospectus and the Prospectus contained in the Exchange Offer Registration
Statement is not appropriate or available for such resales by such Holder, or
(C) such Holder is a Broker-Dealer and holds Series A Senior Preferred Stock
acquired directly from Holdings or one of its affiliates, then Holdings shall
(x) cause to be filed on or prior to (1) in the case of a Registration
Statement filed pursuant to clause (i) above, the earlier to occur of 45 days
after the date on which Holdings determines that it is not required to file
the Exchange Offer Registration Statement or 75 days after the Closing Date
and (2) in the case of a Registration Statement filed pursuant to clause (ii)
above, 45 days after the date on which Holdings receives the notice specified
in clause (ii) above, a shelf registration statement pursuant to Rule 415
under the Securities Act (which may be an amendment to the Exchange Offer
Registration Statement (in either event,
5
<PAGE>
the "Shelf Registration Statement")), relating to all Transfer Restricted
Securities the Holders of which shall have provided the information required
pursuant to Section 4(b) hereof, and shall
(y) use its reasonable best efforts to cause such Shelf Registration
Statement to become effective on or prior to (1) in the case of a
Registration Statement filed pursuant to clause (i) above, 120 days after the
date on which Holdings becomes obligated to file such Shelf Registration
Statement and (2) in the case of a Registration Statement filed pursuant to
clause (ii) above, 120 days after the date on which Holdings receives the
notice specified in clause (ii) above. If, after Holdings has filed an
Exchange Offer Registration Statement which satisfies the requirements of
Section 3(a) above, Holdings is required to file and make effective a Shelf
Registration Statement solely because the Exchange Offer shall not be
permitted under applicable federal law, then the filing of the Exchange Offer
Registration Statement shall be deemed to satisfy the requirements of clause
(x) above. Such an event shall have no effect on the requirements of clause
(y) above, or on the Effectiveness Target Date as defined in Section 5 below.
Holdings shall use its reasonable best efforts to keep such Shelf
Registration Statement continuously effective, supplemented and amended as
required by the provisions of Sections 6(b) and (c) hereof for a period of three
years from the effective date thereof (as extended pursuant to Section 6(c)(i)
or such shorter period that will terminate when all Securities are no longer
Transfer Restricted Securities or all Securities covered by such Shelf
Registration Statement have been sold pursuant thereto, and to ensure that such
Shelf Registration Statement conforms with the requirements of this Agreement,
the Securities Act and the policies, rules and regulations of the Commission as
announced from time to time, for a period of three years from the effective date
thereof (as extended pursuant to Section 6(c)(i)) or such shorter period that
will terminate when all Securities are no longer Transfer Restricted Securities
or all Securities covered by such Shelf Registration Statement have been sold
pursuant thereto.
(b) Provision by Holders of Certain Information in Connection with the
Shelf Registration Statement. No Holder of Transfer Restricted Securities may
include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
Holdings in writing, within 20 Business Days after receipt of a request
therefor, such information as Holdings reasonably may request for use in
connection with any Shelf Registration Statement or Prospectus or preliminary
Prospectus included therein. No Holder of Transfer Restricted Securities shall
be entitled to Liquidated Damages pursuant to Section 5 hereof unless and until
such Holder shall have used its best efforts to provide all such reasonably
requested information. Each Holder as to which any Shelf Registration Statement
is being effected agrees to furnish promptly to Holdings all information
required to be disclosed in order to make the information previously furnished
to Holdings by such Holder not materially misleading.
(c) Restrictions on Sale of Certain Securities by Others. Holdings agrees
not to, and to use its reasonable best efforts to cause its affiliates not to,
offer, sell, contract to sell or grant any option to purchase or otherwise
transfer or dispose of any debt security issued by Holdings or any security
convertible into or exchangeable or exercisable for any such debt security,
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including a sale pursuant to Rule 144 under the Securities Act, during the
30-day period beginning on the closing date of each Underwritten Offering made
pursuant to the Shelf Registration Statement (except as part of such
Underwritten Registration).
SECTION 5. LIQUIDATED DAMAGES
If (i) any of the Registration Statements required by this Agreement are
not filed with the Commission on or prior to the date specified for such filing
in Section 3 or 4 of this Agreement, (ii) any of such Registration Statements
have not been declared effective by the Commission on or prior to the date
specified for such effectiveness in Section 3 or 4 of this Agreement (the
"Effectiveness Target Date"), (iii) the Exchange Offer has not been Consummated
within 30 days of the Effectiveness Target Date with respect to the Exchange
Offer Registration Statement or (iv) subject to the provisions of Section
6(c)(i) below, any Registration Statement required by this Agreement is filed
and declared effective but shall thereafter cease to be effective or fail to be
usable for its intended purpose without being succeeded immediately by a
post-effective amendment to such Registration Statement that cures such failure
and that is itself immediately declared effective (each such event referred to
in clauses (i) through (iv), a "Registration Default"), Holdings hereby agrees
to pay liquidated damages to each Holder of Transfer Restricted Securities,
during the first 90-day period immediately following the occurrence of such
Registration Default, in an amount equal to $.05 per week per $1,000 liquidation
preference of the Transfer Restricted Securities held by such Holder for so long
as the Registration Default continues. The amount of liquidated damages payable
to each Holder shall increase by an additional $.05 per week per $1,000
liquidation preference of Transfer Restricted Securities held by such Holder for
each subsequent 90-day period, up to a maximum amount of liquidated damages of
$.30 per week per $1,000 liquidation preference of Transfer Restricted
Securities held by such Holder. All accrued liquidated damages shall be paid by
Holdings as provided in the Certificate of Designation. Following the cure of
all Registration Defaults relating to any particular Transfer Restricted
Securities, the accrual of liquidated damages with respect to such Transfer
Restricted Securities will cease.
All obligations of Holdings set forth in the preceding paragraph that are
outstanding with respect to any Transfer Restricted Security at the time such
security ceases to be a Transfer Restricted Security shall survive until such
time as all such obligations with respect to such security shall have been
satisfied in full.
SECTION 6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection with the Exchange
Offer, Holdings shall comply with all of the provisions of Section 6(c) below,
shall use its reasonable best efforts to effect such exchange to permit the sale
of Transfer Restricted Securities being sold in accordance with the intended
method or methods of distribution thereof, and shall comply with all of the
following provisions:
(i) If in the reasonable opinion of counsel to Holdings there is a
question as to whether the Exchange Offer is permitted by applicable law,
Holdings hereby agrees to seek a no-action letter or other favorable decision
from the Commission allowing Holdings to
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Consummate an Exchange Offer for such Series A Senior Preferred Stock.
Holdings hereby agrees to pursue the issuance of such a decision to the
Commission staff level, but shall not be required to take commercially
unreasonable action to effect a change of Commission policy. Holdings hereby
agrees, however, (A) to participate in telephonic conferences with the
Commission, (B) to deliver to the Commission staff an analysis prepared by
counsel to Holdings setting forth the legal bases, if any, upon which such
counsel has concluded that such an Exchange Offer should be permitted and (C)
to pursue diligently a resolution (which need not be favorable) by the
Commission staff of such submission.
(ii) As a condition to its participation in the Exchange Offer
pursuant to the terms of this Agreement, each Holder of Transfer Restricted
Securities shall furnish, upon the request of Holdings, prior to the
Consummation thereof, a written representation to Holdings (which may be
contained in the letter of transmittal contemplated by the Exchange Offer
Registration Statement) to the effect that such Holder (A) is not an
affiliate of Holdings, (B) is not engaged in, and does not intend to engage
in, and has no arrangement or understanding with any person to participate
in, a distribution of the Series B Senior Preferred Stock to be issued in the
Exchange Offer and (C) is acquiring the Series B Senior Preferred Stock in
its ordinary course of business. Each Holder hereby acknowledges and agrees
(X) that any Broker-Dealer and any such Holder using the Exchange Offer to
participate in a distribution of the securities to be acquired in the
Exchange Offer (1) could not under Commission policy as in effect on the date
of this Agreement rely on the position of the Commission enunciated in Morgan
Stanley and Co., Inc. (available June 5, 1991) and Exxon Capital Holdings
Corporation (available May 13, 1988), as interpreted in the Commission's
letter to Shearman & Sterling dated July 2, 1993, and similar no-action
letters (including any no-action letter obtained pursuant to clause (i)
above), and (2) must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with a secondary resale
transaction and (Y) that such a secondary resale transaction should be
covered by an effective registration statement containing the selling
security holder information required by Item 507 or 508, as applicable, of
Regulation S-K if the resales are of Series B Senior Preferred Stock obtained
by such Holder in exchange for Series A Senior Preferred Stock acquired by
such Holder directly from Holdings.
(iii) Prior to effectiveness of the Exchange Offer Registration
Statement, Holdings shall provide, if requested by the Commission, a
supplemental letter to the Commission (A) stating that Holdings is
registering the Exchange Offer in reliance on the position of the Commission
enunciated in Exxon Capital Holdings Corporation (available May 13, 1988),
Morgan Stanley and Co., Inc. (available June 5, 1991) and, if applicable, any
no-action letter obtained pursuant to clause (i) above and (B) including a
representation that Holdings has not entered into any arrangement or
understanding with any Person to distribute the Series B Senior Preferred
Stock to be received in the Exchange Offer and that, to the best of Holdings'
information and belief, each Holder participating in the Exchange Offer is
acquiring the Series B Senior Preferred Stock in its ordinary course of
business and has no arrangement or understanding with any Person to
participate in the distribution of the Series B Senior Preferred Stock
received in the Exchange Offer.
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(b) Shelf Registration Statement. In connection with the Shelf
Registration Statement, Holdings shall comply with all of the provisions of
Section 6(c) below and shall use its best efforts to effect such registration to
permit the sale of the Transfer Restricted Securities being sold in accordance
with the intended method or methods of distribution thereof, and pursuant
thereto Holdings as expeditiously as possible will prepare and file with the
Commission a Registration Statement relating to the registration on any
appropriate form under the Securities Act, which form shall be available for the
sale of the Transfer Restricted Securities in accordance with the intended
method or methods of distribution thereof.
(c) General Provisions. In connection with any Registration Statement and
any Prospectus required by this Agreement in order to permit the sale or resale
of Transfer Restricted Securities (including, without limitation, any
Registration Statement and the related Prospectus required to permit resales of
Securities by Broker-Dealers), Holdings shall:
(i) use its reasonable best efforts to keep such Registration
Statement continuously effective and provide all requisite financial
statements for the period specified in Section 3 or 4 of this Agreement, as
applicable. Upon the occurrence of any event that would cause any such
Registration Statement or the Prospectus contained therein (A) to contain a
material misstatement or omission or (B) not to be effective and usable for
resale of Transfer Restricted Securities during the period required by this
Agreement, Holdings promptly shall file an appropriate amendment to such
Registration Statement, in the case of clause (A), correcting any such
misstatement or omission, and, in the case of either clause (A) or (B), use
its best efforts to cause such amendment to be declared effective and such
Registration Statement and the related Prospectus to become usable for their
intended purpose(s) as soon as practicable thereafter. Notwithstanding the
foregoing, Holdings may suspend the effectiveness of (1) the Registration
Statement relating to the Exchange Offer for up to 10 days during the 180-day
period referred to in Section 3(c) and (2) the Shelf Registration Statement
for up to 30 days in each year during which such Shelf Registration Statement
is required to be effective and usable hereunder (measured from the date of
effectiveness of such Shelf Registration Statement to successive
anniversaries thereof) if (A) either (y)(I) Holdings shall be engaged in a
material acquisition or disposition and (II)(aa) such acquisition or
disposition is required to be disclosed in the Registration Statement, the
related Prospectus or any amendment or supplemental thereto, or the failure
by Holdings to disclose such transaction in the Registration Statement or
related Prospectus, or any amendment or supplemental thereto, as then amended
or supplemented, would cause such Registration Statement, Prospectus or
amendment or supplement thereto, to contain an untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statement therein not misleading, in the light of the circumstances under
with they were made, (bb) information regarding the existence of such
acquisition or disposition has not then been publicly disclosed by or on
behalf of Holdings and (cc) a majority of the Board of Directors of Holdings
determines in the exercise of its good faith judgment that disclosure of such
acquisition or disposition would not be in the best interest of Holdings and
its subsidiaries or would have a material adverse effect on the consummation
of such acquisition or disposition or (z) a majority of the Board of
Directors of Holdings determines in the exercise of its good faith judgment
that compliance with the disclosure obligations set forth in this Section
6(c)(i) would otherwise have a material adverse effect on Holdings and its
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<PAGE>
subsidiaries, taken as a whole, and (B) Holdings notifies the Holders within
two Business Days after such Board of Directors makes the relevant
determination set forth in clause (A); provided, however, that in each such
case the applicable period specified in Section 3 and 4 hereof during which
the applicable Registration Statement is required to be kept effective and
usable shall be extended by the number of days during which such
effectiveness was suspended pursuant to the foregoing;
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the Registration Statement as may be necessary
to keep the Registration Statement effective for the applicable period set
forth in Section 3 or 4 hereof, as applicable, or such shorter period as will
terminate when all Transfer Restricted Securities covered by such
Registration Statement have been sold; cause the Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented to
be filed pursuant to Rule 424 under the Securities Act, and to comply fully
with the applicable provisions of Rules 424 and 430A under the Securities Act
in a timely manner; and comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such Registration
Statement during the applicable period in accordance with the intended method
or methods of distribution by the sellers thereof set forth in such
Registration Statement or supplement to the Prospectus;
(iii) advise the underwriter(s), if any, and selling Holders and, if
requested by such Persons, confirm such advice in writing, (A) when the
Prospectus or any Prospectus supplement or post-effective amendment has been
filed, and, with respect to any Registration Statement or any post-effective
amendment thereto, when the same has become effective, (B) of any request by
the Commission for amendments to the Registration Statement or amendments or
supplements to the Prospectus or for additional information relating thereto,
(C) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement under the Securities Act or of
the suspension by any state securities commission of the qualification of the
Transfer Restricted Securities for offering or sale in any jurisdiction, or
the initiation of any proceeding for any of the preceding purposes, (D) of
the existence of any fact or the happening of any event that makes any
statement of a material fact made in the Registration Statement, the
Prospectus, any amendment or supplement thereto or any document incorporated
by reference therein untrue, or that requires the making of any additions to
or changes in the Registration Statement or the Prospectus in order to make
the statements therein not misleading. If at any time the Commission shall
issue any stop order suspending the effectiveness of the Registration
Statement, or any state securities commission or other regulatory authority
shall issue an order suspending the qualification or exemption from
qualification of the Transfer Restricted Securities under state securities or
Blue Sky laws, Holdings shall use its best efforts to obtain the withdrawal
or lifting of such order at the earliest possible time;
(iv) furnish to the Initial Purchaser, each of the selling Holders
and each of the underwriter(s), if any, before filing with the Commission,
copies of any Registration Statement or any Prospectus included therein or
any amendments or supplements to any such Registration Statement or
Prospectus (including all documents incorporated by reference after the
initial filing of such Registration Statement), which documents will be
subject to the
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review of such Holders and underwriter(s), if any, for a period of at least
five Business Days, and Holdings will not file any such Registration
Statement or Prospectus or any amendment or supplement to any such
Registration Statement or Prospectus (including all such documents
incorporated by reference) to which a selling Holder of Transfer Restricted
Securities covered by such Registration Statement or the underwriter(s), if
any, shall object within five Business Days after the receipt thereof. A
selling Holder or underwriter, if any, shall be deemed to have objected
reasonably to such filing if such Registration Statement, amendment,
Prospectus or supplement, as applicable, as proposed to be filed, contains a
material misstatement or omission or fails to comply with the applicable
requirements of the Securities Act;
(v) promptly prior to the filing of any document that is to be
incorporated by reference into a Registration Statement or Prospectus,
provide copies of such document to the selling Holders and to the
underwriter(s), if any, make Holdings' representatives available for
discussion of such document and other customary due diligence matters, and
include such information in such document prior to the filing thereof as such
selling Holders or underwriter(s), if any, reasonably may request;
(vi) make available at reasonable times for inspection by the
selling Holders, any underwriter participating in any disposition pursuant to
such Registration Statement, and any attorney or accountant retained by such
selling Holders or any of the underwriter(s), all financial and other
records, pertinent corporate documents and properties of Holdings and cause
Holdings' officers, directors and employees to supply all information
reasonably requested by any such Holder, underwriter, attorney or accountant
in connection with such Registration Statement subsequent to the filing
thereof and prior to its effectiveness;
(vii) if requested by any selling Holders or the underwriter(s), if
any, promptly incorporate in any Registration Statement or Prospectus,
pursuant to a supplement or post-effective amendment if necessary, such
information as such selling Holders and underwriter(s), if any, reasonably
may request to have included therein, including, without limitation,
information relating to the "Plan of Distribution" of the Transfer Restricted
Securities, information with respect to the liquidation preference of
Transfer Restricted Securities being sold to any such underwriter(s), the
purchase price being paid therefor and any other terms of the Transfer
Restricted Securities to be sold in such offering; and make all required
filings of such Prospectus supplement or post-effective amendment as soon as
practicable after Holdings is notified of the matters to be incorporated in
such Prospectus supplement or post-effective amendment;
(viii) cause the Transfer Restricted Securities covered by the
Registration Statement to be rated with the appropriate rating agencies, if
so requested by the Holders of a majority in aggregate liquidation preference
of Securities covered thereby or the underwriter(s), if any;
(ix) furnish to each selling Holder and each of the underwriter(s),
if any, without charge, at least one copy of the Registration Statement, as
first filed with the Commission,
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and of each amendment thereto, including all documents incorporated by
reference therein and all exhibits (including exhibits incorporated therein
by reference);
(x) deliver to each selling Holder and each of the underwriter(s),
if any, without charge, as many copies of the Prospectus (including each
preliminary prospectus) and any amendment or supplement thereto as such
Persons reasonably may request; Holdings hereby consents to the use of the
Prospectus and any amendment or supplement thereto by each of the selling
Holders and each of the underwriter(s), if any, in connection with the
offering and the sale of the Transfer Restricted Securities covered by the
Prospectus or any amendment or supplement thereto;
(xi) enter into such agreements (including an underwriting
agreement), and make such representations and warranties, and take all such
other actions in connection therewith in order to expedite or facilitate the
disposition of the Transfer Restricted Securities pursuant to any
Registration Statement contemplated by this Agreement, all to such extent as
may be requested by the Initial Purchaser or by any Holder of Transfer
Restricted Securities or underwriter in connection with any sale or resale
pursuant to any Registration Statement contemplated by this Agreement; and
whether or not an underwriting agreement is entered into and whether or not
the registration is an Underwritten Registration, Holdings shall:
(A) furnish to the Initial Purchaser, each selling Holder and each
underwriter, if any, in such substance and scope as they may request and
as are customarily made by issuers to underwriters in primary underwritten
offerings, upon the date of the Consummation of the Exchange Offer and, if
applicable, upon the effectiveness of the Shelf Registration Statement:
(1) a certificate, dated the date of Consummation of the Exchange
Offer or the date of effectiveness of the Shelf Registration Statement,
as the case may be, signed by (x) the Chief Executive Officer or any
Vice President and (y) a principal financial or accounting officer of
Holdings, confirming, as of the date thereof, the matters set forth in
paragraphs (a), (b), (c) and (d) and (e) of Section 7 of the Purchase
Agreement and such other matters as such parties may reasonably
request;
(2) an opinion, dated the date of Consummation of the Exchange
Offer or the date of effectiveness of the Shelf Registration Statement,
as the case may be, of counsel for Holdings covering the matters set
forth in paragraphs (g) and (h) of Section 7 of the Purchase Agreement
and such other matters as the Holders and/or managing underwriter(s)
reasonably may request, and in any event including a statement to the
effect that such counsel has participated in conferences with officers
and other representatives of Holdings, representatives of the
independent public accountants for Holdings, the Initial Purchaser's
representatives and the Initial Purchaser's counsel in connection with
the preparation of such Registration Statement and the related
Prospectus and have considered the matters required to be stated
therein and the statements contained therein, although such counsel has
not independently verified the accuracy, completeness or fairness of
such statements; and that on the basis of the foregoing (relying upon
facts provided to such counsel by
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officers and other representatives of Holdings and without independent
check or verification), that no facts came to such counsel's attention
that caused such counsel to believe that the applicable Registration
Statement, at the time such Registration Statement or any
post-effective amendment thereto became effective, and, in the case of
the Exchange Offer Registration Statement, as of the date of
Consummation, contained an untrue statement of a material fact or
omitted to state a material fact re quired to be stated therein or
necessary to make the statements therein not misleading, or that the
Prospectus contained in such Registration Statement as of its date and,
in the case of the opinion dated the date of Consummation of the
Exchange Offer, as of the date of Consummation, contained an untrue
statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Without
limiting the foregoing, such counsel may state further that such
counsel assumes no responsibility for, and has not independently
verified, the accuracy, completeness or fairness of the financial
statements, notes and schedules and other financial data included in
any Registration Statement contemplated by this Agreement or the
related Prospectus; and
(3) customary comfort letters, dated as of the date of
Consummation of the Exchange Offer or the date of effectiveness of the
Shelf Registration Statement, as the case may be, from Holdings' past
and present independent accountants, in the customary form and covering
matters of the type customarily covered in comfort letters to
underwriters in connection with primary underwritten offerings, and
affirming the matters set forth in the comfort letters delivered
pursuant to Section 7(l) of the Purchase Agreement, without exception;
(B) set forth in full or incorporate by reference in the underwriting
agreement, if any, the indemnification provisions and procedures of
Section 8 hereof with respect to all parties to be indemnified pursuant to
said Section; and
(C) deliver such other documents and certificates as reasonably may be
requested by such parties to evidence compliance with clause (A) above and
with any customary conditions contained in the underwriting agreement or
other agreement entered into by Holdings pursuant to this clause (xi), if
any.
The provisions of this clause (A) shall be applicable at each closing
under such underwriting or similar agreement, as and to the extent required
thereunder and, if at any time the representations and warranties of Holdings
contemplated in clause (A)(1) above cease to be true and correct, Holdings
promptly shall so advise the Initial Purchaser and the underwriter(s), if
any, and each selling Holder and, if requested by such Persons, shall confirm
such advice in writing;
(xii) prior to any public offering of Transfer Restricted
Securities, cooperate with the selling Holders, the underwriter(s), if any,
and their respective counsel in connection with the registration and
qualification of the Transfer Restricted Securities under the securities or
Blue Sky laws of such jurisdictions as the selling Holders or underwriter(s)
may
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request and do any and all other acts or things necessary or advisable to
enable the disposition in such jurisdictions of the Transfer Restricted
Securities covered by the Shelf Registration Statement; provided, however,
that Holdings shall not be required to register or qualify as a foreign
corporation where it is not now so qualified or to take any action that would
subject it to the service of process in suits or to taxation, other than as
to matters and transactions relating to the Registration Statement, in any
jurisdiction where it is not now so subject;
(xiii) upon the request of any Holder of Series A Senior Preferred
Stock covered by the Shelf Registration Statement, issue Series B Senior
Preferred Stock, having an aggregate liquidation preference equal to the
aggregate liquidation preference of Series A Senior Preferred Stock
surrendered to Holdings by such Holder in exchange therefor or being sold by
such Holder, such Series B Senior Preferred Stock to be registered in the
name of such Holder or in the name of the purchaser(s) of such Securities, as
the case may be; in return, the Series A Senior Preferred Stock held by such
Holder shall be surrendered to Holdings for cancellation;
(xiv) cooperate with the selling Holders and the underwriter(s), if
any, to facilitate the timely preparation and delivery of certificates
representing Transfer Restricted Securities to be sold and not bearing any
restrictive legends, and enable such Transfer Restricted Securities to be in
such denominations and registered in such names as the Holders or the
underwriter(s), if any, may request at least two Business Days prior to any
sale of Transfer Restricted Securities made by such underwriter(s);
(xv) use its best efforts to cause the Transfer Restricted
Securities covered by the Registration Statement to be registered with or
approved by such other governmental agencies or authorities as may be
necessary in order to enable the seller or sellers thereof or the
underwriter(s), if any, to consummate the disposition of such Transfer
Restricted Securities, subject to the proviso contained in clause (xii)
above;
(xvi) if any fact or event contemplated by clause (c)(iii)(D) above
shall exist or have occurred, prepare a supplement or post-effective
amendment to the Registration Statement or related Prospectus or any document
incorporated therein by reference or file any other required document so
that, as thereafter delivered to the purchasers of Transfer Restricted
Securities, the Prospectus will not contain an untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein not misleading; provided, however, Holdings shall not be required to
comply with this clause (xvi) if, and only for so long as (A) either (l)(y)
Holdings shall be engaged in a material acquisition or disposition and (z)(I)
such acquisition or disposition is required to be disclosed in the
Registration Statement, the related Prospectus or any amendment or supplement
thereto, or the failure by Holdings to disclose such transaction in the
Registration Statement or related Prospectus, or any amendment or supplement
thereto, as then amended or supplemented, would cause such Registration
Statement, Prospectus or amendment or supplement thereto, to contain an
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein no misleading, in the light
of the circumstances under with they were made, (II) information regarding
the existence of such acquisition or disposition has not been
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publicly disclosed by or on behalf of Holdings and (III) a majority of the
Board of Directors of Holdings determines in the exercise of its good faith
judgment that disclosure of such acquisition or disposition would not be in
the best interests of Holdings and its subsidiaries or would have a material
adverse effect on the consummation of such acquisition or disposition or (2)
a majority of the Board of Directors of Holdings determines in the exercise
of its good faith judgment that compliance with the disclosure obligations
set forth in this clause (xvi) would otherwise have a material adverse effect
on Holdings and its subsidiaries, taken as whole, and (B) Holdings notifies
the Holders within two Business Days after the Board of Directors makes the
relevant determination set forth in clause (A); provided, however, that in
each such case the period specified in Section 3 and 4 hereof during which
the applicable Registration Statement is required to be kept effective and
usable shall be extended by the number of days during which such
effectiveness was suspended pursuant to the foregoing;
(xvii) provide a CUSIP number for all Transfer Restricted Securities
not later than the effective date of the Registration Statement, and provide
the transfer agent and registrar with printed certificates for the Transfer
Restricted Securities which are in a form eligible for deposit with the
Depository Trust Company;
(xviii) cooperate and assist in any filings required to be made with
the NASD and in the performance of any due diligence investigation by any
underwriter (including any "qualified independent underwriter") that is
required to be retained in accordance with the rules and regulations of the
NASD, and use its reasonable best efforts to cause such Registration
Statement to become effective and approved by such governmental agencies or
authorities as may be necessary to enable the Holders selling Transfer
Restricted Securities to Consummate the disposition of such Transfer
Restricted Securities;
(xix) otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the Commission, and make generally
available to its security holders, as soon as practicable, a consolidated
earnings statement meeting the requirements of Rule 158 (which need not be
audited) for the twelve-month period (A) commencing at the end of any fiscal
quarter in which Transfer Restricted Securities are sold to underwriters in a
firm or best efforts Underwritten Offering or (B) if not sold to underwriters
in such an offering, beginning with the first month of Holdings' first fiscal
quarter commencing after the effective date of the Registration Statement;
(xx) use its reasonable best efforts to cause all Transfer
Restricted Securities covered by the Registration Statement to be listed on
each securities exchange on which similar securities issued by Holdings are
then listed if requested by the Holders of a majority of the outstanding
shares or aggregate liquidation preference of Series A Senior Preferred
Stock, or the underwriters, if any; and
(xxi) provide promptly to each Holder upon request each document
filed with the Commission pursuant to the requirements of Section 13 and
Section 15 of the Exchange Act.
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Each Holder agrees by acquisition of a Transfer Restricted Security that,
upon receipt of any notice from Holdings of the existence of any fact of the
kind described in Section 6(c)(iii)(D) hereof, such Holder will forthwith
discontinue disposition of Transfer Restricted Securities pursuant to the
applicable Registration Statement until such Holder's receipt of the copies of
the supplemented or amended Prospectus contemplated by Section 6(c)(xvi) hereof,
or until it is advised in writing (the "Advice") by Holdings that the use of the
Prospectus may be resumed, and has received copies of any additional or
supplemental filings that are incorporated by reference in the Prospectus. If so
directed by Holdings, each Holder will deliver to Holdings (at Holdings'
expense) all copies, other than permanent file copies then in such Holder's
possession, of the Prospectus covering such Transfer Restricted Securities that
was current at the time of receipt of such notice. In the event Holdings shall
give any such notice, the time period regarding the effectiveness of such
Registration Statement set forth in Section 3 or 4 hereof, as applicable, shall
be extended by the number of days during the period from and including the date
of the giving of such notice pursuant to Section 6(c)(iii)(D) hereof to and
including the date when each selling Holder covered by such Registration
Statement shall have received the copies of the supplemented or amended
Prospectus contemplated by Section 6(c)(xvi) hereof or shall have received the
Advice.
SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to Holdings' performance of or compliance with
this Agreement will be borne by Holdings, regardless of whether a Registration
Statement becomes effective, including without limitation: (i) all registration
and filing fees and expenses (including filings made by the Initial Purchaser or
Holder with the NASD (and, if applicable, the fees and expenses of any
"qualified independent underwriter" and its counsel that may be required by the
rules and regulations of the NASD)); (ii) all fees and expenses of compliance
with federal securities and state Blue Sky or securities laws; (iii) all
expenses of printing (including printing certificates for the Series B Senior
Preferred Stock to be issued in the Exchange Offer and printing of
Prospectuses), messenger and delivery services and telephone; (iv) all fees and
disbursements of counsel for Holdings and, subject to Section 7(b) below, the
Holders of Transfer Restricted Securities; (v) all application and filing fees
in connection with listing Securities on a national securities exchange or
automated quotation system pursuant to the requirements hereof; and (vi) all
fees and disbursements of independent certified public accountants of Holdings
(including the expenses of any special audit and comfort letters required by or
incident to such performance).
Holdings will, in any event, bear its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expenses of any annual audit and the
fees and expenses of any Person, including special experts, retained by
Holdings.
(b) Holdings will reimburse the Initial Purchaser and the Holders for the
reasonable fees and disbursements of Simpson Thacher & Bartlett, acting for the
Initial Purchaser or Holders in connection with the offer and sale of the
Securities pursuant to each Registration Statement.
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SECTION 8. INDEMNIFICATION
(a) Holdings agrees to indemnify and hold harmless (i) each Holder and
(ii) each person, if any, who controls (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) any Holder (any of the persons
referred to in this clause (ii) being hereinafter referred to as a "controlling
person") and (iii) the respective officers, directors, partners, employees,
representatives and agents of each Holder and each controlling person (any
person referred to in clause (i), (ii) or (iii) may hereinafter be referred to
as an "Indemnified Holder") to the fullest extent lawful, from and against any
and all losses, claims, damages, judgments, actions and other liabilities
(collectively, "Liabilities"), and will reimburse each Indemnified Holder for
all fees and expenses (including, without limitation, the reasonable fees and
expenses of counsel to any Indemnified Holder) (collectively, "Expenses") as
they are incurred in investigating, preparing, pursuing or defending any claim
or action, or any proceeding or investigation by any governmental agency or
body, whether or not in connection with pending or threatened litigation and
whether or not any Indemnified Holder is a party (collectively, "Actions"),
directly or indirectly caused by, related to, based upon, arising out of or in
connection with any untrue statement or alleged untrue statement of a material
fact contained in any Registration Statement, preliminary Prospectus or
Prospectus (including any amendments thereof and supplements thereto), or 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 the light of the
circumstances under which they were made, not misleading, except insofar as such
Liabilities or Expenses are caused by an untrue statement or omission or alleged
untrue statement or omission (i) that is made in reliance upon and in conformity
with information relating to an Indemnified Holder furnished in writing to
Holdings by such Indemnified Holder expressly for use therein or (ii) that is
made in any preliminary Prospectus if a copy of the final Prospectus (as then
amended or supplemented) was not sent or given by or on behalf of the Holder to
the person asserting any such loss, claim, damage, liability or expense, if
required by law so to have been delivered, at or prior to the written
confirmation of the sale of the Securities and the final prospectus (as then
amended or supplemented) would have corrected such untrue statement or omission.
Holdings also agrees to reimburse each Indemnified Holder for all Expenses as
incurred in connection with enforcing such Indemnified Holder's rights under
this Agreement (including, without limitation, its rights under this Section 8);
provided, that if either Anvil or Holdings reimburses a Holder hereunder for any
Expenses, such Holder hereby agrees to refund such reimbursement of Expenses to
the extent that the Holder is not entitled to be indemnified hereunder. Holdings
shall notify each Indemnified Holder promptly of the institution, threat or
assertion of any Action in connection with the matters addressed by this
Agreement which involves Holdings or an Indemnified Holder.
Upon receipt by an Indemnified Holder of notice of an Action against such
Indemnified Holder with respect to which indemnity may be sought under this
Section 8, such Indemnified Holder shall promptly notify Holdings in writing;
provided that the failure to so notify Holdings shall not relieve Holdings from
any liability which Holdings may have on account of this indemnity or otherwise,
except to the extent Holdings shall have been materially prejudiced by such
failure. Holdings shall, if requested by such Indemnified Holder, assume the
defense of any such Action, including the employment of counsel reasonably
satisfactory to such Indemnified Holder. Any Indemnified Holder shall have the
right to employ separate counsel
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<PAGE>
in any such action and participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Holder,
unless: (i) Holdings has failed promptly to assume the defense and employ
counsel reasonably satisfactory to such Indemnified Holder, (ii) the
indemnifying party has authorized the employment of counsel for such Indemnified
Holder at the expense of the indemnifying party or (iii) the named parties to
any such Action (including any impleaded parties) include such Indemnified
Holder and Holdings , and such Indemnified Holder shall have been advised by
counsel that there may be one or more legal defenses available to it which are
different from or in addition to those available to Holdings ; provided that
Holdings shall not in such event be responsible hereunder for the fees and
expenses of more than one firm of separate counsel in connection with any Action
in the same jurisdiction, in addition to any local counsel. Holdings shall not
be liable for any settlement of any Action effected without its written consent
(which shall not be unreasonably withheld) and Holdings agrees to indemnify and
hold harmless any Indemnified Holder from and against any Liability or Expense
by reason of any settlement of any Action effected with the written consent of
Holdings . Notwithstanding the immediately preceding sentence, if at any time an
Indemnified Holder shall have requested Holdings to reimburse the Indemnified
Holder for fees and expenses of counsel as contemplated by the third sentence of
this paragraph, Holdings 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 sixty (60) Business Days after receipt by Holdings of the
aforesaid request and (ii) Holdings shall not have reimbursed the Indemnified
Holder in accordance with such request prior to the date of such settlement. In
addition, Holdings will not, without the prior written consent of each
Indemnified Holder, settle any pending or threatened Action in respect of which
indemnification or contribution may be sought hereunder (whether or not any
Indemnified Holder is a party thereto), unless such settlement includes an
unconditional release of such Indemnified Holder from all Liabilities on claims
that are the subject matter of such proceeding.
(b) Each Holder of Transfer Restricted Securities agrees, severally and
not jointly, to indemnify and hold harmless Holdings , and its directors,
officers, and any person controlling (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) Holdings , and the respective
officers, directors, partners, employees, representatives and agents of each
such person, to the same extent as the foregoing indemnity from Holdings to each
of the Indemnified Holders, but only with respect to Liabilities and Expenses
incurred in investigating, preparing, pursuing or defending Actions directly or
indirectly caused by, related to, based upon, arising out of or in connection
with any untrue statement or omission or alleged untrue statement of a material
fact contained in any Registration Statement, preliminary Prospectus or
Prospectus (including any amendments thereof and supplements thereto) that was
made in reliance upon and in conformity with information relating to such Holder
furnished in writing by or on behalf of such Holder expressly for use in any
Registration Statement or Prospectus or any amendment or supplement thereto. In
case any Action shall be brought against Holdings or its directors or officers
or any such controlling person in respect of which indemnity may be sought
against a Holder of Transfer Restricted Securities, such Holder shall have the
rights and duties given Holdings or its directors or officers or such
controlling person shall have the rights and duties given to each Holder by the
preceding paragraph. In no event shall the liability of any selling Holder
hereunder be greater than the amount by which the total proceeds received by
such Holder upon the sale of the Registrable Securities giving rise to such
indemnification
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<PAGE>
obligation exceeds the sum of (A) the amount paid by such Holder for such
Registrable Securities plus (B) the amount of any damages which such Holder has
otherwise been required to pay by reason of a claim or action based on such
information.
(c) If the indemnification provided for in this Section 8 is unavailable
to an indemnified party under Section 8(a) or Section 8(b) hereof (other than by
reason of exceptions provided in those Sections) in respect of any Liabilities
or Expenses referred to therein, then each applicable indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such Liabilities
or Expenses (i) in such proportion as is appropriate to reflect the relative
benefits received by Holdings on the one hand and the Holders on the other hand
from their sale of Transfer Restricted Securities or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of Holdings and of the
Indemnified Holder, as well as any other relevant equitable considerations. The
relative benefits received by Holdings and any Indemnified Holder shall be
deemed to be in the same proportion as (x) the total proceeds from the offering
of the Units consisting of the Series A Preferred Stock and Class B Common Stock
of Holdings (net of discounts but before deducting expenses) received by
Holdings and (y) the total proceeds received by such Indemnified Holder upon its
sale of Transfer Restricted Services which otherwise would give rise to the
indemnification obligation, respectively. The relative fault of Holdings on the
one hand and of the Indemnified Holder 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 Holdings or by the Indemnified Holder and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
Holdings and each Holder of Transfer Restricted Securities agree that it
would not be just and equitable if contribution pursuant to this Section 8(c)
were determined by pro rata allocation (even if the Holders were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an indemnified party as a
result of the Liabilities and Expenses referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth in
the second paragraph of Section 8(a), any legal or other fees or expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any Action. Notwithstanding any other provision of this Section 8,
none of the Holders (and its related Indemnified Holders) shall be required to
contribute, in the aggregate, an amount in excess of the amount by which the
total proceeds received by such Holder with respect to the sale of its Series A
Senior Preferred Stock giving rise to such Liabilities or Expenses exceeds the
sum of (A) the amount paid by such Holder for such Senior Preferred Stock plus
(B) the amount of any damages which such Holder 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 Holders'
obligations to contribute pursuant to this Section 8(c) are several in
proportion to the liquidation preference of Series A Senior Preferred
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Stock held
by each of the Holders hereunder and not joint.
SECTION 9. RULE 144A
Holdings hereby agrees with each Holder, for so long as any Transfer
Restricted Securities remain outstanding, to make available to any Holder or
beneficial owner of Transfer Restricted Securities in connection with any sale
thereof and any prospective purchaser of such Transfer Restricted Securities
from such Holder or beneficial owner, the information required by Rule
144A(d)(4) under the Securities Act in order to effect resales of such Transfer
Restricted Securities pursuant to Rule 144A.
SECTION 10. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
No Holder may participate in any Underwritten Registration hereunder
unless such Holder (a) agrees to sell such Holder's Transfer Restricted
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 reasonable questionnaires, powers of attorney, indemnities,
underwriting agreements, lock-up letters and other documents required under the
terms of such underwriting arrangements.
SECTION 11. SELECTION OF UNDERWRITERS
The Holders of Transfer Restricted Securities covered by the Shelf
Registration Statement who desire to do so may sell such Transfer Restricted
Securities in an Underwritten Offering. In any such Underwritten Offering, the
investment banker or investment bankers and manager or managers that will
administer the offering will be selected by the Holders of a majority in
aggregate liquidation preference of the Transfer Restricted Securities included
in such offering; provided that such investment bankers and managers must be
reasonably satisfactory to Holdings.
SECTION 12. MISCELLANEOUS
(a) Remedies. Each Holder, in addition to being entitled to exercise all
rights provided herein, in the Certificate of Designation, the Purchase
Agreement or granted by law, including recovery of liquidated or other damages,
will be entitled to specific performance of its rights under this Agreement.
Holdings agrees that a breach of any of the provisions of this Agreement will
cause irreparable injury to the Holders, that the Holders have no adequate
remedy by law in respect of such breach and, as a consequence, that each and
every provision contained in this Agreement shall be specifically enforceable
against Holdings, and Holdings hereby waives and agrees not to assert as a
defense to the request or granting of specific performance of any such provision
that any breach of any such provision does not or would not cause irreparable
harm or is or would be compensable by an award of money damages in respect of
such breach.
(b) No Inconsistent Agreements. Holdings will not enter, on or after the
date of this Agreement, into any agreement with respect to its securities that
would be inconsistent with the
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rights granted to the Holders in this Agreement or otherwise would conflict with
the provisions hereof. Holdings previously has not entered into any agreement
granting any registration rights with respect to its securities to any Person.
The rights granted to the Holders hereunder do not in any way conflict with and
are not inconsistent in any way with the rights granted to the holders of
Holdings' securities under any agreement in effect on the date hereof.
(c) Adjustments Affecting the Securities. Holdings will not take any
action, or permit any change to occur, with respect to the Securities that would
materially and adversely affect the ability of the Holders to Consummate any
Exchange Offer.
(d) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given unless Holdings has obtained the written
consent of Holders of a majority of the outstanding liquidation preference of
Transfer Restricted Securities. Notwithstanding the foregoing, the Holders of a
majority of the outstanding liquidation preference of Transfer Restricted
Securities being tendered or registered may give a waiver or consent to
departure from the provisions hereof, which waiver or consent relates
exclusively to the rights of Holders whose securities are being tendered
pursuant to the Exchange Offer and does not directly or indirectly affect the
rights of other Holders whose securities are not being tendered pursuant to such
Exchange Offer.
(e) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, then at the address set forth on the records of
the transfer agent and registrar, with a copy to the transfer agent and
registrar; and
(ii) if to Holders and Holdings, then:
Anvil Holdings, Inc.
228 East 45th Street
New York, New York 10017
Telecopier No.: (212) 885-9411
Attention: Jacob Hollander
With copies to:
Kirkland & Ellis
Citicorp Center
153 East 53rd Street
New York, New York 10022
Telecopier No.: (312) 861-2200
Attention: Lance C. Balk, Esq.
399 Venture Partners, Inc.
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<PAGE>
399 Park Avenue, 14th Floor
New York, New York 10043
Telecopier No.: (212) 888-2940
Attention; David F. Thomas
and
Bruckmann, Rosser, Sherrill & Co., Inc.
126 East 56th Street, 29th Floor
New York, New York 10022
Telecopier No.: (212) 521-3799
Attention: Stephen F. Edwards
All such notices and communications shall be deemed to have been duly
given as follows: (A) at the time delivered by hand, if personally delivered;
(B) five Business Days after being deposited in the mail, postage prepaid, if
mailed; (C) when answered back, if telexed; (D) when receipt acknowledged, if
telecopied; and (E) on the next Business Day, if timely delivered to an air
courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be
delivered concurrently to the Trustee, at the address specified in the
Indenture, by the Person giving the same.
(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 Transfer Restricted Securities; 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 acquired
Transfer Restricted Securities from such Holder.
(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,
WITHOUT REGARD TO THE CONFLICT OF LAW RULES THEREOF.
(j) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the
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validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be affected
or impaired thereby.
(k) Entire Agreement. This Agreement together with the other Operative
Documents (as defined in the Purchase Agreement) is intended by the parties as a
final expression of their agreement and 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. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted by Holdings with respect to the
Transfer Restricted Securities. This Agreement supersedes all prior agreements
and understandings between the parties with respect to such subject matter.
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
ANVIL HOLDINGS, INC.
By:
------------------------
Name:
Title:
Accepted and agreed to as of
the date first above written:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By:
-------------------------
Name:
Title:
<PAGE>
REGISTRATION RIGHTS AND
SECURITYHOLDERS AGREEMENT
This REGISTRATION RIGHTS AND SECURITYHOLDERS AGREEMENT is dated as
of March 14, 1997, by and among Anvil Holdings, Inc., a Delaware corporation
(the "Company"), Bruckmann, Rosser, Sherrill & Co., L.P., a Delaware limited
partnership ("BRS"), 399 Venture Partners, Inc., a Delaware corporation ("399"),
CCT II Partners, L.P., a Delaware limited partnership (together with 399, "399
Venture"), and Donaldson, Lufkin & Jenrette Securities Corporation (the "Initial
Purchaser" and including the successors and assigns of the initial purchasers of
the Units, the "Unit Investors"). BRS and 399 Venture are collectively referred
to as the Fund Investors. The Fund Investors and the Unit Investors are
collectively referred to as the "Securityholders" and individually as a
"Securityholder".
WHEREAS, the Initial Purchaser is acquiring Units consisting of
shares of 13.00% Senior Exchangeable Preferred Stock due 2009 and shares of the
Company's Class B Common Stock, par value $.01 per share (the "Class B Common"),
pursuant to that certain Purchase Agreement, dated as of the date hereof, by and
between the Initial Purchaser and the Company (the "Purchase Agreement").
WHEREAS, it is a condition to the obligations of the Initial
Purchaser under the Purchase Agreement that the Company and the Fund Investors
enter into this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereby agree as follows:
1. Definitions. As used herein, the following terms shall have the
following meanings:
"Affiliate" shall mean, as to any Person, any other Person which
directly or indirectly controls, or is under common control with, or is
controlled by, such Person. As used in this definition, "control" (including,
with its correlative meanings, "controlled by" and "under common control with")
shall mean possession, directly or indirectly, of power to direct or cause the
direction of management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise).
"Approved Sale" means the Sale of the Company, which has been
approved by the Board and pursuant to which all holders of Common Stock receive
with respect thereto (whether in such transaction or, with respect to an asset
sale, upon a subsequent liquidation) the same form and amount of consideration
per share of Common Stock or, if any holders are given an option as to the form
and amount of consideration to be received, all holders are given the same
option.
"Board" means the Company's board of directors.
"Common Stock" means the Class B Common, the Company's Class C
Common Stock, par value $.01 per share, and, except for the Company's Class A
Common Stock, par value
<PAGE>
$.01 per share, any other class of common stock of the Company and any other
class of securities of the Company which is not limited to a fixed sum or
percentage of par value or stated value in respect of the rights of the holders
thereof to participate in dividends and in the distribution of assets upon the
voluntary or involuntary liquidation, dissolution or winding up of the Company.
"Independent Third Party" means any Person who, immediately prior to
the contemplated transaction (i) does not own in excess of 5% of the Common
Stock on a fully diluted basis (a "5% Owner"), (ii) is not controlling,
controlled by or under common control with any such 5% Owner and (iii) is not
the spouse or descendent (by birth or adoption) of any such 5% Owner or a trust
for the benefit of such 5% Owner and/or such other Persons.
"Initial Public Offering" means the sale, in an underwritten public
offering registered under the Securities Act, of shares of the Company's Common
Stock resulting in gross proceeds to the Company of at least $30.0 million.
"Person" means an individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization or a governmental entity or any
department, agency or political subdivision thereof.
"Public Sale" means any sale of Securityholder Shares to the public
pursuant to an offering registered under the Securities Act or to the public
effected through a broker, dealer or market maker pursuant to, and otherwise in
compliance with, the provisions of Rule 144 under the Securities Act.
"Sale of the Company" means the sale of the Company to an
Independent Third Party or group of Independent Third Parties pursuant to which
such party or parties acquire (i) capital stock of the Company possessing the
voting power under normal circumstances to elect a majority of the Company's
board of directors (whether by merger, consolidation, sale, transfer or exchange
of the Company's capital stock) or (ii) all or substantially all of the
Company's assets determined on a consolidated basis.
"Securities Act" means the Securities Act of 1933, as amended from
time to time.
"Securityholder Shares" means (i) any Common Stock acquired by the
Securityholders and (ii) any equity securities issued or issuable directly or
indirectly with respect to the securities referred to in clause (i) above by way
of stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. As to any
particular shares constituting Securityholder Shares, such shares will cease to
be Securityholder Shares when they have been sold in a Public Sale by the Fund
Investors, an Approved Sale, or upon the consummation of a Initial Public
Offering.
"Stockholders Agreement" means that certain Stockholders Agreement,
dated as of the date hereof, by and among the Company, BRS, 399 Venture, and the
other parties thereto, as amended, restated or modified from time to time.
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<PAGE>
"Unit Investor Shares" means Securityholder Shares owned by the Unit
Investors.
2. Restrictions on Transfer.
(a) Tag Along Rights. Subject to Section 2(b) and other than in
connection with a Public Sale or Approved Sale, at least 15 days prior to any
sale, transfer, assignment, pledge or other disposal (a "Transfer") of
Securityholder Shares by a Fund Investor, the Fund Investor making such a
Transfer (the "Transferring Securityholder") shall deliver a written notice (the
"Sale Notice") to the Company and each Unit Investor (as set forth in Section
15), specifying in reasonable detail the identity of the prospective
transferee(s) and the terms and conditions of the Transfer. Each Unit Investor
may elect to participate in the contemplated Transfer by delivering written
notice to the Transferring Securityholder within 10 days after delivery of the
Sale Notice. If any Unit Investor has elected to participate in such Transfer,
each such Unit Investor shall be entitled to sell in the contemplated Transfer,
at the same price and on the same terms, a number of Securityholder Shares equal
to the product of (i) the quotient determined by dividing the number of
Securityholder Shares owned by such Unit Investor by the aggregate number of
shares of Common Stock outstanding on a fully diluted basis prior to giving
effect to such Transfer and (ii) the aggregate number of Securityholder Shares
to be sold in the contemplated Transfer. Each Unit Investor transferring
Securityholder Shares pursuant to this Section 2(a) shall pay its pro rata share
(based on the number of Securityholder Shares to be sold) of the expenses
incurred by the Securityholders in connection with such Transfer and shall only
be obligated to make representations, warranties and indemnities given by a
Securityholder regarding such Securityholder's title to and ownership of
Securityholder Shares. The parties hereto acknowledge and agree that certain
other stockholders of the Company will also have the right to participate in
such Transfer pursuant to the Stockholders Agreement.
(b) Permitted Transfers. The restrictions contained in this Section
2 shall not apply with respect to any Transfer of Securityholder Shares by any
Fund Investor (i) among its Affiliates, employees and consultants, (ii) to any
employee, prospective employee, director or prospective director of the Company
or any Affiliate of the Company, (iii) to any former or prospective employee,
director or prospective director of an Investor or any Affiliate of such
Affiliate or (iv) to any Person in order to resolve a Regulatory Problem (as
defined in the Stockholders Agreement). In addition, the restrictions and
obligations set forth in this Section 2 shall not apply to a Transfer or
Transfers by Fund Investors of Securityholder Shares representing an aggregate
of up to 5% of the Company's outstanding shares of Common Stock.
3. Approved Sale.
(a) In the event of an Approved Sale, each Unit Investor will (i)
consent to and raise no objections against the Approved Sale, (ii) waive any
dissenter's rights and other similar rights, and (iii) if the Approved Sale is
structured as a sale of stock, each Unit Investor will agree to sell its
Securityholder Shares on the terms and conditions of the Approved Sale. Each
Unit Investor will take all reasonably necessary and desirable actions as
directed by the Board in connection with the consummation of any Approved Sale,
including, without limitation, executing the applicable purchase agreements;
provided, that each Unit Investor shall only be required to make customary and
reasonable representations, warranties and indemnities regarding such Unit
Investor's
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<PAGE>
title to and ownership of its Securityholder Shares. The obligations of the Unit
Investors with respect to an Approved Sale shall be subject to the receipt by
the Company from a nationally recognized investment bank of a written fairness
opinion that the consideration received by the Securityholders is fair and
adequate.
(b) If the Company or the holders of the Company's securities enter
into any negotiation or transaction for which Rule 506 (or any similar rule then
in effect) under the Securities Act may be available with respect to such
negotiation or transaction (including a merger, consolidation or other
reorganization), each Unit Investor will, at the request of the Company, appoint
a purchaser representative (as such term is defined in Rule 501) reasonably
acceptable to the Company. If any Unit Investor appoints a purchaser
representative designated by the Company, the Company will pay the fees of such
purchaser representative, but if any Unit Investor declines to appoint the
purchaser representative designated by the Company such holder will appoint
another purchaser representative (reasonably acceptable to the Company), and
such holder will be responsible for the fees of the purchaser representative so
appointed.
(c) All Unit Investors will bear their pro rata share (based upon
the number of shares sold) of the reasonable costs of any sale of Securityholder
Shares pursuant to an Approved Sale to the extent such costs are incurred for
the benefit of all selling Securityholders and are not otherwise paid by the
Company or the acquiring party. Costs incurred by any Securityholder on its own
behalf will not be considered costs of the transaction hereunder.
4. Registration Rights. Each Unit Investor will have certain rights
to participate in certain registrations of the Company's Common Stock pursuant
to the Registration Rights Agreement, dated as of the date hereof, by and among
the Company, 399 Venture, BRS, the Initial Purchaser, and certain other
stockholders party thereto, a copy of which is attached hereto as Exhibit A (as
amended, restated or modified from time to time, the "Registration Rights
Agreement"); provided, that, notwithstanding anything contained in Section 7 to
the contrary, the rights and obligations of the Unit Investors set forth in the
Registration Rights Agreement shall terminate in accordance with the terms
thereof.
5. Legend.
(a) In addition to the legend set forth in Exhibit A to the Unit
Agreement, dated as of March 14, 1997 between the Company and United States
Trust Company of New York, as Unit Agent and Transfer Agent, each certificate
evidencing Securityholder Shares and each certificate issued in exchange for or
upon the transfer of any Securityholder Shares (if such shares remain
Securityholder Shares as defined herein after such Transfer) shall be stamped or
otherwise imprinted with a legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY
ISSUED ON MARCH 14, 1997, AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THE TRANSFER OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO A
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<PAGE>
REGISTRATION RIGHTS AND SECURITYHOLDERS AGREEMENT DATED AS OF MARCH
14, 1997, BY AND AMONG THE ISSUER OF SUCH SECURITIES (THE "COMPANY")
AND CERTAIN OF THE COMPANY'S SECURITYHOLDERS (THE "SECURITYHOLDERS
AGREEMENT"). HOLDERS OF THE SECURITIES REPRESENTED HEREBY AND THEIR
TRANSFEREES SHALL BE DEEMED TO HAVE AGREED TO THE TERMS OF THE
SECURITYHOLDERS AGREEMENT, WHICH INCLUDE, WITHOUT LIMITATION,
OBLIGATIONS OF THE HOLDERS AND TRANSFEREES HEREOF TO SELL THE
SECURITIES REPRESENTED HEREBY IN A "SALE OF COMPANY" (AS DEFINED
THEREIN) ON TERMS AND CONDITIONS SET FORTH THEREIN. A COPY OF THE
SECURITYHOLDERS AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY THE
COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST."
The Company shall imprint such legend on certificates evidencing Securityholder
Shares outstanding prior to the date hereof. The legend set forth above shall be
removed from the certificates evidencing any shares which cease to be
Securityholder Shares.
(b) Upon the request of any holder of Unit Investor Shares, the
Company shall remove the legend set forth in this Section 5 from the
certificates for such holder's Unit Investor Shares; provided, that such Unit
Investor Shares are eligible for sale pursuant to Rule 144(k) (or any similar
rule or rules then in effect) of the Securities and Exchange Commission.
6. Transfers in Violation of Agreement. Any Transfer or attempted
Transfer of any Securityholder Shares in violation of any provision of this
Agreement shall be null and void, and the Company shall not record such Transfer
on its books or treat any purported transferee of such Securityholder Shares as
the owner of such shares for any purpose.
7. Termination. Except as otherwise expressly set forth herein, this
Agreement will automatically terminate and be of no further force or effect
immediately after the earlier of the consummation of (i) an Approved Sale or
(ii) a Initial Public Offering.
8. Amendment and Waiver. Except as otherwise provided herein, no
modification, amendment or waiver of any provision of this Agreement shall be
effective against the Company or the Securityholders unless such modification,
amendment or waiver is approved in writing by the Company or the holders of not
less than (a) a majority of the Securityholder Shares held by 399 Venture and
(b) a majority of the Securityholder Shares held by BRS, respectively; provided,
that no such modification, amendment or waiver which adversely and prejudicially
affects the Unit Investors vis-a-vis all other Securityholders shall be
effective against the Unit Investors without the prior written consent of the
holders of not less than 51% of the Unit Investor Shares. For the avoidance of
doubt, an amendment to add another party to this Agreement is not an action
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<PAGE>
which, in and of itself, affects any Securityholder adversely and prejudicially
vis-a-vis Other Securityholders. The failure of any party to enforce any of the
provisions of this Agreement shall in no way be construed as a waiver of such
provisions and shall not affect the right of such party thereafter to enforce
each and every provision of this Agreement in accordance with its terms.
9. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
10. Entire Agreement. Except as otherwise expressly set forth
herein, this Agreement, the Registration Rights Agreement and the Purchase
Agreement embody the complete agreement and understanding among the parties
hereto with respect to the subject matter hereof and supersede and preempt any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.
11. Conflicting Agreements. Each Stockholder represents that such
Stockholder has not granted and is not a party to any proxy, voting trust or
other agreement which is inconsistent with or conflicts with the provisions of
this Agreement, and no holder of Stockholder Shares shall grant any proxy or
become party to any voting trust or other agreement which is inconsistent with
or conflicts with the provisions of this Agreement.
12. Successors and Assigns. Except as otherwise provided herein,
this Agreement shall bind and inure to the benefit of and be enforceable by the
Company and its successors and assigns and the Securityholders and any
subsequent holders of Securityholder Shares and the respective successors and
assigns of each of them, so long as they hold Securityholder Shares.
13. Counterparts. This Agreement may be executed in separate
counterparts each of which shall be an original and all of which taken together
shall constitute one and the same agreement.
14. Remedies. The parties hereto shall be entitled to enforce their
rights under this Agreement specifically to recover damages by reason of any
breach of any provision of this Agreement and to exercise all other rights
existing in their favor. The parties hereto agree and acknowledge that money
damages may not be an adequate remedy for any breach of the provisions of this
Agreement and that the Company, and any Securityholder may in his, hers, or its
sole discretion apply to any court of law or equity of competent jurisdiction
for specific performance and/or injunctive relief (without posting a bond or
other security) in order to enforce or prevent any violation of the provisions
of this Agreement.
15. Notices. All notices, demands or other communications to be
given or delivered under or by reason of the provisions of this Agreement will
be in writing and will be
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<PAGE>
deemed to have been given when delivered personally, mailed by certified or
registered mail, return receipt requested and postage prepaid, or sent via a
nationally recognized overnight courier, or sent via facsimile to the recipient
accompanied by a certified or registered mailing. Such notices, demands and
other communications will be sent to the address indicated below:
To the Company:
Anvil Knitwear, Inc.
228 West 45th Street
New York, New York 10017
Attention: Chief Administrative Officer
Telecopy No.: (212) 885-9411
With a copy (which shall not constitute notice) to:
Kirkland & Ellis
153 East 53rd Street
New York, New York 10022
Attention: Kirk A. Radke, Esq.
Telecopy No.: (212) 446-4900
To BRS:
Bruckmann, Rosser, Sherrill & Co., Inc.
126 East 56th Street, 29th Floor
New York, New York 10022
Attention: Bruce C. Bruckmann
Telecopy No.: (212) 521-3799
With a copy (which shall not constitute notice) to:
Kirkland & Ellis
153 East 53rd Street
New York, New York 10022
Attention: Kirk A. Radke, Esq.
Telecopy No.: (212) 446-4900
To 399 Venture:
c/o 399 Venture Partners, Inc.
399 Park Avenue, 14th Floor
New York, New York 10043
Attention: David F. Thomas
Telecopy No.: (212) 888-2940
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<PAGE>
With a copy (which shall not constitute notice) to:
Kirkland & Ellis
Citicorp Center
153 East 53rd Street
New York, New York 10022-4675
Attention: Kirk A. Radke, Esq.
Telecopy No.: (212) 446-4900
To any holder of the Unit Investor Shares:
To the address set forth for such holder on the
stock records of the Company.
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party.
16. Governing Law. The corporate law of Delaware shall govern all
issues concerning the relative rights of the Company and its Securityholders.
All other questions concerning the construction, validity and interpretation of
this Agreement shall be governed by and construed in accordance with the
domestic laws of the State of New York, without giving effect to any choice of
law or conflict of law provision or rule (whether of the State of New York or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of New York.
17. Waiver of Jury Trial. Each of the parties hereto hereby waive,
to the extent permitted by applicable law, trial by jury in any litigation in
any court with respect to, in connection with, or arising out of this Agreement
or the validity, protection, interpretation or enforcement thereof. Each of the
parties hereto agree that this section is a specific and material aspect of this
Agreement and would not enter into this Agreement if this section were not part
of this Agreement.
18. Time of the Essence; Computation of Time. Time is of the essence
for each and every provision of this Agreement. Whenever the last day for the
exercise of any privilege or the discharge of any duty hereunder shall fall upon
a Saturday, Sunday, or any date on which banks in New York City, New York are
authorized to be closed, the party having such privilege or duty may exercise
such privilege or discharge such duty on the next succeeding day which is a
regular business day.
19. Descriptive Headings. The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
* * * * *
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Registration Rights and Securityholders Agreement as of the date first above
written.
ANVIL HOLDINGS, INC.
By:
---------------------------------------
Name:
Title:
BRUCKMANN, ROSSER, SHERRILL & CO., L.P.
By: BRS Partners, Limited Partnership
Its: General Partner
By:
---------------------------------
Name:
Title
399 VENTURE PARTNERS, INC.
By:
---------------------------------------
Name:
Title:
CCT II PARTNERS, L.P.
By: CCT I Corporation
Its: General Partner
By:
---------------------------------
Name:
Title
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By:
---------------------------------------
Name:
Title:
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<PAGE>
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT is dated as of March 14, 1997 by
and among Anvil Holdings, Inc., a Delaware corporation (the "Company"),
Bruckmann, Rosser, Sherrill & Co., L.P., a Delaware limited partnership ("BRS"),
399 Venture Partners, Inc., a New York corporation ("399 Venture"), CCT II
Partners, L.P., a Delaware limited partnership ("CCT"), Bernard Geller, Anthony
Corsano, William Turner, Jacob Hollander and each other executive of the Company
or its subsidiaries who acquires Common Stock (as defined below) from the
Company after the date hereof and executes a joinder hereto (collectively, the
"Executives", and individually an "Executive"), the Persons set forth on the 399
Individual Investor Signature Page attached hereto (collectively, the "399
Individual Investors", and individually an "Individual Investor"), the Persons
set forth on the BRS Individual Investors Signature Page attached hereto
(collectively, the "BRS Individual Investors", and individually a "BRS
Individual Investor") and Donaldson, Lufkin & Jenrette Securities Corporation
(the "Initial Purchaser" and including the successors and assigns of the initial
purchasers of the Units described below).
WHEREAS, BRS, 399 Venture, CCT, the Executives, the 399 Individual
Investors and the BRS Individual Investors have acquired or retained shares of
the Company's Class A Common Stock, par value $.01 per share (the "Class A
Common"), and shares of the Company's Class B Common Stock, par value $.01 per
share (the "Class B Common"), pursuant to that certain Recapitalization
Agreement, dated as of February 12, 1997, by and among the Company, BRS, an
affiliate of 399 Venture, and certain other parties thereto, as amended (the
"Recapitalization Agreement");
WHEREAS, the Initial Purchaser (together with its successors and
assigns, the "Unit Investors") has acquired Units, each consisting of 40 shares
of 13% Senior Exchangeable Preferred Stock due 2009, of the Company, and 13
shares of Class B Common, pursuant to that certain Purchase Agreement, dated as
of the date hereof, by and among the Company and the Initial Purchaser (the
"Purchase Agreement"); and
WHEREAS, the Company, the Initial Purchaser, BRS, 399 Venture and
certain other parties have entered into a Registration Rights and
Securityholders Agreement, dated as of the date hereof, which incorporates by
reference this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties to this Agreement hereby agree as
follows:
1. Definitions. As used herein, the following terms shall have the
following meanings.
"399 Venture Registrable Securities" means (i) any Common Stock
acquired by or issued or issuable to 399 Venture, CCT, and the 399 Individual
Investors or their respective affiliates on or after the date hereof, and (ii)
any shares of capital stock of the Company issued or issuable with respect to
the securities referred to in clause (i) above by way of a stock dividend or
stock split or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization. For purposes of this Agreement, a
Person will be deemed to be a holder of 399
<PAGE>
Venture Registrable Securities whenever such Person has the right to acquire
directly or indirectly such 399 Venture Registrable Securities (upon conversion
or exercise in connection with a transfer of securities or otherwise, but
disregarding any restrictions or limitations upon the exercise of such right),
whether or not such acquisition has actually been effected.
"BRS Registrable Securities" means (i) any Common Stock acquired by
or issued or issuable to BRS, the BRS Individual Investors or their respective
affiliates on or after the date hereof, and (ii) any shares of capital stock of
the Company issued or issuable with respect to the securities referred to in
clause (i) above by way of a stock dividend or stock split or in connection with
a combination of shares, recapitalization, merger, consolidation or other
reorganization. For purposes of this Agreement, a Person will be deemed to be a
holder of BRS Registrable Securities whenever such Person has the right to
acquire directly or indirectly such BRS Registrable Securities (upon conversion
or exercise in connection with a transfer of securities or otherwise, but
disregarding any restrictions or limitations upon the exercise of such right),
whether or not such acquisition has actually been effected.
"Common Stock" means, (i) the Class A Common, the Class B Common and
the Company's Class C Common Stock, par value $.01 per share, and (ii) any
capital stock of the Company issued or issuable with respect to the securities
referred to in clause (i) by way of stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization.
"Company Registrable Securities" has the meaning set forth in
Section 5(c).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Executive Registrable Securities" means (i) any shares of Common
Stock acquired by or issued or issuable to the Executives on or after the date
hereof and (ii) any shares of capital stock of the Company issued or issuable
with respect to the securities referred to in clause (i) above by way of a stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. For purposes of
this Agreement, a Person will be deemed to be a holder of Executive Registrable
Securities whenever such Person has the right to acquire directly or indirectly
such Executive Registrable Securities (upon conversion or exercise in connection
with a transfer of securities or otherwise, but excluding any such rights which
are subject to vesting or any similar restrictions or limitations upon the
exercise of such right, including, without limitation, any options issued
pursuant to the Anvil Holdings, Inc. 1997 Stock Option Plan which are not yet
vested pursuant to the terms of any grant under such plan), whether or not such
acquisition has actually been effected.
"Investor Registrable Securities" means, collectively, the 399
Venture Registrable Securities and the BRS Registrable Securities.
"NASD" means the National Association of Securities Dealers, Inc.
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<PAGE>
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a limited liability company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Registrable Securities" means, collectively, the 399 Venture
Registrable Securities, the BRS Registrable Securities, the Executive
Registrable Securities and the Unit Investor Registrable Securities.
"Registration Expenses" means all expenses incident to the Company's
performance of or compliance with this Agreement, including without limitation
all SEC and stock exchange or NASD registration and filing fees, fees and
expenses of compliance with securities or blue sky laws, printing expenses,
messenger and delivery expenses, transfer agent fees, and fees and disbursements
of counsel for the Company and all independent certified public accountants,
underwriters (excluding discounts and commissions) and other Persons retained by
the Company.
"Rule 144" means Rule 144 under the Securities Act (or any similar
rule then in force).
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Unit Investor Registrable Securities" means (i) any Common Stock of
the Company acquired by or issued or issuable to the Unit Investors or their
respective affiliates on or after the date hereof, and (ii) any shares of
capital stock of the Company issued or issuable with respect to the securities
referred to in clause (i) above by way of a stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganization. For purposes of this Agreement, a Person will be deemed
to be a holder of Unit Investor Registrable Securities whenever such Person has
the right to acquire directly or indirectly such Unit Investor Registrable
Securities (upon conversion or exercise in connection with a transfer of
securities or otherwise, but disregarding any restrictions or limitations upon
the exercise of such right), whether or not such acquisition has actually been
effected.
2. Demand Registrations.
(a) Requests for Registration. Subject to Section 2(b) below, (i) at
any time and from time to time, the holders of a majority of (A) the 399 Venture
Registrable Securities and (B) the BRS Registrable Securities may together
request, and (ii) on the earlier of (A) the third anniversary of this Agreement
and (B) the consummation of an underwritten public offering of shares of Common
Stock registered under the Securities Act (provided that in no event shall the
issuance of Common Stock pursuant to the Purchase Agreement be deemed an
underwritten public offering for purposes hereof), either (x) the holders of a
majority of the 399 Venture Registrable Securities, or (y) the holders of a
majority of the BRS Registrable Securities may each request (1) registration,
whether underwritten or otherwise, under the Securities Act of all or part of
their Registrable Securities on Form S-1 or any similar long-form registration
("Long-Form
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<PAGE>
Registrations") or on Form S-2 or S-3 or any similar short-form registration
("Short-Form Registrations"), if available or (2) that the Company file with the
SEC a registration statement under the Securities Act on any applicable form
pursuant to Rule 415 under the Securities Act (a "415 Registration"). Each
request for a Long-Form Registration or Short-Form Registration shall specify
the approximate number of Registrable Securities requested to be registered and
the anticipated per share price range for such offering. Within ten days after
receipt of any such request for a Long-Form Registration, Short-Form
Registration or 415 Registration, the Company will give written notice of such
requested registration to all other holders of Registrable Securities and will
include (subject to the provisions of this Agreement) in such registration, all
Registrable Securities with respect to which the Company has received written
requests for inclusion therein within 20 days after the receipt of the Company's
notice. All registrations requested pursuant to in this Section 2(a) are
referred to herein as "Demand Registrations".
(b) Long-Form Registrations. The holders of a majority of (A) the
399 Venture Registrable Securities and (B) the BRS Registrable Securities will
each be entitled to request up to two (2) Long-Form Registrations in which the
Company will pay all Registration Expenses. A registration will not count as the
permitted Long-Form Registration until it has become effective and unless the
holders of Registrable Securities are able to register and sell at least 90% of
the Registrable Securities requested to be included in such registration.
(c) Short-Form Registrations. In addition to the Long-Form
Registrations provided pursuant to Section 2(b), (i) the holders of the 399
Venture Registrable Securities will be entitled to request an unlimited number
of Short-Form Registrations and (ii) the holders of a majority of BRS
Registerable Securities will be entitled to request an unlimited number of
Short-Form Registrations, respectively, in which the Company will pay all
Registration Expenses. Demand Registrations (other than 415 Registrations) will
be Short-Form Registrations whenever the Company is permitted to use any
applicable short form. After the Company has become subject to the reporting
requirements of the Exchange Act, the Company will use its best efforts to make
Short-Form Registrations available for the sale of Registrable Securities.
(d) Priority on Demand Registrations. The Company will not include
in any Long-Form Registration or Short-Form Registration any securities which
are not Registrable Securities without the prior written consent of the holders
of at least a majority of the Registrable Securities included in such
registration. If a Long-Form Registration or a Short-Form Registration is an
underwritten offering and the managing underwriters advise the Company in
writing that in their opinion the number of Registrable Securities and, if
permitted hereunder, other securities requested to be included in such offering
exceeds the number of Registrable Securities and other securities, if any, which
can be sold therein without adversely affecting the marketability of the
offering, the Company will include in such registration (i) first, the number of
Registrable Securities requested to be included in such registration pro rata,
if necessary, among the holders of Registrable Securities based on the number of
shares of Registrable Securities owned by each such holder, and (ii) second, any
other securities of the Company requested to be included in such registration
pro rata, if necessary, on the basis of the number of shares of such other
securities owned by each such holder, and (iii) third, if Company Registrable
Securities are to be included in such registration, the number of Company
Registrable Securities to be included in such registration is that number of
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<PAGE>
Company Registrable Securities which is, after giving effect to the foregoing
clauses (i) and (ii), required to attain the $30 million threshold offering
amount set forth in Section 5(c).
(e) Restrictions on Demand Registrations. The Company will not be
obligated to effect any Demand Registration within six months after the
effective date of a previous Demand Registration.
(f) Selection of Underwriters. In the case of a Demand Registration
for an underwritten offering, the holders of a majority of the Registrable
Securities to be included in such Demand Registration will have the right to
select the investment banker(s) and manager(s) to administer the offering, which
investment banker(s) and manager(s) will be nationally recognized, subject to
the Company's approval which will not be unreasonably withheld.
(g) 415 Registrations.
(i) The holders of (A) a majority of the 399 Venture
Registrable Securities and (B) the holders of a majority of the BRS
Registrable Securities, will each be entitled to request one (1) 415
Registration. Subject to the availability of required financial
information, within 45 days after the Company receives written notice of a
request for a 415 Registration, the Company shall file with the SEC a
registration statement under the Securities Act for the 415 Registration.
The Company shall use its best efforts to cause the 415 Registration to be
declared effective under the Securities Act as soon as practical after
filing, and once effective, the Company shall (subject to the provisions
of clause (x) below) cause such 415 Registration to remain effective for
such time period as is specified in such request, but for no time period
longer than the period ending on the earlier of (x) the third anniversary
of the date of filing of the 415 Registration or (y) the date on which all
399 Venture Registrable Securities or all BRS Registrable Securities, as
applicable, have been sold pursuant to the 415 Registration or (z) the
date as of which there are no longer any 399 Venture Registrable
Securities or any BRS Registrable Securities, as applicable, in existence.
(ii) If either (A) the holders of a majority of the 399
Venture Registrable Securities or (B) the holders of a majority of the BRS
Registrable Securities notify the Company in writing that they intend to
effect the sale of all or substantially all of the Registrable Securities
held by such holders pursuant to a single integrated offering pursuant to
a then effective registration statement for a 415 Registration (a
"Takedown"), (x) the Company will notify all holders of Registrable
Securities who have requested inclusion in such 415 Registration pursuant
to Section 2(a), and (y) the Company and each holder of Registrable
Securities (other than the 399 Venture Individual Investors, the BRS
Individual Investors, the holders of Investor Registrable Securities
pursuant to a 415 Registration and the holders of Unit Investor
Registrable Securities) shall not effect any public sale or distribution
of its equity securities, or any securities convertible into or
exchangeable or exercisable for its equity securities, during the 90-day
period beginning on the date such notice of a Takedown is received.
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<PAGE>
(iii) If in connection with such an offering, the number of
Registrable Securities and other securities (if any) requested to be
included in such Takedown exceeds the number of Registrable Securities and
other securities which can be sold in such offering without adversely
affecting the marketability of the offering, the Company shall include in
such sale (i) first, the Registrable Securities requested to be included
in such Takedown, pro rata among the holders of such Registrable
Securities on the basis of the number of Registrable Securities owned by
each such holder, and (ii) second, other securities requested to be
included in such Takedown to the extent permitted hereunder.
(iv) The holders of a majority of the Investor Registrable
Securities shall have the right to retain and select an investment banker
and manager to administer the 415 Registration and any Takedown pursuant
thereto, subject to the Company's approval which will not be unreasonably
withheld.
(v) In addition to the provisions in Section 6 below, all
expenses incurred in connection with the management of the 415
Registration (whether incurred by the Company or the holders of the
Registrable Securities) shall be borne by the Company (including, without
limitation, all fees and expenses of the investment banker and manager)
(excluding discounts and commissions).
(h) Other Registration Rights. Except as provided in this Agreement,
the Company will not grant to any Persons the right to request the Company to
register any equity securities of the Company, or any securities convertible or
exchangeable into or exercisable for such securities, without the prior written
consent of the holders of a majority of the 399 Venture Registrable Securities
and the holders of a majority of the BRS Registrable Securities.
3. Piggyback Registrations.
(a) Right to Piggyback. Whenever the Company proposes to register
any of its Common Stock under the Securities Act (other than pursuant to a
Demand Registration, and other than pursuant to a registration statement on Form
S-8 or S-4 or any similar form or in connection with a registration the primary
purpose of which is to register debt securities (i.e., in connection with a
so-called "equity kicker")) and a registration form to be used may be used for
the registration of Registrable Securities (a "Piggyback Registration"), the
Company will give prompt written notice to all holders of Registrable Securities
of its intention to effect such a registration and will include in such
registration all Registrable Securities with respect to which the Company has
received written requests for inclusion therein within 20 days after the receipt
of the Company's notice. Notwithstanding the foregoing, in connection only with
the initial registered public offering of the Company's securities which
offering is a primary offering, no Registrable Securities shall be included in
such registration without the prior written consent of the holders of a majority
of the 399 Venture Registrable Securities and the holders of a majority of the
BRS Registrable Securities.
(b) Priority on Primary Registrations. If a Piggyback Registration
is an underwritten primary registration on behalf of the Company, the Company
will include in such registration all securities requested to be included in
such registration; provided, that if the managing
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<PAGE>
underwriters advise the Company in writing that in their opinion the number of
securities requested to be included in such registration exceeds the number
which can be sold in such offering without adversely affecting the marketability
of the offering, the Company will include in such registration (i) first, the
securities the Company proposes to sell, (ii) second, the Registrable Securities
requested to be included in such registration, pro rata among the holders of
such Registrable Securities on the basis of the number of shares of Registrable
Securities owned by each such holder, and (iii) third, other securities, if any,
requested to be included in such registration.
(c) Priority on Secondary Registrations. If a Piggyback Registration
is an underwritten secondary registration on behalf of holders of the Company's
securities (which registration was consented to pursuant to Section 2(h) above),
and the managing underwriters advise the Company in writing that in their
opinion the number of securities requested to be included in such registration
exceeds the number which can be sold in such offering without adversely
affecting the marketability of the offering, the Company will include in such
registration (i) first, the Registrable Securities requested to be included in
such registration, pro rata among the holders of such Registrable Securities on
the basis of the number of shares of Registrable Securities owned by each such
holder, and (ii) second, other securities requested to be included in such
registration not covered by clause (i) above.
(d) Selection of Underwriters. If any Piggyback Registration is an
underwritten offering, the investment banker(s) and manager(s) for the offering
will be selected by the Company.
(e) Other Registrations. If the Company has previously filed a
registration statement with respect to Registrable Securities pursuant to this
Section 3, and if such previous registration has not been withdrawn or
abandoned, the Company will not file or cause to be effected any other
registration of any of its equity securities or securities convertible or
exchangeable into or exercisable for its equity securities under the Securities
Act (except on Forms S-4 or S-8 or any successor forms), whether on its own
behalf or at the request of any holder or holders of such securities, until a
period of at least six months has elapsed from the effective date of such
previous registration.
4. Holdback Agreements.
(a) Each holder of Registrable Securities (other than the 399
Individual Investors, BRS Individual Investors and the holders of Unit Investor
Registrable Securities) hereby agrees not to effect any public sale or
distribution (including sales pursuant to Rule 144) of equity securities of the
Company, or any securities convertible into or exchangeable or exercisable for
such securities, during the seven days prior to and the 180-day period beginning
on the effective date of any Demand Registration (other than a 415 Registration)
or Piggyback Registration for a public offering to be underwritten on a firm
commitment basis in which Registrable Securities are included (except as part of
such underwritten registration), unless the underwriters managing the registered
public offering otherwise agree.
(b) The Company agrees (i) not to effect any public sale or
distribution of its equity securities, or any securities convertible into or
exchangeable or exercisable for such securities,
- 7 -
<PAGE>
during the seven days prior to and during the 180-day period beginning on the
effective date of any underwritten Demand Registration (other than a 415
Registration) or Piggyback Registration (except as part of such underwritten
registration or pursuant to registrations on Forms S-4 or S-8 or any successor
forms), unless the underwriters managing the registered public offering
otherwise agree, and (ii) to cause each holder of Registrable Securities (other
than the 399 Individual Investors, BRS Individual Investors and the holders of
Unit Investor Registrable Securities) and each other holder of at least 5% (on a
fully diluted basis) of Common Stock, or any securities convertible into or
exchangeable or exercisable for Common Stock, purchased from the Company at any
time after the date of this Agreement (other than in a registered public
offering) to agree not to effect any public sale or distribution (including
sales pursuant to Rule 144) of any such securities during such period (except as
part of such underwritten registration, if otherwise permitted), unless the
underwriters managing the registered public offering otherwise agree.
5. Registration Procedures. Whenever the holders of Registrable Securities
have requested that any Registrable Securities be registered pursuant to this
Agreement, the Company will use its best efforts to effect the registration and
the sale of such Registrable Securities in accordance with the intended method
of disposition thereof, and pursuant thereto the Company will as expeditiously
as possible:
(a) prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to cause such
registration statement to become effective (provided that before filing a
registration statement or prospectus or any amendments or supplements thereto,
the Company will furnish to the counsel selected by the holders of a majority of
the Registrable Securities covered by such registration statement copies of all
such documents proposed to be filed);
(b) prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection therewith as
may be necessary to keep such registration statement effective for a period of
not less than six months and comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such registration
statement during such period in accordance with the intended methods of
disposition by the sellers thereof set forth in such registration statement;
(c) if requested by the holders of a majority of the Investor
Registrable Securities in connection with any Demand Registration requested by
such holders, use its commercially reasonable efforts to cause to be included in
such registration Common Stock having an aggregate value (based on the midpoint
of the proposed offering price range specified in the registration statement
used to offer such securities) of up to $30 million ("Company Registrable
Securities"), to be offered in a primary offering of the Company's securities
contemporaneously with such offering of Registrable Securities;
(d) furnish to each seller of Registrable Securities such number of
copies of such registration statement, each amendment and supplement thereto,
the prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as such
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<PAGE>
seller may reasonably request in order to facilitate the disposition of the
Registrable Securities owned by such seller;
(e) use its best efforts to register or qualify such Registrable
Securities under such other securities or blue sky laws of such jurisdictions as
any seller reasonably requests and do any and all other acts and things which
may be reasonably necessary or advisable to enable such seller to consummate the
disposition in such jurisdictions of the Registrable Securities owned by such
seller (provided that the Company will not be required to (i) qualify generally
to do business in any jurisdiction where it would not otherwise be required to
qualify but for this subsection, (ii) subject itself to taxation in any such
jurisdiction or (iii) consent to general service of process (i.e., service of
process which is not limited solely to securities law violations) in any such
jurisdiction);
(f) notify each seller of such Registrable Securities, at any time
when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement contains an untrue statement
of a material fact or omits any fact necessary to make the statements therein
not misleading, and, at the request of any such seller, the Company will
promptly prepare a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
prospectus will not contain an untrue statement of a material fact or omit to
state any fact necessary to make the statements therein not misleading;
(g) cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the Company are then
listed and, if not so listed, to be listed on the Nasdaq National Market
("Nasdaq Market") and, if listed on the Nasdaq Market, use its best efforts to
secure designation of all such Registrable Securities covered by such
registration statement as a Nasdaq "National Market System security" within the
meaning of Rule 11Aa2-1 of the SEC or, failing that, to secure Nasdaq Market
authorization for such Registrable Securities and, without limiting the
generality of the foregoing, to arrange for at least two market makers to
register as such with respect to such Registrable Securities with the NASD;
(h) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration statement;
(i) enter into such customary agreements (including underwriting
agreements in customary form) and take all such other actions as the holders of
a majority of the Registrable Securities being sold or the underwriters, if any,
reasonably request in order to expedite or facilitate the disposition of such
Registrable Securities (including, without limitation, effecting a stock split
or a combination of shares);
(j) make available for inspection by any seller of Registrable
Securities, any underwriter participating in any disposition pursuant to such
registration statement and any attorney, accountant or other agent retained by
any such seller or underwriter, all financial and other records, pertinent
corporate documents and properties of the Company, and cause the Company's
officers, directors, employees and independent accountants to supply all
information reasonably requested
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<PAGE>
by any such seller, underwriter, attorney, accountant or agent in connection
with such registration statement;
(k) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC, and make available to its security holders, as
soon as reasonably practicable, an earning statement covering the period of at
least twelve months beginning with the first day of the Company's first full
calendar quarter after the effective date of the registration statement, which
earning statement shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 promulgated thereunder;
(l) permit any holder of Registrable Securities which holder, in its
sole and exclusive judgment, might be deemed to be an underwriter or a
controlling person of the Company, to participate in the preparation of such
registration or comparable statement and to require the insertion therein of
material, furnished to the Company in writing, which in the reasonable judgment
of such holder and its counsel should be included;
(m) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any common stock included in such registration statement for sale in any
jurisdiction, the Company will use its reasonable best efforts promptly to
obtain the withdrawal of such order;
(n) use its best efforts to cause such Registrable Securities
covered by such registration statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary to enable the
sellers thereof to consummate the disposition of such Registrable Securities;
and
(o) obtain a "cold comfort" letter from the Company's independent
public accountants in customary form and covering such matters of the type
customarily covered by "cold comfort" letters as the holders of a majority of
the Registrable Securities being sold reasonably request.
If any such registration or comparable statement refers to any holder by name or
otherwise as the holder of any securities of the Company and if, in its sole and
exclusive judgment, such holder is or might be deemed to be a controlling person
of the Company, such holder shall have the right to require (i) the insertion
therein of language, in form and substance satisfactory to such holder and
presented to the Company in writing, to the effect that the holding by such
holder of such securities is not to be construed as a recommendation by such
holder of the investment quality of the Company's securities covered thereby and
that such holding does not imply that such holder will assist in meeting any
future financial requirements of the Company, or (ii) in the event that such
reference to such holder by name or otherwise is not required by the Securities
Act or any similar Federal statute then in force, the deletion of the reference
to such holder; provided, that with respect to this clause (ii) such holder
shall furnish to the Company an opinion of counsel to such effect, which opinion
and counsel shall be reasonably satisfactory to the Company.
- 10 -
<PAGE>
6. Registration Expenses.
(a) All expenses incident to the Company's performance of or
compliance with this Agreement, including without limitation all Registration
Expenses, will be borne by the Company.
(b) In connection with each Demand Registration and each Piggyback
Registration, the Company will reimburse the holders of Registrable Securities
covered by such registration for the reasonable fees and disbursements of one
counsel for such holders, such counsel to be chosen by the holders of a majority
of the Registrable Securities initially requesting such registration.
7. Indemnification.
(a) The Company agrees to indemnify, to the extent permitted by law,
each holder of Registrable Securities, its officers and directors and each
Person who controls such holder (within the meaning of the Securities Act)
against all losses, claims, damages, liabilities and expenses arising out of or
based upon any untrue or alleged untrue statement of material fact contained in
any registration statement, prospectus or preliminary prospectus or any
amendment thereof or supplement thereto or any omission or alleged omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and shall reimburse such holder, director, officer or
controlling person for any legal or other expenses reasonably incurred by such
holder, director, officer or controlling person in connection with the
investigation or defense of such loss, claim, damage, liability or expense,
except insofar as the same are caused by or contained in any information
furnished in writing to the Company by such holder expressly for use therein. In
connection with an underwritten offering, the Company will indemnify such
underwriters, their officers and directors and each Person who controls such
underwriters (within the meaning of the Securities Act) to the same extent as
provided above with respect to the indemnification of the holders of Registrable
Securities.
(b) In connection with any registration statement in which a holder
of Registrable Securities is participating, each such holder will furnish to the
Company in writing such information and affidavits as the Company reasonably
requests for use in connection with any such registration statement or
prospectus and, to the extent permitted by law, will indemnify the Company, its
directors and officers and each Person who controls the Company (within the
meaning of the Securities Act) against any losses, claims, damages, liabilities
and expenses resulting from any untrue or alleged untrue statement of material
fact contained in the registration statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto or any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading, but only to the extent that such
untrue statement or omission is contained in any information or affidavit so
furnished in writing by such holder; provided, that the obligation to indemnify
will be individual to each holder and will be limited to the net amount of
proceeds received by such holder from the sale of Registrable Securities
pursuant to such registration statement.
- 11 -
<PAGE>
(c) Any Person entitled to indemnification hereunder will (i) give
prompt written notice to the indemnifying party of any claim with respect to
which it seeks indemnification and (ii) unless in such indemnified party's
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim, permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party. If such defense is assumed, the
indemnifying party will not be subject to any liability for any settlement made
by the indemnified party without its consent (but such consent will not be
unreasonably withheld). An indemnifying party who is not entitled to, or elects
not to, assume the defense of a claim will not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment
of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim.
(d) The indemnification provided for under this Agreement will
remain in full force and effect regardless of any investigation made by or on
behalf of the indemnified party or any officer, director or controlling Person
of such indemnified party and will survive the transfer of securities. The
Company also agrees to make such provisions, as are reasonably requested by any
indemnified party, for contribution to such party in the event the Company's
indemnification is unavailable for any reason.
8. Participation in Underwritten Registrations. No Person may participate
in any registration hereunder which is underwritten unless such Person (a)
agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Person or Persons entitled hereunder
to approve such arrangements and (b) completes and executes all customary
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements; provided, that no holder of Registrable Securities included in any
underwritten registration shall be required to make any representations or
warranties to the Company or the underwriters other than representations and
warranties regarding such holder and such holder's intended method of
distribution.
9. Rule 144 Reporting. With a view to making available to the holders of
Registrable Securities the benefits of certain rules and regulations of the SEC
which may permit the sale of the Registrable Securities to the public without
registration, the Company agrees to use its best efforts to:
(a) make and keep current public information available, within the
meaning of Rule 144 or any similar or analogous rule promulgated under the
Securities Act, at all times after it has become subject to the reporting
requirements of the Exchange Act;
(b) file with the SEC, in a timely manner, all reports and other
documents required of the Company under the Securities Act and Exchange Act
(after it has become subject to such reporting requirements); and
(c) so long as any party hereto owns any Registrable Securities,
furnish to such Person forthwith upon request, a written statement by the
Company as to its compliance with the
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<PAGE>
reporting requirements of said Rule 144 (at any time commencing 90 days after
the effective date of the first registration filed by the Company for an
offering of its securities to the general public), the Securities Act and the
Exchange Act (at any time after it has become subject to such reporting
requirements); a copy of the most recent annual or quarterly report of the
Company; and such other reports and documents as such Person may reasonably
request in availing itself of any rule or regulation of the SEC allowing it to
sell any such securities without registration.
10. Notices. All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when delivered personally, mailed
by certified or registered mail, return receipt requested and postage prepaid,
or sent via a nationally recognized overnight courier, or sent via facsimile to
the recipient. Such notices, demands and other communications will be sent to
the address indicated below:
To the Company:
Anvil Holdings, Inc.
228 East 45th Street
New York, New York 10017
Attention: Chief Administrative Officer
Telecopy No.: (212) 885-9411
With copies (which shall not constitute notice) to:
Kirkland & Ellis
Citicorp Center
153 East 53rd Street
New York, New York 10022-4675
Attention: Kirk A. Radke, Esq.
Telecopy No.: (212) 446-4900
To any holder of 399 Venture Registrable Securities:
c/o 399 Venture Partners Inc.
399 Park Avenue
14th Floor
New York, New York 10043
Attention: David F. Thomas
Telecopy No.: (212) 888-2940
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<PAGE>
With a copy (which shall not constitute notice) to:
Kirkland & Ellis
Citicorp Center
153 East 53rd Street
New York, New York 10022-4675
Attention: Kirk A. Radke, Esq.
Telecopy No.: (212) 446-4900
To any holder of BRS Registrable Securities:
c/o Bruckmann, Rosser, Sherrill & Co., Inc.
126 East 56th Street
New York, New York 10022
Attention: Bruce C. Bruckmann
Telecopier: (212) 521-3799
With a copy (which shall not constitute notice) to:
Kirkland & Ellis
Citicorp Center
153 East 53rd Street
New York, New York 10022-4675
Attention: Kirk A. Radke, Esq.
Telecopy No.: (212) 446-4900
To any of the Executives:
Anvil Holdings, Inc.
228 East 45th Street
New York, New York 10017
Attention: [Executive's Name]
Telecopy No.: (212) 885-9411
To any holder of Unit Investor Registrable Securities:
At the address set forth on the stock records
of the Company
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party.
- 14 -
<PAGE>
11. Miscellaneous.
(a) No Inconsistent Agreements. The Company will not enter into any
agreement which is inconsistent with or violates the rights granted to the
holders of Registrable Securities in this Agreement.
(b) Remedies. Any Person having rights under any provision of this
Agreement will be entitled to enforce such rights specifically to recover
damages caused by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach of
the provisions of this Agreement and that any party may in its sole discretion
apply to any court of law or equity of competent jurisdiction (without posting
any bond or other security) for specific performance and for other injunctive
relief in order to enforce or prevent violation of the provisions of this
Agreement.
(c) Amendments and Waivers. Except as otherwise provided herein, the
provisions of this Agreement may be amended or waived only upon the prior
written consent of the Company and holders of a majority of the 399 Venture
Registrable Securities and the holders of a majority of the BRS Registrable
Securities.
(d) Successors and Assigns. All covenants and agreements in this
Agreement by or on behalf of any of the parties hereto will bind and inure to
the benefit of the respective successors and assigns of the parties hereto
whether so expressed or not; provided, that in no event shall a successor or
assign of the Units held by 399 Venture, BRS, CCT or the Individual Investors be
deemed to be holders of 399 Venture Registrable Securities or BRS Registrable
Securities, as the case may be. In addition, whether or not any express
assignment has been made, the provisions of this Agreement which are for the
benefit of purchasers or holders of Registrable Securities are also for the
benefit of, and enforceable by, any subsequent holder of Registrable Securities.
(e) Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
(f) Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, any one of which need not contain the signatures of
more than one party, but all such counterparts taken together will constitute
one and the same Agreement.
(g) Descriptive Headings. The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
(h) Waiver of Jury Trial. Each of the parties hereto hereby waive,
to the extent permitted by applicable law, trial by jury in any litigation in
any court with respect to, in connection with, or arising out of this Agreement
or the validity, protection, interpretation or enforcement
- 15 -
<PAGE>
thereof. Each of the parties hereto hereby agree that this section is a specific
and material aspect of this Agreement and would not enter into this agreement if
this section were not part of this Agreement.
(i) Governing Law. The corporate laws of the State of Delaware will
govern all questions concerning the relative rights of the Company and its
stockholders. All other questions concerning the construction, validity and
interpretation of this Agreement shall be governed by and construed in
accordance with the domestic laws of the State of New York, without giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of New York or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of New York.
(i) Time of the Essence; Computation of Time. Time is of the essence
for each and every provision of this Agreement. Whenever the last day for the
exercise of any privilege or the discharge or any duty hereunder shall fall upon
a Saturday, Sunday, or any date on which banks in New York City, New York are
authorized to be closed, the party having such privilege or duty may exercise
such privilege or discharge such duty on the next succeeding day which is a
regular business day.
* * * * *
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Registration Rights Agreement as of the date first above written.
ANVIL HOLDINGS, INC.
By:
------------------------------------
Name:
Title:
399 VENTURE PARTNERS, INC.
By:
------------------------------------
Name:
Title:
BRUCKMANN, ROSSER, SHERRILL & CO., L.P.
By: BRS Partners, Limited Partnership
Its: General Partner
By:
------------------------------
Name:
Title:
CCT II PARTNERS, L.P.
By: CCT I Corporation
Its: General Partner
By:
------------------------------
Name:
Title:
BERNARD GELLER
----------------------------------------
ANTHONY CORSANO
----------------------------------------
- 17 -
<PAGE>
WILLIAM TURNER
----------------------------------------
JACOB HOLLANDER
----------------------------------------
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By:
------------------------------------
Name:
Title:
<PAGE>
399 INDIVIDUAL INVESTORS
SIGNATURE PAGE FOR
REGISTRATION RIGHTS AGREEMENT
JAMES URRY DAVID F. THOMAS
- -------------------------------- -------------------------------------
NATASHA PARTNERSHIP JOHN WEBER
- -------------------------------- -------------------------------------
JOSEPH SILVESTRI NOELLE C. DOUMAR
- -------------------------------- -------------------------------------
<PAGE>
BRS INDIVIDUAL INVESTORS
SIGNATURE PAGE FOR
REGISTRATION RIGHTS AGREEMENT
BRUCE BRUCKMANN STEPHEN SHERRILL
- -------------------------------- -------------------------------------
DONALD BRUCKMANN NAZ PARTNERSHIP
- -------------------------------- -------------------------------------
BCB PARTNERSHIP HAROLD ROSSER
- -------------------------------- -------------------------------------
NANCY ZWENG VIRGIL H. SHERRILL
- -------------------------------- -------------------------------------
PAUL D. KAMINSKI PAUL D. KAMINSKI IRA
- -------------------------------- -------------------------------------
<PAGE>
STOCKHOLDERS AGREEMENT
This STOCKHOLDERS AGREEMENT is dated as of March 14, 1997, by and
among Anvil Holdings, Inc., a Delaware corporation (the "Company"), Bruckmann,
Rosser, Sherrill & Co., L.P., a Delaware limited partnership ("BRS"), 399
Venture Partners, Inc., a Delaware corporation ("399 Venture", and together with
BRS, the "Investors"), CCT II Partners, L.P., a Delaware limited partnership
("CCT"), Bernard Geller, Jacob Hollander, William Turner, Anthony Corsano, and
any other executives of the Company and its Subsidiaries acquiring Common Stock
(as defined below) from the Company after the date hereof and executing a
joinder hereto in the form attached as Exhibit A (collectively, the
"Executives", and individually an "Executive"), the Persons set forth on the 399
Individual Investors Signature Page attached hereto (collectively, the "399
Individual Investors", and individually a "399 Individual Investor") and the
Persons set forth on the BRS Individual Investors Signature Page attached hereto
(collectively, the "BRS Individual Investors", and individually a "BRS
Individual Investor"). 399 Venture, CCT, BRS, the 399 Individual Investors, the
BRS Individual Investors and each of the Executives and their respective
Permitted Transferees (as defined below) are collectively referred to as the
"Stockholders" and individually as a "Stockholder".
WHEREAS, the Stockholders have acquired or retained shares of the
Company's Class A Common Stock, par value $.01 per share (the "Class A Common"),
and shares of the Company's Class B Common Stock, par value $.01 per share (the
"Class B Common"), pursuant to that certain Recapitalization Agreement, dated as
of February 12, 1997, by and among the Stockholders (provided, that an Affiliate
of 399 Venture, and not 399 Venture, is a party thereto), the Company, and
certain other parties thereto, as amended from time to time (the
"Recapitalization Agreement"), in the amounts set forth on Schedule A hereto.
WHEREAS, the Company and the Stockholders desire to enter into this
Agreement for the purposes, among others, of (i) establishing the composition of
the Company's Board (as defined below), (ii) assuring continuity in the
management and ownership of the Company and (iii) limiting the manner and terms
by which the Stockholder Shares (as defined below) may be transferred.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereby agree as follows:
1. Definitions. As used herein, the following terms shall have the
following meanings:
"399 Venture Stockholder Shares" means all Stockholder Shares issued
or issuable to 399 Venture, CCT, the 399 Individual Investors and their
respective Permitted Transferees.
"Affiliate" shall mean, as to any Person, any other Person which
directly or indirectly controls, or is under common control with, or is
controlled by, such Person. As used in this definition, "control" (including,
with its correlative meanings, "controlled by" and "under common control with")
shall mean possession, directly or indirectly, of power to direct or cause the
direction
<PAGE>
of management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise).
"Board" means the Company's board of directors.
"BRS Stockholder Shares" means all Stockholder Shares issued or
issuable to BRS, the BRS Individual Investors and their respective Permitted
Transferees.
"Common Stock" means, collectively, the Class A Common, the Class B
Common, the Company's Class C Common Stock, par value $.01 per share, and any
other class of common stock of the Company and any other class of securities of
the Company which is not limited to a fixed sum or percentage of par value or
stated value in respect of the rights of the holders thereof to participate in
dividends and in the distribution of assets upon the voluntary or involuntary
liquidation, dissolution or winding up of the Company.
"Executive Shares" means Stockholder Shares owned by Executives or
their Permitted Transferees.
"Family Group" means, with respect to an individual Stockholder,
such Stockholder's spouse, siblings and descendants (whether natural or adopted)
and any trust solely for the benefit of such Stockholder and/or such
Stockholder's spouse or siblings, their respective ancestors and/or descendants
(whether natural or adopted).
"Independent Third Party" means any Person who, immediately prior to
the contemplated transaction (i) does not own in excess of 5% of the Common
Stock on a fully diluted basis (a "5% Owner"), (ii) is not controlling,
controlled by or under common control with any such 5% Owner and (iii) is not
the spouse or descendent (by birth or adoption) of any such 5% Owner or a trust
for the benefit of such 5% Owner and/or such other Persons.
"Other Stockholders" means, with respect to a Stockholder, all
Stockholders other than such Stockholder.
"Ownership Ratio" means, as to a Stockholder at the time of
determination, the percentage obtained by dividing the amount of shares of
Common Stock held by such Stockholder on a fully diluted basis at such time by
the aggregate amount of shares of Common Stock outstanding on a fully diluted
basis at such time. For the purpose of calculating the Ownership Ratio for any
of (i) 399 Venture, CCT or the 399 Individual Investors, such Stockholders shall
be aggregated and shall be deemed to have, as a group, their aggregate Ownership
Ratio, and (ii) BRS or the BRS Individual Investors, such Stockholders shall be
aggregated and shall be deemed to have, as a group, their aggregate Ownership
Ratio.
"Person" means an individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization or a governmental entity or any
department, agency or political subdivision thereof.
- 2 -
<PAGE>
"Public Sale" means any sale of Stockholder Shares to the public
pursuant to an offering registered under the Securities Act or to the public
effected through a broker, dealer or market maker pursuant to the provisions of
Rule 144 under the Securities Act.
"Qualified Public Offering" means the sale, in an underwritten
public offering registered under the Securities Act, of shares of the Company's
Common Stock having an aggregate value of at least $30 million.
"Registration Rights Agreement" means that certain Registration
Rights Agreement, dated as of the date hereof, by and among the Company, the
Stockholders and the initial purchaser named therein, as amended, restated or
modified from time to time.
"Regulatory Problem" has the meaning set forth in Section 10(b).
"Sale of the Company" means the sale of the Company to an
Independent Third Party or group of Independent Third Parties pursuant to which
such party or parties acquire (i) capital stock of the Company possessing the
voting power under normal circumstances to elect a majority of the Company's
board of directors (whether by merger, consolidation, sale, transfer or exchange
of the Company's capital stock) or (ii) all or substantially all of the
Company's assets determined on a consolidated basis.
"Securities Act" means the Securities Act of 1933, as amended from
time to time.
"Stockholder Shares" means (i) any Common Stock held by the
Stockholders and (ii) any equity securities issued or issuable directly or
indirectly with respect to the securities referred to in clause (i) above by way
of stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. As to any
particular shares constituting Stockholder Shares, such shares will cease to be
Stockholder Shares when they have been sold in a Public Sale, an Approved Sale,
or upon the consummation of a Qualified Public Offering. For purposes of this
Agreement, a Person will be deemed to be a holder of Stockholder Shares whenever
such Person has the right to acquire directly or indirectly such Stockholder
Shares (upon conversion or exercise in connection with a transfer of securities
or otherwise, but disregarding any restrictions or limitations upon the exercise
of such right), whether or not such acquisition has actually been effected.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, association or other business entity of which (i) if a corporation,
a majority of the total voting power of shares of stock entitled (without regard
to the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other Subsidiaries of that
Person or a combination thereof, or (ii) if a partnership, association or other
business entity, a majority of the partnership or other similar ownership
interest thereof is at the time owned or controlled, directly or indirectly, by
any Person or one or more Subsidiaries of that Person or a combination thereof.
For purposes hereof, a Person or Persons shall be deemed to have a majority
ownership interest in a partnership, association or other business entity if
such Person or Persons shall be allocated a majority of
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partnership, association or other business entity gains or losses or shall be or
control the managing director or a general partner of such partnership,
association or other business entity.
"Transaction Documents" means the following agreements: this
Agreement, the Registration Rights Agreement, the Recapitalization Agreement,
and the Unitholders Agreement.
"Unitholders Agreement" means that certain Registration Rights and
Securityholders Agreement, by and among the initial purchaser named therein,
BRS, 399 Venture, and the Company, as amended, restated or modified from time to
time.
2. Board of Directors.
(a) Until the provisions of this Section 2 cease to be effective, to
the extent permitted by law, each Stockholder shall vote all voting securities
of the Company over which such Stockholder has voting control, and shall take
all other necessary or desirable actions within such Stockholder's control
(whether in such Stockholder's capacity as a stockholder, director, member of a
board committee or officer of the Company or otherwise, and including, without
limitation, attendance at meetings in Person or by proxy for purposes of
obtaining a quorum and execution of written consents in lieu of meetings), and
the Company shall take all necessary and desirable actions within its control
(including, without limitation, calling special board and stockholder meetings),
so that:
(i) the authorized number of directors on the Board shall mutually
be established at eight. There will be two Executive Directors, three BRS
Directors and three 399 Venture Directors (in each case as defined below),
in each case to be designated as follows:
(A) Certain employees of the Company shall serve as
directors (the "Executive Directors"). The Executive
Directors will be:
(1) Bernard Geller, for so long as he is the duly
elected and acting Chairman of the Board and Chief
Executive Officer of the Company; and
(2) Jacob Hollander, for so long as he is the duly
elected and acting Chief Administrative Officer of
the Company;
provided, that any Executive Director no longer so
elected and acting in such positions shall be removed as
a director of the Company, and shall be replaced with a
director designated by the holders of a majority of the
Executive Shares (excluding, for this purpose, such
Executive Director).
(B) The holders of a majority of the 399 Venture Stockholder
Shares will be entitled to designate three directors
(the "399 Venture Directors").
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(C) The holders of a majority of the BRS Stockholder Shares
will entitled to designate three directors (the "BRS
Directors").
(ii) if the Board so requests at any time, the composition of the
board of directors of each of the Company's Subsidiaries (a "Sub Board")
shall be the same as that of the Board;
(iii) the Board and each Sub Board shall create a Compensation
Committee, which shall consist of one 399 Venture Director, one BRS
Director, and one Executive Director;
(iv) any committees of the Board or a Sub Board (other than the
Compensation Committee) shall be created only upon the approval of a
majority of the voting power of the Board (which majority must include the
approval of the BRS Directors and the 399 Venture Directors) and the
composition of each such committee (if any) shall consist of one 399
Venture Director, one BRS Director, and one Executive Director;
(v) any director shall be removed from the Board, a Sub Board or any
committee thereof (with or without cause) at the written request of the
Stockholder or Stockholders which have the right to designate such a
director hereunder, but only upon such written request and under no other
circumstances (in each case, determined on the basis of a vote or consent
of the Stockholders referred to in clause (i)(A), (i)(B) or (i)(C) above,
as the case may be); provided, that in no case may the directors referred
to in clauses (i)(A)(1) and (i)(A)(2) above be removed from the Board or
Sub Board as long as such directors are duly elected and acting in the
offices set forth in clauses (i)(B)(1) and (i)(B)(2), respectively;
(vi) in the event that any representative designated hereunder for
any reason ceases to serve as a member of the Board or a Sub Board or any
committee thereof during such representative's term of office, the
resulting vacancy on the Board or such Sub Board or committee shall be
filled by a representative designated by the Stockholders referred to in
clause (i)(A), (i)(B) or (i)(C), as the case may be.
(b) Except as set forth in Section 5 of this Agreement, each action
of the Board or such Sub Board shall require the approval of a majority of the
Board and the approval of the BRS Directors and the 399 Venture Directors voting
on such action to constitute an action of the Board, or of any Sub Board.
(c) The Company shall pay the reasonable out-of-pocket expenses
incurred by each director in connection with attending the meetings of the Board
or any Sub Board and any committee thereof.
(d) If any party fails to designate a representative to fill a
directorship pursuant to the terms of this Section 2, the election of a Person
to such directorship shall be accomplished in accordance with the Company's
bylaws, certificate of incorporation, and applicable law. In the event that any
provision of the Company's bylaws or certificate of incorporation is
inconsistent with any provision of this Section 2, the Stockholders shall take
such action as may be necessary to amend
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any such provision in the Company's bylaws or certificate of incorporation to
remedy such inconsistency.
3. Conflicting Agreements. Each Stockholder represents that such
Stockholder has not granted and is not a party to any proxy, voting trust or
other agreement which is inconsistent with or conflicts with the provisions of
this Agreement, and no holder of Stockholder Shares shall grant any proxy or
become party to any voting trust or other agreement which is inconsistent with
or conflicts with the provisions of this Agreement.
4. Restrictions on Transfer of Stockholder Shares.
(a) Tag Along Rights. Subject to Sections 4(c) and 4(d) and other
than in connection with a Public Sale or an Approved Sale, at least 30 days
prior to any sale, transfer, assignment, pledge or other disposal (a "Transfer")
of Stockholder Shares by the Investor making such a Transfer (the "Transferring
Stockholder") shall deliver a written notice (the "Sale Notice") to the Company
and the Other Stockholders, specifying in reasonable detail the identity of the
prospective transferee(s), the number and class of Stockholders Shares to be so
transferred and the terms and conditions of the Transfer. The Other Stockholders
may elect to participate in the contemplated Transfer by delivering written
notice to the Transferring Stockholder within 15 days after delivery of the Sale
Notice. If any Other Stockholders have elected to participate in such Transfer,
each of the Transferring Stockholder and such Other Stockholders shall be
entitled to sell in the contemplated Transfer, at the same price and on the same
terms, a number of Stockholder Shares of any class equal to the product of (i)
the quotient determined by dividing the percentage of Stockholder Shares owned
by such Stockholder by the aggregate percentage of Stockholder Shares owned by
the Transferring Stockholder and the Other Stockholders participating in such
Transfer and (ii) the aggregate number of Stockholder Shares to be sold in the
contemplated Transfer. Each Stockholder transferring Stockholder shares pursuant
to this Section 4(a) shall pay its pro rata share (based on the number of
Stockholder shares to be sold) of the expenses incurred by the Stockholders in
connection with such transfer and shall be obligated to join on a pro rata basis
(based on the number of Stockholder shares to be sold) in any indemnification or
other obligations that the Transferring Stockholder agrees to provide in
connection with such Transfer (other than any such obligations that relate
specifically to a particular Stockholder such as indemnification with respect to
representations and warranties given by a Stockholder regarding such
Stockholder's title to and ownership of Stockholder shares); provided, that no
Stockholder shall be obligated in connection with such Transfer to agree to
indemnify or hold harmless the transferees with respect to an amount in excess
of the net cash proceeds paid to such Stockholder in connection with such
Transfer. The parties hereto acknowledge and agree that certain other
stockholders of the Company will also participate in such Transfers pursuant to
the Unitholders Agreement.
(b) First Offer Rights. Subject to Sections 4(c) and 4(d), at least
45 days prior to any Transfer of Stockholder Shares by any Executive, or any of
their Permitted Transferees (other than pursuant to an Approved Sale), the
Person making such Transfer (the "Offering Stockholder") shall deliver a written
notice (the "Transfer Notice") to the Company and to the Investors (the
"Investor Offeree(s)"), specifying in reasonable detail the number and class of
Stockholder Shares proposed to be transferred, the proposed purchase price
(which shall be payable solely in cash) and
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<PAGE>
the other terms and conditions of the Transfer. The Company may elect to
purchase all or any (but not, together with the Investor Offeree(s), less than
all) of the Stockholder Shares to be transferred, upon the same terms and
conditions as those set forth in the Transfer Notice, by delivering a written
notice of such election to the Offering Stockholder within 30 days after the
Transfer Notice has been delivered to the Company. If the Company has not
elected to purchase all of the Stockholder Shares to be transferred, the
Investor Offeree(s) (or their designees) may elect to purchase all (but not, in
the aggregate, less than all) of the Stockholder Shares to be transferred, upon
the same terms and conditions as those set forth in the Transfer Notice, by
giving written notice of such election to the Offering Stockholder within 20
days after the Transfer Notice has been given to the Investor Offeree(s) (the
"Investor Option Period"); provided, that if both Investor Offerees make such
election, such Stockholder Shares shall be allocated among the Investor Offerees
on a pro rata basis in accordance with the relative number of Stockholder Shares
held by such Investor Offerees. If neither the Company nor the Investor
Offeree(s) (or their designees) elects to purchase all, in the aggregate, of the
Stockholder Shares specified in the Transfer Notice, then the Offering
Stockholder may transfer the Stockholder Shares specified in the Transfer Notice
to the designated transferee at a price and on terms no more favorable to the
transferee(s) thereof than specified in the Transfer Notice during the 60-day
period immediately following the expiration of the Investor Option Period. Any
Stockholder Shares not transferred within such 60-day period will be subject to
the provisions of this Section 4(b) upon subsequent Transfer.
(c) Permitted Transfers. The restrictions contained in this Section
4 shall not apply with respect to any Transfer of Stockholder Shares by any
Stockholder (i) in the case of an individual Stockholder, pursuant to applicable
laws of descent and distribution or to any member of such Stockholder's Family
Group, and (ii) in the case of the Investors and their Permitted Transferees,
(A) among their Affiliates, employees and consultants, (B) to any employee,
prospective employee, director or prospective director of the Company or any
Affiliate of the Company, (C) to any former or prospective employee, director or
prospective director of an Investor or any Affiliate of such Affiliate, (D) to
any Person in order to resolve a Regulatory Problem, or (E) to third parties not
to exceed 10% of such Investor's Stockholder Shares held as of the date hereof;
provided, that the restrictions contained in this Section 4 shall continue to be
applicable to such Stockholder Shares after any such Transfer; and provided
further, that the transferees of such Stockholder Shares shall have agreed in
writing to be bound by the provisions of this Agreement which affect the
Stockholder Shares so transferred by executing a joinder in the form
substantially attached hereto as Exhibit A. All transferees permitted under this
Section 4(c) are collectively referred to herein as "Permitted Transferees."
(d) Termination of Restrictions. The restrictions set forth in this
Section 4 shall continue with respect to each Stockholder Share until the
earlier of (i) the Transfer of such Stockholder Share in a Public Sale or an
Approved Sale, or (ii) the consummation of a Qualified Public Offering.
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<PAGE>
5. Sale of the Company; Initial Public Offering.
(a) Notwithstanding any provision to the contrary contained herein,
(i) at any time, both the holders of a majority of the 399 Venture Stockholder
Shares and the holders of a majority of the BRS Stockholder Shares, acting
together as a group may require, and (ii) after March 14, 2001, either the
holders of a majority of the 399 Venture Stockholder Shares or the holders of a
majority of the BRS Stockholder Shares (the "Sale Stockholders") may require,
that the Company enter into a Sale of the Company by providing written notice of
such request (an "Exit Notice") to the Company. Upon receipt of an Exit Notice,
(i) the Company shall, in accordance with the provisions of this Agreement,
proceed to consummate a Sale of the Company, and (ii) the Board shall be deemed
to have approved such sale (an "Approved Sale").
(b) If the Company has received an Exit Notice in accordance with
Section 5(a) above, unless the holders of a majority of the 399 Venture
Stockholder Shares and the holders of a majority of the BRS Stockholder Shares
agree otherwise, the Board will engage a nationally recognized investment bank
to assist in the sale, which firm shall be reasonably acceptable to the holders
of a majority of the 399 Venture Stockholder Shares and the holders of a
majority of the BRS Stockholder Shares.
(c) In the event of an Approved Sale, the Board and the Stockholders
shall proceed as set forth in this Section 5(d).
(i) Each holder of Stockholder Shares will take such action as
is (A) necessary or desirable in order to cause the Board to effect a Sale
of the Company, or (B) requested by the directors designated by the Sale
Stockholders (the "Sale Directors") in order to facilitate the Sale of the
Company, in each case with a view to accomplishing such Sale of the
Company as soon as is reasonably practicable (but in any event
consummating such Sale of the Company within six months of the date of the
Exit Notice).
(ii) Each holder of the Stockholder Shares will consent to and
raise no objections to the Approved Sale or to the process by which such
Approved Sale is effectuated. If the Approved Sale is structured as a
merger or consolidation, each of the holders of Stockholder Shares will
waive any dissenter rights, appraisal rights or similar rights in
connection with such merger or consolidation. If the Approved Sale is
structured as a sale of stock (whether by merger, consolidation,
reorganization or otherwise), each of the holders of Stockholder Shares
will agree to sell all of his Stockholder Shares and rights to acquire
Stockholder Shares on the terms and conditions approved by the Sale
Directors. If the Approved Sale is structured as a sale of assets, each of
the holders of Stockholder Shares will take all actions necessary to cause
a liquidation of the Company following the consummation of such Approved
Sale.
(iii) The obligations of the holders of the Stockholder Shares
with respect to the Approved Sale of the Company are also subject to the
satisfaction of the following conditions: (x) the consideration received
in an Approved Sale shall be distributed among the holders of Stockholder
Shares in the manner which such proceeds would be distributed
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<PAGE>
in a complete liquidation of the Company pursuant to the rights and
preferences set forth in the Certificate of Incorporation as in effect
immediately prior to such Approved Sale; (y) the receipt by the Company
from an investment bank of nationally recognized standing, which shall be
the same investment bank described in Section 5(b) or, if there is no such
investment bank, which shall be a nationally recognized investment bank
reasonably acceptable to the holders of a majority of the 399 Venture
Stockholder Shares and the holders of a majority of the CVC Stockholder
Shares of a written fairness opinion that the consideration received in
such Approved Sale is fair and adequate, and (z) all holders of then
currently exercisable rights to acquire, directly or indirectly, shares of
any class of Common Stock will be given an opportunity either to (A)
exercise such rights prior to the consummation of the Approved Sale and
participate in such sale as holders of such class of Common Stock or (B)
receive in exchange for such rights, following the consummation of the
Approved Sale, consideration equal to the amount determined by multiplying
(1) the same amount of consideration per share of such class of Common
Stock receivable by the holders of such class of Common Stock in
connection with the Approved Sale less the exercise price, conversion
price or any other consideration per share of such class of Common Stock
payable upon exercise or conversion of such right to acquire, directly or
indirectly, such class of Common Stock by (2) the number of shares of such
class of Common Stock represented by such rights.
(iv) In the event of a sale or exchange by the holders of
Stockholder Shares of all or substantially all of the Stockholder Shares
(whether by sale, merger, recapitalization, reorganization, consolidation,
combination or otherwise), each holder of Stockholder Shares shall receive
consideration for the Stockholder Shares held by such holder in the same
proportion of the aggregate consideration from such sale or exchange that
such holder would have received if such aggregate consideration had been
distributed by the Company in complete liquidation pursuant to the rights
and preferences set forth in the Certificate of Incorporation as in effect
immediately prior to such sale or exchange.
(v) If the Company or the Sale Stockholders enter into any
negotiation or transaction for which Rule 506 promulgated under the
Securities Act (or any similar rule then in effect) may be available with
respect to such negotiation or transaction (including a merger,
consolidation or other reorganization), the holders of Stockholder Shares
will, at the request of the Board, appoint a purchaser representative (as
such term is defined in Rule 501 promulgated under the Securities Act)
reasonably acceptable to the Board. If any holder of Stockholder Shares
appoints the purchaser representative designated by the Board, the Company
will pay the fees of such purchaser representative, but if any holder of
Stockholder Shares declines to appoint the purchaser representative
designated by the Board, such holder will appoint another purchaser
representative (reasonably acceptable to the Board), and such holder will
be responsible for the fees of the purchaser representative so appointed.
(vi) Each holder of Stockholder Shares (or other Persons
receiving consideration pursuant to Section 5(c)(iii) above) will bear its
pro rata share (based upon the aggregate proceeds received by such
Stockholder) of the costs of any sale of Stockholder Shares pursuant to an
Approved Sale to the extent such costs are incurred for the benefit of
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all holders of Common Stock and are not otherwise paid by the Company or
the acquiring party (costs incurred by any holder of Stockholder Shares on
its own behalf will not be considered costs of the transaction hereunder)
and will be obligated to join on a pro rata basis (based on the number of
Stockholder Shares to be sold) in any indemnification or other obligations
that the Sale Stockholders agree to provide in connection with such Sale
of the Company (other than any such obligations that relate specifically
to a particular Stockholder such as indemnification with respect to
representations and warranties given by a Stockholder regarding such
Stockholder's title to and ownership of Stockholder Shares); provided,
that no Stockholder shall be obligated in connection with such Sale of the
Company to agree to indemnify or hold harmless the transferees with
respect to an amount in excess of the net cash proceeds paid to such
Stockholder in connection with such Sale of the Company.
(d) In the event that an initial public offering of shares of Common
Stock, registered under the Securities Act (a "Public Offering"), is to occur
pursuant to a Demand Registration (as defined in the Registration Rights
Agreement), the Stockholders will take all necessary and desirable actions in
consummation of any such Public Offering. In the event that such Public Offering
is an underwritten offering and the managing underwriters advise the Company
that in their opinion the Common Stock structure may adversely affect the
marketability of the offering, the Stockholders will vote for a recapitalization
and/or exchange of the Stockholder Shares into securities (the "Reclassified
Securities") that the managing underwriters and the BRS Directors and the CVC
Directors find acceptable; provided, that (i) the Reclassified Securities
provide each Stockholder with the same relative economic and voting interest as
such Stockholder had prior to such recapitalization and/or exchange and is
consistent with the rights and preferences set forth in the Certificate of
Incorporation as in effect immediately prior to such Public Offering, and (ii)
in the event that 399 Venture determines in its reasonable good faith judgment
that, as a result of receiving the Reclassified Securities, a Regulatory Problem
exists, then (x) 399 Venture may elect not to accept only the portion of such
Reclassified Securities which would cause such Regulatory Problem; provided, at
399 Venture's request, the Company shall issue to 399 Ventures, in lieu of
Reclassified Securities, nonvoting securities which shall otherwise be identical
in all respects to such securities constituting Reclassified Securities, except
that it (i) shall be nonvoting, (ii) shall be convertible into a voting security
(including the securities constituting Reclassified Securities) on such terms as
are requested by 399 Ventures in light of the applicable regulatory
considerations then prevailing, and (iii) may not, at 399 Venture's request, be
a common equity security.
6. Legend. In addition to any legend required by any other
Transaction Document, each certificate evidencing Stockholder Shares and each
certificate issued in exchange for or upon the transfer of any Stockholder
Shares (if such shares remain Stockholder Shares as defined herein after such
transfer) shall be stamped or otherwise imprinted with a legend in substantially
the following form:
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"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY
ISSUED ON MARCH 14, 1997, AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THE TRANSFER OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO A STOCKHOLDERS
AGREEMENT DATED AS OF MARCH 14, 1997, BY AND AMONG THE ISSUER OF
SUCH SECURITIES (THE "COMPANY") AND CERTAIN OF THE COMPANY'S
STOCKHOLDERS. A COPY OF SUCH STOCKHOLDERS AGREEMENT WILL BE
FURNISHED WITHOUT CHARGE BY THE COMPANY TO THE HOLDER HEREOF UPON
WRITTEN REQUEST."
The Company shall imprint such legend on certificates evidencing Stockholder
Shares outstanding prior to the date hereof. The legend set forth above shall be
removed from the certificates evidencing any shares which cease to be
Stockholder Shares.
7. Transfers in Violation of Agreement. Any Transfer or attempted
Transfer of any Stockholder Shares in violation of any provision of this
Agreement shall be null and void, and the Company shall not record such Transfer
on its books or treat any purported transferee of such Stockholder Shares as the
owner of such shares for any purpose.
8. Transfer of Stockholder Shares.
(a) Stockholder Shares are transferable only pursuant to (i) public
offerings registered under the Securities Act, (ii) subject to the provisions of
Section 4 above, Rule 144 or Rule 144A (or any similar rule or rules then in
effect) of the Securities and Exchange Commission if such rule is available, and
(iii) subject to Section 4 or 5 and Section 8(b) below, any other legally
available means of Transfer.
(b) In connection with the Transfer of any Stockholder Shares other
than a Transfer described in clause (i) or (ii) of Section 8(a) above, the
holder thereof shall deliver written notice to the Company describing in
reasonable detail the Transfer or proposed Transfer, together with an opinion of
counsel reasonably acceptable to the Company to the effect that such Transfer of
Stockholder Shares may be effected without registration of such Stockholder
Shares under the Securities Act. In addition, if the holder of the Stockholder
Shares delivers to the Company an opinion of counsel that no subsequent Transfer
of such Stockholder Shares shall require registration under the Securities Act,
the Company shall promptly upon such contemplated Transfer deliver new
certificates for such Stockholder Shares which do not bear the legend set forth
in Section 6 above. If the Company is not required to deliver new certificates
for such Stockholder Shares not bearing such legend, the holder thereof shall
not consummate a Transfer of the same until the prospective transferee has
confirmed to the Company in writing its agreement to be bound by the conditions
contained in this Section 8 and Section 6 above.
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(c) Upon the request of a holder of Stockholder Shares, the Company
shall promptly supply to such Person or its prospective transferees all
information regarding the Company required to be delivered in connection with a
Transfer pursuant to Rule 144A (or any similar rule or rules then in effect) of
the Securities and Exchange Commission.
(d) Upon the request of any holder of Stockholder Shares, the
Company shall remove the legend set forth in Section 6 above from the
certificates for such holder's Stockholder Shares; provided, that such
Stockholder Shares are eligible for sale pursuant to Rule 144(k) (or any similar
rule or rules then in effect) of the Securities and Exchange Commission.
9. Pre-emptive Rights. If the Company issues any shares of Common
Stock or any securities containing options or rights to acquire any shares of
Common Stock or any securities convertible or exchangeable for Common Stock in
each case, after the date hereof to an Investor or any Affiliate of an Investor,
the Company will offer to sell to each Other Stockholder a number of such
securities ("Offered Shares") so that the Ownership Ratio immediately after the
issuance of such securities for each Stockholder would be equal to the Ownership
Ratio for such Stockholder immediately prior to such issuance of securities. The
Company shall give each Stockholder at least 30 days prior written notice of any
proposed issuance, which notice shall disclose in reasonable detail the proposed
terms and conditions of such issuance (the "Issuance Notice"). Each Stockholder
will be entitled to purchase such securities at the same price, on the same
terms, and at the same time as the securities are issued by delivery of written
notice to the Company of such election within 15 days after delivery of the
Issuance Notice (the "Election Notice"); provided, that (i) if more than one
type of security was issued, each Stockholder shall, if it exercises its rights
pursuant to this Section 9, purchase such securities in the same ratio as issued
and (ii) the holders of the majority of the BRS Stockholder Shares shall make
the election for all such holders, and the holders of the majority of the
holders of the 399 Venture Stockholder Shares shall make the election for all
such holders, in each case for purposes of this Section 9. If any of the
Stockholders have elected to purchase any Offered Shares, the sale of such
shares shall be consummated as soon as practical (but in any event within 10
days) after the delivery of the Election Notice. In the event that any
Stockholder elects to purchase Offered Shares, at such Stockholder's request
(which request shall be included in the Election Notice), the Company shall
issue to such Stockholders, in lieu of the securities constituting Offered
Shares, nonvoting securities which shall otherwise be identical in all respects
to such securities constituting Offered Shares, except that it (i) shall be
nonvoting, (ii) shall be convertible into a voting security (including the
securities constituting Offered Shares) on such terms as are requested by such
Stockholder in light of the applicable regulatory considerations then
prevailing, and (iii) may not, at Stockholder's request, be a common equity
security. In the event any Stockholder elects not to exercise its rights
pursuant to this Section 9, no other Stockholder shall have the right to
purchase the securities offered to such Stockholder.
10. SBA Provisions.
(a) Number of Stockholders. As long as 399 Venture holds any of the
Stockholder Shares, the Company shall notify 399 Venture (i) at least 15 days
prior to taking any action after which the number of record holders of the
Company's voting stock would be increased to 50 or more, and (ii) of any other
action or occurrence after which the number of record holders
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of the Company's voting stock was increased (or would increase) to 50 or more,
as soon as practicable after the Company becomes aware that such other action or
occurrence has occurred or is proposed to occur.
(b) Regulatory Compliance Cooperation. In the event that 399 Venture
determines that there is a Regulatory Problem (as defined below), the Company
agrees to take all such actions as are reasonably requested by 399 Venture in
order (i) to effectuate and facilitate any transfer by 399 Venture of any
securities of the Company then held by 399 Venture to any Person designated by
399 Venture, (ii) to permit 399 Venture (or any of its Affiliates) to exchange
all or a portion of any voting security then held by it on a share-for-share
basis for shares of a nonvoting security of the Company, which nonvoting
security shall be identical in all respects to the voting security exchanged for
it, except that it shall be nonvoting and shall be convertible into a voting
security on such terms as are requested by 399 Venture in light of regulatory
considerations then prevailing, and (iii) to continue and preserve the
respective allocation of the voting interests with respect to the Company
provided for herein. Such actions may include, but shall not necessarily be
limited to entering into such additional agreements, adopting such amendments to
the Certificate of Incorporation and bylaws of the Company and taking such
additional actions as are reasonably requested by CVC in order to effectuate the
intent of the foregoing. For purposes of this Agreement, a "Regulatory Problem"
means any set of facts or circumstances wherein it has been asserted by any
governmental regulatory agency (or 399 Venture believes that there is a
substantial risk of such assertion) that 399 Venture is not entitled to hold, or
exercise any significant right with respect to, its Stockholder Shares.
11. Information Rights.
(a) Financial Statements and Other Information. The Company shall
deliver to each Investor (so long as such Investor holds any Stockholder
Shares):
(i) as soon as available but in any event within 30 days after the
end of each monthly accounting period in each fiscal year, unaudited
consolidating and consolidated statements of income and cash flows of the
Company and its Subsidiaries for such monthly period and for the period
from the beginning of the fiscal year to the end of such month, and
unaudited consolidating and consolidated balance sheets of the Company and
its Subsidiaries as of the end of such monthly period, setting forth in
each case comparisons to the Company's annual budget and to the
corresponding period in the preceding fiscal year, and all such statements
shall be prepared in accordance with generally accepted accounting
principles, consistently applied, subject to the absence of footnote
disclosures;
(ii) within 90 days after the end of each fiscal year, consolidating
and consolidated statements of income and cash flows of the Company and
its Subsidiaries for such fiscal year, and consolidating and consolidated
balance sheets of the Company and its Subsidiaries as of the end of such
fiscal year, setting forth in each case comparisons to the Company's
annual budget and to the preceding fiscal year, all prepared in accordance
with generally accepted accounting principles, consistently applied, and
accompanied by (A) with respect to the consolidated portions of such
statements, an opinion of an independent
- 13 -
<PAGE>
accounting firm of recognized national standing acceptable to the holders
of a majority of BRS Stockholder Shares and the holders of a majority of
the 399 Venture Stockholder Shares, (B) a certificate from such accounting
firm, addressed to the Board, stating that in the course of its
examination nothing came to its attention that caused it to believe that
there was any default by the Company or any Subsidiary in the fulfillment
of or compliance with any of the terms, covenants, provisions or
conditions of any material agreement to which the Company or any
Subsidiary is a party or, if such accountants have reason to believe any
default by the Company or any Subsidiary exists, a certificate specifying
the nature and period of existence thereof, and (C) a copy of such firm's
annual management letter to the Board;
(iii) at least 30 days but not more than 90 days prior to the
beginning of each fiscal year, an annual budget prepared on a monthly
basis for the Company and its Subsidiaries for such fiscal year
(displaying anticipated statements of income and cash flows and balance
sheets), and promptly upon preparation thereof any other significant
budgets prepared by the Company and any revisions of such annual or other
budgets, and within 30 days after any monthly period in which there is a
material adverse deviation from the annual budget, an officer's
certificate explaining the deviation and what actions the Company has
taken and proposes to take with respect thereto;
(iv) promptly (but in any event within five business days) after the
discovery or receipt of notice of any default under any material agreement
to which it or any of its Subsidiaries is a party, or any other material
adverse change, event or circumstance affecting the Company or any
Subsidiary (including, without limitation, the filing of any material
litigation against the Company or any Subsidiary or the existence of any
dispute with any Person which involves a reasonable likelihood of such
litigation being commenced), an officer's certificate specifying the
nature and period of existence thereof and what actions the Company and
its Subsidiaries have taken and propose to take with respect thereto;
(v) within ten days after transmission thereof, copies of all
financial statements, proxy statements, reports and any other general
written communications which the Company sends to its stockholders and
copies of all registration statements and all regular, special or periodic
reports which it files, or any of its officers or directors file with
respect to the Company, with the United States Securities and Exchange
Commission or with any securities exchange on which any of its securities
are then listed, and copies of all press releases and other statements
made available generally by the Company to the public concerning material
developments in the Company's and its Subsidiaries' businesses; and
(vi) with reasonable promptness, such other information and
financial data concerning the Company and its Subsidiaries as any Investor
may reasonably request.
(b) Inspection of Property. The Company shall permit any
representatives designated by any Investor, upon reasonable notice and during
normal business hours and at such other times as any such holder may reasonably
request, to (i) visit and inspect any of the properties of the Company and its
Subsidiaries, (ii) examine the corporate and financial records of the
- 14 -
<PAGE>
Company and its Subsidiaries and make copies thereof or extracts therefrom and
(iii) discuss the affairs, finances and accounts of any such corporations with
the directors, officers, key employees and independent accountants of the
Company and its Subsidiaries. The presentation of an executed copy of this
Agreement by any Investor to the Company's independent accountants shall
constitute the Company's permission to its independent accountants to
participate in discussions with such Persons.
12. Termination. This Agreement will automatically terminate and be
of no further force or effect immediately after the earlier of the consummation
of (i) an Approved Sale or (ii) a Qualified Public Offering.
13. Amendment and Waiver. Except as otherwise provided herein, no
modification, amendment or waiver of any provision of this Agreement shall be
effective against the Company or the Stockholders unless such modification,
amendment or waiver is approved in writing by the Company or the holders of not
less than a majority of the 399 Venture Stockholder Shares and a majority of the
BRS Stockholder Shares, respectively; provided, that no such modification,
amendment or waiver which adversely and prejudicially affects the Executives
vis-a-vis all Other Stockholders shall be effective against the Executives
without the prior written consent of the holders of not less than 51% of the
Executive Shares. For the avoidance of doubt, an amendment to add another party
to this Agreement is not an action which, in and of itself, affects any
Stockholder adversely and prejudicially vis-a-vis Other Stockholders. The
failure of any party to enforce any of the provisions of this Agreement shall in
no way be construed as a waiver of such provisions and shall not affect the
right of such party thereafter to enforce each and every provision of this
Agreement in accordance with its terms.
14. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
15. Entire Agreement. Except as otherwise expressly set forth
herein, this document and the other Transaction Documents embody the complete
agreement and understanding among the parties hereto with respect to the subject
matter hereof and supersede and preempt any prior understandings, agreements or
representations by or among the parties, written or oral, which may have related
to the subject matter hereof in any way.
16. Successors and Assigns. Except as otherwise provided herein,
this Agreement shall bind and inure to the benefit of and be enforceable by the
Company and its successors and assigns and the Stockholders and any subsequent
holders of Stockholder Shares and the respective successors and assigns of each
of them, so long as they hold Stockholder Shares.
- 15 -
<PAGE>
17. Counterparts. This Agreement may be executed in separate
counterparts each of which shall be an original and all of which taken together
shall constitute one and the same agreement.
18. Remedies. The parties hereto shall be entitled to enforce their
rights under this Agreement specifically to recover damages by reason of any
breach of any provision of this Agreement and to exercise all other rights
existing in their favor. The parties hereto agree and acknowledge that money
damages may not be an adequate remedy for any breach of the provisions of this
Agreement and that the Company, and any Stockholder may in his, hers, or its
sole discretion apply to any court of law or equity of competent jurisdiction
for specific performance and/or injunctive relief (without posting a bond or
other security) in order to enforce or prevent any violation of the provisions
of this Agreement.
19. Notices. All notices, demands or other communications to be
given or delivered under or by reason of the provisions of this Agreement will
be in writing and will be deemed to have been given when delivered personally,
mailed by certified or registered mail, return receipt requested and postage
prepaid, or sent via a nationally recognized overnight courier, or sent via
facsimile to the recipient accompanied by a certified or registered mailing.
Such notices, demands and other communications will be sent to the address
indicated below:
To the Company:
Anvil Holdings, Inc.
228 West 45th Street
New York, New York 10017
Attention: Chief Administrative Officer
Telecopy No.: (212) 885-9411
With a copy (which shall not constitute notice) to:
Kirkland & Ellis
153 East 53rd Street
New York, New York 10022
Attention: Kirk A. Radke, Esq.
Telecopy No.: (212) 446-4900
To any holder of BRS Stockholder Shares:
c/o Bruckmann, Rosser, Sherrill & Co., Inc.
126 East 56th Street, 29th Floor
New York, New York 10022
Attention: Bruce C. Bruckmann
Telecopy No.: (212) 521-3799
- 16 -
<PAGE>
With a copy (which shall not constitute notice) to:
Kirkland & Ellis
153 East 53rd Street
New York, New York 10022
Attention: Kirk A. Radke, Esq.
Telecopy No.: (212) 446-4900
To any holder of 399 Venture Stockholder Shares:
c/o 399 Venture Partners, Inc.
399 Park Avenue, 14th Floor
New York, New York 10043
Attention: David F. Thomas
Telecopy No.: (212) 888-2940
With a copy (which shall not constitute notice) to:
Kirkland & Ellis
Citicorp Center
153 East 53rd Street
New York, New York 10022-4675
Attention: Kirk A. Radke, Esq.
Telecopy No.: (212) 446-4900
To any of the Executives:
Anvil Knitwear, Inc.
228 East 45th Street
New York, New York 10017
Attention: [Executive's Name]
Telecopy No.: (212) 885-9411
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party.
20. Governing Law. The corporate law of Delaware shall govern all
issues concerning the relative rights of the Company and its stockholders. All
other questions concerning the construction, validity and interpretation of this
Agreement shall be governed by and construed in accordance with the domestic
laws of the State of New York, without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of New York or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of New York.
- 17 -
<PAGE>
21. Waiver of Jury Trial. Each of the parties hereto hereby waive,
to the extent permitted by applicable law, trial by jury in any litigation in
any court with respect to, in connection with, or arising out of this Agreement
or the validity, protection, interpretation or enforcement thereof. Each of the
parties hereto hereby agree that this section is a specific and material aspect
of this Agreement and would not enter into this Agreement if this section were
not part of this Agreement.
22. Time of the Essence; Computation of Time. Time is of the essence
for each and every provision of this Agreement. Whenever the last day for the
exercise of any privilege or the discharge or any duty hereunder shall fall upon
a Saturday, Sunday, or any date on which banks in New York City, New York are
authorized to be closed, the party having such privilege or duty may exercise
such privilege or discharge such duty on the next succeeding day which is a
regular business day.
23. Descriptive Headings. The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
* * * * *
- 18 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Stockholders Agreement as of the date first above written.
ANVIL HOLDINGS, INC.
By:
---------------------------------------
Name:
Title:
BRUCKMANN, ROSSER, SHERRILL & CO., L.P.
By: BRS Partners, Limited Partners
Its: General Partner
By:
---------------------------------------
Name:
Title:
399 VENTURE PARTNERS, INC.
By:
---------------------------------------
Name:
Title:
CCT II PARTNERS, L.P.
By: CCT I Corporation
Its: General Partner
By:
---------------------------------------
Name:
Title:
BERNARD GELLER
-------------------------------------------
<PAGE>
JACOB HOLLANDER
-------------------------------------------
ANTHONY CORSANO
-------------------------------------------
WILLIAM TURNER
-------------------------------------------
<PAGE>
399 INDIVIDUAL INVESTORS
SIGNATURE PAGE FOR
STOCKHOLDERS AGREEMENT
JAMES URRY DAVID F. THOMAS
- ----------------------------------- --------------------------------------
NATASHA PARTNERSHIP JOHN WEBER
- ----------------------------------- --------------------------------------
JOSEPH SILVESTRI NOELLE C. DOUMAR
- ----------------------------------- --------------------------------------
<PAGE>
BRS INDIVIDUAL INVESTORS
SIGNATURE PAGE FOR
STOCKHOLDERS AGREEMENT
BRUCE BRUCKMANN STEPHEN SHERRILL
- ----------------------------------- --------------------------------------
DONALD BRUCKMANN NAZ PARTNERSHIP
- ----------------------------------- --------------------------------------
BCB PARTNERSHIP HAROLD ROSSER
- ----------------------------------- --------------------------------------
NANCY ZWENG VIRGIL H. SHERRILL
- ----------------------------------- --------------------------------------
PAUL D. KAMINSKI PAUL D. KAMINSKI IRA
- ----------------------------------- --------------------------------------
<PAGE>
EXHIBIT A
FORM OF JOINDER TO
STOCKHOLDERS AGREEMENT
THIS JOINDER to the Stockholders Agreement, dated as of March 14,
1997 by and among Anvil Holdings, Inc., a Delaware corporation (the "Company"),
and certain stockholders of the Company (the "Agreement"), is made and entered
into as of _________ by and between the Company and _________________
("Holder"). Capitalized terms used herein but not otherwise defined shall have
the meanings set forth in the Agreement.
WHEREAS, Holder has acquired certain shares of Common Stock ("Holder
Stock"), and the Agreement and the Company requires Holder, as a holder of
Common Stock, to become a party to the Agreement, and Holder agrees to do so in
accordance with the terms hereof.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties to this Joinder hereby agree as
follows:
1. Agreement to be Bound. Holder hereby agrees that upon execution
of this Joinder, it shall become a party to the Agreement and shall be fully
bound by, and subject to, all of the covenants, terms and conditions of the
Agreement as though an original party thereto and shall be deemed a Stockholder
[and an Executive/Investor] for all purposes thereof. In addition, Holder hereby
agrees that all Common Stock held by Holder shall be deemed Stockholder Shares
for all purposes of the Agreement
2. Successors and Assigns. Except as otherwise provided herein, this
Joinder shall bind and inure to the benefit of and be enforceable by the Company
and its successors and assigns and Holder and any subsequent holders of Holder
Stock and the respective successors and assigns of each of them, so long as they
hold any shares of Holder Stock.
3. Counterparts. This Joinder may be executed in separate
counterparts each of which shall be an original and all of which taken together
shall constitute one and the same agreement.
4. Notices. For purposes of Section 19 of the Agreement, all
notices, demands or other communications to the Holder shall be directed to:
[Name]
[Address]
[Facsimile Number]
<PAGE>
5. Governing Law. The corporate law of Delaware shall govern all
issues concerning the relative rights of the Company and its stockholders. All
other questions concerning the construction, validity and interpretation of this
Joinder shall be governed by and construed in accordance with the domestic laws
of the State of New York, without giving effect to any choice of law or conflict
of law provision or rule (whether of the State of New York or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of New York.
6. Descriptive Headings. The descriptive headings of this Joinder
are inserted for convenience only and do not constitute a part of this Joinder.
* * * * *
A-2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Joinder as
of the date first above written.
ANVIL HOLDINGS, INC.
By:
---------------------------------------
Name:
Title:
[HOLDER]
By:
---------------------------------------
<PAGE>
Exhibit 21.1
Anvil Holdings, Inc. Subsidiaries
- --------------------------------------------------------------------------------
State or Other Jurisdiction
of Incorporation or Names Under Which Such
Name of Subsidiary Organization Subsidiary Does Business
- --------------------------------------------------------------------------------
Anvil Knitwear, Inc. Delaware n/a
- --------------------------------------------------------------------------------
Anvil Knitwear, Inc. Subsidiaries
- --------------------------------------------------------------------------------
State or Other Jurisdiction
of Incorporation or Names Under Which Such
Name of Subsidiary Organization Subsidiary Does Business
- --------------------------------------------------------------------------------
Cottontops, Inc. Delaware n/a
- --------------------------------------------------------------------------------
Anvil (Czech), Inc. Delaware n/a
- --------------------------------------------------------------------------------
Anvil SRO Czech Republic n/a
- --------------------------------------------------------------------------------
A.K.H., S.A. Houndruas n/a
- --------------------------------------------------------------------------------
Cottontops, Inc. Subsidiaries
- --------------------------------------------------------------------------------
State or Other Jurisdiction
of Incorporation or Names Under Which Such
Name of Subsidiary Organization Subsidiary Does Business
- --------------------------------------------------------------------------------
None.
- --------------------------------------------------------------------------------
<PAGE>
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement (relating to
$130,000,000, 10-7/8% Series B Notes due 2007) of Anvil Knitwear, Inc. on
Form S-4 of our report dated March 28, 1997, relating to Anvil Holdings, Inc.
appearing in the Prospectus, which is part of this Registration Statement. We
also consent to the reference to us under the headings "Summary Historical
and Pro Forma Financial Data", "Selected Historical Financial Data" and
"Experts" in such Prospectus.
Our audits of the financial statements referred to in our aforementioned
report also included the financial statement schedule of Anvil Knitwear,
Inc., listed in Item 21(b). The financial statement schedule is the
responsibility of the Company's management. Our responsibility is to express
an opinion based on our audits. In our opinion, such financial statement
schedule, when considered in relation to the basic financial statements taken
as a whole, present fairly in all material respects the information set forth
therein.
DELOITTE & TOUCHE LLP
New York, New York
May 12, 1997
<PAGE>
Exhibit 23.2
[KPMG PEAT MARWICK LLP LETTERHEAD]
The Board of Directors
Anvil Knitwear
The audit referred to in our report dated March 24, 1995, included the related
financial statement schedule for the year ended January 28, 1995, included in
the registration statement. This financial statement schedule is the
responsibility of the Company's management. Our responsibility is to express an
opinion on the financial statement schedule based on our audit. In our opinion,
such financial statement schedule, when considered in relation to the basic
combined financial statements taken as a whole, presents fairly in all material
respects the information set forth therein.
We consent to the use of our reports included herein and to the reference to
our firm under the heading "Experts" in the prospectus.
/s/ KPMG Peat Marwick LLP
New York, New York
May 12, 1997
<PAGE>
FORM T-1
==============================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
__________________
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) _______
__________________
UNITED STATES TRUST COMPANY OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-3818954
(Jurisdiction of incorporation (I.R.S. employer
if not a U.S. national bank) identification No.)
114 West 47th Street 10036-1532
New York, NY (Zip Code)
(Address of principal
executive offices)
United States Trust Company of New York
114 West 47th Street
New York, NY 10036-1532
(212) 852-1000
(Agent for Service)
__________________
Anvil Knitwear, Inc.
(Exact name of obligor as specified in its charter)
Delaware 13-3801709
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
228 East 45th Street
New York, NY 10017
(Address of principal executive offices) (Zip Code)
__________________
<PAGE>
-2-
__________________
Anvil Holdings, Inc.
(Exact name of guarantor as specified in its charter)
Delaware 13-3801705
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
228 East 45th Street
New York, NY 10017
(Address of principal executive offices) (Zip Code)
__________________
Cottontops, Inc.
(Exact name of subsidiary guarantor as specified in its charter)
Delaware 56-2005760
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
228 East 45th Street
New York, NY 10017
(Address of principal executive offices) (Zip Code)
__________________
10-7/8% Series B Senior Notes Due 2007
(Title of the indenture securities)
==============================================
<PAGE>
- 3 -
GENERAL
1. General Information
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
Federal Reserve Bank of New York (2nd District), New York, New York
(Board of Governors of the Federal Reserve System)
Federal Deposit Insurance Corporation, Washington, D.C.
New York State Banking Department, Albany, New York
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
2. Affiliations with the Obligor
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None
3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and 15:
Neither Anvil Knitwear, Inc., Anvil Holdings, Inc. nor Cottontops, Inc.
currently is in default under any of its outstanding securities for which
United States Trust Company of New York is Trustee. Accordingly, responses
to Items 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and 15 of Form T-1 are
not required under General Instruction B.
16. List of Exhibits
T-1.1 -- Organization Certificate, as amended, issued by the State of
New York Banking Department to transact business as a Trust
Company, is incorporated by reference to Exhibit T-1.1 to Form
T-1 filed on September 15, 1995 with the Commission pursuant
to the Trust Indenture Act of 1939, as amended by the Trust
Indenture Reform Act of 1990 (Registration No. 33-97056).
T-1.2 -- Included in Exhibit T-1.1.
T-1.3 -- Included in Exhibit T-1.1.
<PAGE>
- 4 -
16. List of Exhibits
(cont'd)
T-1.4 -- The By-Laws of United States Trust Company of New York, as
amended, is incorporated by reference to Exhibit T-1.4 to Form
T-1 filed on September 15, 1995 with the Commission pursuant
to the Trust Indenture Act of 1939, as amended by the Trust
Indenture Reform Act of 1990 (Registration No. 33-97056).
T-1.6 -- The consent of the trustee required by Section 321(b) of the
Trust Indenture Act of 1939, as amended by the Trust Indenture
Reform Act of 1990.
T-1.7 -- A copy of the latest report of condition of the trustee
pursuant to law or the requirements of its supervising or
examining authority.
NOTE
As of April 16, 1997, the trustee had 2,999,020 shares of Common Stock
outstanding, all of which are owned by its parent company, U.S. Trust
Corporation. The term "trustee" in Item 2, refers to each of United States Trust
Company of New York and its parent company, U. S. Trust Corporation.
In answering Item 2 in this statement of eligibility as to matters peculiarly
within the knowledge of the obligor or its directors, the trustee has relied
upon information furnished to it by the obligor and will rely on information to
be furnished by the obligor and the trustee disclaims responsibility for the
accuracy or completeness of such information.
__________________
Pursuant to the requirements of the Trust Indenture Act of 1939, the trustee,
United States Trust Company of New York, a corporation organized and existing
under the laws of the State of New York, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of New York, and State of New York, on the 16th day
of April, 1997.
UNITED STATES TRUST COMPANY
OF NEW YORK, Trustee
By: /s/ Christine C. Collins
------------------------
Assistant Vice President
CCC/kk
<PAGE>
Exhibit T-1.6
The consent of the trustee required by Section 321(b) of the Act.
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
January 7, 1997
Securities and Exchange Commission
450 5th Street, N.W.
Washington, DC 20549
Gentlemen:
Pursuant to the provisions of Section 321(b) of the Trust Indenture Act of 1939,
as amended by the Trust Indenture Reform Act of 1990, and subject to the
limitations set forth therein, United States Trust Company of New York ("U.S.
Trust") hereby consents that reports of examinations of U.S. Trust by Federal,
State, Territorial or District authorities may be furnished by such authorities
to the Securities and Exchange Commission upon request therefor.
Very truly yours,
UNITED STATES TRUST COMPANY
OF NEW YORK
/s/Gerard F. Ganey
------------------------
By: Gerard F. Ganey
Senior Vice President
<PAGE>
EXHIBIT T-1.7
UNITED STATES TRUST COMPANY OF NEW YORK
CONSOLIDATED STATEMENT OF CONDITION
DECEMBER 31, 1996
(IN THOUSANDS)
ASSETS
- ------
Cash and Due from Banks $ 75,754
Short-Term Investments 276,399
Securities, Available for Sale 925,886
Loans 1,638,516
Less: Allowance for Credit Losses 13,168
---------
Net Loans 1,625,348
Premises and Equipment 61,278
Other Assets 120,903
---------
Total Assets $3,085,568
==========
LIABILITIES
- -----------
Deposits:
Non-Interest Bearing $ 645,424
Interest Bearing 1,694,581
----------
Total Deposits 2,340,005
Short-Term Credit Facilities 449,183
Accounts Payable and Accrued Liabilities 139,261
----------
Total Liabilities $2,928,449
==========
STOCKHOLDER'S EQUITY
- --------------------
Common Stock 14,995
Capital Surplus 42,394
Retained Earnings 98,926
Unrealized Gains (Losses) on Securities
Available for Sale, Net of Taxes 804
----------
Total Stockholder's Equity 157,119
----------
Total Liabilities and
Stockholder's Equity $3,085,568
==========
I, Richard E. Brinkmann, Senior Vice President & Comptroller of the named bank
do hereby declare that this Statement of Condition has been prepared in
conformance with the instructions issued by the appropriate regulatory authority
and is true to the best of my knowledge and belief.
Richard E. Brinkmann, SVP & Controller
April 9, 1997
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-01-1997
<PERIOD-START> JAN-28-1996
<PERIOD-END> FEB-01-1997
<CASH> 1,863
<SECURITIES> 0
<RECEIVABLES> 29,391
<ALLOWANCES> 874
<INVENTORY> 32,471
<CURRENT-ASSETS> 68,208
<PP&E> 50,811
<DEPRECIATION> 11,981
<TOTAL-ASSETS> 136,832
<CURRENT-LIABILITIES> 38,740
<BONDS> 0
0
2
<COMMON> 101
<OTHER-SE> 43,283
<TOTAL-LIABILITY-AND-EQUITY> 136,832
<SALES> 193,389
<TOTAL-REVENUES> 193,389
<CGS> 149,723
<TOTAL-COSTS> 18,514
<OTHER-EXPENSES> (616)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,844
<INCOME-PRETAX> 16,924
<INCOME-TAX> 6,770
<INCOME-CONTINUING> 10,154
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,154
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
