UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1993
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission File Number: 0-22138
Triangle Pacific Corp.
(Exact name of registrant as specified in its charter)
Delaware 94-
2998971
State or other jurisdiction or (I.R.S.
Employer
incorporation or organization Identification
No.)
16803 Dallas Parkway, Dallas, Texas
75248
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (214) 931-3000
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to section 12(g) of the Act:
Common Stock, par value $.01 per share
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days. YES X NO
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference
in Part III of this Form 10-K or any amendment to this Form 10-K. [X]
At February 15, 1994, the aggregate market value of the
registrant's common stock held by non-affiliates was $213,512,835.
The number of shares outstanding of the registrant's Common
Stock, par value $.01 per share, as of March 18, 1994: Common Stock -
14,661,329 shares.
DOCUMENTS INCORPORATED BY REFERENCE
Part III of this Form 10-K incorporates certain information by
reference from the registrant's Proxy Statement to be issued in
connection with its Annual Meeting of Shareholders to be held May 4,
1994.
<PAGE>
PART I
Item 1. Business
The Company is a Delaware corporation organized in February 1986
for the purpose of acquiring Triangle Pacific Corp., a New York
corporation ("Old Triangle"), in a leveraged buyout transaction
completed in May 1986. In September 1988, TPC Holding Corp. ("Holding")
acquired the Company in a second leveraged buyout transaction pursuant
to which the Company became a wholly-owned subsidiary of Holding.
On June 8, 1992, the Company successfully completed a capital
restructuring (the "1992 Restructuring") pursuant to which substantially
all of the Company's outstanding long-term indebtedness, redeemable
preferred stock and common stock were exchanged for new debt with lower
interest rates and new common stock, and Holding was merged into the
Company.
The Company filed two registration statements with the Securities
and Exchange Commission in 1993 and sold to the public 7,939,750 shares
of the Company's Common Stock and $160 million aggregate principal
amount of 10 1/2% Senior Notes due 2003 (collectively, "the Offerings").
The net proceeds of the Offerings together with borrowings under a new
$90 million credit facility were used (i) to repay the entire unpaid
balance under the Company's previously-existing senior debt financing
agreements, redeem certain previously outstanding debentures and pay
related accrued interest, for a total of approximately $227 million, and
(ii) for working capital and general corporate purposes.
The Company's operations are conducted through a single business
segment which consists of the manufacture and distribution of building
products. The Company through its Bruce Hardwood Floors Division
produces hardwood flooring and through its Cabinet Division manufactures
and distributes kitchen and bathroom cabinets. The Company's products
are used primarily in the residential new construction and remodeling.
The Company through its Beltsville Division also operates a general
building materials distribution center located in Beltsville, Maryland.
The Company's business is seasonal, with demand for its products
generally highest between April and November.
Presented below is a summary of sales results for each of the
fiscal years 1989 through 1993.
<TABLE>
<CAPTION> 1993 1992 1991 1990 1989
Net Sales: (in millions)
<S> <C> <C> <C> <C> <C>
Bruce Hardwood
Floors Division $ 200.0 $ 151.3 $ 116.3 $ 129.9 $ 130.4
Cabinet Division 125.6 123.2 125.1 165.3 185.6
Beltsville
Division 20.7 19.2 16.2 29.2 40.9
Intracompany sales* - (.9) (1.5) (3.3) (4.3)
Total Net Sales $ 346.3 $ 292.8 $ 256.1 $ 321.1 $ 352.6
<FN>
*Represents intracompany sales from the Cabinet Division to the
Beltsville Division which are eliminated in consolidation.
</TABLE>
<PAGE>
Bruce Hardwood Floors Division
The Company's Bruce Hardwood Floors Division is the largest and
best known manufacturer of hardwood flooring in the United States. The
Company produces a complete line of hardwood flooring products and
believes that it is generally recognized for its superior quality and
service. The Company believes the Bruce name is the most recognized
brand name in hardwood flooring.
Industry Overview
Sales of hardwood flooring have grown from 2.9% of total United
States floorcovering sales in 1982 to an estimated 5.5% of estimated
total United States floorcovering sales in 1993. The Company believes
that the growth of hardwood flooring sales is due to increased consumer
preference for the aesthetic appeal of hardwood flooring and
technological advances in the production, installation and maintenance
of hardwood flooring.
Hardwood flooring competes primarily with carpet, vinyl and ceramic
tile in the floorcovering market. The increased sales of hardwood
flooring during the last decade have been achieved at the expense of
carpet and vinyl floorcovering. The Company believes that the principal
competitive factors in the floorcovering market are aesthetic appeal,
price, durability and ease of installation and maintenance.
Products and Product Development
The Company offers approximately 100 varieties of hardwood flooring
products in three basic categories - 3/4" solid strip and plank, 3/8"
laminated strip, plank and parquet and 5/16" solid parquet - in
unfinished and a variety of pre-finished styles and colors. The
Company's hardwood flooring products are generally available in various
widths and lengths and are differentiated in terms of quality and price
based primarily on whether the product is finished or unfinished and on
the grade of the raw materials used to produce the product.
The Company has been a leader in developing a wide variety of new
hardwood flooring products, including (i) 5/16" solid parquet flooring,
(ii) 3/8" laminated flooring, (iii) 3/8" laminated, square-edge, pre-
finished flooring, (iv) 3/8" acrylic-impregnated flooring for commercial
applications (all of the above for glue-down installation) and (v) 3/4"
square-edge, pre-finished flooring. The Company believes that new
product development has enabled it to increase its sales and has
contributed to the overall growth of hardwood flooring sales since
the mid- 1970s. The Company's product innovations have improved the
attractiveness of hardwood flooring for a variety of floorcovering
applications.
The Company has been instrumental in the development of thinner
hardwood flooring products which can be glued to the concrete slab
foundations increasingly used in new home construction. Installation of
3/4" hardwood flooring over concrete slabs requires the construction of
a false floor above the slab to which the hardwood flooring can be
nailed, thereby increasing installation time and expense. The Company
has developed 5/16" flooring products, which can be glued to wood or
concrete slab foundations, eliminating the need for a false floor. The
development of 3/8" laminated flooring (consisting of multiple layers of
oak veneer, glued and pressed together), which can be glued to a wood or
concrete sub-floor, further expanded the uses for hardwood flooring.
The dimensional stability of laminated flooring permits its installation
in kitchens and basements where the presence of moisture had previously
rendered hardwood flooring impractical.
<PAGE>
More recently, the Company has pioneered the development of new
products with improved durability and ease of maintenance to meet the
higher standards demanded by the commercial floorcovering users. The
Company's new patent-pending Wear Master line of acrylic - impregnated
laminated flooring, offering the only lifetime wear surface available in
hardwood floor covering today, was introduced in 1993. These products
make Bruce hardwood flooring a much more viable alternative for commercial
applications such as office buildings, hotels, restaurants and retail
establishments.
Manufacturing
The Company manufactures its 3/4" solid oak hardwood flooring
products at its plants in Nashville, and Jackson, Tennessee; Beverly,
West Virginia, and West Plains, Missouri. These plants have the
capacity to produce a total of 1.55 million square feet of 3/4" flooring
per week. The Company manufactures its 3/8" laminated hardwood flooring
products at its plants in Center, Texas and Port Gibson, Mississippi.
The Center plant has a capacity of 500,000 square feet of 3/8" flooring
per week and produces sufficient 1/8" oak veneer to supply approximately
one-half of its veneer requirements. The Port Gibson, Mississippi plant
has a capacity of 200,000 square feet of 3/8" flooring per week and also
supplies most of the remainder of the Center plant's veneer requirements
for the production of 3/8" laminated products. The Company manufactures
its 5/16" solid parquet products at its plant in Jackson, Tennessee,
which has the capacity to produce 400,000 square feet of 5/16" flooring
per week in addition to its production of 3/4" product.
To alleviate capacity limitations, the Company is currently in the
process of further expanding the plants in Beverly, West Virginia and
Port Gibson, Mississippi. The West Virginia project will enable that
plant to increase its capacity to produce 3/4" product from 540,000
square feet per week to 690,000 square feet per week. The Port Gibson
project will expand that plant's capacity to produce 3/8" laminated
flooring from 200,000 square feet per week to 350,000 square feet per
week, while maintaining the Port Gibson plant's ability to supply veneer
to the Center plant. These capacity expansions, which are expected to
be completed by mid-1994, will increase total hardwood flooring capacity
from 2.65 million to 2.95 million square feet per week.
The Beverly, West Virginia facility is operated by the Company
under an 18-year lease with the West Virginia Economic Development
Corporation expiring 2007 (subject to extension until 2017 at the option
of the Company). In connection with the Beverly, West Virginia plant
expansion, the Company made capital expenditures of $7.5 million for the
purchase of equipment in the name of the West Virginia Economic
Development Corporation. Pursuant to the operating lease, the West
Virginia Economic Development Corporation reimbursed the Company for
$5.5 million of the cost of such equipment.
The following table sets forth certain information concerning the
manufacturing facilities operated by the Bruce Hardwood Floors Division.
<TABLE>
Owned/ Capacity (1)
Location Leased Product (Sq.Ft./Week)
<CAPTION>
<S> <C> <C>
Nashville, TN Owned 3/4" strip and plank; 450,000
pre-finished, unfinished
West Plains, MO Owned 3/4" strip; pre-finished, 360,000
unfinished
Beverly, WV Leased 3/4" strip; pre-finished, 540,000
unfinished
<PAGE>
Jackson, TN (2) Owned 5/16" solid parquet; 400,000
pre-finished, unfinished
3/4" strip; unfinished 200,000
Center, TX (3) Owned 3/8" laminated strip, plank 500,000
and parquet; pre-finished,
unfinished
Port Gibson, MS (3) Owned 3/8" laminated strip, plank 200,000
and parquet; pre-finished,
unfinished __________
Total Capacity 2,650,000
<FN>
______________________
(1) Production capacity based on multiple shift operations.
(2) The Jackson plant also manufactures dimension parts used by the
Cabinet Division in cabinet production. See "- Cabinet Division -
Manufacturing" below.
(3) The Center and Port Gibson plants also produce 1/8" veneer, which
is used in the manufacture of 3/8" laminated products at these
plants.
</TABLE>
In 1994, the Company plans to construct a new 3/4" solid product
plant, which will add approximately 360,000 square feet of capacity per
week. The new facility is currently in the design stage and the Company
is in the process of selecting a site for the new plant. Construction
is expected to commence in the second quarter of 1994 and will take
approximately nine to twelve months to complete.
Raw materials for the hardwood flooring products produced at the
Nashville, Jackson, Beverly and West Plains plants consist primarily of
rough cut oak lumber. Each plant obtains lumber from local independent
sawmill operators, purchasing entire truckloads of ungraded, mixed
specie lumber. The Company maintains an inventory of purchased lumber
which is sufficient for approximately three to four months of
operations. The quality and efficiency of lumber purchasing and grading
operations are important determinants of manufacturing yields and
productivity.
Purchased lumber is stacked for drying in the open air for 90 to
120 days, and then placed in dry kilns for approximately five to seven
days to reduce moisture content. Where necessary, the Company operates
pre-drying kilns, which shorten the required open-air drying time. The
Company's drying processes are another important determinant of
satisfactory product yields. Following drying, the flooring-grade
lumber is cut into various sizes of strip, plank and parquet flooring.
The products are then sanded and, in most cases, bevelled. A majority
of the Company's products are pre-finished with a urethane or
combination stain and wax finish. Pre-finished products are more
durable and do not require a time-consuming sanding and finishing
process at the installation site. Recently, the Company began treating
a portion of its 3/8" laminated product with an acrylic impregnating
process to produce its new Wear Master line of commercial flooring.
Raw materials for the laminated hardwood flooring products
manufactured at the Company's plants in Center, Texas and Port Gibson,
Mississippi consist of oak logs which are purchased primarily from
independent loggers located within about 100 miles of the respective
plants. Purchased logs are stored in soaking ponds until needed, and
then debarked, soaked in hot water or steamed, cut into five-foot
lengths, loaded into a lathe, and peeled to produce sheets of thin oak
veneer. Layers of veneer are then pressed into plywood which is cut into
strip, plank and parquet hardwood flooring and pre-finished. The
Company employs advanced veneer manufacturing processes which
substantially increase material yields, thereby reducing costs.
The total conversion time for laminated products, from log to finished
product, is approximately one week.
Sales
The Bruce Hardwood Floors Division sells its products to over 100
independent wholesale floorcovering distributors located throughout the
United States and eight other countries. Most distributors handle a
diverse line of floorcovering products in addition to hardwood flooring.
The Company's distributors sell their products to retail floorcovering
dealers, installation contractors, builders, remodelers and retail home
center stores. The Company believes that new home construction and
remodeling account for approximately 40% and 60%, respectively, of its
hardwood flooring sales.
The Bruce trademark is a valuable asset because of its significant
brand name recognition. Based on independent surveys, the Company
believes that Bruce has the highest consumer brand name recognition of
any hardwood flooring product. Sales and marketing efforts for Bruce
hardwood floors are designed to further solidify its well-recognized
position among resellers of hardwood flooring and to heighten Bruce's
brand name recognition among end users. The Company advertises its
Bruce hardwood flooring products in national and regional publications,
including House Beautiful, Better Homes and Gardens, Sunset, Southern
Living and others.
The Company has developed Bruce product displays, more than 50,000,
of which have been placed in floorcovering dealer showrooms. These
product displays are available in a variety of sizes designed to
accommodate the varying floor spaces available in dealer showrooms. The
Company has also developed marketing programs specifically tailored to
retail home center stores and commercial users and has developed
displays to demonstrate the ease of do-it-yourself installation of
hardwood floors. The do-it-yourself installation displays have been
placed in approximately 4,000 retail locations. More than half of these
displays have been placed in the past two years. Management believes
that both the product displays and the do-it-yourself installation
displays are important sales promotion devices.
The Company operates a training facility at its Nashville plant to
give its floorcovering distributors, dealers and contractors training in
the sale, installation and maintenance of hardwood floors. The Company
believes it is the only hardwood flooring manufacturer to offer
installation training services to its distributors and their customers.
Providing this training, results in better educated resellers and
installers, which the Company believes should enhance their ability to
sell more Bruce products and improve consumer satisfaction with the
installed products.
The Bruce Hardwood Floors Division currently employs 44
salespersons who are assigned geographical sales territories. In
addition to making direct sales to independent distributors, the sales
force assists distributors in broadening their market penetration by
making joint sales calls on dealers, conducting installation training
for distributors and their customers, and advising on the use of
advertising and special product promotions. Salespersons earn bonuses,
in addition to their salaries, based on volume and sales mix.
Competition
The Bruce Hardwood Floors Division is currently the largest
manufacturer of hardwood flooring in the United States.
<PAGE>
The floorcovering industry, which includes carpeting, sheet vinyl,
vinyl tile, hardwood flooring and ceramic tile, is highly competitive.
The principal competitive factors in floorcovering are aesthetic appeal,
price, durability and ease of installation and maintenance. Hardwood
flooring is generally more durable than other floorcoverings. Thus,
although the average initial selling price of hardwood flooring is
higher than that of the initial selling price of some other
floorcoverings, the Company believes that the overall cost is competitive
after taking into account average product life, maintenance expenses and
removal and replacement costs.
The Company believes it competes favorably based on the high
quality of the Company's products and the additional product support
services offered by the Company and on the Company's network of
independent distributors, its production of a complete line of hardwood
flooring products, its innovative product development and manufacturing
technology, and its well-known Bruce trademark.
Cabinet Division
The Company estimates that new construction accounts for
approximately one-third of the total cabinet industry sales with
remodeling generating the remaining two-thirds. Residential new
construction activity is more cyclical than remodeling activity, which
has historically been relatively stable. Cabinet manufacturing is a
highly fragmented industry with competitors of widely varying production
capacities, distribution capabilities and financial resources. In
recent years, contraction in the industry has resulted in smaller
competitors leaving the market and more aggressive cost controls and
marketing programs being implemented by the remaining participants. The
Kitchen Cabinet Manufacturing Association estimates that there are 8,000
manufacturers of kitchen and bathroom cabinets competing for
approximately 50% of the total cabinet market. The balance of the
market is supplied by trim carpenters and job-site cabinet makers. The
market is dependent on new home construction and remodeling activity.
The entire cabinet manufacturing industry is characterized by
substantial excess capacity. In the late 1970's, new construction
expanded to meet the demands of more than two million housing starts
annually plus remodeling. Price competition is severe, due principally
to the excess industry capacity.
Products
The Company manufactures kitchen and bathroom cabinets in
approximately 100 different styles and colors. Cabinets are marketed
under the brand names "TriPac", "IXL" and "Classic Bath Products." In
addition, the Company recently began marketing cabinets under the well
known Bruce name. The Company continues to develop new product styles.
While the styles of the Company's cabinets vary from other
manufacturers' brands, kitchen and bathroom cabinet construction is
fundamentally the same throughout the industry. Differences in the
price and quality of the Company's cabinets result from variations in
basic materials (e.g., solid oak, plywood, particleboard or fiberboard
doors), the type and quality of exterior and interior finish, the
quality of the hardware and other features such as adjustable shelves
and interior storage aids.
<PAGE>
Manufacturing
The Company operates seven cabinet manufacturing plants, generally
located within 500 miles of most major population centers in the United
States. These regional plants enable the Company to compete with local
and regional manufacturers on the basis of the cost of freight, speed of
delivery and service to customers. The Company also operates a
manufacturing facility at Jefferson City, Tennessee which supplies
cultured marble vanity tops, primarily to the Cabinet Division, and to
retail home center stores, and a dimension parts manufacturing facility
at Nappanee, Indiana.
<TABLE>
The following table sets forth certain information concerning the
Company's cabinet manufacturing facilities:
<CAPTION>
Owned/ Capacity (1)
Location Leased Product (Units/Week)
<S> <C> <C> <C>
Auburn, NE Owned Kitchen and bathroom 10,000
cabinets
Elizabeth City, NC Owned Bruce and IXL kitchen 15,000
and bathroom cabinets
and European frameless
cabinets
McKinney, TX Owned Kitchen and bathroom 6,000
cabinets
Morristown, TN Owned Kitchen and bathroom 9,000 (2)
cabinets
Morristown, TN Owned Kitchen and bathroom 7,500
cabinets
Thompsontown, PA Owned Kitchen and bathroom 15,000
cabinets
Union City, IN Owned Kitchen and bathroom 9,000
cabinets ________
71,500
<FN>
________________________
(1) Production capacity based on single shift operations.
(2) This plant also produces finished end panels for certain other
cabinet plants.
</TABLE>
The plants are primarily cabinet assembly operations. The plant
inventories consist of raw materials, component parts and a limited
amount of work in process. Raw materials utilized by the plants consist
of sheet stock of plywood, particleboard or fiberboard, and component
parts consist of dimension parts (front frame parts, doors and drawer
fronts), finished end panels, finishing materials and hardware. In the
cabinet assembly operations, front frame parts, doors and drawer fronts
are sanded smooth and color stained and finished. Then, end panels,
tops, bottoms and shelves are glued and stapled to the front frames,
drawers are assembled to drawer fronts and hardware is attached. The
completed cabinet is inspected, packed and staged for shipment.
<PAGE>
Sheet stock is a commodity product purchased from a variety of
suppliers. The Company obtains its dimension parts, consisting of front
frame parts, doors and drawer fronts, primarily from its manufacturing
facility located at the Bruce hardwood flooring plant in Jackson,
Tennessee. See "- Bruce Hardwood Floors Division - Manufacturing"
above. The Jackson plant supplies 74% of the Cabinet Division's front
frame parts requirements and, together with a similar but smaller
facility located in Nappanee, Indiana, approximately 85% of its door and
drawer front requirements. The Company manufacturers finished end
panels at its Morristown, Tennessee cabinet plants. Finishing materials
and hardware are purchased from several suppliers.
The Cabinet Division is not dependent on any single supplier for
any of its raw materials or component parts, other than the Jackson
dimension parts plant. The Company believes its sources of supply are
adequate to meet its needs. Imports from foreign suppliers, which
account for less than ten percent of the Company's cabinet materials,
consist of wood veneer, laminated veneer door panels and certain
hardware items. While the Company maintains insurance coverage on all
of its properties, including the Jackson dimension parts plant, the loss
of that plant could have an adverse effect on the Company's operations.
See "- Properties" below.
Sales and Marketing
The Company distributes its cabinets directly from its regional
factories and through 37 Company-operated cabinet distribution centers
and approximately 22 independent distributors. Factory-direct shipments
are made for full truckload orders which typically are sold to national
and regional builders, retail home center chain stores and to a lesser
extent, independent building materials distributors. The Company also
sells its cabinets to builders, kitchen and bath dealers and remodeling
contractors through its Company-operated cabinet distribution centers
and its Beltsville building products distribution center. Factory-
direct shipments accounted for approximately 56% of the Cabinet Division
sales in 1993, with sales through the Company's distribution centers and
independent distributors accounting for the balance.
The Company-operated distribution centers are also used to support
sales to major builders and retail home centers by providing prompt
replacements for lost or damaged cabinets and delivery and storage for
truckload quantities of cabinets pending staged deliveries to job sites.
The Company believes that its distribution centers are an important
factor in maintaining and increasing its sales, and intends to open
additional distribution centers in new geographic markets as conditions
warrant.
Buyers Choice is an innovative marketing strategy developed to
enable buyers to design semi-custom cabinets to meet their individual
preferences. Buyers Choice product displays contain samples of the
various types, colors and qualities of basic materials, hardware and
other features available to complete a semi-custom cabinet design. The
buyer chooses the preferred combination and the Cabinet Division
assembles the cabinets in accordance with the buyer's specifications.
The Buyers Choice program has been popular with single-family home
builders, who use the displays in model homes in connection with their
marketing efforts.
The Company provides personal computer software for use primarily
by retail home center stores to create complete kitchen floor plans,
including elevations and product specifications lists, with related
prices, based on room measurements provided by customers. Management
believes this software package to be a significant sales aid.
The Cabinet Division has one of the largest sales forces in the
cabinet industry, currently employing approximately 164 salespersons.
The sales force makes direct sales and service calls on builders,
independent distributors and retail home center stores, and offers
kitchen design, cabinet installation and cabinet display and marketing
advice to retail home center stores and independent distributors. Most
<PAGE>
sales personnel are affiliated with one of the Company's distribution
centers and are responsible for sales to all customers within their sales
area including sales of cabinets directly by the plant. The Cabinet Division
maintains a competitive salary base and provides performance incentives
by compensating its sales force with bonuses tied to volume and
profitability.
Competition
The Company is the fourth largest manufacturer in the United States
cabinet industry.
The cabinet industry is a mature, highly competitive, regionalized
and highly fragmented industry with thousands of cabinet makers
competing primarily on a local basis. There is a relatively high manual
labor content in cabinet products. Because of the low capital
requirements for cabinet assembly, it is relatively easy and inexpensive
for small cabinet makers to enter the industry as manufacturing
competitors. In addition, high transportation costs limit the area to
which a manufacturer can ship cabinets and still remain competitive.
This has led the Company, and more recently, some of its larger
competitors, to open regional manufacturing plants and distribution
centers. The Company's seven regional manufacturing plants and 37
Company-operated distribution centers are important factors in the
Company's ability to maintain cost and price competitiveness with local
and regional manufacturers.
Due to significant excess manufacturing capacity, the cabinet
industry has been subject to severe price competition. Other
competitive factors include quality of product, production capacity and
speed of delivery. The Company believes it competes favorably because
of its breadth and quality of product offerings, and its production
capacity, regional manufacturing facilities, national sales force and
distribution capabilities.
Beltsville Division
The Company operates a general building materials distribution
center in Beltsville, Maryland, located between Baltimore and
Washington, D.C. Principal products sold, primarily to builders,
include lumber, doors, windows, kitchen and bathroom cabinets and custom
millwork. The Beltsville Division is the largest customer of the
Cabinet Division and also purchases hardwood flooring products from
local distributors of the Bruce Hardwood Floors Division. Management
believes that the Beltsville Division has a reputation in its market
area for quality products and a high level of customer service.
Backlog
The Company generally sells its flooring products from inventories
on hand. The company produces its cabinets primarily in response to
firm orders and, to a lesser extent, to maintain a working inventory at
distribution centers operated by the Company. The Company generally
ships its cabinets within a short time (e.g., one week) after receipt of
an order. Accordingly, the dollar amount of backlog orders believed to
be firm is not significant or indicative of the Company's future sales
and earnings.
Employees
As of December 31, 1993, the Company employed approximately 3,545
persons, of which 2,171 were employed by the Bruce Hardwood Floors
Division, 1,230 by the Cabinet Division, 108 by the Beltsville Division
and the remainder in the Company's headquarters and other operations.
The Company has entered into collective bargaining agreements with
hourly employees at three of its six hardwood flooring plants, and
<PAGE>
three of its seven cabinet plants covering in the aggregate
approximately 1,589 employees. Management considers its employee
relations to be satisfactory.
Environmental Matters
The Company's operations are subject to extensive federal, state
and local laws and regulations relating to the generation, storage,
handling, emission, transportation and discharge of materials into the
environment. Permits are required for certain of the Company's
operations, and these permits are subject to revocation, modification
and renewal by issuing authorities. Governmental authorities have the
power to enforce compliance with their regulations, and violations may
result in the payment of fines or the entry of injunctions, or both.
The Company does not believe it will be required under existing
environmental laws and enforcement policies to expend amounts which will
have a material adverse effect on its results of operations or financial
condition. However, the requirements of such laws and enforcement
policies have generally become stricter in recent years. Accordingly,
the Company is unable to predict the ultimate cost of compliance with
environmental laws and enforcement policies.
Item 2. Properties
The Company's principal manufacturing facilities are described
under "- Bruce Hardwood Floors Division - Manufacturing" and "- Cabinet
Division - Manufacturing" above. Management believes that the Company's
plants and properties are generally well-maintained and in good
operating condition.
The Company maintains blanket property insurance coverage on all
its properties with aggregate limits of $100 million. The Company is
also insured for losses arising from loss of inventory, business
interruption and certain extra expense. Although this coverage is
sufficient to replace any of the Company's manufacturing facilities, the
complete loss of the dimension parts plant in Jackson, Tennessee for an
extended period of time could adversely affect the Company's operations.
See "- Cabinet Division - Manufacturing" above.
Item 3. Legal Proceedings
The Company is not a party to any material pending legal
proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Executive Officers of the Registrant
Set forth below as of December 31, 1993 are the names, ages and
principal occupations of the executive officers of the Company, as well
as certain other information concerning their business experience.
Name and Positions held Principal Occupation
with the Company and Other Information
Floyd F. Sherman Mr. Sherman has served as President
Chairman of the Board of of the Company since 1981 and
Directors, President and Chairman of the Board
Chief Executive Officer Directors, President and since
July 1992. Prior thereto he served as
Executive Vice President of the
Company. Mr. Sherman is 54 years old
and became a director of the Company
in 1986.
<PAGE>
M. Joseph McHugh Mr. McHugh has served as Senior
Director, Senior Executive Vice President and Treasurer
Executive Vice President of the Company since 1981. Prior
and Treasurer thereto he served as Executive
Vice President of the Company.
He became a director of the
Company in 1986. Mr. McHugh is also
a director of Pillowtex Corporation.
He is 56 years old.
Robert J. Symon Mr. Symon has served as Vice President -
Vice President - Controller of the Company since
Controller 1978. Mr. Symon is 62 years old and
served as a director of the Company
from December 19
Darryl T. Marchand Mr. Marchand has served as Vice
Vice President, Secretary President Secretary and General
and General Counsel Counsel of the Company since 1986.
Prior thereto he served as Vice
President - Legal of the
Company from 1981 to 1986 and as
Treasurer from February to August,
1981. Mr. Marchand is 51 years old.
John G. Conklin Mr. Conklin has served as a Vice
Vice President President of the Company since 1978.
He has been
President of the Cabinet Division
since September 1993. Prior thereto
he was responsible for cabinet
manufacturing. Mr. Conklin is 60
years old.
Charles A. Engle Mr. Engle has served as a Vice
Vice President President of the Company since 1979.
His primary
responsibility for the Company is
Cabinet Division sales. Mr. Engle is
50 years old.
James T. Fidler Mr. Fidler has served as a Vice
Vice President President of the Company since 1981.
Mr. Fidler
is primarily responsible for data
processing for the Company. Mr.
Fidler is 51 years old.
Michael J. Kearins Mr. Kearins has served as a Vice President of
Vice President the Company since 1985. He had been
a divisional Vice President of sales
of the Bruce Hardwood Floors Division
from December, 1983 to May, 1985. He
is primarily responsible for sales
and marketing in the Bruce Hardwood
Floors Division. Prior to 1983, he
had been a Regional Sales Manager of
the Company. Mr. Kearins is 47 years
old.
Allen Silver Mr. Silver has served as a Vice President of
Vice President the Company since 1985. Prior to that time
he had been a divisional
Vice President of manufacturing of
the Cabinet Division. Mr. Silver is
54 years old.
<PAGE>
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters
A) Price range of common stock
The following table shows the range of high and low sales
prices for the common stock on the NASDAQ National Market
System. (Trading began August 11, 1993).
Market Price
1993 High Low
Third Quarter 12-1/4 10
Fourth Quarter 15-7/8 11-3/8
B) Approximate number of equity security holders (As of March 21, 1994)
Class of Security Number of Record Holders
Common Stock ($.01 par value) 1,585
C) Dividend Policy
The Company has not declared or paid any dividends on its Common
Stock. Management currently intends to retain future earnings for the
operation and expansion of the Company's business and does not
anticipate paying any cash dividends in the foreseeable future. The
payment of cash dividends is prohibited under the terms of the New
Credit Facility and is restricted under the terms of the indenture
relating to the Company's 10 1/2% Senior Notes due 2003.
<PAGE>
Item 6. Selected Consolidated Financial Data
(In thousands, except per share amounts)
<TABLE>
The selected consolidated financial data of the
Company
presented below for the five fiscal years ended December 31, 1993
was
derived from the consolidated financial statements of the Company
and
should be read in conjunction with the consolidated financial
statements
and related notes included herein.
<CAPTION>
Fiscal Seven Five Fiscal Fiscal
Fiscal
year months months year year
year
INCOME ended ended ended ended ended
ended
STATEMENT December 31, January 1, June 8, January 3, December
28, December 29,
DATA 1993 1993 1992* 1992* 1990*
1989*
<S> <C> <C> <C> <C> <C>
<C>
Net sales $ 346,296 $ 173,426 $ 119,417 $ 256,112 $
321,126
$ 352,616
Cost of sales 269,360 137,413 90,991 204,026
250,305
272,207
Gross profit 76,936 36,013 28,426 52,086
70,821
80,409
Selling, general
and administra-
tive 44,213 27,179 19,404 41,597
47,383
49,906
Gain on insurance
settlement - (1,350) (3,624) -
- -
-
Amortization of
goodwill 1,613 884 1,863 4,463
4,463
4,462
Interest 19,406 11,289 25,786 59,719
56,983
56,406
Income (loss)
before income
taxes and
extraordinary
items 11,704 (1,989) (15,003) (53,693)
(38,008)
(30,365)
Provision
(benefit) for
income taxes 4,501 (940) - (10,028)
(12,857)
(10,173)
Income (loss)
before extra-
ordinary items 7,203 (1,049) (15,003) (43,665)
(25,151)
(20,192)
Extraordinary
items - gain
from extin-
guishment
of debt - - 201,308 -
- -
-
- Loss from
repayment of
debt (11,307) - - -
- -
-
Net income (loss) $ (4,104) $ (1,049) $ 186,305 $ (43,665) $
(25,151)
$ (20,192)
Per share data: (1)
Net income (loss)
before extra-
ordinary items $ 0.74 $ (0.16)
Net income (loss) $ (0.42) $ 0.16
Weighted average
shares
outstanding 9,714 6,707
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Fiscal years
ended
December 31,
January 1,
1993
1993
<S> <C> <C>
Pro-Forma Income Data (3)
Net income (loss) before extraordinary
items, as reported $ 7,203 $
(16,052)
Pro-Forma adjustments re: 1992 restructuring &
1993 recapitalization 490
16,852
Pro-Forma net income before extraordinary items $ 7,693 $
800
Pro-Forma net income before extraordinary
items, per share $ 0.53 $
0.05
Weighted average shares outstanding 14,648
14,648
</TABLE>
<TABLE>
<CAPTION>
BALANCE December 31, January 1, June 8, January 3, December
28, December 29,
SHEET DATA 1993 1993 1992(2) 1992 1990
1989
<S> <C> <C> <C> <C> <C>
<C>
Working capital $ 74,082 $ 53,480 $ 79,421 $ 78,927 $
63,599
$ 92,054
Total assets 329,099 304,813 323,563 453,105
465,352
508,656
Long-term debt and
redeemable
preferred
stock 162,897 198,332 222,483 470,506
450,948
450,902
Common shareholders'
investment 88,047 18,951 20,000 (121,081)
(71,218)
(45,877)
<FN>
* Prior to the restructuring on June 8, 1992 (See Notes 2 and 3
to
the Consolidated Financial Statements).
__________
(1) As the Company was a wholly-owned subsidiary of another
company,
earnings per share are not meaningful for the periods prior to
June
8, 1992.
(2) The balance sheet data as of June 8, 1992 (unaudited) reflects
the
quasi-reorganization adjustments recorded by the Company on
that
date. (See Notes 2 and 3 to the Consolidated
Financial
Statements).
(3) See Note 10 to the Consolidated Financial Statements.
</TABLE>
<PAGE>
Item 7. Management's Discussion and Analysis Of Financial Condition
and Results of Operations
Results of Operations
The following table sets forth selected information concerning
the
Company's results of operations for fiscal 1991, 1992 and 1993.
For
clarity of presentation, the discussion of results of operations
for
fiscal 1992 reflects the combined results of operations for the
five
month period ended June 8, 1992, the date the 1992 Restructuring
was
completed, and the seven month period ended January 1, 1993.
<TABLE>
<CAPTION>
Fiscal Year
1991 1992
1993
(Dollars in
millions)
<S> <C> <C> <C>
Net sales:
Bruce Hardwood Floors Division $116.3 $151.3
$200.0
Cabinet Division 125.1 123.2
125.6
Beltsville Division 16.2 19.2
20.7
Intracompany sales (1.5) (.9)
- -
Total net sales 256.1 292.8
346.3
Gross profit 52.1 64.4
76.9
Selling, general and administrative
expenses 41.6 46.6
44.2
Gain on insurance settlement - (5.0)
- -
Amortization of goodwill 4.5 2.7
1.6
Operating income $ 6.0 $ 20.1 $
31.1
As a percent of net sales:
Gross profit 20.3% 22.0%
22.2%
Selling, general and administrative
expenses 16.2 15.9
12.8
Operating income 2.3 6.9
9.0
</TABLE>
Fiscal year 1993 compared to fiscal year 1992
Net sales for fiscal 1993 were $346.3 million, or 18.3% greater
than the $292.8 million in net sales for fiscal 1992. Net sales for the
Bruce Hardwood Floors Division increased 32.2% to $200.0 million from
$151.3 million in the prior year. The increase in hardwood flooring
sales resulted from increased unit sales and increased average sales
prices. Cabinet Division net sales for the year were $125.6 million, or
an increase of 1.9% over 1992 net sales of $123.2 million. During 1993,
sales and marketing attention was focused on the stronger and more
stable single-family housing markets, yet without deserting either the
multi-family or home center business. Net sales of the Beltsville
Division increased 7.8% to $20.7 million from $19.2 million in the prior
year. The increased sales resulted primarily from an improved housing
market in the Washington, D.C., Baltimore and Northern Virginia areas.
Gross profit for fiscal 1993 was $76.9 million, or 22.2% of net
sales, compared to $64.4 million, or 22.0% of net sales in the previous
year. All divisions experienced higher raw material prices, especially
for lumber and logs. Increased sales prices, together with improved
operations and plant utilization, especially in the Bruce Hardwood
Floors Division, resulted in the modest improvement in gross profit as a
percent of sales.
Selling, general and administrative expenses were $44.2 million, or
12.8% of net sales, in fiscal 1993 compared to $46.6 million, or 15.9%
of net sales, in the prior <PAGE>
year. The reduction in selling, general and administrative expenses was
primarily in the Cabinet Division where salaried payroll and related
expenses were reduced. Also in 1992, selling, general and
administrative expenses included a $.9 million expense relating to the
common stock issued to management in connection with the 1992
Restructuring.
Operating income was $31.1 million, or 9.0% of net sales, in fiscal
1993 compared to $20.1 million, or 6.9% of net sales, in the previous
year. The improvement was $16.0 million before the gain in 1992 of $5
million from the Thompsontown cabinet plant fire insurance settlement.
The improved results were attributable to higher net sales, slightly
higher gross margins, lower selling, general and administrative expenses
and lower goodwill amortization attributable to the 1992 Restructuring.
Interest expense was $19.4 million in fiscal 1993 compared to $37.1
million in the prior fiscal year due principally to the effects of the
1992 Restructuring.
Net income before an extraordinary item for fiscal 1993 was $7.2
million compared to a net loss of $16.1 million before an extraordinary
item in fiscal 1992. Higher net sales, the reduction in interest
expense, and increase in operating income were significant factors in
this improvement.
Fiscal year 1992 compared to fiscal year 1991
Net sales for fiscal 1992 were $292.8 million, or 14.3% greater
than the $256.1 million in net sales for fiscal 1991. Net sales for the
Bruce Hardwood Floors Division increased 30.1% to $151.3 million from
$116.3 million in the prior year. The sales growth in the Bruce
Hardwood Floors Division was attributable to strong consumer demand for
hardwood flooring, aggressive marketing programs and an improvement in
general economic conditions. The increase in hardwood flooring sales
resulted from increased unit sales, increased average sales prices and a
favorable change in product mix resulting from increased sales of pre-
finished strip and laminated plank and reduced sales of unfinished strip
and parquet products. Cabinet Division sales for the year were $123.2
million, or 1.5% below the $125.1 million recorded in the prior year.
Cabinet Division sales were impacted by substantial excess capacity in
the industry, severe price competition, the limited availability of
residential construction financing from traditional sources of such
financing, the Company's decision not to pursue low-margin sales and the
disruption caused by the Thompsontown plant fire discussed below. Sales
of the Beltsville Division increased 18.9% to $19.2 million from $16.2
million in the prior year. That increase was attributable to a recovery
in the residential construction economy in the Beltsville trade area.
Gross profit for fiscal 1992 was $64.4 million, or 22.0% of net
sales, compared to $52.1 million, or 20.3% of net sales, in the previous
year. The improvement in gross profit was attributable to higher sales,
increased selling prices and improvements in manufacturing yields and
productivity, partially offset by sharply higher lumber prices. Selling
prices lagged lumber price increases in the latter half of fiscal 1992,
which negatively impacted gross margins in that period.
Selling, general and administrative expenses were $46.6 million, or
15.9% of net sales, in fiscal 1992 compared to $41.6 million, or 16.2%
of net sales, in the prior year. Of the increase, $.9 million was
attributable to long-term compensation expense related to Common Stock
issued to management in connection with the 1992 Restructuring. The
lower expenses as a percent of net sales were attributable to greater
operating efficiencies and reductions in salaried payroll. In both
periods, the Cabinet and
<PAGE>
Beltsville Divisions made substantial provisions to reserves for
doubtful accounts because of the difficulty experienced in the
collection of accounts receivable under depressed economic conditions in
the housing industry.
On January 2, 1992, the Cabinet Division plant at Thompsontown,
Pennsylvania was destroyed by fire. The Company was insured for the
replacement cost, less a $100,000 deductible, as well as for losses
arising from loss of inventory, business interruption and certain
related expenses. The Company has rebuilt the plant and production
there resumed in the second quarter of fiscal 1993. In fiscal 1992 the
Company recorded a gain of $5.0 million, which is the settlement
received from the insurance company less the net book value of the plant
and equipment as of the date of the fire.
Operating income was $20.1 million, or 6.9% of net sales, in fiscal
1992 compared to $6.0 million, or 2.3% of net sales, in the previous
year. The improvement was attributable to higher gross profit on
increased net sales, reduced operating expenses as a percent of net
sales and the $5.0 million gain related to the estimated insurance
settlement for the Thompsontown plant fire.
Interest expense was $37.1 million in fiscal 1992 compared to $59.7
million in the prior fiscal year due principally to the effects of the
1992 Restructuring. Net income for fiscal 1992 was $185.3 million
compared to a net loss of $43.7 million in fiscal 1991. An extraordinary
of gain $201.3 million, net of tax benefits, arising from the extinguishment
of debt pursuant to the 1992 Restructuring was the major reason for the
substantial improvement in net income. The reduction in interest
expense and increase in operating income were also factors in the
improvement.
Liquidity and Capital Resources
On June 8, 1992, the Company successfully completed the 1992
Restructuring pursuant to which approximately $297.7 million of the
Company's long-term indebtedness and redeemable preferred stock
(including accrued interest and dividends) was exchanged for Common
Stock. The 1992 Restructuring was necessitated by the highly- leveraged
condition of the Company coupled with the protracted recession in the
U.S. housing industry.
In 1993, the Company completed two public offerings for 7,939,750
shares of the Company's Common Stock and $160 million aggregate
principal amount of 10-1/2% Senior Notes due 2003. The net proceeds of
the Offerings, together with borrowings under a new $90 million bank
credit facility were used (i) to repay the entire unpaid balance under
the Company's previously existing senior debt financing agreements,
redeem certain previously outstanding debentures and pay related accrued
interest, for a total of approximately $227 million, and (ii) for
working capital and general corporate purposes. As a result of this
repayment of debt, the Company incurred an extraordinary loss of $11.3
million, net of tax, as a result of the original issue discount on
certain of the repaid notes as well as the premium required to redeem
the debentures. The New Credit Facility provides for up to $90 million
of revolving credit loans for working capital and for letters of credit.
Availability of borrowings under the New Credit Facility is based upon a
formula related to inventory and accounts receivable.
For the fiscal year ended December 31, 1993, cash increased by $.2
million. The Company's primary source of liquidity during this period
was cash flow from financing activities of $12.8 million, representing
sale of stock and of notes of $239.4 million, offset by long-term debt
payments of $217.7 million, refinancing costs of $14.9 million, and a
$5.5 million reimbursement of construction deposits from the West
Virginia Economic Development Authority for the Beverly, West Virginia
plant expansion. Cash provided by financing activities was offset by
capital expenditures of $7.6
<PAGE>
million and $7.5 million for the construction deposits incurred in the
Beverly, West Virginia plant expansion.
At December 31, 1993, the Company had working capital of $74.1
million, or 22.5% of total assets, and $52.5 million of unused bank
borrowing capacity.
During the third quarter of 1993 the Company settled and paid the
federal taxes and interest applicable to an examination of the tax
returns for the years 1986 through 1990. The settlement had no material
impact on the Company's financial position or results of operations.
The Company believes that borrowing availability under the New
Credit Facility and cash generated from operations will be adequate to
fund working capital requirements, debt service payments and the planned
capital expenditures.
<PAGE>
Item 8. Financial Statements and Supplementary Data
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of Triangle Pacific Corp.:
We have audited the accompanying consolidated balance sheets of
Triangle Pacific Corp. and subsidiaries (a Delaware corporation) as of
December 31, 1993 and January 1, 1993, and the related statements of
operations, shareholders' investment and cash flows for the fiscal year
ended December 31, 1993, the seven month period ended January 1, 1993,
the five month period ended June 8, 1992 and for the fiscal year ended
January 3, 1992. 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, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position
of Triangle Pacific Corp. and subsidiaries as of December 31, 1993 and
January 1, 1993, and the results of their operations and their cash
flows for the fiscal year ended December 31, 1993, the seven month
period ended January 1, 1993, the five month period ended June 8, 1992,
and for the fiscal year ended January 3, 1992, in conformity with
generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the
basic consolidated financial statements taken as a whole. Schedules V,
VI, VIII and X are the responsibility of the Company's management and
are presented for purposes of complying with the Securities and Exchange
Commission's rules and are not part of the basic consolidated financial
statements. These schedules have been subjected to the auditing
procedures applied in our audits of the basic consolidated financial
statements and, in our opinion, fairly state in all material respects
the financial data required to be set forth therein in relation to the
basic consolidated financial statements taken as a whole.
ARTHUR ANDERSEN & CO.
Dallas, Texas,
February 15, 1994
<PAGE>
<TABLE>
TRIANGLE PACIFIC CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
<CAPTION>
December 31, January
1,
1993 1993
<S> <C> <C>
ASSETS
Current assets:
Cash & cash equivalents $ 785 $
547
Receivables (net of allowances
of $3,323 & $5,098 respectively) 39,454
32,417
Inventories 64,072
47,612
Prepaid expenses 4,273
5,255
Total current assets 108,584
85,831
Property, plant & equipment
Land 13,452
13,452
Buildings 43,382
38,469
Equipment, furniture & fixtures 65,759
55,360
122,593
107,281
Less: accumulated depreciation 13,171
5,255
109,422
102,026
Other assets:
Goodwill 60,580
66,193
Trademark 30,733
31,533
Other 11,654
19,230
Deferred financing costs 8,126
- -
Total assets $ 329,099 $
304,813
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' INVESTMENT
<S> <C> <C>
Current liabilities:
Current portion of long-term debt $ 1,467 $
4,038
Accounts payable 13,336
11,835
Accrued liabilities 19,699
14,597
Current portion of deferred compensation -
1,881
Total current liabilities 34,502
32,351
Long-term debt, net of current portion 162,897
198,332
Deferred income taxes 43,653
51,992
Deferred compensation -
3,187
Total liabilities 241,052
285,862
Shareholders' investment:
Common stock - $.01 par value,
authorized shares - 30,000,000
issued and outstanding shares - 14,647,607
at December 31, 1993 and
6,707,861 at January 1, 1993 146
67
Additional paid-in capital 93,054
19,933
Accumulated deficit:
Post June 8, 1992 (5,153)
(1,049)
Total shareholders' investment 88,047
18,951
Total liabilities & shareholders' investment $ 329,099 $
304,813
<FN>
The accompanying notes to consolidated financial statements are an
integral part of these balance sheets.
</TABLE>
<PAGE>
<TABLE>
TRIANGLE PACIFIC CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
<CAPTION>
Fiscal Seven Five
Fiscal
Year Months Months
Year
Ended Ended Ended
Ended
December 31, January 1, June 8,
January 3,
1993 1993 1992*
1992*
<S> <C> <C> <C> <C>
Net Sales $ 346,296 $ 173,426 $ 119,417 $
256,112
Costs and expenses:
Cost of sales 269,360 137,413 90,991
204,026
Selling, general
and administrative 44,213 27,179 19,404
41,597
Gain on insurance
settlement - (1,350) (3,624)
- -
Amortization of goodwill 1,613 884 1,863
4,463
Interest 19,406 11,289 25,786
59,719
334,592 175,415 134,420
309,805
Income (loss) before
income taxes and
extraordinary items 11,704 (1,989) (15,003)
(53,693)
Provision (benefit)
for income taxes 4,501 (940) -
(10,028)
Net income (loss) before
extraordinary items 7,203 (1,049) (15,003)
(43,665)
Extraordinary items
Gain from extinguishment
of debt - - 201,308
- -
Loss from repayment
of debt, net of tax (11,307) - -
- -
Net income (loss) $ (4,104) $ (1,049) $ 186,305 $
(43,665)
Per Share Data:
Net income (loss) before
extraordinary items $ .74 $ (0.16) (1)
(1)
Net income (loss) $ (0.42) $ (0.16)
Weighted average shares
outstanding 9,714 6,707
</TABLE>
<TABLE>
<CAPTION>
Fiscal years
ended
December 31,
January 1,
1993
1993
<S> <C> <C>
Pro-Forma Income Data (Unaudited) (See Note 10)
Net income (loss) before extraordinary
items, as reported $ 7,203 $
(16,052)
Pro-Forma adjustments re: 1992 restructuring &
1993 recapitalization 490
16,852
Pro-Forma net income before extraordinary items $ 7,693 $
800
Pro-Forma net income before extraordinary
items, per share $ 0.53 $
0.05
Weighted average shares outstanding 14,648
14,648
<FN>
________________________
* Prior to the restructuring on June 8, 1992 (see Notes 2 and 3 for
additional information).
(1) As the Company was a wholly-owned subsidiary of another company,
earnings per share for the periods prior to June 8, 1992, are not
meaningful.
The accompanying notes to consolidated financial statements are an
integral part of these statements.
</TABLE>
<PAGE>
<TABLE>
TRIANGLE PACIFIC CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' INVESTMENT
FOR THE FISCAL YEAR ENDED JANUARY 3, 1992,
FOR THE FIVE MONTHS ENDED JUNE 8, 1992,
FOR THE SEVEN MONTHS ENDED JANUARY 1, 1993, AND
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1993
(in thousands)
<CAPTION>
Carryover
Additional Basis of
Common Paid-in Common
Accumulated
Stock Capital Stock Deficit
Total
<S> <C> <C> <C> <C>
<C>
Balance,
December 28, 1990* $ 1 $ 14,999 $ (26,000) $
(60,218)
$ (71,218)
Net loss - - -
(43,665)
(43,665)
Dividends on
mandatory redeemable
preferred stock - - -
(6,198)
(6,198)
Balance,
January 3, 1992* $ 1 $ 14,999 $ (26,000)
$(110,081)
$(121,081)
Net income - - - 186,305
186,305
Dividends on
mandatory redeemable
preferred stock - - -
(2,913)
(2,913)
Quasi-reorganization
adjustments - net 66 4,934 26,000
(73,311)
(42,311)
Balance,
June 8, 1992 $ 67 $ 19,933 $ - $ -
$ 20,000
Net loss - - -
(1,049)
(1,049)
Balance,
January 1, 1993 $ 67 $ 19,933 $ - $
(1,049)
$ 18,951
Net loss - - -
(4,104)
(4,104)
Sale of Common
Stock (Net of
Refinancing Cost) 79 73,121 - -
73,200
Balance,
December 31, 1993 $ 146 $ 93,054 $ - $
(5,153)
$ 88,047
<FN>
* Prior to the restructuring on June 8, 1992 (See notes 2 and 3 for
additional information).
The accompanying notes to consolidated financial statements are an
integral part of these statements.
</TABLE>
<PAGE>
<TABLE>
TRIANGLE PACIFIC CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<CAPTION>
Fiscal Seven Five
Fiscal
Year Months
Months
Year
Ended Ended Ended
Ended
December 31, January 1, June
8,
January 3,
<S> <C> <C> <C>
<C>
Cash flows from operating activities: 1993 1993
1992*
1992*
Net income (loss) $ (4,104) $ (1,049)
$186,305
$ (43,665)
Adjustments:
Depreciation 7,929 5,255
3,734
9,431
Deferred income taxes 2,680 (940)
- -
(10,028)
Gain on insurance settlement - (1,350)
(3,624) -
Amortization of goodwill &
trademark 2,413 1,351
2,279
5,463
Amortization of deferred
financing costs 536 -
1,603
3,773
Amortization of original
issue discount 1,037 749
- -
8,150
Extraordinary items 11,307 -
(201,308) -
Provision for doubtful accounts 485 1,438
678
2,170
Other - -
106
312
Changes in assets and liabilities:
Receivables (7,522) (2,351)
(4,529) 9,672
Inventories (16,460) 2,151
(7,387) 15,303
Prepaid expenses 982 1,436
(1,316) (1,983)
Accounts payable 1,502 5,553
(408) (6,128)
Accrued liabilities - other 1,414 (3,115)
4,058
(3,722)
Accrued liabilities - interest 3,688 2,795
10,052
45,151
Deferred compensation (5,068) 147
105
(50)
Other assets 1,810 (2,963)
(1,847) (577)
Other (126) 142
(240) (338)
Net cash provided by (used in)
operating activities 2,503 9,249
(11,739) 32,934
Cash flows from investing activities:
Proceeds from sale of property,
plant and equipment 34 3
41
110
Additions to property, plant
and equipment (7,636) (2,386)
(890) (2,256)
Construction deposits (7,504) -
(18) (325)
Net cash used in investing activities (15,106) (2,383)
(867) (2,471)
Cash flows from financing activities:
Long-term debt borrowings 500 -
- -
- -
Long-term debt payments (10,332) (22,890)
(908) (1,954)
Tranche I and II Note payments (207,400) -
- -
- -
Restructuring costs - -
(2,994) (4,966)
Refinancing costs (14,860) -
- -
- -
Proceeds from senior notes issued 160,000 -
- -
- -
Sale of common stock 79,398 -
- -
- -
Reimbursement for construction
deposits 5,535 -
- -
- -
Net cash provided by (used in)
financing activities 12,841 (22,890)
(3,902) (6,920)
Net increase (decrease) in cash $ 238 $(16,024)
$(16,508) $ 23,543
Cash and cash equivalents,
beginning of period 547 16,571
33,079
9,536
Cash and cash equivalents,
end of period $ 785 $ 547 $
16,571
$ 33,079
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest
(net of amount capitalized) $ 14,667 $ 8,035 $
14,029
$ 3,330
Income taxes 45 -
- -
3
Supplemental schedule of non-cash
investing and financing activities:
Accrued dividends on preferred stock $ - $ - $
2,913
$ 6,198
<FN>
* Prior to the restructuring on June 8, 1992 (see Notes 2 and 3 for
additional information).
The accompanying notes to consolidated financial statements are an
integral part of these statements.
</TABLE>
<PAGE>
TRIANGLE PACIFIC CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - 1993 RECAPITALIZATION:
The Company filed, in 1993, two registration statements with the
Securities and Exchange Commission and sold to the public 7,939,750
shares of the Company's Common Stock and $160 million aggregate
principal amount of 10-1/2% Senior Notes due 2003 ("the Offerings").
The net proceeds of the Offerings together with borrowings under a new
$90 million bank credit facility were used (i) to repay the entire
unpaid balance under the Company's previously-existing senior debt
financing agreements, redeem certain previously outstanding debentures
and pay related accrued interest, for a total of approximately $227
million, and (ii) for working capital and general corporate purposes.
As a result of this repayment of debt the Company incurred an
extraordinary loss of $11.3 million, net of tax, as a result of the
original issue discount on certain of the repaid notes as well as the
premium required to redeem the debentures.
On June 14, 1993, the Company's Board of Directors approved a
reclassification pursuant to which each share of Series A Common Stock
was changed and converted into .67 of a share of Common Stock. The
transaction became effective upon completion of the Offerings described
above and has been reflected retroactively in the accompanying
consolidated financial statements.
NOTE 2 - 1992 RESTRUCTURING:
On June 8, 1992, the Company successfully completed a capital
restructuring (the "1992 Restructuring") pursuant to which substantially
all of the Company's then outstanding long-term indebtedness, redeemable
preferred stock and common stock, were exchanged for new debt with lower
interest rates and new common stock.
Under the 1992 Restructuring, the Company entered into amendments
to its previously existing senior debt financing agreements pursuant to
which $237.4 million principal amount of senior indebtedness outstanding
prior to the restructuring plus accrued and unpaid interest through June
8, 1992 was restructured as approximately $150.0 million principal
amount of Tranche I Term Notes, $30.0 million principal amount of
Tranche I Revolving Notes, $57.4 million principal amount of Tranche II
Notes and approximately 9% of the Company's new Series A Common Stock.
In addition, approximately $11.6 million of letters of credit remained
outstanding under a facility pursuant to which they could be renewed or
replaced. The Tranche II Notes were recorded at $37.3 million, which
the Company and its investment bankers estimated to be the market value.
The difference was treated as original issue discount and amortized over
the life of the Tranche II Notes, which were to have matured on June 30,
1999. (See Note 5)
The senior subordinated split coupon reset debentures, a note
payable to the former principal shareholder, other obligations, the
mandatory redeemable preferred stock and common stock outstanding prior
to the 1992 Restructuring were exchanged for new shares of common stock.
The mandatory redeemable preferred stock and the special preferred stock
were retired in conjunction with the 1992 Restructuring.
In addition to the exchange for common stock, the principal
shareholder prior to the 1992 Restructuring received warrants entitling
the holder to purchase up to approximately .8 million shares of common
stock at prices ranging from $22.39 to $37.31 per share. The warrants
are currently exercisable and will terminate, if not previously
exercised, on June 8, 1999.
<PAGE>
In connection with the 1992 Restructuring, the Company entered into
an agreement with certain members of management pursuant to which, shortly
after the 1992
Restructuring, the Company issued to such members of management 200,990
shares of common stock and stock options to purchase 201,007 shares of
common stock. The exercisability of such options is tied to the
achievement of certain levels of operating income. A portion of the
options became exercisable as a result of the Company's 1992 and 1993
operating results. In connection with the issuance of the common stock
in 1992, management shareholders incurred ordinary income tax liability
and were compensated by the Company for a portion of the tax liability
arising from receipt of such shares and such incremental compensation.
Such compensation was expensed in conjunction with the 1992
Restructuring.
NOTE 3 - QUASI-REORGANIZATION ELECTION:
In connection with the 1992 Restructuring, the Company's Board of
Directors approved quasi-reorganization accounting procedures. Under
these procedures, an entity restates its assets and liabilities at fair
value and eliminates its accumulated deficit. Such adjustments are
reflected entirely through the Company's capital accounts. None of the
adjustments are recorded through the income statement. Such adjustments
included both the quasi-reorganization related fair value restatements
of assets, liabilities, and equity as well as the recognition of the
1992 Restructuring. Because the Company's historical and future
expected operations exhibited an ability to cover amortization of its
intangibles on an earnings before interest and tax basis, the partial
write-down of such intangibles by approximately $98.4 million was
reflected by the Company as a quasi-reorganization adjustment. Other
principal adjustments made in conjunction with the quasi- reorganization
election included (i) the extinguishment of senior bank debt of
approximately $261.0 million, senior subordinated debentures of
approximately $218.9 million, notes, obligations, and payables due to
the former principal shareholder of Holding of approximately $10.3
million, mandatory redeemable preferred stock of approximately $44.9
million and the common stock of $15.0 million and (ii) the recording of
new senior debt of approximately $217.3 million and new common stock of
$20.0 million. This transfer resulted in a gain from extinguishment of
debt of approximately $201.3 million, net of deferred financing costs
and restructuring costs of $11.6 million. In addition, the property,
plant and equipment was revalued resulting in a decrease in net book
value of $3.0 million. An additional decrease in net book value of $6.5
million was recorded prior to January 1, 1993. The trademark was also
reduced by approximately $4.3 million to fair value. In addition, a
write-down of certain deferred financing costs of approximately $4.5
million and restructuring costs of approximately $5.9 million was
included as part of the quasi-reorganization adjustments. Because the
Company has adopted the provisions of SFAS No. 109, Accounting for
Income Taxes, it is required to gross up the fair value of the net
assets to, in effect, ignore the tax consequences of the differences
between the market value and tax bases of its assets and liabilities.
Such tax consequences are then recognized through the recording of a
corresponding deferred tax asset or liability. The deferred tax
liability was increased by approximately $20.3 million due to the loss
of the net operating loss carryforwards, and by approximately $10.4
million for the tax effects of other quasi-reorganization adjustments.
The final quasi-reorganization accounting adjustment was to eliminate
the accumulated deficit of the Company.
NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Consolidation:
The consolidated financial statements include the financial
statements of Triangle Pacific Corp. and its subsidiaries. The Company
maintains its records on a 52/53 week year.
<PAGE>
Prior Period Reclassifications:
Certain reclassifications have been made to the January 1, 1993
balances, in order to conform to the current year presentation.
Cash and Cash Equivalents:
The Company considers all investments with an original maturity of
less than three months to be a cash equivalent.
Inventories:
Inventories are valued at the lower of cost or market. The last-
in, first-out (LIFO) method is used for certain lumber inventories and
the first-in, first-out (FIFO) method is used for all other inventories.
Inventories valued by the LIFO method were $23,965,000 at December 31,
1993 and $16,198,000 at January 1, 1993. Had all inventories been
valued by the FIFO method, which approximates current cost, inventories
would have been increased by $5,138,000 at December 31, 1993 and
$2,745,000 at January 1, 1993. Raw materials inventories include
purchased parts and supplies to be used in manufactured products. Work-
in-process and finished goods inventories include material, labor and
overhead costs incurred in the manufacturing process. The major
components of inventories are as follows:
<TABLE>
<CAPTION>
December 31, January 1,
1993 1993
(in thousands)
<S> <C> <C>
Raw materials $ 42,045 $ 29,676
Work-in-process 3,125 3,994
Finished goods 18,902 13,942
Total $ 64,072 $ 47,612
</TABLE>
In connection with the reorganization and the related quasi-
reorganization accounting, a new basis for the LIFO inventories was
established at June 8, 1992. As a result, the LIFO inventories are
greater than those reportable for federal income tax purposes by
$6,935,000 at December 31, 1993.
Property, Plant and Equipment:
Property, plant and equipment are stated at fair value as of June
8, 1992, plus acquisition or construction cost subsequent thereto.
Expenditures for maintenance, repairs, renewals and improvements which
do not extend the useful lives of assets are charged to appropriate
expense accounts in the year incurred. Upon disposition of an asset,
cost and accumulated depreciation are removed from the accounts, and any
gain or loss is included in the results of operations. Depreciation and
amortization are computed on the straight-line basis using the following
estimated useful lives:
Buildings 10 to 50 years
Equipment, furniture and fixtures 3 to 22 years
Amortization of leasehold improvements is provided over the terms
of the leases or the useful lives of the assets, whichever is shorter.
For income tax purposes, all assets are depreciated under allowable tax
depreciation methods.
<PAGE>
Intangible Assets:
The Company annually evaluates its carrying value and expected
period of benefit of trademark and goodwill in relation to results of
operations. In determining the recoverability of these assets the
Company analyzes its historical and future ability to generate earnings
before interest and taxes using the non-discounted method. Deferred
financing costs are being amortized on the effective interest method
over the lives of the related debt. The trademark and goodwill are
being amortized over 40 years. Accumulated amortization of trademark
and goodwill is $1,267,000 and $2,497,000, respectively at December 31,
1993 and $467,000 and $884,000, respectively, at January 1, 1993.
Fair Value of Financial Instruments:
In conjunction with the offerings that took place during 1993, all
debt was recorded at fair market value which was the current market rate
of return to the holders of the debt. Warrants, issued to the former
principal shareholder in conjunction with the 1992 Restructuring, to
purchase up to approximately .8 million shares of common stock at prices
ranging from $22.39 to $37.31 per share, were not assigned a value since
the exercise prices are significantly higher than the current value of
the common equity.
NOTE 5 - LONG-TERM DEBT:
Long-term debt consists of the following (in thousands):
<TABLE>
<CAPTION>
December 31, January 1,
1993 1993
<S> <C> <C>
Mortgages payable $ 4,364 $ 5,294
Senior Notes, 10 1/2%
due 8-1-2003 160,000 -
Tranche I Notes:
Term notes:
Amortizing portion - 115,511
Non-amortizing portion - 34,489
Revolving credit notes - 8,500
Tranche II Notes, net of
original issue discount
of $19,351 - 38,049
Senior subordinated
debentures, 12-1/2%,
due 7-1-98 - 402
Notes payable - other - 125
164,364 202,370
Less: Current portion
of long-term debt (1,467) (4,038)
$ 162,897 $ 198,332
</TABLE>
Letters of credit outstanding at December 31, 1993 and January 1,
1993 were $9.8 million and $11.6 million, respectively, under a
facility pursuant to which they can be renewed or replaced.
Senior Notes
The Senior Notes are senior unsecured obligations of the Company
with an aggregate principal of $160 million. The Senior Notes mature in
2003 and bear interest at an annual rate of 10 1/2%, payable semi-
annually. The Senior Notes were issued under an Indenture (the
"Indenture") between the Company and Texas Commerce Trust Company NA, as
Trustee (the "Trustee"). The Senior Notes rank pari passu with all
<PAGE>
present and future senior indebtedness of the Company and senior to all
present and future subordinated indebtedness of the Company. However,
because borrowings under the New Credit Facility are secured by
inventory and accounts receivable of the Company and the proceeds
thereof, the Senior Notes are effectively subordinated to such
borrowings to the extent of such security interest.
The Senior Notes are not redeemable prior to August 1, 1998.
Thereafter, the Senior Notes are redeemable at the option of the Company
at redemption prices specified in the Indenture. The Senior Notes are
not subject to any mandatory sinking fund requirements.
Upon a "change of control" (as defined in the Indenture), the
Company is required to offer to purchase all outstanding Senior Notes at
101% of the principal amount thereof, plus accrued interest to the date
of repurchase. In addition, the Company may be required to offer to
purchase the Senior Notes at 100% of the principal amount plus accrued
interest with the net cash proceeds of certain sales or other
dispositions of assets.
The Indenture contains covenants which restrict, among other
things, the incurrence of additional indebtedness by the Company and its
subsidiaries, the payment of dividends and other distributions in
respect of the capital stock of the Company, the creation of liens on
the assets of the Company and its subsidiaries, the creation of certain
restrictions on the payment of dividends and other distributions by the
Company's subsidiaries, the issuance of preferred stock by the Company's
subsidiaries, and certain mergers, sales of assets and transactions with
affiliates.
The Indenture specifies a number of events of default including,
among others, the failure to make timely principal, premium and interest
payments or to perform the covenants contained therein. The Indenture
contains a cross-default to other indebtedness of the Company
aggregating more than $5,000,000 and certain customary bankruptcy and
insolvency defaults. Upon the occurrence of an event of default under
the Indenture, the Trustee or the holders of not less than 25% in
principal amount of the outstanding Senior Notes may declare all amounts
thereunder immediately due and payable, except that such amounts
automatically become immediately due and payable in the event of a
bankruptcy or insolvency default.
New Credit Facility
The Company has entered into the New Credit Facility, which
provides for up to $90 million of revolving loans for working capital
and general corporate purposes and for letters of credit. Availability
of borrowings under the New Credit Facility is based upon a formula
related to inventory and accounts receivable. The Company had $52.5
million of unused borrowing capacity under this facility at December 31,
1993. Borrowings under the New Credit Facility bear interest at the
agent's prime rate plus 1% (7.0% at December 31, 1993) or, at the
Company's option, at certain alternate floating rates and is secured by
a pledge of the Company's inventory and accounts receivable. The unpaid
balance is due on August 4, 1996.
The New Credit Facility contains covenants which restrict, among
other things, the incurrence of additional indebtedness and rental
obligations by the Company and its subsidiaries, the payment of
dividends and other distributions in respect of the capital stock of
the
Company, the creation of liens on the assets of the Company and its
subsidiaries, the creation of certain restrictions on the payment of
dividends and other distributions by the Company's subsidiaries, the
making of investments and capital expenditures by the Company and its
subsidiaries, the creation of new subsidiaries by the Company, and
certain mergers, sales of assets and transactions with affiliates. The
New Credit Facility also contains certain financial covenants relating
<PAGE>
to the consolidated financial condition of the Company and its
subsidiaries, including covenants relating to their net worth, the ratio
of their earnings to their fixed charges, the ratio of their earnings to
their interest expense, the ratio of their current assets to their
current liabilities, and the ratio of their indebtedness to their total
capitalization. At December 31, 1993, the Company was in compliance
with all financial covenants.
The New Credit Facility specifies a number of events of default
including, among others, the failure to make timely payments of
principal, fees, and interest, the failure to perform the covenants
contained therein, the failure of representations and warranties to be
true, the occurrence of a "change of control" (as defined in the New
Credit Facility, to include, among other things, the ownership by any
person or group of more than 25% or, (in the case of The TCW Group, Inc.
and its affiliates, 40%) of the total voting securities of the Company),
and certain impairments of the security for the New Credit Facility.
The New Credit Facility also contains a cross-default to other
indebtedness of the Company aggregating more than $2,000,000 and certain
customary bankruptcy, insolvency and similar defaults. Upon the
occurrence of an event of default under the New Credit Facility, at
least three of the lenders holding at least 60% in amount of the
principal indebtedness outstanding under the New Credit Facility may
declare all amounts thereunder immediately due and payable, except that
such amounts automatically become immediately due and payable in the
event of certain bankruptcy, insolvency or similar defaults.
The New Credit Facility generally prohibits the Company from
prepaying the Senior Notes whether the prepayment would result from the
redemption of the Senior Notes, an offer by the Company to purchase the
Senior Notes following a change of control or a sale or other
disposition of assets, or the acceleration of the due date for payment
of the Senior Notes.
Mortgages payable represent various Industrial Revenue Bond (IRB)
notes. The IRB notes vary in interest rate, with several notes
dependent upon the prime rate. At December 31, 1993 and January 1,
1993, the interest rates ranged up to 9.0%.
These notes are payable through 2000 and are collateralized by the
related underlying assets.
<TABLE>
<CAPTION>
Maturities for all long-term debt are as follows:
(in thousands)
<S> <C>
1994 $ 1,467
1995 1,081
1996 892
1997 694
1998 127
Thereafter 160,103
Total $ 164,364
</TABLE>
NOTE 6 - INCOME TAXES:
As of June 8, 1992, the date of the quasi-reorganization, the
Company elected to adopt the Statement of Financial Accounting Standards
No. 109, "Accounting for Income Taxes". The Company used the catch- up
approach in adopting the provision; however, such adoption did not have
a material effect on the Company's consolidated balance sheet. Prior
years' financial statements have not been restated to apply this
provision.
<PAGE>
The components of the deferred tax liability and asset are as
follows (in thousands):
<TABLE>
<CAPTION>
December 31, January 1,
1993 1993
<S> <C> <C>
Deferred Tax Liability:
Property, plant and
equipment $ 28,429 $ 27,892
Original issue discount - 7,411
Trademark 12,078 12,077
Other 7,123 8,614
Total $ 47,630 $ 55,994
Deferred Tax Asset:
Tax carryforwards $ 1,991 $ 777
Other 1,986 3,225
Total $ 3,977 $ 4,002
</TABLE>
The provision (benefit) for income taxes consists of the
following
(in thousands):
<TABLE>
<CAPTION>
Fiscal Seven Five
Fiscal
Year Months Months
Year
Ended Ended Ended
Ended
December 31, January 1, June 8,
January 3,
1993 1993 1992
1992
<S> <C> <C> <C> <C>
Current:
Federal $ 168 $ - $ - $
- -
State and Local - - -
- -
$ 168 $ - $ - $
- -
Deferred:
Federal $ 3,841 $ (834) $ - $
(8,905)
State and Local 492 (106) -
(1,123)
$ 4,333 $ (940) $ - $
(10,028)
Subtotal $ 4,501 $ (940) $ - $
(10,028)
Extraordinary
benefit:
Federal $ (6,251) $ - $ - $
- -
State and Local (768) - -
- -
$ (7,019) $ - $ - $
- -
TOTAL $ (2,518) $ (940) $ - $
(10,028)
</TABLE>
For the fiscal year ended January 3, 1992, deferred income tax
benefits were provided for significant temporary differences in the
recognition of revenue and expenses for tax and financial statement
purposes. Principally, these benefits consisted of a net operating loss
carryforward of $10.5 million for the year ended January 3, 1992.
<PAGE>
The tax provision or benefit for the periods ending December 31,
1993, January 1, 1993, June 8, 1992 and January 3, 1992, is 38.5%,
47.28%, 0% and 18.7% of pre-tax income or losses, respectively. The
factors causing the rate to vary from the U.S. Federal statutory rate
are as follows (in thousands):
<TABLE>
<CAPTION>
Fiscal Seven Five
Fiscal
Year Months Months
Year
Ended Ended Ended
Ended
December 31, January 1, June 8,
January 3,
1993 1993 1992
1992
<S> <C> <C> <C>
<C>
Computed (expected) tax
provision (benefit) $ 4,097 $ (676) $ (5,101)
$ (18,256)
Increase (decrease) from:
State and local taxes 503 (106) -
(1,123)
Amortization of goodwill 634 546 -
1,517
Change due to limitation
of net operating loss
carryforwards - - 5,101
7,834
Other book to tax
differences, net (733) (704) -
- -
$ 4,501 $ (940) $ -
$ (10,028)
</TABLE>
The Company has adjusted the deferred liability and current
provision for taxes to reflect the change in tax rate from 34% to 35%
enacted by the Revenue Reconciliation Act of 1993. At December 31,
1993, the Company has, for tax purposes, net operating loss
carryforwards in the amount of $4.9 million.
During the third quarter of 1993 the Company settled, and paid the
federal taxes and interest applicable to an examination of the tax
returns for the years 1986 through 1990. The settlement had no material
impact on the Company's financial position or results of operations. In
connection with the 1992 quasi-reorganization, the Company recorded an
additional reserve for this contingency. As a result of this
settlement, the Company adjusted the reserve by $4.0 million and
correspondinely reduced goodwill.
NOTE 7 - LEASE COMMITMENTS:
The Company rents certain real estate and equipment under leases
expiring at various dates to 2008. Several leases include options for
renewal or purchase and contain clauses for payment of real estate taxes
and insurance. In most cases management expects that in the normal
course of business, most leases will be renewed or replaced by other
leases.
The following is a summary of minimum future rental payments
required under operating leases that have initial non-cancellable lease
terms in excess of one year:
<TABLE>
<CAPTION>
(in thousands)
<S> <C>
1994 $ 3,043
1995 2,035
1996 1,230
1997 1,114
1998 1,002
Thereafter 1,252
Total $ 9,676
</TABLE>
<PAGE>
Rental expense for operating leases amounted to $6,309,000,
$3,562,000, $2,538,000, and $6,236,000 for the fiscal year ended
December 31, 1993, for the seven months ended January 1, 1993, for the
five months ended June 8, 1992, and for the fiscal year ended January 3,
1992, respectively.
The Company has an agreement with the West Virginia Economic
Development Authority to lease land, buildings and equipment for the
Bruce Hardwood Floors Division plant which is located in Beverly, West
Virginia. Land and buildings have a lease term of 18 years and
equipment has a term of 10 years, both with 10 year renewal options. In
June, 1990, the Company was reimbursed $22,653,000 by the West Virginia
Economic Development Authority for the Phase I construction cost, which
included all costs advanced by the Company in 1989 and the first six
months of 1990 except for 28% of the cost of equipment. In December,
1993, the Company was reimbursed $5,535,000 by the West Virginia
Economic Development Authority for 72% of the Phase II equipment cost.
NOTE 8 - EMPLOYEE BENEFIT PLANS:
Pension and Profit Sharing Plans:
The Company sponsors several defined benefit pension plans and is
required to contribute to several labor union-related defined
contribution plans. Total pension expense was $967,000, $483,000,
$217,000, and $898,000 for the year ended December 31, 1993, for the
seven months ended January 1, 1993, for the five months ended June 8,
1992, and for the fiscal year ended January 3, 1992, respectively,
including $481,000, $290,000, $207,000, and $722,000, respectively, for
defined benefit plans, which includes amortization of prior service
costs over the estimated average remaining service period of active
employees. The Company does not have any requirement to provide life or
health insurance coverage for retired employees. The following table
sets forth the defined benefit pension plans' funded status at December
31, 1993, and January 1, 1993.
<TABLE>
<CAPTION>
Fiscal years ended
December 31, January 1,
1993 1993
(in thousands)
<S> <C> <C>
Actuarial present value
of benefit obligation:
Vested $ 8,382 $ 7,959
Non-vested 481 466
Accumulated and projected
benefit obligation 8,863 8,425
Plan assets at fair value 8,109 7,093
Projected benefit
obligation in excess
of plan assets (754) (1,332)
Unrecognized prior service
costs 105 72
Unrecognized net loss from
past experience different
from that assumed and
effects of changes in
assumptions 928 1,324
Adjustment to recognize
minimum liability (1,121) (1,434)
Accrued pension expense $ (842) $ (1,370)
</TABLE>
<PAGE>
Net periodic pension costs for defined benefit pension plans for
the year ended December 31, 1993, for the seven months ended January 1,
1993, for the five months ended June 8, 1992, and for the fiscal year
ended January 3, 1992, includes the following components:
<TABLE>
<CAPTION>
Fiscal Seven Five
Fiscal
year months months
year
ended ended ended
ended
December 31, January 1, June 8,
January 3,
1993 1993 1992
1992
(in thousands)
<S> <C> <C> <C>
<C>
Service cost-benefits
earned during the
period $ 258 $ 152 $ 111
$
277
Interest cost on
projected benefit
obligation 696 383 273
636
Actual return on plan
assets (872) (247) (177)
(676)
Net amortization and
deferral 399 2 -
485
Net periodic pension
cost $ 481 $ 290 $ 207
$
722
</TABLE>
A weighted average discount rate of 8.50% at December 31, 1993,
January 1, 1993 and January 3, 1992 was used to determine the benefit
obligations of the Company's defined benefit pension plans. The plans
do not provide for future compensation increases in calculating benefit
obligations as the benefits do not derive from compensation levels but
from length of service. The plans' assets are invested in a diversified
portfolio of common stocks and fixed income securities. The expected
long-term rate of return on plan assets was 8.0% in 1993, 1992, and
1991.
The Company has a profit sharing plan for salaried employees to
which contributions are made at the discretion of its Board of Directors
as long as the Company has met specified financial goals. The fiscal
1993 and 1992 contributions were $500,000 and $400,000, respectively.
In fiscal 1991, such goals were not met, and as such, no contribution
was made.
Deferred Compensation Plan:
A liability existed under the provision of the deferred
compensation plan for the Company. Final payments under this plan were
made in January 1993 and August 1993.
Long-Term Incentive Compensation Plan:
In June 1993, the Company adopted the Triangle Pacific Corp. Long-
Term Incentive Compensation Plan, which authorizes grants of various
incentive awards to all regular salaried full-time officers and key
employees of the Company. There are 1,000,000 shares of common stock
reserved for this plan. In February 1994, stock options were granted
for 37,700 shares at 100% of fair market value at the date of grant.
These options expire in ten years. Also granted in February 1994 were
28,200 stock bonus shares and $425,517 in deferred cash bonuses. These
awards vested 25% at the date of grant and will vest 25% each year
thereafter, with the vested amount payable on the third anniversary of
the date of grant.
<PAGE>
Stock Option Plan:
In connection with the 1992 Restructuring, certain members of
management received options for 201,007 shares of common stock pursuant
to a Stock Option Plan which was adopted by the Board of Directors of
the Company and approved by its sole shareholder at the time. The
management options are exercisable at a price of $2.99 per share. The
exercisability of the management options is tied to the achievement of
certain levels of operating income. Twenty percent of the management
options become exercisable in each fiscal year in which the Company
meets the annual target for such fiscal year. For the years ended
December 31, 1993 and January 1, 1993, twenty percent each year became
exercisable. In addition, if the Company fails to meet the annual
target in any fiscal year but meets the cumulative target in such fiscal
year or any subsequent fiscal year, the management options for such
fiscal year and all prior fiscal years will become exercisable if they
had not previously become exercisable.
Non-Employee Director Stock Option Plan:
In June 1993, the Company adopted a Non-employee Director Stock
Option Plan for up to 50,000 shares of common stock. Options have been
granted to six non-employee directors for an aggregate of 30,000 shares,
with option prices at 100% of fair market value at the date of grant.
These options are currently exercisable and generally expire 10 years
from the date of grant.
Post-retirement and Post-employment Benefits:
The Company, as of December 31, 1993, does not provide post-
retirement medical benefits or any post-employment benefits other than
those previously discussed.
NOTE 9 - ACCRUED LIABILITIES:
Amounts included in accrued liabilities are as follows
(in thousands):
<TABLE>
<CAPTION>
December 31, January 1,
1993 1993
<S> <C> <C>
Payroll $ 2,960 $ 2,410
Pension and profit
sharing 2,060 2,091
Taxes, other than
income 2,013 2,120
Insurance 3,043 2,512
Interest 6,623 2,935
Other 3,000 2,529
Total $ 19,699 $ 14,597
</TABLE>
NOTE 10 - PRO-FORMA INCOME DATA (Unaudited):
Pro-forma figures assume that the Company's third quarter 1993
Recapitalization and the 1992 Restructuring occurred on the first day of
fiscal 1992.
<PAGE>
NOTE 11 - SUPPLEMENTARY QUARTERLY FINANCIAL DATA (Unaudited)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Income
Income (Loss)
(Loss) Before
Net
Before Extra-
Income
Extra- ordinary Net
(Loss)
Net Gross ordinary Items Per Income
Per
Quarters Sales Profit Items Share (Loss)
Share
<S> <C> <C> <C> <C> <C>
<C>
1993
First Quarter $ 78,482 $ 17,947 $ 373 $ 0.04 $ 373
$ 0.04
Second Quarter 87,853 20,832 2,917 0.43 2,917
0.43
Third Quarter 85,911 18,274 1,835 0.17
(9,472)
(0.88)
Fourth Quarter 94,050 19,883 2,078 0.10 2,078
0.10
1992
First Quarter $ 71,408 $ 16,913 $(10,374) $ (a)
$(10,374)
$ (a)
Second Quarter 74,416 17,672 (4,056) (a) 197,252
(a)
Third Quarter 72,436 13,670 (2,180) (0.32)
(2,180)
(0.32)
Fourth Quarter 74,583 16,184 558 0.08 558
0.08
<FN>
(a) As the Company was a wholly-owned subsidiary of another company,
earnings per share for the periods prior to June 8, 1992 are not
meaningful.
(b) The third quarter of 1993 reflects the results of the 1993
Recapitalization and the second quarter of 1992 reflects the 1992
Restructuring. (See Notes 1 and 2)
</TABLE>
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
None
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Company
The section entitled "Election of Directors" appearing in the
definitive proxy statement of the Registrant for the annual meeting of
shareholders to be held May 4, 1994 sets forth certain information
regarding the directors and is incorporated herein by reference. The
section entitled "Certain Transactions-Compliance with Section 16(a) of
the Exchange Act" appearing in the definitive proxy statement of the
Registrant for the annual meeting of shareholders to be held May 4, 1994
sets forth certain information regarding reporting under Section 16 of
the Securities Exchange Act of 1934, as amended, and is incorporated
herein by reference. Certain information with respect to the executive
officers of the Registrant is set forth in Part I of this Form 10-K
under the caption "Executive Officers of the Registrant."
Item 11. Executive Compensation
Information regarding the compensation of management is contained
in the definitive proxy statement of the Registrant for the annual
meeting of shareholders to be held on May 4, 1994, under the caption
"Executive Compensation" and, except for the report of the compensation
committee of the Board of Directors and the information contained under
the caption "Performance Graph," is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Information regarding ownership of the Company's Common Stock is
contained in the definitive proxy statement of the Registrant for the
annual meeting of shareholders to be held on May 4, 1994, under the
captions "Security Ownership of Certain Beneficial Owners" and "Security
Ownership of Management" and is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
Information regarding certain relationships and related
transactions is contained in the definitive proxy statement of the
Registrant for the annual meeting of shareholders to be held on May 4,
1994, under the caption "Certain Transactions - Payments Pursuant to
Previous Deferred Compensation Plan" and is incorporated herein by reference.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a)(1) Financial Statements
Included in Part II of this report.
- Report of independent public accountants
- Consolidated balance sheets as of December 31, 1993
and January 1, 1993.
- Consolidated statements of operations for the fiscal
year ended December 31, 1993, for the seven months
ended January 1, 1993, for the five months ended
June 8, 1992, and for the fiscal year ended January
3, 1992.
- Consolidated statements of changes in shareholders'
investment for the fiscal year ended December 31,
1993, for the seven months ended January 1, 1993,
for the five months ended June 8, 1992 and for the
fiscal year ended January 3, 1992.
- Consolidated statements of cash flows for the fiscal
year ended December 31, 1993, for the seven months
ended January 1, 1993, for the five months ended
June 8, 1992 and for the fiscal year ended January
3, 1992.
- Notes to consolidated financial statements.
(a)(2) Financial Statement Schedules
Included in Part IV of this report:
For the fiscal year ended December 31, 1993, for the
seven months ended January 1, 1993, for the five months
ended June 8, 1992 and for the fiscal year ended January
3, 1992.
- Schedule V - Property, plant and equipment.
- Schedule VI - Accumulated depreciation of property,
plant and equipment.
- Schedule VIII - Valuation and qualifying accounts
and reserves.
- Schedule X - Supplementary income statement
information.
Information required by other schedules called for under
Regulation S-X is either not applicable or is included in
the consolidated financial statements or notes thereto.
(a)(3) Exhibits
The information required by this Item 14(a)(3) is set
forth in the Index to Exhibits accompanying this annual
report on Form 10-K.
<PAGE>
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the fourth
quarter of the year ended December 31, 1993.
(c) Exhibits
3.1 - Restated Certificate of Incorporation the Registrant.
3.2 - Amended and Restated Bylaws of the Registrant.
4.1 - Form of 10 1/2% Senior Notes due 2003
(incorporated herein by reference to Exhibit 4.2 to the Registrant's
Registration Statement on Form S-1 (Registration No. 33-64598)).
4.2 - Indenture governing 10 1/2% Senior Notes due
2003.
4.3 - Credit Agreement dated as of August 4, 1993,
as amended, among the Registrant, the Lenders listed therein and
CitiCorp USA, Inc., as the Co-Agent for the Lenders, and the Bank of
Nova Scotia, as the Agent for the Lenders (incorporated herein by
reference to Exhibit 4.4 to the Registrant's Registration Statement on
Form S-1 (Registration No. 33-64530)).
4.4 - Amendment No. 7 dated as of June 5, 1992
amending the Credit and Guaranty Agreement dated as of September 9,
1988 by and among TPC Holding Corp., Pacific Corp., the Registrant,
the Banks listed therein and Morgan Guaranty Trust Company of New York
(incorporated herein by reference to Exhibit 4.1 to the Registrant's
Registration Statement on Form S-1 (Registration No. 33-50724)).
4.5 - Amendment No. 5 dated as of June 5, 1992
amending the Security Agreement dated as of September 9, 1988 by and
between the Registrant and J.P. Morgan (incorporated herein by
reference to Exhibit 4.2 to the Registrant's Registration Statement on
Form S-1 (Registration No. 33-50724)).
4.6 - Subsidiary Security Agreement dated as of
June 5, 1992 by and among each of the Subsidiary Guarantors listed
herein and J.P. Morgan (incorporated herein by reference to Exhibit
4.3 to the Registrant's Registration Statement on Form S-1
(Registration No. 33-50724)).
<PAGE>
4.7 - Amendment No. 1 dated as of June 5, 1992 to
the Subsidiary Guaranty amending the Guaranty dated as of April 1,
1991 given by the Subsidiary Guarantor listed therein (incorporated
herein by reference to Exhibit 4.4 to the Registrant's Registration
Statement on Form S-1 (Registration No. 33-50724)).
4.8 - Pledge Agreement dated as of June 5, 1992 by
and between the Registrant and J.P. Morgan (incorporated herein by
reference to Exhibit 4.5 to the Registrant's Registration Statement on
Form S-1 (Registration No. 33-50724)).
4.9 - Subsidiary Pledge Agreement dated as of June
5, 1992 by and between each of the Subsidiary Guarantors listed
therein and J.P. Morgan (incorporated herein by reference to Exhibit
4.6 to the Registrant'sRegistration Statement on Form S-1
(Registration No. 33-50724)).
4.10 - Trademark Security Agreement dated as of June
5, 1992 by and between the Registrant and J.P. Morgan (incorporated
herein by reference to Exhibit 4.7 to the Registrant's Registration
Statement on Form S-1 (Registration No. 33-50724)).
4.11 - Amendment No. 6 dated as of June 5, 1992
amending the Senior Note Purchase Agreement dated as of September 30,
1988 by and among the Registrant, TPC Holding Corp and the Insurance
Company Lenders listed therein (incorporated herein by reference to
Exhibit 4.8 to the Registrant's Registration Statement on Form S-1
(Registration No. 33-50724)).
10.1 - Registration Rights Agreement, dated as of
June 5, 1992 by and among the Registrant and the Persons listed
therein (incorporated herein by reference to Exhibit 10.1 to the
Registrant's Registration Statement on Form S-1 (Registration No. 33-
50724)).
10.2 - Lenders' Equity Agreement dated as of June 5,
1992 by and among the Registrant and the Banks and other financial
institutions listed therein (incorporated herein by reference to
Exhibit 10.2 to the Registrant's Registration Statement on Form S-1
(Registration No. 33-50724)).
10.3 - ESJ Exchange Agreement dated as of June 5,
1992 by and among the Registrant, TPC Holding Corp. and the ESJ
Entities (incorporated herein by reference to Exhibit 10.3 to the
Registrant's Registration Statement on Form S-1 (Registration No. 33-
50724)).
10.4* - Management Equity Agreement dated as of
June 5, 1992 by and among the Registrant and the individuals listed
therein, and including a form of the Triangle Pacific Corp. Stock
Option Plan (incorporated herein by reference to Exhibit 10.4 to the
Registrant's Registration Statement on Form S-1 (Registration No. 33-
50724)).
10.5* - Form of Amended and Restated Employment
Agreement (incorporated herein by reference to Exhibit 10.5 to the
Registrant's Registration Statement on Form S-1 (Registration No. 33-
50724)).
10.6* - Form of Services and Compensation
Agreement (incorporated herein by reference to Exhibit 10.6 to the
Registrant's Registration Statement on Form S-1 (Registration No. 33-
50724)).
<PAGE>
10.7* - Salaried Employees Profit Sharing Plan
(as restated January 1, 1993) of the Registrant (incorporated herein
by reference to Exhibit 10.7 to the Registrant's Registration
Statement on Form S-1 (Registration No. 33-64530)).
10.8* - Salaried Employees Cash Bonus plan of
the Registrant (incorporated herein by reference to Exhibit 10.8 to
the Registrant's Registration Statement on Form S-1 (Registration No.
33-50724)).
10.9*- Form of Stock Option Plan of the Registrant
(incorporated herein by reference to Exhibit 10.12 to the Registrant's
Registration Statement on Form S-1 (Registration No. 33-64530)).
10.10*- Form of Stock Option Agreement of the
Registrant (incorporated herein by reference to Exhibit 10.13 to the
Registrant's Registration Statement on Form S-1 (Registration No. 33-
64530)).
10.11 - Lease dated as of June 1, 1988 by and
between West Virginia Jobs and Development Corporation and Registrant
(incorporated herein by reference to Exhibit 10.11 to the Registrant's
Registration Statement on Form S-1 (Registration No. 33-50724)).
10.12 - Amendment to Lease effective as of April
14, 1989 by and between West Virginia Jobs and Development Corporation
and the Registrant (incorporated herein by reference to Exhibit 10.15
to the Registrant's Registration Statement on Form S-1 (Registration
No. 33-64530)).
10.13 - Second Amendment to lease effective as
of November 1, 1991 by and between West Virginia Economic Development
Authority, as successor to West Virginia Jobs and Development
Corporation, and the Registrant (incorporated herein by reference to
Exhibit 10.16 to the Registrant's Registration Statement on Form S-1
(Registration No. 33-64530)).
10.14 - Third Amendment to Lease effective as of
March 10, 1993 by and between West Virginia Economic Development
Authority, as successor to West Virginia Jobs and Development
Corporation, and the Registrant (incorporated herein by reference to
Exhibit 10.17 to the Registrant's Registration Statement on Form S-1
(Registration No. 33-64530)).
10.15*- Triangle Pacific Corp. 1993 Long-Term
Incentive Compensation Plan (incorporated herein by reference to
Exhibit 10.18 to the Registration's Registration Statement on Form S-1
(Registration No. 33-64530)).
10.16*- Triangle Pacific Corp. Nonemployee Director
Stock Option Plan (incorporated herein by reference to Exhibit 10.19
to the Registrant's Registration Statement on Form S-1 (Registration
No. 33-64530)).
<PAGE>
10.17 - Form of Indemnity Agreement between the
Registrant and each of its directors and executive officers.
10.18 - Amendment No. 8 dated as of January 7,
1993 amending the Credit and Guaranty Agreement dated as of September
9, 1988 by and among TPC Holding Corp., Pacific Corp, the Registrant
and J.P. Morgan (incorporated herein by reference to the Registrant's
Registration Statement on Form S-1 (Registration No. 33-64530)).
10.19 - Amendment No. 6 dated as of August 15,
1992 amending the Security Agreement dated as of September 9, 1988 by
and between the Registrant and J.P. Morgan (incorporated herein by
reference to Exhibit 10.23 to the Registrant's Registration Statement
on Form S-1 (Registration No. 33-64570)).
23.1 - Consent of Arthur Andersen & Co.
27.1 - Financial Data Schedule.
__________
* Management contract or compensatory plan or arrangement required
to be filed as an exhibit hereto.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the
Securities Exchange Act of 1934, the Registrant has duly caused
this
report to be signed on its behalf by the undersigned, thereto
duly
authorized.
TRIANGLE PACIFIC CORP.
By: /s/ Floyd F. Sherman
Floyd F. Sherman
Chairman of the Board,
President and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
/s/ Floyd F. Sherman Chairman of the Board March 30, 1994
Floyd F. Sherman and President
(Principal Executive Officer)
/s/ M. Joseph McHugh Director and Senior March 30, 1994
M. Joseph McHugh Executive Vice President
(Principal Financial Officer)
/s/ Robert J. Symon Vice President and March 30, 1994
Robert J. Symon Controller
(Principal Accounting Officer)
/s/ B. William Bonnivier Director March 30, 1994
B. William Bonnivier
/s/ Charles M. Hansen, Jr. Director March 30, 1994
Charles M. Hansen, Jr.
/s/ David R. Henkel Director March 30, 1994
David R. Henkel
Director March __, 1994
Jack L. McDonald
Director March __, 1994
Carson R. McKissick
/s/ Karen Gordon Mills Director March 30, 1994
Karen Gordon Mills
<PAGE>
SCHEDULE V
TRIANGLE PACIFIC CORP. AND SUBSIDIARIES
PROPERTY, PLANT AND EQUIPMENT
(in thousands)
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
Column F
Balance at
Balance
beginning Additions Retire- Other
at
end
Classifications of period at cost ments changes of
period
<S> <C> <C> <C> <C> <C>
Fiscal Year ended
January 3, 1992:
Land $ 16,302 $ 25 $ - $ - $
16,327
Buildings and
improvements 50,142 796 236 (1,613)
49,089
Equipment, furni-
ture & fixtures 82,234 1,435 180 (1,824)
81,665
$ 148,678 $ 2,256 $ 416 $ (3,437) $
147,081
Five months ended
June 8, 1992:
Land $ 16,327 $ 6 $ - $ (3,000) $
13,333
Buildings and
improvements 49,089 380 31 (6,532)
42,906
Equipment, furni-
ture & fixtures 81,665 504 811 (26,203)
55,155
$ 147,081 $ 890 $ 842 $ (35,735)(1)$
111,394
Seven months ended
January 1, 1993:
Land $ 13,333 $ 119 $ - $ - $
13,452
Buildings and
improvements 42,906 299 15 (4,721)
38,469
Equipment, furni-
ture & fixtures 55,155 1,968 343 (1,420)
55,360
$ 111,394 $ 2,386 $ 358 $ (6,141)(1)$
107,281
Fiscal year ended
December 31, 1993:
Land $ 13,452 $ - $ - $ - $
13,452
Buildings and
improvements 38,469 1,397 - 3,516
43,382
Equipment, furni-
ture & fixtures 55,360 6,239 47 4,207
65,759
$ 107,281 $ 7,636 $ 47 $ 7,723(2) $
122,593
<FN>
(1) Results primarily from the quasi-reorganization. The Company
restated its property, plant and equipment to fair value. In
conncection with this, land was reduced by $3.0 million and
buildings and equipment by $6.5 million. In addition, the
accumulated depreciation was eliminated against the applicable
property categories. (See Note 3 to Consolidated Financial
Statements.)
(2) Represent costs incurred to replace the buildings and equipment at
Thompsontown, Pennsylvania which was destroyed by fire. The
Company was reimbursed for these costs by an insurance company.
</TABLE>
<PAGE>
SCHEDULE
VI
TRIANGLE PACIFIC CORP. AND SUBSIDIARIES
ACCUMULATED DEPRECIATION OF
PROPERTY, PLANT AND EQUIPMENT
(in thousands)
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
Column F
Additions
Balance at charged to
Balance
beginning costs and Retire- Other
at
end
Classifications of period expenses ments changes of
period
<S> <C> <C> <C> <C> <C>
Fiscal Year ended
January 3, 1992:
Buildings and
improvements $ 4,323 $ 2,000 $ 38 $ (254) $
6,031
Equipment, furni-
ture & fixtures 17,259 7,431 294 (432)
23,964
$ 21,582 $ 9,431 $ 332 $ (686) $
29,995
Five months ended
June 8, 1992:
Buildings and
improvements $ 6,031 $ 797 $ 21 $ (6,807) $
- -
Equipment, furni-
ture & fixtures 23,964 2,937 780 (26,121)
- -
$ 29,995 $ 3,734 $ 801 $ (32,928)(1)$
- -
Seven months ended
January 1, 1993:
Buildings and
improvements $ - $ 1,155 $ - $ - $
1,155
Equipment, furni-
ture & fixtures - 4,100 - -
4,100
$ - $ 5,255 $ - $ - $
5,255
Fiscal year ended
December 31, 1993:
Buildings and
improvements $ 1,155 $ 1,700 $ - $ - $
2,855
Equipment, furni-
ture & fixtures 4,100 6,229 13 -
10,316
$ 5,255 $ 7,929 $ 13 $ - $
13,171
<FN>
(1) Results primarily from the quasi-reorganization. The accumulated
depreciation was eliminated against the applicable property
categories. (See Note 3 to Consolidated Financial Statements.)
</TABLE>
<PAGE>
SCHEDULE
VIII
TRIANGLE PACIFIC CORP. AND SUBSIDIARIES
VALUATION AND QUALIFYING
ACCOUNTS AND RESERVES
(in thousands)
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
Additions
Balance at charged to Balance
beginning costs and at end
of
Classifications of period expenses Deductions(1) period
<S> <C> <C> <C> <C>
Fiscal Year ended
January 3, 1992:
Reserve for
doubtful accounts
and returns and
and allowances $ 3,674 $ 2,170 $ 2,406 $ 3,438
Five months ended
June 8, 1992:
Reserve for
doubtful accounts
and returns and
and allowances $ 3,438 $ 678 $ (19) $ 4,135
Seven months ended
January 1, 1993:
Reserve for
doubtful accounts
and returns and
and allowances $ 4,135 $ 1,438 $ 475 $ 5,098
Fiscal Year ended
December 31, 1993:
Reserve for
doubtful accounts
and returns and
and allowances $ 5,098 $ 485 $ 2,260 $ 3,323
<FN>
(1) Write-offs of specific accounts, net of recoveries.
<PAGE>
SCHEDULE
X
TRIANGLE PACIFIC CORP. AND SUBSIDIARIES
SUPPLEMENTARY INCOME STATEMENT INFORMATION
(in thousands)
</TABLE>
<TABLE>
<CAPTION>
Column A Column B
Charged to costs and
expenses
Fiscal Seven Five
Fiscal
year months months
year
ended ended ended
ended
December 31, January 1, June 8,
January 3,
Item 1993 1993 1992
1992
<S> <C> <C> <C>
<C>
Maintenance and repairs $ 7,442 $ 3,502 $ 2,630
$ 5,148
Depreciation and amortization of
intangible assets, pre-operating
costs and similar deferrals:
Amortization of goodwill $ 1,613 $ 884 $ 1,863
$ 4,463
Amortization of deferred
financing costs 536 - 1,537
3,773
Amortization of trademark 800 416 467
1,000
$ 2,949 $ 1,300 $ 3,867
$ 9,236
Taxes, other than payroll and
income taxes * * *
*
Royalties * * *
*
Advertising costs $ 6,317 $ 3,986 $ 3,213
$ 5,010
<FN>
*Less than 1% of sales.
</TABLE>
<PAGE>
RESTATED CERTIFICATE OF INCORPORATION
OF
TRIANGLE PACIFIC CORP.
TRIANGLE PACIFIC CORP., a corporation organized and existing
under the laws of the State of Delaware (herein called the
"Corporation"), hereby certifies as follows:
1. The name of the Corporation is Triangle Pacific Corp.
The Corporation was originally incorporated under the name
"Tripac Holding Corp.", and the original Certificate of
Incorporation of the Corporation was filed with the Secretary of
State of Delaware on February 25, 1986.
2. This Restated Certificate of Incorporation restates and
integrates and further amends the provisions of the Restated
Certificate of Incorporation of the Corporation filed with the
Secretary of State of Delaware on October 19, 1992.
3. The text of the Restated Certificate of Incorporation
of the Corporation filed with the Secretary of State of Delaware
on October 19, 1992, is hereby restated and further amended to
read in its entirety as set forth on Annex A attached hereto and
incorporated herein by reference.
4. Upon this Restated Certificate of Incorporation
becoming effective pursuant to the General Corporation Law of the
State of Delaware (the "Effective Time"):
(a) Each outstanding share of Series A Common Stock,
par value $.01 per share, of the Corporation ("Series A
Stock") shall be automatically reclassified as and changed
and converted into .67 of a share of Common Stock, par value
$.01 per share, of the Corporation ("Common Stock"), without
any action by the holder thereof.
(b) No fractional shares of Common Stock shall be
issued as a result of the reclassification of Series A Stock
into Common Stock, but each stockholder whose shares of
Series A Stock are reclassified into shares of Common Stock
and who would otherwise be entitled to receive a fractional
share of Common Stock by reason of such reclassification
shall be entitled to receive from the Corporation, in lieu
of such fractional share, a cash payment in an amount equal
to $10.00 multiplied by such fraction.
(c) Each certificate that represents shares of Series
A Stock outstanding immediately prior to the Effective Time
shall thereafter be deemed to represent that number of whole
shares of Common Stock determined by multiplying the number
of shares of Series A Stock previously represented by such
certificate by .67. Each person who is a holder of record
of outstanding shares of Series A Stock at the Effective
Time shall thereafter be entitled to receive from the
Corporation a certificate or certificates representing the
number of whole shares of Common Stock into which such
shares of Series A Stock are reclassified and a check in
payment of the value of any fractional share, upon the
surrender by such holder to the Corporation of the
certificate or certificates that represented such shares of
Series A Stock.
-2-
<PAGE>
(d) The aggregate amount of capital represented by the
shares of Common Stock into which the outstanding shares of
Series A Stock are reclassified shall be the amount
determined by multiplying the total number of such shares of
Common Stock outstanding immediately after such
reclassification by the amount of One Cent ($.01); provided,
however, that the foregoing shall not prohibit the
Corporation from thereafter increasing or reducing the
amount of capital represented by any of such shares in any
manner permitted by applicable law. The reclassification of
the Series A Stock effects a reduction of the capital of the
Corporation in the amount of $33,039, which shall be
transferred to the surplus of the Corporation. The assets
of the Corporation remaining after such reduction are
sufficient to pay any debts of the Corporation for which
payment has not been otherwise provided.
5. This Restated Certificate of Incorporation has been
duly adopted in accordance with the requirements of Sections 242
and 245 of the General Corporation Law of the State of Delaware.
The stockholders of the Corporation have duly adopted this
Restated Certificate of Incorporation pursuant to written
consents given in accordance with the provisions of Section 228
of the General Corporation Law of the State of Delaware, and
written notice of the taking of such corporate action without a
meeting by less than unanimous written consent has been given to
stockholders who did not consent in writing to the action in
accordance with the provisions of that Section.
6. This Restated Certificate of Incorporation shall become
effective on August 17, 1993, concurrently with the consummation
of the underwritten public offerings of the Corporation's equity
and debt securities registered with the Securities and Exchange
Commission pursuant to Registration Statement No. 33-64530 and
Registration Statement No. 33-64598, and in any event by not
later than 5:00 p.m., eastern time, on such date.
IN WITNESS WHEREOF, this Restated Certificate of
Incorporation has been signed under the seal of the Corporation
this 13th day of August, 1993.
TRIANGLE PACIFIC CORP.
By: /s/ M J. McHugh
Name: M. Joseph McHugh
Title: Senior Executive Vice
President
and Treasurer
[Seal]
-3-
Attest:
/s/ Darryl T. Marchand
Name: Darryl T. Marchand
Title: Secretary
83411 08208 CORP 32701
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<PAGE>
ANNEX A
<PAGE>
RESTATED CERTIFICATE OF INCORPORATION
OF
TRIANGLE PACIFIC CORP.
ARTICLE I
The name of the corporation is Triangle Pacific Corp. (the
"Corporation").
ARTICLE II
The address of the registered office of the Corporation in
the State of Delaware is Corporation Trust Center, 1209 Orange
Street, in the City of Wilmington, County of New Castle. The
name of its registered agent at such address is The Corporation
Trust Company.
ARTICLE III
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.
ARTICLE IV
The aggregate number of shares of all classes of stock which
the Corporation shall have authority to issue is 40,000,000,
divided into 10,000,000 shares of Preferred Stock, par value $.01
per share (the "Preferred Stock"), and 30,000,000 shares of
Common Stock, par value $.01 per share (the "Common Stock").
The following is a statement of the designations and the
powers, preferences and rights, and the qualifications,
limitations or restrictions thereof, of the classes of stock of
the Corporation:
Section I. Preferred Stock
Shares of Preferred Stock may be issued from time to time in
one or more series as from time to time may be determined by the
Board of Directors of the Corporation. Each series shall be
distinctly designated. The Board of Directors of the Corporation
is hereby expressly granted authority to fix, by resolution or
resolutions adopted prior to the issuance of any shares of each
particular series of Preferred Stock, the designation, powers,
preferences and relative, participating, optional or other
special rights, and the qualifications, limitations or
restrictions thereof, if any, of such series, including, but
without limiting the generality of the foregoing, the following:
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<PAGE>
(1) the designation of, and the number of shares of
Preferred Stock which shall constitute, the series, which
number may be increased (except as otherwise fixed by the
Board of Directors, and in any event not above the total
number of authorized shares of the class) or decreased (but
not below the number of shares thereof then outstanding)
from time to time by action of the Board of Directors;
(2) the rate and times at which (or the method of
determination thereof), and the terms and conditions upon
which, dividends, if any, on shares of the series shall be
paid, the nature of any preferences or the relative rights
of priority of such dividends to the dividends payable on
any other class or classes of stock of the Corporation or on
any other series of Preferred Stock, and a statement whether
such dividends shall be cumulative;
(3) whether shares of the series shall be convertible
into or exchangeable for shares of capital stock or other
securities or property of the Corporation or of any other
corporation or entity, and, if so, the terms and conditions
of such conversion or exchange, including any provisions for
the adjustment of the conversion or exchange rate in such
events as the Board of Directors shall determine;
(4) whether shares of the series shall be redeemable,
and, if so, the terms and conditions of such redemption,
including the date or dates upon or after which they shall
be redeemable, and the amount and type of consideration
payable in case of redemption, which amount may vary under
different conditions and at different redemption dates;
(5) the rights, if any, of the holders of shares of
the series upon voluntary or involuntary liquidation,
merger, consolidation, distribution or sale of assets,
dissolution or winding-up of the Corporation;
(6) whether shares of the series shall have a sinking
fund or purchase account for the redemption or purchase of
shares of the series, and, if so, the terms, conditions and
amount of such sinking fund or purchase account;
(7) whether shares of the series shall have voting
rights in addition to the voting rights provided by law,
which may, without limiting the generality of the foregoing,
include (a) the right to more or less than one vote per
share on any or all matters voted upon by the Corporation's
stockholders and (b) the right to vote, as a series by
itself or together with other series of Preferred Stock or
together with all series of Preferred Stock as a class or
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with the Common Stock as a class, upon such matters, under
such circumstances and upon such conditions as the Board of
Directors may fix, including, without limitation, the right,
voting as a series by itself or together with other series
of Preferred Stock or together with all series of Preferred
Stock as a class, to elect one or more directors of the
Corporation in the event there shall have been a default in
the payment of dividends on any one or more series of
Preferred Stock or under such other circumstances and upon
such conditions as the Board of Directors may determine; and
(8) any other powers, preferences and relative,
participating, optional or other special rights, and
qualifications, limitations or restrictions, of shares of
that series.
<PAGE>
The relative powers, preferences and rights of each series of
Preferred Stock in relation to the powers, preferences and rights
of each other series of Preferred Stock shall, in each case, be
as fixed from time to time by the Board of Directors in the
resolution or resolutions adopted pursuant to the authority
granted in this Section I, and the consent, by class or series
vote or otherwise, of the holders of Preferred Stock or such of
the series of the Preferred Stock as are from time to time
outstanding shall not be required for the issuance by the
Corporation of any other series of Preferred Stock, whether the
powers, preferences and rights of such other series shall be
fixed by the Board of Directors as senior to, or on a parity
with, the powers, preferences and rights of such outstanding
series, or any of them; provided, however, that the Board of
Directors may provide in such resolution or resolutions adopted
with respect to any series of Preferred Stock that the consent of
the holders of a majority (or such greater proportion as shall be
therein fixed) of the outstanding shares of such series voting
thereon shall be required for the issuance of any or all other
series of Preferred Stock.
Section II. Common Stock
(1) Dividends. After the requirements with respect to
preferential dividends on Preferred Stock, if any, shall have
been met and after the Corporation shall have complied with all
the requirements, if any, with respect to the setting aside of
sums as sinking funds or redemption or purchase accounts and
subject further to any other conditions which may be fixed in
accordance with the provisions of this Restated Certificate of
Incorporation, then, but not otherwise, the holders of Common
Stock shall be entitled to receive such dividends, if any, as may
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be declared from time to time by the Board of Directors on the
Common Stock, which dividends shall be paid out of assets legally
available for the payment of dividends and shall be distributed
among the holders of shares of the Common Stock pro rata in
accordance with the number of shares of such stock held by each
such holder.
(2) Liquidation. After distribution in full of the
preferential amount, if any, to be distributed to the holders of
Preferred Stock or both such classes of stock in the event of
voluntary or involuntary liquidation, distribution or sale of
assets, dissolution or winding-up of the Corporation, the holders
of the Common Stock shall be entitled to receive all the
remaining assets of the Corporation, tangible and intangible, of
whatever kind available for distribution to stockholders, which
assets shall be distributed pro rata in accordance with the
number of shares of such stock held by each such holder.
(3) Voting. Except as may otherwise be required by law,
this Restated Certificate of Incorporation or the provisions of
the resolution or resolutions as may be adopted by the Board of
Directors pursuant to Section I of this Article IV, each holder
of Common Stock shall have one vote in respect of each share of
Common Stock held by such holder on each matter voted upon by the
stockholders. Cumulative voting of shares of Common Stock is
prohibited.
ARTICLE V
The following provisions are inserted for the management of
the business and for the conduct of the affairs of the
Corporation, and for further definition, limitation and
regulation of the powers of the Corporation and of its directors
and stockholders:
<PAGE>
(1) Management. The business and affairs of the
Corporation shall be managed by or under the direction of the
Board of Directors.
(2) Number, Election and Terms of Directors. Subject to
the rights of the holders of any series of Preferred Stock to
elect additional directors under specified circumstances, the
Board of Directors shall consist of not less than seven and not
more than eleven directors, and the exact number of directors
which shall constitute the Board of Directors shall be fixed from
time to time by resolution adopted by at least two-thirds of the
members of the Board of Directors then in office. The directors,
other than those who may be elected by the holders of any series
of Preferred Stock under specified circumstances, shall be
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classified, with respect to the time for which they severally
hold office, into three classes, as nearly equal in number as
possible, with the term of office of the first class to expire at
the annual meeting of stockholders to be held in 1994, the term
of office of the second class to expire at the annual meeting of
stockholders to be held in 1995 and the term of office of the
third class to expire at the annual meeting of stockholders to be
held in 1996, with each director to hold office until his or her
successor is duly elected and qualified or until his or her
earlier resignation or removal. At each annual meeting of
stockholders of the Corporation, commencing with the annual
meeting to be held in 1994, the successors of the class of
directors whose term expires at that meeting shall be elected to
hold office for a term expiring at the annual meeting of
stockholders held in the third year following the year of their
election and until their successors are duly elected and
qualified or until their earlier resignation or removal.
Election of directors need not be by written ballot unless the
Bylaws of the Corporation so provide. No decrease in the number
of directors constituting the Board of Directors shall shorten
the term of any incumbent director.
(3) Stockholder Nomination of Directors and Introduction of
Business. Advance notice of stockholder nominations for the
election of directors and of business to be brought by
stockholders before any meeting of the stockholders of the
Corporation shall be given in the manner and to the extent
provided in the Bylaws of the Corporation.
(4) Vacancies and Newly Created Directorships. Subject to
the rights of the holders of any series of Preferred Stock, any
vacancies in the Board of Directors for any reason, and any newly
created directorships resulting from any increase in the
authorized number of directors, may be filled only by a majority
of the directors then in office, though less than a quorum, or by
a sole remaining director, and the directors so chosen shall hold
office for a term expiring at the annual meeting of stockholders
at which the term of office of the class to which they have been
elected expires and until their successors are duly elected and
qualified or until their earlier resignation or removal.
(5) Removal. Subject to the rights of the holders of any
series of Preferred Stock, any director may be removed from
office at any time, but only for cause, as defined below, and
only by the affirmative vote of the holders of a majority of the
voting power of all outstanding shares of capital stock of the
Corporation entitled to vote in the election of directors
generally, voting together as a single class. For purposes of
the immediately preceding sentence, and except as may otherwise
be provided by law, "cause" shall mean: (a) the willful and
continuous failure of a director to substantially perform such
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director's duties to the Corporation (other than any such failure
resulting from incapacity due to physical or mental illness); (b)
the willful engaging by a director in gross misconduct materially
and <PAGE>
demonstrably injurious to the Corporation; or (c) the termination
for cause of the director's employment as a director, officer or
employee of any other corporation, partnership or other
enterprise.
(6) Action by Written Consent. Subject to the rights of
the holders of any series of Preferred Stock, any action required
or permitted to be taken by the stockholders of the Corporation
must be effected at a duly called annual or special meeting of
stockholders of the Corporation and may not be effected by any
consent in writing by such stockholders.
(7) Bylaws. In furtherance and not in limitation of the
powers conferred by law, the Board of Directors is expressly
authorized to adopt, alter, amend and repeal the Bylaws of the
Corporation, subject to the power of the stockholders of the
Corporation to adopt, alter, amend and repeal the Bylaws;
provided, however, that, with respect to the power of the
stockholders to adopt, alter, amend and repeal the Bylaws of the
Corporation, notwithstanding any other provision of this Restated
Certificate of Incorporation or any provision of law which might
otherwise permit a lesser vote or no vote, but in addition to any
affirmative vote of the holders of any particular class or series
of the capital stock of the Corporation required by law, this
Restated Certificate of Incorporation or any resolution or
resolutions as may be adopted by the Board of Directors pursuant
to Section I of Article IV hereof, the affirmative vote of the
holders of at least 66_% of the voting power of all outstanding
shares of capital stock of the Corporation entitled to vote in
the election of directors generally, voting together as a single
class, shall be required to adopt, alter, amend or repeal any
provision of the Bylaws of the Corporation.
(8) Powers of Directors. In addition to the powers and
authority hereinbefore or by statute expressly conferred upon
them, the directors are hereby empowered to exercise all such
powers and do all such acts and things as may be exercised or
done by the Corporation, subject, nevertheless, to the provisions
of the statutes of Delaware, this Restated Certificate of
Incorporation and any Bylaws adopted by the stockholders;
provided, however, that no Bylaws thereafter adopted by the
stockholders shall invalidate any prior act of the directors
which would have been valid if such Bylaws had not been adopted.
(9) Amendment, Repeal or Alteration. Notwithstanding any
other provision of this Restated Certificate of Incorporation or
any provision of law which might otherwise permit a lesser vote
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or no vote, but in addition to any affirmative vote of the
holders of any particular class or series of the capital stock of
the Corporation required by law, this Restated Certificate of
Incorporation or any resolution or resolutions as may be adopted
by the Board of Directors pursuant to Section I of Article IV
hereof, the affirmative vote of the holders of at least 66_% of
the voting power of all outstanding shares of capital stock of
the Corporation entitled to vote in the election of directors
generally, voting together as a single class, shall be required
to alter, amend or repeal, or adopt any provision inconsistent
with, this Article V.
ARTICLE VI
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, except to the extent that such
exemption from liability or limitation thereof shall not be
permitted under the General Corporation Law of the State of
Delaware as amended from time to time. Any repeal or
modification of this Article VI shall not adversely affect any
right or protection of a director of <PAGE>
the Corporation in respect of any act or omission occurring prior
to the time of such repeal or modification. The provisions of
this Article VI shall not be deemed to limit or preclude
indemnification of a director by the Corporation for any
liability of a director which has not been eliminated by the
provisions of this Article VI.
ARTICLE VII
The Corporation reserves the right to amend, alter, change
or repeal any provision contained in this Restated 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.
83411 08208 CORP 33281
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<PAGE>
AMENDED AND RESTATED BYLAWS
OF
<PAGE>
TRIANGLE PACIFIC CORP.
Effective August 17, 1993
<PAGE>
TABLE OF CONTENTS
.Begin Table C.
ARTICLE I OFFICES........................................ 1
Section 1..................................Registered Office
1
Section 2......................................Other Offices
1
ARTICLE II ..........................MEETINGS OF STOCKHOLDERS
1
Section 1..................................Place of Meetings
1
Section 2....................................Annual Meetings
1
Section 3...................................Special Meetings
1
Section 4.............................................Quorum
2
Section 5.............................................Voting
2
Section 6..............List of Stockholders Entitled to Vote
2
Section 7........................................Record Date
3
Section 8............Conduct of Meetings by Presiding Person
3
Section 9........................Notification of Nominations
4
Section 10....................Notice of Stockholder Business
5
Section 11.........................Action by Written Consent
6
ARTICLE III DIRECTORS...................................... 6
Section 1...................Number and Election of Directors
6
Section 2..........................................Vacancies
7
Section 3..................................Duties and Powers
7
Section 4...........................................Meetings
7
Section 5.............................................Quorum
7
Section 6.........................Actions by Written Consent
8
Section 7...................Meetings by Conference Telephone
8
Section 8.........................................Committees
8
Section 9.......................................Compensation
8
Section 10..............................Interested Directors
8
Section 11...........................................Removal
9
ARTICLE IV OFFICERS....................................... 9
Section 1............................................General
9
Section 2...........................................Election
9
Section 3.................Chairman of the Board of Directors
10
Section 4..........................................President
10
Section 5..........................Executive Vice Presidents
10
Section 6....................................Vice Presidents
10
Section 7..........................................Secretary
11
Section 8.........................................Controller
11
Section 9..........................................Treasurer
11
Section 10.............................Assistant Secretaries
11
Section 11..............................Assistant Treasurers
12
Section 12....................................Other Officers
12
ARTICLE V STOCK.......................................... 12
Section 1...............................Form of Certificates
12
Section 2.........................................Signatures
12
Section 3..................................Lost Certificates
12
Section 4..........................................Transfers
13
ARTICLE VI NOTICES........................................ 13
Section 1............................................Notices
13
<PAGE>
Section 2..................................Waivers of Notice
13
ARTICLE VII INDEMNIFICATION................................ 13
Section 1............................................General
13
Section 2....................Expenses Related to Proceedings
14
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Section 3............................Advancement of Expenses
14
Section 4........................Request for Indemnification
14
Section 5......Determining Entitlement to Indemnification if
no Change of Control................................ 14
Section 6......Determining Entitlement to Indemnification if
Change of Control................................... 14
Section 7..................Procedures of Independent Counsel
15
Section 8....................Expenses of Independent Counsel
15
Section 9......................................Trial De Novo
15
Section 10...................................Non-Exclusivity
16
Section 11.........................Insurance and Subrogation
17
Section 12......................................Severability
17
Section 13...................Certain Persons Not Entitled to
Indemnification..................................... 17
Section 14.......................................Definitions
17
Section 15...........................................Notices
18
Section 16................................Contractual Rights
19
ARTICLE VIII GENERAL PROVISIONS............................. 19
Section 1..........................................Dividends
19
Section 2......................................Disbursements
19
Section 3........................................Fiscal Year
19
Section 4.....................................Corporate Seal
19
ARTICLE IX AMENDMENT...................................... 19
.End Table C.
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<PAGE>
BYLAWS
OF
TRIANGLE PACIFIC CORP.
(hereinafter the "Corporation")
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of
the Corporation shall be located at 1209 Orange Street, City of
Wilmington, State of Delaware 19801.
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.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings. Meetings of the
stockholders for the election of directors or for any other
purpose shall be held at such time and place, either within or
without the State of Delaware, as may be designated from time to
time by the Board of Directors and stated in the notice of the
meeting or in a duly executed waiver of notice thereof.
Section 2. Annual Meetings. The annual meeting of
stockholders shall be held on such date and at such time as may
be designated from time to time by the Board of Directors and
stated in the notice of the meeting, at which meeting the
stockholders shall elect by a plurality vote a Board of
Directors, and transact such other business as may properly be
brought before the meeting. Written notice of the annual meeting
stating the place, date and hour of the meeting shall be given to
each stockholder entitled to vote at such meeting not less than
ten nor more than sixty days before the date of the meeting,
except that where the matter to be acted upon is a merger or
consolidation of the Corporation or a sale, lease or exchange of
all or substantially all its assets, such notice shall be given
not less than twenty nor more than sixty days prior to such
meeting.
Section 3. Special Meetings. Unless otherwise
prescribed by law or by the Corporation's Restated Certificate of
Incorporation as may be amended and restated from time to time
(the "Certificate of Incorporation"), special meetings of
stockholders, for any purpose or purposes, may be called by (a)
the Chairman of the Board of Directors, (b) the President or (c)
the Chairman of the Board of Directors, the President or the
Secretary of the Corporation at (i) the instruction of a majority
of the Board of Directors or (ii) the written request of the
holders of at least 50% of the total number of shares of stock
then outstanding and entitled to vote stating the specific
purpose or purposes thereof. Written notice of a special meeting
stating the place, date and hour of the meeting and the purpose
or purposes for which the meeting is being called shall be given
to each stockholder entitled to vote at such meeting not less
than ten nor more than sixty days before the meeting, except that
where the matter to be acted upon is a merger or consolidation of
the Corporation or a sale, lease or exchange of all <PAGE>
or substantially all its assets, such notice shall be given not
less than twenty nor more than sixty days prior to such meeting.
Section 4. Quorum. Except as otherwise provided by law
or by the Certificate of Incorporation, the holders of a majority
of the capital stock issued and outstanding and entitled to vote
thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the
transaction of business. If, however, such quorum shall not be
present or represented at any meeting of the stockholders, the
stockholders entitled to vote thereat, present in person or
represented by proxy, shall have power to adjourn the meeting
from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented. At such
adjourned meeting at which a quorum shall be present or
represented, any business may be transacted that might have been
transacted at the meeting as originally noticed. 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 entitled to vote at the meeting.
Section 5. Voting. Unless otherwise required by law,
the Certificate of Incorporation or these Bylaws, any question
brought before any meeting of stockholders shall be decided by
the vote of the holders of a majority of the voting power of the
stock represented and entitled to vote thereat. Such votes may
be cast in person or by proxy but no proxy shall be voted or
acted upon after three years from its date, unless such proxy
provides for a longer period. The presiding person at a meeting
of stockholders, in his or her discretion, may require that any
votes cast at such meeting shall be cast by written ballot.
Section 6. List of Stockholders Entitled to Vote. The
officer of the Corporation who has charge of the stock ledger of
the Corporation shall prepare and make, at least ten days before
every meeting of stockholders, a complete list of the
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stockholders entitled to vote at the meeting, arranged in
alphabetical order, and 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 ten 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 of the
Corporation who is present. The stock ledger of the Corporation
shall be the only evidence as to who are the stockholders of the
Corporation.
Section 7. Record Date. 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, or
entitled to receive payment of any dividend or other distribution
or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the Board of Directors may
fix a record date, which, in the case of a meeting, shall not be
less than the minimum nor more than the maximum number of days
prior to the scheduled date of such meeting permitted under the
laws of the State of Delaware or the rules of any exchange on
which shares of capital stock of the Company are listed for
trading and which, in the case of any other action, shall be not
more than the maximum number of days prior to any such action
permitted by the laws of the State of Delaware. If no such
record date is fixed by the Board of Directors, the record date
shall be that prescribed by the laws of the State of Delaware. A
determination of stockholders of record entitled to notice of or
to vote at a meeting of stockholders shall apply to any <PAGE>
adjournment of the meeting; provided, however, that the Board of
Directors may fix a new record date for the adjourned meeting.
Section 8. Conduct of Meetings by Presiding Person. All
determinations of the presiding person at each meeting of
stockholders shall be conclusive unless a matter is determined
otherwise upon motion duly adopted by the affirmative vote of the
holders of at least 66_% of the voting power of the shares of
capital stock of the Corporation entitled to vote in the election
of directors generally, held by stockholders present in person or
represented by proxy at such meeting. Accordingly, in any
meeting of stockholders or part thereof, the presiding person
shall have the sole power to determine appropriate rules or to
dispense with theretofore prevailing rules. Without limiting the
foregoing, the following rules shall apply:
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(a) The presiding person may ask or require that
anyone not a bona fide stockholder or proxy leave the meeting.
(b) A resolution or motion shall be considered for
vote only if proposed by a stockholder or duly authorized proxy,
and seconded by an individual, who is a stockholder or duly
authorized proxy, other than the individual who proposed the
resolution or motion, subject to compliance with any other
requirements concerning such a proposed resolution or motion
contained in these Bylaws. The presiding person may propose any
motion for vote. The order of business at all meetings of
stockholders shall be determined by the presiding person.
(c) The presiding person may impose any reasonable
limits with respect to participation in the meeting by
stockholders, including, but not limited to, limits on the amount
of time at the meeting taken up by the remarks or questions of
any stockholder, limits on the numbers of questions per
stockholder and limits as to the subject matter and timing of
questions and remarks by stockholders.
(d) Before any meeting of stockholders, the Board of
Directors may appoint any persons other than nominees for office
to act as inspectors of election at the meeting or its
adjournment. If no inspectors of election are so appointed, the
presiding person may, and on the request of any stockholder or a
stockholder's proxy shall, appoint inspector(s) of election at
the meeting of stockholders. If any person appointed as
inspector fails to appear or fails or refuses to act, the
presiding person may, and upon the request of any stockholder or
a stockholder's proxy shall, appoint a person to fill such
vacancy.
The duties of these inspectors shall be as follows:
(i) determine the number of shares outstanding and the
voting power of each, the shares represented at the meeting,
the existence of a quorum and the authenticity, validity and
effect of proxies;
(ii) receive votes or ballots;
(iii) hear and determine all challenges and questions in
any way arising in connection with the right to vote;
(iv) count and tabulate all votes;
<PAGE>
(v) report to the Board of Directors the results based
on the information assembled by the inspectors; and
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(vi) do any other acts that may be proper to conduct
the election or vote with fairness to all stockholders.
Notwithstanding the foregoing, the final certification of the
results of any election or other matter acted upon at a meeting
of stockholders shall be made by the Board of Directors.
Section 9. Notification of Nominations. Subject to the
rights of the holders of any series of Preferred Stock of the
Corporation to elect directors under specified circumstances,
nominations for the election of directors may be made by the
Board of Directors or by any stockholder entitled to vote in the
election of directors generally. Subject to the foregoing, only
a stockholder of record entitled to vote in the election of
directors generally may nominate one or more persons for election
as directors at a meeting of stockholders and only if written
notice of such stockholder's intent to make such nomination or
nominations has been given, either by personal delivery or by
United States mail, postage prepaid, to the Secretary of the
Corporation and has been received by the Secretary: (i) with
respect to an election to be held at an annual meeting of
stockholders, not less than ninety days nor more than 180 days
prior to the anniversary of the previous year's annual meeting of
stockholders; and (ii) with respect to an election to be held at
a special meeting of stockholders for the election of directors,
not less than forty days nor more than sixty days prior to the
date of such meeting, provided, however, that in the event that
less than fifty days' notice or prior public disclosure of the
date of the special meeting of stockholders is given or made to
the stockholders, such notice must be so received not later than
the close of business on the seventh day following the day on
which such notice of date of the meeting was mailed or such
public disclosure was made.
Each such notice shall set forth: (a) the name and address
of the stockholder who intends to make the nomination and of the
person or persons to be nominated; (b) a representation that the
stockholder is a holder of record of stock of the Corporation
entitled to vote at such meeting and intends to appear in person
or by proxy at the meeting to nominate the person or persons
specified in the notice; (c) a description of all arrangements or
understandings between the stockholder and each nominee and any
other person or persons (naming such person or persons) pursuant
to which the nomination or nominations are to be made by the
stockholder; and (d) such other information regarding each
nominee proposed by such stockholder as would be required to be
included in a proxy statement filed pursuant to the proxy rules
of the Securities and Exchange Commission, had the nominee been
nominated, or intended to be nominated, by the Board of
Directors. To be effective, each notice of intent to make a
nomination given hereunder shall be accompanied by the written
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consent of each nominee to serve as a director of the Corporation
if elected.
The presiding person at the meeting shall, if the facts
warrant, determine that a nomination was not properly brought
before the meeting in accordance with the provisions hereof and,
if such presiding person should so determine, he or she shall
declare to the meeting that such nomination was not properly
brought before the meeting and shall not be considered.
Section 10. Notice of Stockholder. At a meeting of the
stockholders, only such business shall be conducted as shall have
been properly brought before the meeting. To be <PAGE>
properly brought before a meeting, business must (a) be specified
in the notice of meeting (or any supplement thereto) given by or
at the direction of the Board of Directors or by or at the
direction of the stockholders calling the meeting pursuant to
Section 3 of this Article II, (b) otherwise be properly brought
before the meeting by or at the direction of the Board of
Directors or (c) otherwise (i) be properly requested to be
brought before the meeting by a stockholder of record entitled to
vote in the election of directors generally and (ii) constitute a
proper subject to be brought before such meeting. For business
to be properly brought before a meeting of stockholders, any
stockholder who intends to bring any matter (other than the
election of directors) before a meeting of stockholders and is
entitled to vote on such matter must deliver written notice of
such stockholder's intent to bring such matter before the meeting
of stockholders, either by personal delivery or by United States
mail, postage prepaid, to the Secretary of the Corporation. Such
notice must be received by the Secretary: (i) with respect to an
annual meeting of stockholders, not less than ninety days nor
more than 180 days prior to the anniversary of the previous
year's annual meeting of stockholders; and (ii) with respect to a
special meeting of stockholders, not less than forty days nor
more than sixty days prior to the date of such meeting, provided,
however, that in the event that less than fifty days' notice or
prior public disclosure of the date of the special meeting of
stockholders is given or made to the stockholders, such notice
must be so received not later than the close of business on the
seventh day following the day on which such notice of date of the
meeting was mailed or such public disclosure was made.
A stockholder's notice to the Secretary shall set forth as
to each matter the stockholder proposes to bring before the
meeting of stockholders: (a) a brief description of the business
desired to be brought before the meeting and the reasons for
conducting such business at the meeting; (b) the name and
address, as they appear on the Corporation's books, of the
stockholder proposing such business; (c) the class and number of
shares of the Corporation which are beneficially owned by the
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stockholder; and (d) any material interest of the stockholder in
such business. No business shall be conducted at a meeting of
stockholders except in accordance with the procedures set forth
in this Section 10.
The presiding person at the meeting shall, if the facts
warrant, determine that (i) the business proposed to be brought
before the meeting is not a proper subject therefor and/or (ii)
such business was not properly brought before the meeting in
accordance with the provisions hereof and, if such presiding
person should so determine, he or she shall declare to the
meeting that (i) the business proposed to be brought before the
meeting is not a proper subject therefor and/or (ii) such
business was not properly brought before the meeting and shall
not be transacted.
Section 11. Action by Written Consent. Subject to the
rights of the holders of any series of Preferred Stock of the
Corporation, any action required or permitted to be taken by the
stockholders of the Corporation must be effected at a duly called
annual or special meeting of stockholders of the Corporation and
may not be effected by any consent in writing by such
stockholders.
ARTICLE III
DIRECTORS
Section 1. Number and Election of Directors. The
business and affairs of the Corporation shall be managed by a
Board of Directors. Subject to the rights of the holders of
<PAGE>
any series of Preferred Stock of the Corporation to elect
additional directors under specified circumstances, the Board of
Directors shall consist of not less than seven and not more than
eleven directors, and the exact number of directors which shall
constitute the Board of Directors shall be fixed from time to
time by resolution adopted by at least two-thirds of the members
of the Board of Directors then in office. No decrease in the
number of directors constituting the Board of Directors shall
shorten the term of any incumbent director. Except as provided
in Section 2 of this Article III, and subject to the rights of
the holders of any series of Preferred Stock of the Corporation,
directors shall be elected by a plurality of the votes cast at
annual meetings of stockholders.
The directors, other than those who may be elected by the
holders of any series of Preferred Stock of the Corporation under
specified circumstances, shall be classified, with respect to the
time for which they severally hold office, into three classes, as
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nearly equal in number as possible, with the term of office of
the first class to expire at the annual meeting of stockholders
to be held in 1994, the term of office of the second class to
expire at the annual meeting of stockholders to be held in 1995
and the term of office of the third class to expire at the annual
meeting of stockholders to be held in 1996, with each director to
hold office until his or her successor is duly elected and
qualified or until his or her resignation or removal. At each
annual meeting of stockholders of the Corporation, commencing
with the annual meeting to be held in 1994, the successors of the
class of directors whose term expires at that meeting shall be
elected to hold office for a term expiring at the annual meeting
of stockholders held in the third year following the year of
their election and until their successors are duly elected and
qualified or until their earlier resignation or removal.
Any director may resign at any time upon notice to the
Corporation. A director need not be a stockholder, a citizen of
the United States or a resident of the State of Delaware.
Section 2. Vacancies. Subject to the rights of the
holders of any series of Preferred Stock of the Corporation, any
vacancies in the Board of Directors for any reason, and any newly
created directorships resulting from any increase in the
authorized number of directors, may be filled only by a majority
of the directors then in office, though less than a quorum, or by
a sole remaining director, and the directors so chosen shall hold
office for a term expiring at the annual meeting of stockholders
at which the term of office of the class to which they have been
elected expires and until their successors are duly elected and
qualified or until their earlier resignation or removal. If
there are no directors in office, then an election of directors
may be held in the manner provided by statute.
Section 3. Duties and Powers. The business of the
Corporation shall be managed by or under the direction of the
Board of Directors, which may exercise all such powers of the
Corporation and do all such lawful acts and things as are not by
statute or by the Certificate of Incorporation or by these Bylaws
directed or required to be exercised or done by the stockholders.
Section 4. Meetings. Meetings of the Board of Directors
shall be held at such time as the Board of Directors shall fix.
Meetings shall be held at such place within or without the State
of Delaware as may be fixed by the Board of Directors. No call
shall be required for regular meetings for which the time and
place have been fixed. Special meetings may be called by or at
the direction of the Chairman of the Board of Directors, the
President or any two directors then in office. No notice shall
be required for regular meetings for which the time and place
have been fixed. Written, oral or any other mode of notice of
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the time and place shall be given for special meetings at least
one day before the meeting. Notice need not <PAGE>
be given to any director or to any member of a committee of
directors who submits a written waiver of notice signed by him or
her before or after the time stated therein. Attendance of any
such person at a meeting shall constitute a waiver of notice of
such meeting, except when he or she attends a meeting 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. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting
of the directors need be specified in any written waiver of
notice.
Section 5. Quorum. Except as may be otherwise
specifically provided by law, the Certificate of Incorporation or
these Bylaws, at all meetings of the Board of Directors, a
majority of the entire Board of Directors shall constitute a
quorum for the transaction of business, and the act of a majority
of the directors present at any 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 6. Actions by Written Consent. Unless otherwise
provided by the Certificate of Incorporation or these Bylaws, 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 the members of the Board of Directors or
committee, as the case may be, consent thereto in writing, in one
document or in counterparts, and the writing or writings are
filed with the minutes of proceedings of the Board of Directors
or committee.
Section 7. Meetings by Conference Telephone. Unless
otherwise provided by the Certificate of Incorporation or these
Bylaws, members of the Board of Directors or any committee may
participate in a meeting of the Board of Directors or such
committee by means of conference telephone or similar
communications equipment by means of which all persons
participating in the meeting can hear each other, and
participation in a meeting pursuant to this Section 7 shall
constitute presence in person at such meeting.
Section 8. Committees. The Board of Directors may, by
resolution passed by a majority of the entire Board of Directors,
designate one or more committees, each committee to consist of
one or more of the directors of the Corporation. The Board of
Directors may designate one or more directors as alternate
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members of any committee who may replace any absent or
disqualified member at any meeting of any such committee. In the
absence or disqualification of a member of a committee, and in
the absence of a designation by the Board of Directors of an
alternate member to replace the absent or disqualified member,
the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a
quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in place of any absent or
disqualified member. Any committee, to the extent allowed by law
and provided in the resolution establishing such committee, shall
have and may exercise all the powers and authority of the Board
of Directors in the management of the business and affairs of the
Corporation. Each committee shall keep regular minutes and
report to the Board of Directors when required.
Section 9. Compensation. The Board of Directors may
from time to time by resolution authorize the payment of fees or
other compensation to the directors for services as such to the
Corporation, including, but not limited to, a fixed sum and
expenses for attendance at each regular or special meeting of the
Board of Directors or any committee thereof; <PAGE>
provided that nothing contained herein shall be construed to
preclude any director from serving the Corporation in any other
capacity and receiving compensation therefor.
Section 10. Interested Directors. No contract or
transaction between the Corporation and one or more of its
directors or officers, or between the Corporation and any other
corporation, partnership, association or other organization in
which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable
solely for this reason, or solely because the director or officer
is present at or participates in the meeting of the Board of
Directors or committee thereof that authorizes the contract or
transaction, or solely because his, her or their votes are
counted for such purpose, if (a) the material facts as to his,
her or their relationship or interest as to the contract or
transaction are disclosed or are known to the Board of Directors
or committee, and the Board of Directors or committee in good
faith authorizes the contract or transaction by the affirmative
vote of a majority of the disinterested directors, even though
the disinterested directors be less than a quorum, (b) the
material facts as to his, her or their relationship or interest
as to the contract or transaction are disclosed or are known to
the stockholders entitled to vote thereon and the contract or
transaction is specifically approved in good faith by vote of the
stockholders or (c) the contract or transaction is fair as to the
Corporation as of the time it is authorized, approved or ratified
by the Board of Directors, a committee thereof or the
stockholders. Common or interested directors may be counted in
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determining the presence of a quorum at a meeting of the Board of
Directors or a committee that authorizes the contract or
transaction.
Section 11. Removal. Subject to the rights of the
holders of any series of Preferred Stock of the Corporation, any
director may be removed from office at any time, but only for
cause, as defined below, and only by the affirmative vote of the
holders of a majority of the voting power of all outstanding
shares of capital stock of the Corporation entitled to vote in
the election of directors generally, voting together as a single
class. For purposes of the immediately preceding sentence, and
except as may otherwise be provided by law, "cause" shall mean:
(1) the willful and continuous failure of a director to
substantially perform such director's duties to the Corporation
(other than any such failure resulting from incapacity due to
physical or mental illness); (2) the willful engaging by a
director in gross misconduct materially and demonstrably
injurious to the Corporation; or (3) the termination for cause of
the director's employment as a director, officer or employee of
any other corporation, partnership or other enterprise.
ARTICLE IV
OFFICERS
Section 1. General. The officers of the Corporation
shall be chosen by the Board of Directors and shall be a
President and a Secretary. The Board of Directors, in its
discretion, may also choose a Chairman of the Board (who must be
a director), a Treasurer and one or more Executive Vice
Presidents, Vice Presidents, Assistant Secretaries, Assistant
Treasurers and other officers. Any number of offices may be held
by the same person, unless otherwise prohibited by law, the
Certificate of Incorporation or these Bylaws. The officers of
the Corporation need not be stockholders of the Corporation or,
except in the case of the Chairman of the Board of Directors,
directors of the Corporation.
<PAGE>
Section 2. Election. The Board of Directors at its
first meeting held after each annual meeting of stockholders
shall elect the officers of the Corporation, who shall hold their
offices for such terms and shall exercise such powers and perform
such duties as shall be determined from time to time by the Board
of Directors; and all officers of the Corporation shall hold
office until their successors are chosen and qualified or until
their earlier death, resignation or removal. Any officer elected
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by the Board of Directors may be removed at any time by the
affirmative vote of a majority of the Board of Directors. Any
vacancy occurring in any office of the Corporation shall be
filled by the Board of Directors. The salaries of all officers
of the Corporation shall be fixed by the Board of Directors and
may be altered from time to time except as otherwise provided by
contract.
Section 3. Chairman of the Board of Directors. The
Chairman of the Board of Directors shall preside at all meetings
of the stockholders and of the Board of Directors. Except where
by law the signature of the President is required, the Chairman
of the Board of Directors shall possess the same power as the
President to sign all contracts, certificates and other
instruments of the Corporation. During the absence or disability
of the President, the Chairman of the Board of Directors shall
exercise all the powers and discharge all the duties of the
President. The Chairman of the Board of Directors shall also
perform such other duties and may exercise such other powers as
from time to time may be assigned to him or her by these Bylaws
or by the Board of Directors.
Section 4. President. The President shall, subject to
the control of the Board of Directors, have general supervision
of the business of the Corporation and shall see that all orders
and resolutions of the Board of Directors are carried into
effect. He or she shall be the Chief Executive Officer of the
Corporation and shall execute all bonds, mortgages, contracts and
other instruments of the Corporation requiring a seal, under the
seal of the Corporation, except where required or permitted by
law to be otherwise signed and executed and except that the other
officers of the Corporation may sign and execute documents when
so authorized by these Bylaws, the Board of Directors or the
President. In the absence or disability of the Chairman of the
Board of Directors, or if there be none, the President shall
preside at all meetings of the stockholders and (if the President
is a director) the Board of Directors. The President shall also
perform such other duties and may exercise such other powers as
from time to time may be assigned to him or her by these Bylaws
or by the Board of Directors.
Section 5. Executive Vice Presidents. At the request of
the President or in his or her absence or in the event of his or
her inability or refusal to act (and if there be no Chairman of
the Board of Directors or if the Chairman of the Board of
Directors shall be unable or refuses to act or is absent), the
Executive Vice President or the Executive Vice Presidents, if
there be more than one, shall perform the duties of the
President, and when so acting, shall have all the powers of and
be subject to all the restrictions upon the President. Each
Executive Vice President shall perform such other duties and have
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such other powers as the Board of Directors or the President from
time to time may prescribe.
Section 6. Vice Presidents. In the absence or
disability of the President (and if there be no Chairman of the
Board of Directors and no Executive Vice Presidents or if the
Chairman of the Board of Directors and the Executive Vice
Presidents shall be unable or refuse to act or are absent), the
Vice President or the Vice Presidents, if there be more than one,
shall perform the duties of the President, and when so acting,
shall have all the powers of and be subject to all the
restrictions upon the President. Each Vice President shall
perform such other duties and have such other powers as the Board
of Directors, the President or the Executive Vice Presidents from
time to time may prescribe. If there be no Chairman of the <PAGE>
Board of Directors, Executive Vice President or Vice President,
the Board of Directors shall designate the officer of the
Corporation who, in the absence of the President or in the event
of the inability or refusal of the President to act, shall
perform the duties of the President, and when so acting, shall
have all the powers of and be subject to all the restrictions
upon the President.
Section 7. Secretary. The Secretary shall attend all
meetings of the Board of Directors and all meetings of
stockholders and record all the proceedings thereat in a book or
books to be kept for that purpose; the Secretary shall also
perform like duties for the standing committees when required.
If any standing committee should appoint someone other than the
Secretary to perform such duties at any meeting of such standing
committee, the person so appointed shall promptly furnish to the
Secretary a true and accurate copy of the minutes of the meeting
of such standing committee. The Secretary shall give, or cause
to be given, notice of all meetings of the stockholders and
special meetings of the Board of Directors, and shall perform
such other duties as may be prescribed by the Board of Directors
or President, under whose supervision he or she shall be. If the
Secretary shall be unable or shall refuse to cause to be given
notice of all meetings of the stockholders and special meetings
of the Board of Directors, and if there be no Assistant
Secretary, then either the Board of Directors or the President
may choose another officer to cause such notice to be given. The
Secretary shall have custody of the seal of the Corporation and
the Secretary or an Assistant Secretary, if there by one, shall
have authority to affix the same to any instrument requiring it,
and when so affixed, it may be attested by the signature of the
Secretary or by the signature of any 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 Secretary shall see that
all books, reports, statements, certificates and other documents
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and records required by law to be kept or filed are properly kept
or filed, as the case may be.
Section 8. Controller. The Controller, if there be one,
shall be the principal officer in charge of the accounts of the
Corporation and shall perform such duties as from time to time
may be assigned to him by the Board of Directors.
Section 9. Treasurer. The Treasurer, if there be one,
shall have the custody of the corporate funds and securities and
shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to
the credit of the Corporation in such depositories as may be
designated by the Board of Directors. The Treasurer shall
disburse the funds 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
Directors, at its regular meeting, or when the Board of Directors
so requires, an account of all his or her transactions as
Treasurer and of the financial condition of the Corporation. If
required by the Board of Directors, the Treasurer shall give the
Corporation a bond in such sum and with such surety or sureties
as shall be satisfactory to the Board of Directors for the
faithful performance of the duties of his or her office and for
the restoration to the Corporation, in case of his or her death,
resignation, retirement or removal from office, of all books,
papers, vouchers, money and other property of whatever kind in
his or her possession or under his or her control belonging to
the Corporation.
Section 10. Assistant Secretaries. Except as may be
otherwise provided in these Bylaws, Assistant Secretaries, if
there be any, shall perform such duties and have such powers as
from time to time may be assigned to them by the Board of
Directors, the President, any Executive Vice President, if there
be one, any Vice President, if there be one, or the <PAGE>
Secretary, and in the absence of the Secretary or in the event of
his or her disability or refusal to act, shall perform the duties
of the Secretary, and when so acting, shall have all the powers
of and be subject to all the restrictions upon the Secretary.
Section 11. Assistant Treasurers. Assistant Treasurers,
if there be any, shall perform such duties and have such powers
as from time to time may be assigned to them by the Board of
Directors, the President, any Executive Vice President, if there
be one, any Vice President, if there be one, or the Treasurer,
and in the absence of the Treasurer or in the event of his or her
disability or refusal to act, shall perform the duties of the
Treasurer, and when so acting, shall have all the powers of and
be subject to all the restrictions upon the Treasurer. If
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required by the Board of Directors, an Assistant Treasurer shall
give the Corporation a bond in such sum and with such surety or
sureties as shall be satisfactory to the Board of Directors for
the faithful performance of the duties of his or her office and
for the restoration to the Corporation, in case of his or her
death, resignation, retirement or removal from office, of all
books, papers, vouchers, money and other property of whatever
kind in his or her possession or under his or her control
belonging to the Corporation.
Section 12. Other Officers. Such other officers as the
Board of Directors may appoint shall perform such duties and have
such powers as from time to time may be assigned to them by the
Board of Directors. The Board of Directors may delegate to any
other officer of the Corporation the power to choose such other
officers and to prescribe their respective duties and powers.
ARTICLE V
STOCK
Section 1. Form of Certificates. Every holder of stock
in the Corporation shall be entitled to have a certificate signed
in the name of the Corporation (a) by the President or an
Executive Vice President or Vice President and (b) by the
Treasurer or an Assistant Treasurer, or the Secretary or an
Assistant Secretary of the Corporation, certifying the number of
shares owned by such holder.
Section 2. Signatures. Where a certificate is
countersigned by (a) a transfer agent other than the Corporation
or its designated employees or (b) a registrar other than the
Corporation or its designated employees, any other signature on
the certificate may be a facsimile. In case any officer,
transfer agent or registrar who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to
be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with
the same effect as if he or she were such officer, transfer agent
or registrar at the date of issue.
Section 3. Lost Certificates. The Board of Directors
may direct a new certificate to be issued in place of any
certificate 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, 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 his or
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her legal representative, to advertise the same in such manner as
the Board of Directors shall require and/or to give the
Corporation a bond or other indemnity deemed satisfactory by the
Board of Directors in such sum as it may direct as indemnity
against any claim that may be <PAGE>
made against the Corporation with respect to the certificate
alleged to have been lost, stolen or destroyed.
Section 4. Transfers. Stock of the Corporation shall be
transferable in the manner prescribed by law and in these Bylaws.
Transfers of stock shall be made on the books of the Corporation
only by the person named in the certificate or by his or her
attorney lawfully constituted in writing and upon the surrender
of the certificate therefor, which shall be cancelled before a
new certificate shall be issued.
ARTICLE VI
NOTICES
Section 1. Notices. Whenever written notice is required
by law, the Certificate of Incorporation or these Bylaws to be
given to any director, member of a committee or stockholder, such
notice may be given by mail, addressed to such director, member
of a committee or stockholder, at his or her address as it
appears on the records of the Corporation, with postage thereon
prepaid, and such notice shall be deemed to be given at the time
when same shall be deposited in the United States mail. Written
notice may also be given personally or by facsimile transmission,
telegram, telex or cable, and such notice shall be deemed given
at the time when the same shall be sent.
Section 2. Waivers of Notice. Whenever any notice is
required by law, the Certificate of Incorporation or these Bylaws
to be given to any director, member of a committee or
stockholder, a waiver thereof in writing, signed by the person or
persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent to notice.
ARTICLE VII
INDEMNIFICATION
Section 1. General. The Corporation shall indemnify,
and advance Expenses (as this and all other capitalized words
used in this Article VII and not previously defined in these
Bylaws are defined in Section 14 of this Article VII) to,
Indemnitee to the fullest extent permitted by applicable law in
effect on the date of the effectiveness of these Bylaws, and to
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such greater extent as applicable law may thereafter permit. The
rights of Indemnitee provided under the preceding sentence shall
include, but not be limited to, the right to be indemnified to
the fullest extent permitted by Section 145(b) of the D.G.C.L. in
Proceedings by or in the right of the Corporation and to the
fullest extent permitted by Section 145(a) of the D.G.C.L. in all
other Proceedings. The provisions set forth below in this
Article VII are provided in furtherance, and not by way of
limitation, of the obligations expressed in this Section 1.
Section 2. Expenses Related to Proceedings. If
Indemnitee is, by reason of his or her Corporate Status, a
witness in or a party to and is successful, on the merits or
otherwise, in any Proceeding, he or she shall be indemnified
against all Expenses actually and reasonably incurred by him or
her or on his or her behalf in connection therewith. If
Indemnitee is not wholly successful in such Proceeding but is
successful, on the merits or otherwise, as to any Matter in such
Proceeding, the Corporation shall indemnify Indemnitee against
all Expenses <PAGE>
actually and reasonably incurred by him or her or on his or her
behalf relating to each Matter. The termination of any Matter in
such a Proceeding by dismissal, with or without prejudice, shall
be deemed to be a successful result as to such Matter.
Section 3. Advancement of Expenses. Indemnitee shall be
advanced Expenses within ten days after requesting them to the
fullest extent permitted by Section 145(e) of the D.G.C.L.
Section 4. Request for Indemnification. To obtain
indemnification Indemnitee shall submit to the Corporation a
written request with such information as is reasonably available
to Indemnitee. The Secretary of the Corporation shall promptly
advise the Board of Directors of such request.
Section 5. Determining Entitlement to Indemnification if
no Change of Control. If there has been no Change of Control at
the time the request for indemnification is sent, Indemnitee's
entitlement to indemnification shall be determined in accordance
with Section 145(d) of the D.G.C.L. If entitlement to
indemnification is to be determined by Independent Counsel, the
Corporation shall furnish notice to Indemnitee within ten days
after receipt of the request for indemnification, specifying the
identity and address of Independent Counsel. Indemnitee may,
within fourteen days after receipt of such written notice of
selection, deliver to the Corporation a written objection to such
selection. Such objection may be asserted only on the ground
that the Independent Counsel so selected does not meet the
requirements of Independent Counsel and the objection shall set
forth with particularity the factual basis of such assertion. If
there is an objection to the selection of Independent Counsel,
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either the Corporation or Indemnitee may petition the Court of
Chancery of the State of Delaware or any other court of competent
jurisdiction for a determination that the objection is without a
reasonable basis and/or for the appointment as Independent
Counsel of a person selected by the court.
Section 6. Determining Entitlement to Indemnification if
Change of Control. If there has been a Change of Control at the
time the request for indemnification is sent, Indemnitee's
entitlement to indemnification shall be determined in a written
opinion by Independent Counsel selected by Indemnitee.
Indemnitee shall give the Corporation written notice advising of
the identity and address of the Independent Counsel so selected.
The Corporation may, within seven days after receipt of such
written notice of selection, deliver to Indemnitee a written
objection to such selection. Indemnitee may, within five days
after receipt of such objection from the Corporation, submit the
name of another Independent Counsel and the Corporation may,
within seven days after receipt of such written notice of
selection, deliver to Indemnitee a written objection to such
selection. Any objection is subject to the limitations in
Section 5 of this Article VII. Indemnitee may petition the Court
of Chancery of the State of Delaware or any other court of
competent jurisdiction for a determination that the Corporation's
objection to the first and/or second selection of Independent
Counsel is without a reasonable basis and/or for the appointment
as Independent Counsel of a person selected by the court.
Section 7. Procedures of Independent Counsel. If there
has been a Change of Control before the time the request for
indemnification is sent by Indemnitee, Indemnitee shall be
presumed (except as otherwise expressly provided in this Article
VII) to be entitled to indemnification upon submission of a
request for indemnification in accordance with Section 4 of this
Article VII, and thereafter the Corporation shall have the burden
of proof to overcome the presumption in reaching a determination
contrary to the presumption. The presumption <PAGE>
shall be used by Independent Counsel as a basis for a
determination of entitlement to indemnification unless the
Corporation provides information sufficient to overcome such
presumption by clear and convincing evidence or the
investigation, review and analysis of Independent Counsel
convinces him or her by clear and convincing evidence that the
presumption should not apply.
Except in the event that the determination of entitlement to
indemnification is to be made by Independent Counsel, if the
person or persons empowered under Section 5 or 6 of this Article
VII to determine entitlement to indemnification shall not have
made and furnished to Indemnitee in writing a determination
within sixty days after receipt by the Corporation of the request
-18-
therefor, the requisite determination of entitlement to
indemnification shall be deemed to have been made and Indemnitee
shall be entitled to such indemnification unless Indemnitee
knowingly misrepresented a material fact in connection with the
request for indemnification or such indemnification is prohibited
by law. The termination of any Proceeding or of any Matter
therein, by judgment, order, settlement or conviction, or upon a
plea of nolo contendere or its equivalent, shall not (except as
otherwise expressly provided in this Article VII) of itself
adversely affect the right of Indemnitee to indemnification or
create a presumption that (a) Indemnitee did not act in good
faith and in a manner that he or she reasonably believed to be in
or not opposed to the best interests of the Corporation, or (b)
with respect to any criminal Proceeding, that Indemnitee had
reasonable cause to believe that his or her conduct was unlawful.
Section 8. Expenses of Independent Counse. The
Corporation shall pay any and all reasonable fees and expenses of
Independent Counsel incurred acting pursuant to this Article VII
and in any proceeding to which it is a party or witness in
respect of its investigation and written report and shall pay all
reasonable fees and expenses incident to the procedures in which
such Independent Counsel was selected or appointed. No
Independent Counsel may serve if a timely objection has been made
to his or her selection until a court has determined that such
objection is without a reasonable basis.
Section 9. Trial De Novo. In the event that (a) a
determination is made pursuant to Section 5 or 6 of this Article
VII that Indemnitee is not entitled to indemnification under this
Article VII, (b) advancement of Expenses is not timely made
pursuant to Section 3 of this Article VII, (c) Independent
Counsel has not made and delivered a written opinion determining
the request for indemnification (i) within ninety days after
being appointed by a court, (ii) within ninety days after
objections to his or her selection have been overruled by a court
or (iii) within ninety days after the time for the Corporation or
Indemnitee to object to his or her selection or (d) payment of
indemnification is not made within five days after a
determination of entitlement to indemnification has been made or
deemed to have been made pursuant to Section 5, 6 or 7 of this
Article VII, Indemnitee shall be entitled to an adjudication in
any court of competent jurisdiction of his or her entitlement to
such indemnification or advancement of Expenses. In the event
that a determination shall have been made that Indemnitee is not
entitled to indemnification, any judicial proceeding or
arbitration commenced pursuant to this Section 9 shall be
conducted in all respects as a de novo trial on the merits, and
Indemnitee shall not be prejudiced by reason of that adverse
determination. If a Change of Control shall have occurred, in
any judicial proceeding commenced pursuant to this Section 9, the
-19-
Corporation shall have the burden of proving that Indemnitee is
not entitled to indemnification or advancement of Expenses, as
the case may be. If a determination shall have been made or
deemed to have been made that Indemnitee is entitled to
indemnification, the Corporation shall be bound by such
determination in any judicial proceeding commenced pursuant to
this Section 9, or otherwise, unless Indemnitee knowingly
misrepresented a <PAGE>
material fact in connection with the request for indemnification,
or such indemnification is prohibited by law.
The Corporation shall be precluded from asserting in any
judicial proceeding commenced pursuant to this Section 9 that the
procedures and presumptions of this Article VII are not valid,
binding and enforceable and shall stipulate in any such court
that the Corporation is bound by all provisions of this Article
VII. In the event that Indemnitee, pursuant to this Section 9,
seeks a judicial adjudication to enforce his or her rights under,
or to recover damages for breach of, this Article VII, Indemnitee
shall be entitled to recover from the Corporation, and shall be
indemnified by the Corporation against, any and all Expenses
actually and reasonably incurred by him or her in such judicial
adjudication, but only if he or she prevails therein. If it
shall be determined in such judicial adjudication that Indemnitee
is entitled to receive part but not all of the indemnification or
advancement of Expenses sought, the Expenses incurred by
Indemnitee in connection with such judicial adjudication or
arbitration shall be appropriately prorated.
Section 10. Non-Exclusivity. The rights of
indemnification and to receive advancement of Expenses as
provided by this Article VII shall not be deemed exclusive of any
other rights to which Indemnitee may at any time be entitled
under applicable law, the Certificate of Incorporation, these
Bylaws, any agreement, a vote of stockholders, a resolution of
the Board of Directors or otherwise. No amendment, alteration or
repeal of this Article VII or any provision hereof shall be
effective as to any Indemnitee for acts, events and circumstances
that occurred, in whole or in part, before such amendment,
alteration or repeal. The provisions of this Article VII shall
continue as to an Indemnitee whose Corporate Status has ceased
and shall inure to the benefit of his or her heirs, executors and
administrators.
Section 11. Insurance and Subrogation. To the extent the
Corporation maintains an insurance policy or policies providing
liability insurance for directors or officers of the Corporation
or of any other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise which such person
serves at the request of the Corporation, Indemnitee shall be
covered by such policy or policies in accordance with its or
-20-
their terms to the maximum extent of coverage available for any
such director or officer under such policy or policies.
In the event of any payment hereunder, the Corporation shall
be subrogated to the extent of such payment to all the rights of
recovery of Indemnitee, who shall execute all papers required and
take all action necessary to secure such rights, including
execution of such documents as are necessary to enable the
Corporation to bring suit to enforce such rights.
The Corporation shall not be liable under this Article VII
to make any payment of amounts otherwise indemnifiable hereunder
if, and to the extent that, Indemnitee has otherwise actually
received such payment under any insurance policy, contract,
agreement or otherwise.
Section 12. Severability. If any provision or provisions
of this Article VII shall be held to be invalid, illegal or
unenforceable for any reason whatsoever, the validity, legality
and enforceability of the remaining provisions shall not in any
way be affected or impaired thereby; and, to the fullest extent
possible, the provisions of this Article VII shall be construed
so as to give effect to the intent manifested by the provisions
held invalid, illegal or unenforceable.
<PAGE>
Section 13. Certain Persons Not Entitled to
Indemnification. Notwithstanding any other provision of this
Article VII, no person shall be entitled to indemnification or
advancement of Expenses under this Article VII with respect to
any Proceeding, or any Matter therein, brought or made by such
person against the Corporation.
Section 14. Definitions. For purposes of this Article
VII:
"Change of Control" means a change in control of the
Corporation after the date of effectiveness of these Bylaws in
any one of the following circumstances: (a) there shall have
occurred an event required to be reported in response to Item
6(e) of Schedule 14A of Regulation 14A (or in response to any
similar item on any similar schedule or form) promulgated under
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), whether or not the Corporation is then subject to such
reporting requirement; (b) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) shall have become
the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the
Corporation representing 30% or more of the combined voting power
of the Corporation's then outstanding voting securities without
prior approval of at least two-thirds of the members of the Board
-21-
of Directors in office immediately prior to such person's
attaining such percentage interest; (c) the Corporation is a
party to a merger, consolidation, sale of assets or other
reorganization, or a proxy contest, as a consequence of which
members of the Board of Directors in office immediately prior to
such transaction or event constitute less than a majority of the
Board of Directors thereafter; or (d) during any period of two
consecutive years, individuals who at the beginning of such
period constituted the Board of Directors (including for this
purpose any new director whose election or nomination for
election by the Corporation's stockholders was approved by a vote
of at least two-thirds of the directors then still in office who
were directors at the beginning of such period) cease for any
reason to constitute at least a majority of the Board of
Directors.
"Corporate Status" describes a status of a person who is or
was a director, officer, or employee or agent of the Corporation
or of any other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise which such person is or
was serving at the request of the Corporation.
"D.G.C.L." means the General Corporation Law of the State of
Delaware, as currently in effect or as amended from time to time.
"Expenses" shall include all reasonable attorneys' fees,
retainers, court costs, transcript costs, fees of experts,
witness fees, travel expenses, duplicating costs, printing and
binding costs, telephone charges, postage, delivery service fees
and all other disbursements or expenses of the types customarily
incurred in connection with prosecuting, defending, preparing to
prosecute or defend, investigating or being or preparing to be a
witness in a Proceeding.
"Indemnitee" includes any person who is, or is threatened to
be made, a witness in or a party to any Proceeding as described
in Section 1 or 2 of this Article VII by reason of his or her
Corporate Status.
"Independent Counsel" means a law firm, or member of a law
firm, that is experienced in matters of corporation law and
neither presently is, nor in the five years previous to his or
her selection or appointment has been, retained to represent:
(a) the Corporation or Indemnitee in any matter material to
either such party, (b) any other party to the Proceeding giving
rise to a claim for indemnification hereunder or (c) the
beneficial owner, directly or <PAGE>
indirectly, of securities of the Corporation representing 5% or
more of the combined voting power of the Corporation's then
outstanding voting securities.
-22-
"Matter" is a claim, a material issue or a substantial
request for relief.
"Proceeding" includes any action, suit, arbitration,
alternate dispute resolution mechanism, investigation,
administrative hearing or any other proceeding, whether civil,
criminal, administrative or investigative, except one initiated
by an Indemnitee pursuant to Section 9 of this Article VII to
enforce his or her rights under this Article VII.
Section 15. Notices. Any notice or other communication
required or permitted to be given or made to the Corporation or
Indemnitee pursuant to this Article VII shall be given or made in
writing by depositing the same in the United States mail, with
postage thereon prepaid, addressed to the person to whom such
notice or communication is directed at the address of such person
on the records of the Corporation, and such notice or
communication shall be deemed given or made at the time when the
same shall be so deposited in the United States mail. Any such
notice or communication to the Corporation shall be addressed to
the Secretary of the Corporation.
Section 16. Contractual Rights. The right to be
indemnified or to the advancement or reimbursement of Expenses
under this Article VII (i) is a contract right based upon good
and valuable consideration, pursuant to which Indemnitee may sue
as if these provisions were set forth in a separate written
contract between him or her and the Corporation, (ii) is and is
intended to be retroactive and shall be available as to events
occurring prior to the effectiveness of these provisions and
(iii) shall continue after any rescission or restrictive
modification of such provisions as to events occurring prior
thereto.
ARTICLE VIII
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock
of the Corporation, subject to the provisions of law and of the
Certificate of Incorporation, if any, may be declared by the
Board of Directors at any regular or special meeting, and may be
paid in cash, in property or in shares of the capital stock.
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 Board of Directors from time to time, in its absolute
discretion, deems proper as a reserve or reserves to meet
contingencies, or for any proper purpose, and the Board of
Directors may modify or abolish any such reserve.
-23-
Section 2. Disbursements. All checks or demands for
money and notes of the Corporation shall be signed by such
officer or officers or such other person or persons as the Board
of Directors may from time to time designate.
Section 3. Fiscal Year. The fiscal year of the
Corporation shall be fixed by resolution of the Board of
Directors.
Section 4. Corporate Seal. The corporate seal shall
have inscribed thereon the name of the Corporation, the year of
its organization and the words "Corporate Seal, <PAGE>
Delaware". The seal may be used by causing it or a facsimile
thereof to be impressed or affixed or reproduced.
ARTICLE IX
AMENDMENT
These Bylaws may be altered, amended or repealed, or new
bylaws may be adopted, (a) by the affirmative vote of at least
two-thirds of all directors then in office at any regular or
special meeting of the Board of Directors called for that purpose
or (b) by the stockholders at any annual or special meeting of
the stockholders called for that purpose; provided, however,
that, with respect to the power of the stockholders to adopt,
alter, amend or repeal the Bylaws of the Corporation,
notwithstanding any other provision of these Bylaws or any
provision of law which might otherwise permit a lesser vote or no
vote, but in addition to any affirmative vote of the holders of
any particular class or series of the capital stock of the
Corporation required by law, the Certificate of Incorporation or
any resolution or resolutions as may be adopted by the Board of
Directors pursuant to Section I of Article IV of the Certificate
of Incorporation, the affirmative vote of the holders of at least
66_% of the voting power of all outstanding shares of capital
stock of the Corporation entitled to vote in the election of
directors generally, voting together as a single class, shall be
required to adopt, alter, amend or repeal any provision of the
Bylaws of the Corporation.
83411 08208 CORP 35143
-24-
[EXECUTIONCOPY]
TRIANGLE PACIFIC CORP.,
Issuer
and
AMERITRUST TEXAS NATIONAL ASSOCIATION,
Trustee
_______________
INDENTURE
Dated as of August 1, 1993
_______________
$160,000,000
10-1/2% Senior Notes due 2003
L1103/WP88/03AV18
<PAGE> TABLE OF CONTENTS
.Begin Table C.
ARTICLE I - DEFINITIONS AND INCORPORATION BY
REFERENCE............................................1
SECTION 1.1...............................Definitions.
1
SECTION 1.2.........Incorporation by Reference of TIA.
19
SECTION 1.3.....................Rules of Construction.
19
ARTICLE II - THE SECURITIES..............................20
SECTION 2.1...........................Form and Dating.
20
SECTION 2.2..............Execution and Authentication.
20
SECTION 2.3 Registrar and Paying Agent..............21
SECTION 2.4.............Paying Agent to Hold Assets in
Trust. 22
SECTION 2.5......................Securityholder Lists.
22
SECTION 2.6.....................Transfer and Exchange.
22
SECTION 2.7....................Replacement Securities.
23
SECTION 2.8....................Outstanding Securities.
23
SECTION 2.9.......................Treasury Securities.
24
SECTION 2.10.....................Temporary Securities.
24
SECTION 2.11.............................Cancellation.
24
SECTION 2.12.......................Defaulted Interest.
25
ARTICLE III - REDEMPTION.................................25
SECTION 3.1.......................Right of Redemption.
25
SECTION 3.2........................Notices to Trustee.
26
L1103/WP88/03AV18
2
SECTION 3.3..............Selection of Securities to Be
Redeemed.......................................26
SECTION 3.4......................Notice of Redemption.
26
SECTION 3.5...............Deposit of Redemption Price.
28
SECTION 3.6........Payment of Securities on Redemption
Date. 28
SECTION 3.7...............Securities Redeemed in Part.
28
ARTICLE IV - COVENANTS...................................29
SECTION 4.1.....................Payment of Securities.
29
SECTION 4.2...........Maintenance of Office or Agency.
29
SECTION 4.3.......................Corporate Existence.
30
SECTION 4.4.........Payment of Taxes and Other Claims.
30
SECTION 4.5..............Maintenance of Properties and
Insurance......................................30
SECTION 4.6. Limitations on Incurrence of
Additional
Indebtedness............................31
SECTION 4.7.........Limitation on Restricted Payments.
34
SECTION 4.8.......................Limitation on Liens.
35
SECTION 4.9............Limitations on Sales of Assets.
35
SECTION 4.10...........Limitation on Transactions with
Affiliates.....................................40
<PAGE>
SECTION 4.11. Limitations on Restricting
Subsidiary
Dividends...............................41
SECTION 4.12 Limitation on Issuance of
Preferred Stock by
Subsidiaries............................41
SECTION 4.13..............................SEC Reports.
41
SECTION 4.14.........Compliance Certificate; Notice of
Default........................................42
SECTION 4.15........Waiver of Stay, Extension or Usury
Laws. 43
L1103/WP88/03AV18
3
ARTICLE V - SUCCESSOR CORPORATION........................43
SECTION 5.1...............When Company May Merge, Etc.
43
SECTION 5.2.........Successor Corporation Substituted.
45
ARTICLE VI - EVENTS OF DEFAULT AND REMEDIES..............45
SECTION 6.1.........................Events of Default.
45
SECTION 6.2.............Acceleration of Maturity Date;
Rescission and Annulment................47
SECTION 6.3. Collection of Indebtedness
and Suits for
Enforcement by Trustee..................49
SECTION 6.4..........Trustee May File Proofs of Claim.
49
SECTION 6.5. Trustee May Enforce Claims
Without Possession
of Securities...........................50
SECTION 6.6................................Priorities.
51
SECTION 6.7..........Limitation on Suits and Remedies.
51
SECTION 6.8. Unconditional Right of
Holders to Receive
Principal, Premium and Interest.........52
SECTION 6.9............Rights and Remedies Cumulative.
52
SECTION 6.10.............Delay or Omission Not Waiver.
52
SECTION 6.11.......................Control by Holders.
53
SECTION 6.12........................Waiver of Default.
53
SECTION 6.13....................Undertaking for Costs.
54
SECTION 6.14.......Restoration of Rights and Remedies.
54
ARTICLE VII - TRUSTEE....................................54
SECTION 7.1.........................Duties of Trustee.
54
SECTION 7.2.........................Rights of Trustee.
56
L1103/WP88/03AV18
4
SECTION 7.3..............Individual Rights of Trustee. 56
SECTION 7.4......................Trustee's Disclaimer.
57
SECTION 7.5.........................Notice of Default.
57
SECTION 7.6.............Reports by Trustee to Holders.
57
SECTION 7.7................Compensation and Indemnity.
57
SECTION 7.8....................Replacement of Trustee.
59
SECTION 7.9..........Successor Trustee by Merger, Etc.
60
SECTION 7.10............Eligibility; Disqualification.
60
SECTION 7.11. Preferential Collection of
Claims
against Company.........................60
<PAGE>
ARTICLE VIII - SATISFACTION AND DISCHARGE................60
SECTION 8.1. Satisfaction, Discharge of
the Indenture and
Defeasance of the Securities............60
SECTION 8.2. Termination of Obligations
Upon Cancellation
of the Securities.......................62
SECTION 8.3...........Survival of Certain Obligations.
63
SECTION 8.4............Acknowledgement of Discharge by
Trustee........................................63
SECTION 8.5...............Application of Trust Assets.
63
SECTION 8.6..................Repayment to the Company.
64
SECTION 8.7.............................Reinstatement.
64
ARTICLE IX - AMENDMENTS, SUPPLEMENTS AND WAIVERS.........65
SECTION 9.1............Supplemental Indentures Without
Consent of Holders......................65
SECTION 9.2........Amendments, Supplemental Indentures
and Waivers with Consent of Holders.
65
L1103/WP88/03AV18
5
SECTION 9.3.......................Compliance with TIA. 67
SECTION 9.4.........Revocation and Effect of Consents.
67
SECTION 9.5.................Notation on or Exchange of
Securities.....................................68
SECTION 9.6...........Trustee to Sign Amendments, Etc.
68
ARTICLE X - MEETINGS OF HOLDERS..........................69
SECTION 10.1........Purposes for Which Meetings May Be
Called.........................................69
SECTION 10.2...............Manner of Calling Meetings.
69........................................
SECTION 10.3............Call of Meetings by Company or
Holders.................................70
SECTION 10.4........Who May Attend a Vote at Meetings.
70
SECTION 10.5. Regulations May Be Made by
Trustee;
Conduct of the Meeting; Voting Rights;
Adjournment.............................70
SECTION 10.6.......Voting at the Meeting and Record to
Be Kept........................................71
SECTION 10.7. Exercise of Rights of Trustee
or holders of
Securities May Not Be Hindered or Delayed
by
Call of Meeting.........................72
ARTICLE XI - RIGHT TO REQUIRE REPURCHASE UPON A CHANGE
OF CONTROL........................................72
SECTION 11.1. Repurchase of Securities at
Option of the
Holder Upon a Change of Control.........72
ARTICLE XII - MISCELLANEOUS..............................75
SECTION 12.1. TIA Controls.........................75
SECTION 12.2. Notices..............................75
<PAGE>
SECTION 12.3. Communications by Holders with
Other Holders..................................76
SECTION 12.4. Certificate and Opinion as to
Conditions Precedent...........................76
L1103/WP88/03AV18
6
SECTION 12.5. Statements Required in Certificate
or Opinion.....................................76
SECTION 12.6. Rules by Trustee, Paying Agent,
Registrar......................................77
SECTION 12.7. Legal Holidays.......................77
SECTION 12.8. Governing Law........................77
SECTION 12.9. No Adverse Interpretation of Other
Agreements.....................................78
SECTION 12.10..............No Recourse against Others.
78
SECTION 12.11..............................Successors.
78
SECTION 12.12.....................Duplicate Originals.
78
SECTION 12.13............................Severability.
79
SECTION 12.14........Table of Contents, Headings, Etc.
79
.End Table C.
L1103/WP88/03AV18
7
<PAGE> CROSS-REFERENCE TABLE
TIA Inde
nture
Section Section
_
310(a)(1)........................................ 7.10
(a)(2)......................................... 7.10
(a)(3)......................................... N.A.
(a)(4)......................................... N.A.
(a)(5)......................................... 7.10
(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; 12.2
314(a)........................................... 4.13;
12.2
(b)............................................N.A.
(c)(1).........................................2.2; 7.2;
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(b)
(b)............................................7.5; 7.6;
12.2
(c)............................................7.1(a)
(d)............................................6.11;
7.1(c)
(e)............................................6.13
L1103/WP88/03AV18
8
<PAGE> TIA Inde
nture
Section Section
_
316(a) (last sentence)........................... 2.9
(a)(1)(A)...................................... 6.11
(a)(1)(B)...................................... 6.12
(a)(2)......................................... N.A.
(b)............................................ 6.12; 6.8
317(a)(1)........................................ 6.3
(a)(2)......................................... 6.4
(b)............................................ 2.4
318(a)........................................... 12.1
__________
N.A. means Not Applicable
Note: This Cross-Reference Table shall not, for any
purposes, be deemed to be part of the Indenture.
L1103/WP88/03AV18
9
<PAGE> INDENTURE, dated as of August 1, 1993, between
Triangle Pacific Corp., a Delaware corporation, and
Ameritrust Texas National Association, a national banking
association, as Trustee.
<PAGE>
Each party hereto agrees as follows for the
benefit of each other party and for the equal and ratable
benefit of the holders of the Company's 10-1/2% Senior Notes
due 2003:
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1.
"Accounts Receivable" means, with respect to any
person, all accounts, contracts or contract rights of such
person and any other rights of such person to payment for
goods sold or leased or for services rendered, whether or
not evidenced by any chattel paper, documents or
instruments, together with (i) all rights and interests of
such person in any goods the sale or lease of which gave
rise to such accounts, contracts, contract rights or other
rights, including any security interests or liens therein,
(ii) all guaranties, security agreements, leases,
indemnities, warranties and other contracts securing or
otherwise relating to such accounts, contracts, contract
rights or other rights, and (iii) all chattel paper,
documents, instruments, books, records, writings, data
bases, information and information media relating to, used
or useful in connection with, evidencing, embodying or
incorporating such accounts, contracts, contract rights or
other rights or the goods the sale or lease of which gave
rise thereto.
"Accumulated Amount" has the meaning specified in
Section 4.9(a).
"Acquired Indebtedness" means Indebtedness of any
person existing at the time such person becomes a
Subsidiary of the Company (or such person is merged into
the Company or one of its Subsidiaries) or assumed in
connection with the acquisition of assets from such person
by the Company or any of its Subsidiaries, including
Indebtedness Incurred in connection with, or in
contemplation of, such person becoming a Subsidiary of the
Company (but excluding Indebtedness of such person which is
extinguished, retired or repaid in connection with such
person becoming a Subsidiary of the Company).
"Affiliate" means, with respect to any person,
any other person directly or indirectly controlling,
controlled by, or under direct or indirect common control
with, such person. For purposes of this definition, the
term "control" means the power to direct the management and
policies of a person, directly or through one or more
intermediaries, whether through the ownership of voting
securities, by contract, or otherwise.
"Affiliate Transaction" means, with respect to
any person, any sale, lease, transfer or other disposition
of any properties, assets or securities to, any purchase or
lease of any properties, assets or securities from, or the
entering into or <PAGE>
amendment of any contract or agreement with or for the
benefit of, (i) any Affiliate of such person, (ii) any
"person" or "group" (as such terms are used for purposes of
Sections 13(d)(3) and 14(d) of the Exchange Act, whether or
not applicable) that, directly or indirectly, is the
"beneficial owner" (as that term is used in Rules 13d-3 and
13d-5 under the Exchange Act, whether or not applicable,
except that a person shall be deemed to have "beneficial
ownership" of all shares that any such person has the right
to acquire, whether such right is exercisable immediately
or only after the passage of time) of more than 10% of the
Capital Stock of any class of equity securities of such
person, (iii) any person who is an Affiliate of any such
beneficial owner or (iv) any officer, employee or director
of any of the foregoing.
"Agent" means any Registrar, Paying Agent or co-
Registrar.
"Asset Acquisition" means (i) an investment by
the Company or any Subsidiary of the Company in any other
person pursuant to which such person shall become a
Subsidiary of the Company or shall be merged with the
Company or any Subsidiary of the Company or (ii) the
acquisition by the Company or any Subsidiary of the Company
of the assets of any person which constitute substantially
all of an operating unit or business of such person.
"Asset Sale" has the meaning specified in Section
4.9(a).
L1103/WP88/03AV18
-2-
"Bankruptcy Law" means Title 11, U.S. Code or any
similar Federal, state or foreign law for the relief of
debtors.
"Board of Directors" means, with respect to any
person, the Board of Directors of such person or any
committee of the Board of Directors of such person
authorized, with respect to any particular matter, to
exercise the power of the Board of Directors of such
person.
"Board Resolution" means, with respect to any
person, a resolution duly adopted by the Board of Directors
of such person and certified as being in full force and
effect.
"Business Day" means any day other than a
Saturday, Sunday or other day on which banks are required
or authorized to close in the City of New York.
"Capital Stock" means, with respect to any
person, any and all shares, interests, participations or
other equivalents (however designated) of capital stock of
such person and any rights (other than debt securities
convertible into any of the foregoing), warrants or options
to purchase any of the foregoing, whether outstanding on
the Issue Date or thereafter issued, and includes all
Common Stock and Preferred Stock.
"Capitalized Lease" means, with respect to any
person, a lease of property (whether real, personal or
mixed) by such person if the obligations of such <PAGE>
person thereunder are required to be capitalized for
financial reporting purposes in accordance with GAAP.
"Capitalized Lease Obligation" means, with
respect to any person, the capitalized amount of the rental
obligations under any Capitalized Lease, as determined in
accordance with GAAP.
"Change of Control" means (i) a direct or
indirect sale, lease, exchange or other transfer of all or
substantially all of the assets of the Company, on a
consolidated basis, to any "person" or "group" (as such
terms are used for purposes of Sections 13(d)(3) and 14(d)
of the Exchange Act, whether or not applicable), as an
entirety or substantially as an entity in one transaction
L1103/WP88/03AV18
-3-
or series of related transactions, in each case with the
effect that the ultimate beneficial owners of the Company's
Capital Stock having the right to vote generally in an
election of directors immediately prior to the transaction
own, directly or indirectly, in the aggregate, and in the
same proportion with respect to each other, less than 50%
of the total voting power entitled to vote in the election
of directors, managers or trustees of the transferee entity
immediately after such transaction, (ii) any "person" or
"group" (as such terms are used for purposes of Sections
13(d)(3) and 14(d) of the Exchange Act, whether or not
applicable), is or becomes the "beneficial owner" (as that
term is used in Rules 13d-3 and 13d-5 under the Exchange
Act, whether or not applicable, except that a person shall
be deemed to have "beneficial ownership" of all shares that
any such person has the right to acquire, whether such
right is exercisable immediately or only after the passage
of time), directly or indirectly, of more than 50% of the
total voting power in the aggregate of all classes of
Capital Stock then outstanding of the Company entitled to
vote generally in elections of directors, (iii) the merger
or consolidation of the Company with or into another
corporation or the merger of another corporation into the
Company with the effect that immediately after such
transaction any "person" or "group" (as such terms are used
for purposes of Sections 13(d)(3) and 14(d) of the Exchange
Act, whether or not applicable) of persons holds more than
50% of the total voting power of the then outstanding
securities of the surviving corporation of such merger or
consolidation entitled to vote generally in the election of
directors, managers or trustees of such surviving
corporation, or (iv) during any period of 24 consecutive
months, individuals who at the beginning of such period
constituted the Board of Directors of the Company (together
with any new directors whose election by such Board or
whose nomination for election by the stockholders of the
Company was approved by a vote of a majority of the
directors then still in office who were either directors at
the beginning of such period or whose election or
nomination for election was previously so approved) cease
for any reason to constitute a majority of the Board of
Directors then in office.
"Change of Control Offer" has the meaning
specified in Section 11.1(b).
L1103/WP88/03AV18
-4-
"Change of Control Payment Date" has the meaning
specified in Section 11.1(a).
<PAGE>
"Change of Control Purchase Price" has the
meaning specified in Section 11.1(a).
"Common Stock" means with respect to any person,
any shares, interests, participations or other equivalents
(however designated) of the common stock of such person,
whether outstanding on the Issue Date or thereafter issued,
and includes all series and classes of such common stock.
"Company" means the party named as such in this
Indenture until a successor replaces it pursuant to the
Indenture and thereafter means such successor.
"Consolidated EBIT" means, with respect to any
person, for any period, Consolidated Net Income of such
person, plus, to the extent Consolidated Net Income has
been reduced thereby, the sum of (i) all income taxes of
such person and its Subsidiaries paid or accrued for such
period (other than income taxes attributable to
extraordinary, unusual or non-recurring gains or losses)
determined on a consolidated basis for such person and its
Consolidated Subsidiaries in accordance with GAAP, (ii)
Consolidated Interest Expense and (iii) all foreign
currency exchange losses less all foreign currency exchange
gains, in each case determined on a consolidated basis for
such person and its Consolidated Subsidiaries in accordance
with GAAP.
"Consolidated EBITDA" means, with respect to any
person, for any period, the Consolidated EBIT of such
person, plus the sum of (i) amortization expense (including
write-offs of deferred financing costs) and depreciation
expense, and (ii) all other non-cash items reducing
Consolidated Net Income of such person for such period,
less all non-cash items increasing Consolidated Net Income
of such person during such period, all determined on a
consolidated basis for such person and its Consolidated
Subsidiaries in accordance with GAAP.
"Consolidated EBITDA Coverage Ratio" means, with
respect to any person, the ratio, on a pro forma basis, of
(i) the Consolidated EBITDA of any person for the Reference
Period immediately prior to the date of the transaction
L1103/WP88/03AV18
-5-
giving rise to the need to calculate the Consolidated
EBITDA Coverage Ratio (the "Transaction Date") to (ii) the
Consolidated Fixed Charges of such person for such
Reference Period; provided, however, that (A) for purposes
of such computation, in calculating Consolidated EBITDA and
Consolidated Fixed Charges, (1) the Incurrence of the
Indebtedness giving rise to the need to calculate the
Consolidated EBITDA Coverage Ratio and the application of
the proceeds therefrom shall be assumed to have occurred on
the first day of the Reference Period, (2) the Incurrence
of any Indebtedness during the Reference Period or
subsequent to the Reference Period and prior to the
Transaction Date and the application of the proceeds
therefrom shall be assumed to have occurred on the first
day of such Reference Period, (3) Consolidated Interest
Expense attributable to any Indebtedness (whether existing
or being Incurred) computed on a pro forma basis and
bearing a floating interest rate shall be computed as if
the rate in effect on the date of computation had been the
applicable rate for the <PAGE>
entire period, unless such person or any of its
Subsidiaries is a party to an Interest Rate Agreement
(which will remain in effect for the 12-month period after
the Transaction Date) which has the effect of fixing the
interest rate in effect on the date of computation, in
which case such rate (whether higher or lower) shall be
used, and (4) there shall be excluded from Consolidated
Fixed Charges any Consolidated Fixed Charges related to any
Indebtedness which was outstanding during and subsequent to
the Reference Period but is not outstanding on the
Transaction Date, except for Consolidated Fixed Charges
actually Incurred with respect to Indebtedness borrowed (as
adjusted pursuant to clause (3)) (x) under a revolving
credit or similar arrangement to the extent the commitment
thereunder remains in effect on the Transaction Date or (y)
pursuant to Section 4.6(e), and (B) in making any
calculation of the Consolidated EBITDA Ratio for any period
commencing prior to the Recapitalization, the
Recapitalization shall be deemed to have taken place on the
first day of such period. For purposes of making the
computation referred to in clause (A) above, Asset Sales
and Asset Acquisitions which have been made by any person
which has become a Subsidiary of the Company or has been
merged with or into the Company or any Subsidiary of the
Company during the Reference Period or subsequent to the
Reference Period and prior to the Transaction Date and
Asset Acquisitions to be made by the Company or a
L1103/WP88/03AV18
-6-
Subsidiary of the Company with the Indebtedness referred to
in clause (A)(1) above shall be calculated on a pro forma
basis (including all of the calculations referred to in
clauses (A)(1) through (A)(4) above) as if such Asset Sales
or Asset Acquisitions had occurred on the first day of the
Reference Period.
"Consolidated Fixed Charges" means, with respect
to any person, for any period, the sum of (i) Consolidated
Interest Expense and (ii) the product of (a) cash and non-
cash dividends and other payments made in respect of any
Subsidiary Preferred Stock and Disqualified Capital Stock
of such person and (b) a fraction the numerator of which is
one and the denominator of which is one minus the then
current effective consolidated Federal, state and local tax
rate of such person (expressed as a decimal).
"Consolidated Interest Expense" means, with
respect to any person, for any period, the aggregate amount
(without duplication) of interest expensed in accordance
with GAAP (including, in accordance with the following
sentence, interest attributable to Capitalized Lease
Obligations) during such period in respect of all
Indebtedness of such person and its Consolidated
Subsidiaries (but including (i) amortization of original
issue discount on any Indebtedness, (ii) the interest
portion of all deferred payment obligations, calculated in
accordance with GAAP, and (iii) all commissions, discounts
and other fees and charges owed with respect to letters of
credit and bankers' acceptance financing and, the net costs
associated with Interest Rate Agreements, in each case to
the extent attributable to such period). For purposes of
this definition, interest on a Capitalized Lease Obligation
shall be deemed to accrue at an interest rate reasonably
determined by the Company to be the rate of interest
implicit in such Capitalized Lease Obligation in accordance
with GAAP.
"Consolidated Net Income" means, with respect to
any person, for any period, the Net Income of such person
and its Consolidated Subsidiaries for such <PAGE>
period, determined on a consolidated basis in accordance
with GAAP; provided, however, that there shall be excluded
(i) the Net Income of any person other than a Consolidated
Subsidiary in which such person or any of its Consolidated
Subsidiaries has a joint interest with a third party except
to the extent of the amount of dividends or distributions
L1103/WP88/03AV18
-7-
actually paid to such person or a Consolidated Subsidiary
during such period, (ii) except to the extent includible
pursuant to the foregoing clause (i), the Net Income of any
person accrued prior to the date it becomes a Subsidiary of
such person or is merged into or consolidated with such
person or any of its Subsidiaries or the assets of that
person are acquired by such person or any of its
Subsidiaries (except that clause (ii) shall not be
effective for any calculation of the Consolidated EBITDA
Coverage Ratio to be made in accordance with the last
sentence of the definition of the term "Consolidated EBITDA
Coverage Ratio" contained in this Section 1.1), (iii) the
Net Income of any Subsidiary to the extent that the
declaration or payment of dividends or similar
distributions or intercompany loans or advances or tax
sharing payments by that Subsidiary to the Company of such
Net Income is not at the time permitted by operation of the
terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental
regulation applicable to that Subsidiary, (iv) any gains or
losses attributable to asset sales not in the ordinary
course of business (including any sales of Capital Stock),
(v) the cumulative effect of a change in accounting
principles and (vi) amounts paid as dividends in cash on
Subsidiary Preferred Stock of a Subsidiary of such person.
"Consolidated Net Worth" means, with respect to
any person, the consolidated stockholders' equity of such
person and its Consolidated Subsidiaries, as determined in
accordance with GAAP, adjusted to exclude (to the extent
included in calculating such equity) (a) the amount of
equity attributable to any Disqualified Capital Stock and
(b) all upward revaluations and other write-ups in the book
value of any asset of such person or a Consolidated
Subsidiary of such person subsequent to the date of this
Indenture.
"Consolidated Subsidiary" means, with respect to
any person, each Subsidiary of such person (whether now
existing or hereafter created or acquired) the financial
statements of which shall be (or should have been)
consolidated for financial statement reporting purposes
with the financial statements of such person in accordance
with GAAP.
"Currency Agreement" means any foreign exchange
contract, currency swap agreement or other similar
L1103/WP88/03AV18
-8-
agreement or arrangement designed to protect the Company or
any of its Subsidiaries against fluctuations in currency
values.
"Custodian" means any receiver, trustee,
assignee, liquidator, sequestrator or similar official
under any Bankruptcy Law.
"Default" means any event which is, or after
notice or passage of time, or both, would be, an Event of
Default.
<PAGE>
"Disqualified Capital Stock" means, with respect
to any person, any class or series of Capital Stock of such
person that, by its terms or by the terms of any security
into which it is convertible or exchangeable, is, or upon
the happening of an event or the passage of time would be,
(i) required to be redeemed or repurchased by such person
or any of its Subsidiaries, in whole or in part, prior to
the Stated Maturity of the Securities or (ii) convertible
into or exchangeable for Capital Stock referred to in
clause (i) above or Indebtedness having a scheduled
maturity prior to the Stated Maturity of the Securities.
"Eligible Receivables" means Accounts Receivable
(net of any valid offsets, counterclaims or defenses or any
repurchase obligations or rights of return) which (a) are
not past due for more than 60 days and (b) constitute
legal, valid and binding obligations of the account debtors
obligated thereon and are enforceable against such account
debtors in accordance with their respective terms.
"ERISA" means the Employee Retirement Income
Security Act of 1974, as amended from time to time, and any
successor statute.
"Event of Default" has the meaning specified in
Section 6.1.
"Exchange Act" means the Securities Exchange Act
of 1934, as amended, and the rules and regulations
promulgated by the SEC thereunder.
"Final Change of Control Put Date" has the
meaning specified in Section 11.1(b).
L1103/WP88/03AV18
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"Final Put Date" has the meaning specified in
Section 4.9(b).
"GAAP" means generally accepted accounting
principles as in effect in the United States as of the date
of this Indenture.
"Guarantee" means, with respect to any person,
any obligation, contingent or otherwise, of such person
directly or indirectly guaranteeing any Indebtedness or
other obligation of any other person and, without limiting
the generality of the foregoing, includes any obligation,
direct or indirect, contingent or otherwise, of such person
(i) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Indebtedness or other
obligation of such other person (whether arising by virtue
of partnership arrangements, by agreement to keep-well, to
purchase assets, goods, securities or services, to take-or-
pay or to maintain financial statement conditions or
otherwise) or (ii) entered into for the purpose of assuring
in any other manner the obligee of such Indebtedness or
other obligation of the payment thereof or to protect such
obligee against loss in respect thereof (in whole or in
part). The term "Guarantee" used as a verb has a
correlative meaning.
<PAGE>
"holder" or "holder of Securities" means the
person in whose name a Security is registered on the
Registrar's books.
"Incur" has the meaning specified in Section
4.6(a).
"Incurrence Date" has the meaning specified in
Section 4.6(b).
"Indebtedness" means, with respect to any person
at any date, without duplication, (a) all obligations of
such person (i) in respect of borrowed money (whether or
not the recourse of the lender is to the whole of the
assets of such person or only to a portion thereof), (ii)
evidenced by bonds, notes, debentures or similar
instruments, (iii) representing the balance deferred and
unpaid of the purchase price of any property or services
(other than trade accounts payable arising in the ordinary
course of business), (iv) evidenced by bankers' acceptances
L1103/WP88/03AV18
-10-
or similar instruments issued or accepted by banks, (v) for
the payment of money relating to Capitalized Leases or (vi)
evidenced by a letter of credit or a reimbursement
obligation of such person with respect to any letter of
credit; (b) all Indebtedness of other persons secured by a
Lien to which the property or assets (including, but not
limited to, leasehold interests and any other tangible or
intangible property rights) of such person are subject,
whether or not the obligations secured thereby shall have
been assumed by or shall otherwise be a legal liability of
such person; provided, however, that, for purposes of
determining the amount of any Indebtedness of the type
described in this clause (b), if recourse with respect to
such indebtedness is limited to such asset, the amount of
such indebtedness shall be limited to the fair market value
of such asset; (c) all Indebtedness of other persons
Guaranteed by such person; (d) all Disqualified Capital
Stock of such person, which Disqualified Capital Stock
shall be valued at the greater of its voluntary or
involuntary liquidation preference, plus accrued and unpaid
dividends; (e) to the extent not otherwise included in the
preceding clauses (a), (b), (c) or (d), obligations under
Currency Agreements and Interest Rate Agreements; and
(f) any and all deferrals, renewals, extensions,
refinancings and refundings (whether direct or indirect)
of, or amendments, modifications or supplements to, any
liability of the kind described in any of the preceding
clauses (a), (b), (c), (d) or (e), or this clause (f),
whether or not between or among the same parties.
"Indenture" means this Indenture, as amended or
supplemented from time to time in accordance with the terms
hereof.
"Independent Financial Advisor" means a
nationally recognized investment banking firm which does
not (and whose directors, officers, employees and
Affiliates do not) have a direct or indirect material
financial interest in the Company or any of its
Subsidiaries and which is otherwise independent and
qualified to perform the task for which such firm is being
engaged.
"Interest Payment Date" means the stated due date
of an installment of interest on the Securities.
<PAGE>
L1103/WP88/03AV18
-11-
"Interest Rate Agreement" means any interest rate
protection agreement, interest rate future, interest rate
option, interest rate swap, interest rate cap or other
interest rate hedge arrangement to which the Company or any
of its Subsidiaries is or becomes a party or a beneficiary.
"Inventory" means, with respect to a person, any
and all of the goods, merchandise, inventory and all other
personal property (including goods in transit) of such
person wheresoever located, which are or may be at any time
held for sale or lease, furnished under any contract of
service, or held as raw materials, work in process or
supplies or materials used or consumed in such person's
business and all documents of title or other documents
representing the same, together with all accessions thereto
or products thereof and all chattel paper, documents,
instruments, books, records, writings, data bases,
information and information media relating to, used or
useful in connection with, evidencing, embodying or
incorporating the foregoing.
"Issue Date" means the date of first issuance of
the Securities under this Indenture.
"Legal Holiday" has the meaning provided in
Section 12.7.
"Lien" means any mortgage, lien, pledge, charge,
security interest or other encumbrance of any kind, whether
or not filed, recorded or otherwise perfected under
applicable law (including any conditional sale or other
title retention agreement and any lease deemed to
constitute a security interest and any option or other
agreement to give any security interest).
"Maturity Date" means, when used with respect to
any Security, the date on which the principal of such
Security becomes due and payable as therein or herein
provided, whether at the Stated Maturity, Change of Control
Payment Date, Purchase Date or by declaration of
acceleration, call for redemption or otherwise.
"Net Cash Proceeds" means, when used with respect
to any Asset Sale, the aggregate amount of U.S. Legal
Tender received by the Company and its Subsidiaries from
such Asset Sale, less the sum of all legal, title and
recording expenses, commissions and other fees and expenses
L1103/WP88/03AV18
-12-
incurred in connection with such Asset Sale, including the
amount (estimated reasonably and in good faith by the
Company) of all federal, state, provincial, foreign and
local taxes required to be accrued as a liability under
GAAP as a consequence of such Asset Sale, and less a
reasonable reserve for the after-tax cost of any
indemnification payments (fixed and contingent)
attributable to the seller's indemnities to the purchaser
undertaken by the Company or any of its Subsidiaries in
connection with such Asset Sale, and less all payments made
on any Indebtedness which is secured by such property, in
accordance with the terms of any Lien upon or with respect
to such property or which must by its
<PAGE>
terms or by applicable law be repaid out of the proceeds
from such Asset Sale, and less all distributions and other
payments made to minority interest holders in Subsidiaries
or joint ventures as a result of such Asset Sale.
"Net Income" of any person, for any period, means
the net income (loss) of such person for such period,
determined in accordance with GAAP, except that
extraordinary or nonrecurring gains and losses, as
determined in accordance with GAAP, shall be excluded.
"New Credit Facility" means the Credit Agreement,
dated as of August 4, 1993, among the Company, the banks
and other financial institutions named therein, and
Citicorp USA, Inc., as co-agent, and The Bank of Nova
Scotia, as agent, as the same may be supplemented, amended
or restated from time to time.
"Offer Amount" has the meaning specified in
Section 4.9(b).
"Offer Price" has the meaning specified in
Section 4.9(b).
"Offer to Purchase" means any offer made by the
Company to holders of the Securities required by the
provisions of Section 4.9(a) and made pursuant to the
provisions of Section 4.9(b).
"Officer" means, with respect to the Company, the
Chairman of the Board, the President, any Vice President,
the Chief Financial Officer, the Treasurer, the Controller
or the Secretary of the Company.
L1103/WP88/03AV18
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"Officer's Certificate" means, with respect to
the Company, a certificate signed by two Officers or by an
Officer and an Assistant Secretary of the Company and
otherwise complying with the requirements of Sections 12.4
and 12.5.
"Old Debentures" means the Company's outstanding
12-1/2% Senior Subordinated Debentures due 1998 issued
pursuant to the Old Debenture Indenture.
"Old Debenture Indenture" means the Indenture,
dated as of June 19, 1986, between the Company and
Manufacturers Hanover Trust Company, as trustee, relating
to the Old Debentures.
"Old Financing Agreements" means (a) the Credit
and Guaranty Agreement, dated as of September 9, 1988,
among the Company, TPC Holding Corp., Pacific Corp., the
financial institutions parties thereto and Morgan Guaranty
Trust Company of New York, as agent, as amended or
otherwise modified from time to time and in effect on the
Issue Date, and (b) the Senior Note Purchase Agreement,
dated as of September 9, 1988, among the Company, TPC
Holding Corp., Teachers Insurance and Annuity Association
of America, AIG Life Insurance Company and American
International Life Assurance Company of New York, as
amended or otherwise modified from time to time and in
effect on the Issue Date.
<PAGE>
"Opinion of Counsel" means a written opinion from
legal counsel who is reasonably acceptable to the Trustee
complying with the requirements of Sections 12.4 and 12.5.
Unless otherwise required by the Trustee, the counsel may
be an employee of, or counsel to, the Company.
"Paying Agent" has the meaning specified in
Section 2.3.
"Permitted Business" means any line of business
conducted by the Company or any of its Subsidiaries on the
Issue Date and any other line of business that is an
extension of or is substantially similar to any such line
of business as determined in good faith by the Board of
Directors of the Company.
L1103/WP88/03AV18
-14-
"Permitted Liens" means (i) Liens granted on
Inventory and Accounts Receivable and the products and
proceeds thereof (including proceeds which constitute
property of the types described in the definitions of the
terms "Inventory" and "Accounts Receivable" contained in
this Section 1.1, proceeds deposited in any collateral
account or lock box of the Company or any of its
Subsidiaries for the benefit of the lenders party to any
Working Capital Facility, all payments under insurance with
respect to Inventory and any indemnity, warranty or
guaranty payable by reason of loss or damage to or
otherwise with respect to any of the foregoing) to secure
any Working Capital Financing; (ii) Liens for taxes,
assessments, government charges or claims not yet
delinquent or which are being contested in good faith by
appropriate proceedings promptly instituted and diligently
conducted if adequate reserves with respect thereto are
maintained on the books and records of the Company or a
Subsidiary of the Company in accordance with GAAP and so
long as no item or portion of property subject thereto is
in jeopardy of being seized, levied upon or forfeited;
(iii) statutory Liens of carriers, warehousemen, mechanics,
suppliers, materialmen, landlords or repairmen or other
like Liens arising in the ordinary course of business and
deposits made to obtain the release of such Liens if the
underlying obligations are not overdue or such Liens are
being contested in good faith by appropriate proceedings
promptly instituted and diligently conducted and adequate
reserves with respect thereto are maintained on the books
and records of the Company or a Subsidiary of the Company
in accordance with GAAP and so long as no item or portion
of property subject thereto is in jeopardy of being seized,
levied upon or forfeited; (iv) Liens incurred or deposits
made to secure the performance of bids, surety and appeal
bonds, performance or return of money bonds, leases,
statutory obligations, tenders, governmental contracts and
other similar obligations incurred in the ordinary course
of business (exclusive of obligations for the payment of
Indebtedness); (v) attachment or judgment Liens arising by
operation of law, except to the extent that such Liens give
rise to an Event of Default; (vi) rights of a bank to set
off deposits against debts owed to such bank; (vii) any
title or other interest of a lessor in the property demised
pursuant to a lease; (viii) easements, rights-of-way,
zoning and similar restrictions and other similar
encumbrances or title defects which do not in any case
materially detract from the value of the property subject
L1103/WP88/03AV18
-15-
thereto (as such property is used by the Company and its
Subsidiaries) or interfere with the ordinary conduct of the
business of the Company or its Subsidiaries; provided,
<PAGE>
however, that such Liens are not incurred in connection
with any borrowing of money or any commitment to loan any
money or to extend any credit; (ix) Liens securing
Indebtedness to the extent existing on the Issue Date,
after giving effect to the Recapitalization; (x) customary
Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation,
unemployment insurance and other types of social security
legislation or regulations; (xi) Liens consisting of
mortgages or pledges by Subsidiaries of the Company in
favor of the Company or a Wholly Owned Subsidiary of the
Company as security for Indebtedness owing by them solely
to the Company or its Wholly Owned Subsidiaries; (xii)
purchase money mortgages, purchase money security interests
or other Liens securing Purchase Money Obligations incurred
in respect of property acquired or purchased by the Company
or any of its Subsidiaries at any time after the Issue Date
("Acquired Property") and other Indebtedness incurred for
the purpose of financing the construction of properties or
fixed improvements at any time after the Issue Date as
permitted pursuant to Section 4.6(i); provided, however,
that such purchase money mortgages, purchase money security
interests and other Liens shall not encumber or extend to
any property or assets of the Company or any of its
Subsidiaries other than Acquired Property or facilities or
fixed improvements which are constructed by the Company or
any of its Subsidiaries at any time after the Issue Date,
in each case together with accessions and fixtures thereto
(it being understood that any Liens so granted on Acquired
Property may also extend to facilities or fixed
improvements constructed thereon and any Liens so granted
on facilities and improvements may also encumber or extend
to Acquired Property on which such facilities or fixed
improvements are constructed, in each case so long as (a)
all such Liens are entered into within the period specified
in clause (i) of the definition of the term "Purchase Money
Obligations" contained in this Section 1.1 and (b) the
Indebtedness secured by such Liens meets the conditions
specified in clauses (ii) and (iii) of the definition of
the term "Purchase Money Obligations" contained in this
Section 1.1); (xiii) Liens pursuant to Capitalized Lease
Obligations permitted to be Incurred by the Company or its
Subsidiaries pursuant to Section 4.6(i); (xiv) Liens
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securing Acquired Indebtedness permitted to be Incurred by
the Company or its Subsidiaries pursuant to Section 4.6(i);
(xv) Liens consisting of mortgages of or security interests
in the property owned by the Company on the Issue Date
located in Port Gibson, Mississippi which are granted in
connection with the financing of the construction of
facilities or fixed improvements thereon; provided,
however, that the Indebtedness secured thereby shall be
Incurred in compliance with Section 4.6 and shall be in an
aggregate amount at any time outstanding not exceeding
$3,000,000; (xvi) Liens consisting of pledges of or
security interests in equipment and fixtures used in the
facilities operated by the Company on the Issue Date
located in Auburn, Nebraska which are granted to secure
Indebtedness to state and local governmental authorities or
agencies Incurred in connection with the financing of the
construction or expansion of such facilities; provided,
however, that the Indebtedness secured thereby shall be
Incurred in compliance with Section 4.6 and shall be in an
aggregate amount at any time outstanding not exceeding
$500,000; (xvii) Liens securing Indebtedness Incurred in
exchange for, or to exchange, renew, refund or replace,
Indebtedness to the extent that the Indebtedness being
exchanged, extended, renewed, refunded or replaced was
permitted to be secured pursuant to clause (ix), (xii),
(xiii), (xiv) or (xv) above; <PAGE>
provided, however, that such Indebtedness shall not
encumber or extend to any property of the Company or its
Subsidiaries other than the property theretofore subject
thereto; and (xviii) other Liens securing obligations in an
aggregate amount at any time not exceeding $500,000, as
determined in good faith by the Board of Directors of the
Company.
"Permitted Payment" means, with respect to the
Company or any of its Subsidiaries, (i) any dividend,
distribution or other payment by the Company or any of its
Subsidiaries on Capital Stock to the extent payable solely
in Capital Stock (other than Disqualified Capital Stock);
(ii) any dividend, distribution or other payment to the
Company or any of its Subsidiaries by any of its or their
Subsidiaries; (iii) any defeasance, redemption, purchase or
other acquisition or retirement by the Company or any of
its Subsidiaries of Capital Stock or Indebtedness that is
subordinated in right of payment to the Securities with the
net proceeds received by the Company or such Subsidiary
from the substantially concurrent sale of its Capital Stock
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(other than Disqualified Capital Stock); and (iv) any
defeasance, redemption, purchase or other acquisition or
retirement by the Company or any of its Subsidiaries of
Indebtedness that is subordinated in right of payment to
the Securities with the net proceeds received by the
Company or such Subsidiary from the substantially
concurrent sale of Indebtedness (a) if such Indebtedness is
subordinated in right of payment to the Securities at least
to the same extent and in the same manner as the
Indebtedness to be retired and (b) if no payments or
principal of such Indebtedness by way of sinking fund,
amortization, mandatory redemption or otherwise (including
defeasance) may be made or required (including, but not
limited to, at the option of the holder thereof) in an
amount greater than or at a time prior to the amounts and
times specified in the Indebtedness being retired and the
Weighted Average Life to Maturity of such Indebtedness is
greater than the Weighted Average Life to Maturity of the
Indebtedness to be retired.
"person" means any individual, corporation,
partnership, joint venture, association, joint-stock
company, trust, unincorporated organization or government
or other agency or political subdivision thereof.
"Plan of Liquidation" means, with respect to any
person, a plan that provides for, contemplates or the
effectuation of which is preceded or accompanied by
(whether or not substantially contemporaneously) (i) the
sale, lease, conveyance or other disposition of all or
substantially all of the assets of such person as an
entirety or substantially as an entirety and (ii) the
distribution of all or substantially all of the proceeds of
such sale, lease, conveyance or other disposition and all
or substantially all of the remaining assets of such person
to holders of Capital Stock or a class or classes of
Indebtedness of such person.
"Preferred Stock" means, with respect to any
person, any and all shares, interests, participations or
other equivalents (however designated) of preferred <PAGE>
or preference stock of such person, whether outstanding on
the Issue Date or issued thereafter, and includes all
series and classes of such preferred or preference stock.
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"principal" of any Indebtedness (including the
Securities) means the principal of such Indebtedness plus
any premium, if any, applicable to such Indebtedness.
"property" means any right or interest in or to
property or assets of any kind whatsoever, whether real,
personal or mixed and whether tangible or intangible.
"Prospectus" means the prospectus relating to
$160,000,000 principal amount of Securities constituting a
part of the Registration Statement on Form S-1 (Commission
File No. 33-64598) filed by the Company with the SEC, in
the form first used to confirm sales of Securities (as
amended or supplemented, if the Company shall thereafter
have furnished any amendments or supplements thereto.)
"Purchase Date" has the meaning specified in
Section 4.9(b).
"Purchase Money Obligation" means any
Indebtedness secured by a Lien on Acquired Property;
provided, however, that (i) the purchase money mortgages,
purchase money security interests or other Liens on such
Acquired Property shall be entered into within 180 days
after the purchase or acquisition of such Acquired
Property; (ii) the aggregate outstanding principal amount
of Indebtedness secured by such Acquired Property and the
facilities and fixed improvements constructed thereon shall
not at any time exceed 80% of the aggregate of (a) the
purchase price paid by the Company or any of its
Subsidiaries for the Acquired Property and (b) the cost of
the facilities and fixed improvements constructed on such
Acquired Property; and (iii) at no time after such
Indebtedness has been fully funded shall the aggregate
principal amount of the outstanding Indebtedness secured by
such Lien be increased.
"Recapitalization" means the transactions to be
consummated on the Issue Date which are described under the
caption "Recapitalization Plan" in the Prospectus,
including, but not limited to, (i) the issuance and sale by
the Company of $160,000,000 aggregate principal amount of
Securities and the application of the net proceeds
therefrom as described therein, (ii) the issuance and sale
by the Company of 6,960,000 shares of its common stock, par
value $.01 per share, and the application of the net
proceeds therefrom as described therein and (iii) the
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establishment of the New Credit Facility and the initial
borrowings of funds thereunder for the purposes described
therein.
"Record Date" means a Record Date specified in
the Securities whether or not such Record Date is a
Business Day.
"Redemption Date" means, when used with respect
to any Security to be redeemed, the date fixed for such
redemption pursuant to this Indenture and Paragraph 5 of
the Security.
<PAGE>
"Redemption Price" means, when used with respect
to any Security to be redeemed, the redemption price for
such redemption specified in Paragraph 5 of the Security.
"Reference Period" means, with respect to any
person, the four full fiscal quarters ended immediately
preceding any date upon which any determination is to be
made pursuant to the terms of the Securities or the
Indenture.
"Registrar" has the meaning specified in
Section 2.3.
"Restricted Payment" means, with respect to any
person, (i) the declaration or payment of any dividend or
other distribution in respect of the Capital Stock of such
person or any Subsidiary of such person, (ii) any payment
on account of the purchase, redemption, retirement or other
acquisition or retirement for value of the Capital Stock of
such person or any Subsidiary of such person, or (iii) any
purchase, redemption, or other acquisition or retirement
for value of, or any payment in respect of any amendment of
the terms of, or any defeasance of, any Indebtedness,
directly or indirectly, by such person or a Subsidiary of
such person prior to the scheduled maturity, any scheduled
repayment of principal, or scheduled sinking fund payment,
as the case may be, of such Indebtedness, if such
Indebtedness is subordinate in right of payment (whether
pursuant to its terms or by operation of law) to the
Securities; provided, however, that the term "Restricted
Payment" does not include any Permitted Payment.
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"SEC" means the Securities and Exchange
Commission.
"Securities" means the 10-1/2% Senior Notes due
2003, as supplemented from time to time in accordance with
the terms hereof, issued under this Indenture.
"Securities Act" means the Securities Act of
1933, as amended, and the rules and regulations of the SEC
promulgated thereunder.
"Significant Subsidiary" means, with respect to
any person as of any date, any Subsidiary of such person
(a) the value of whose assets, as such assets would appear
on a consolidated balance sheet of such Subsidiary and its
Consolidated Subsidiaries prepared as of the end of the
fiscal quarter next preceding such date in accordance with
GAAP, is at least 10% of the value of the assets of such
person and its Consolidated Subsidiaries, determined as
aforesaid, or (b) which has revenues, Consolidated EBITDA
or Consolidated Net Income, as such revenues and
Consolidated Net Income would appear on a consolidated
income statement of such Subsidiary and its Consolidated
Subsidiaries prepared as of the end of the fiscal quarter
next preceding such date in accordance with GAAP,
constituting at least 10% of the revenues, Consolidated
EBITDA or Consolidated Net Income of such person and its
Consolidated Subsidiaries.
<PAGE>
"Stated Maturity" means, when used with respect
to any Security, August 1, 2003.
"Subsidiary" means, with respect to any person,
(i) a corporation a majority of whose Capital Stock is
directly or indirectly, owned by such person, by such
person and one or more Subsidiaries of such person or by
one or more Subsidiaries of such person or (ii) any other
person (other than a corporation) in which such person, one
or more Subsidiaries of such person, or such person and one
or more Subsidiaries of such person, directly or
indirectly, has at least majority ownership interest.
"Subsidiary Preferred Stock" means, with respect
to any person, any series of Preferred Stock issued by a
Subsidiary of such person.
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"Surviving Person" has the meaning specified in
Section 5.1(a).
"TIA" means the Trust Indenture Act of 1939 (15
U.S. Code Sections 77aaa-77bbbb) as in effect on the date of the
execution of this Indenture.
"Trustee" means the party named as such in this
Indenture until a successor replaces it in accordance with
the provisions of this Indenture and thereafter means such
successor.
"Trust Officer" means any officer within the
corporate trust department (or any successor group) of the
Trustee including any vice president, assistant vice
president, secretary, assistant secretary or any other
officer or assistant officer of the Trustee customarily
performing functions similar to those performed by the
persons who at that time shall be such officers, and also
means, with respect to a particular corporate trust matter,
any other officer of the corporate trust department (or any
successor group) of the Trustee to whom such trust matter
is referred because of his knowledge of and familiarity
with the particular subject.
"U.S. Government Obligations" means direct
non-callable obligations of, or non-callable obligations
guaranteed by, the United States of America for the payment
of which obligation or guarantee the full faith and credit
of the United States of America is pledged.
"U.S. Legal Tender" means such coin or currency
of the United States of America as at the time of payment
shall be legal tender for the payment of public and private
debts.
"Weighted Average Life to Maturity" means, when
applied to any Indebtedness at any date, the quotient
obtained by dividing (i) the sum of the products of the
number of years from the date of determination to the dates
of each successive scheduled principal (or redemption)
payment of such Indebtedness multiplied by the amount of
such principal (or redemption) payment by (ii) the sum of
all principal (or redemption) payments.
<PAGE>
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"Wholly Owned Subsidiary" means, with respect to
any person, a Subsidiary of such person all of the Capital
Stock of which is owned by such person.
"Working Capital Facility" means a credit
facility (including, but not limited to, the New Credit
Facility) which, if secured, is secured exclusively by any
of Inventory, Accounts Receivable and the products and
proceeds thereof (including proceeds which constitute
property of the types described in the definitions of the
terms "Inventory" and "Accounts Receivable" contained in
this Section 1.1, proceeds deposited in any collateral
account or lock box of the Company or any of its
Subsidiaries for the benefit of the lenders party to any
Working Capital Facility, all payments under insurance with
respect to Inventory and any indemnity, warranty or
guaranty payable by reason of loss or damage to or
otherwise with respect to any of the foregoing) of the
Company and its Subsidiaries.
"Working Capital Financing" means, at any time,
the sum of (i) the aggregate outstanding principal amount
of all loans, advances and other extensions of credit made
pursuant to any Working Capital Facilities and (ii) the
aggregate amount of all outstanding reimbursement
obligations in respect of and all amounts available to be
drawn under any outstanding letters of credit issued
pursuant to any Working Capital Facilities.
SECTION 1.2. Incorporation by Reference of TIA.
Whenever this Indenture refers to a provision of
the TIA, such provision is incorporated by reference in and
made a part of this Indenture. The following TIA terms
used in this Indenture have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture securityholder" means a holder or
holder of Securities.
"indenture to be qualified" means this Indenture.
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"indenture trustee" or "institutional trustee"
means the Trustee.
"obligor" on the indenture securities means the
Company and any other obligor on the Securities.
<PAGE>
All other TIA terms used in this Indenture that
are defined by the TIA, defined by TIA reference to another
statute or defined by SEC rule and not otherwise defined
herein have the meanings assigned to them thereby.
SECTION 1.3. 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 words in the plural include
the singular;
(5) provisions apply to
successive events and transactions;
(6) the words "herein," "hereof"
and other words of similar import refer to
this Indenture as a whole and not to any
particular Article, Section or other
subdivision hereof; and
(7) references to Sections or
Articles constitute reference to such
Section or Article in this Indenture, unless
stated otherwise.
ARTICLE II
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THE SECURITIES
SECTION 2.1. Form and Dating.
The Securities and the Trustee's certificate of
authentication in respect thereof shall be substantially in
the form of Exhibit A hereto, which is part of this
Indenture. The Securities may have notations, legends or
endorsements required by law, stock exchange rule or usage.
The Company shall approve the form of the Securities and
any notation, legend or endorsement thereon. Any such
notations, legends or endorsements not contained in the
form of Security attached as Exhibit A hereto shall be
delivered in writing to the Trustee. Each Security shall
be dated the date of its authentication.
<PAGE>
The terms and provisions contained in the form of
Securities shall constitute, and are hereby expressly made,
a part of this Indenture and, to the extent applicable, the
Company and the Trustee, by their execution and delivery of
this Indenture, expressly agree to such terms and
provisions and to be bound thereby.
SECTION 2.2. Execution and Authentication.
Two Officers shall sign, or one Officer shall
sign and one Officer shall attest to, the Securities for
the Company by manual or facsimile signature. The
Company's seal shall be impressed, affixed, imprinted or
reproduced on the Securities and may be in facsimile form.
If an Officer whose signature is on a Security
was an Officer at the time of such execution but no longer
holds that office at the time the Trustee authenticates the
Security, the Security shall be valid nevertheless and the
Company shall nevertheless be bound by the terms of the
Securities and this Indenture.
A Security shall not be valid until an authorized
signatory of the Trustee manually signs the certificate of
authentication on the Security. The signature shall be
conclusive evidence that the Security has been
authenticated pursuant to the terms of this Indenture.
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The Trustee shall authenticate Securities for
original issue in the aggregate principal amount of up to
$160,000,000 upon a written order of the Company in the
form of an Officers' Certificate. The Officers'
Certificate shall specify the amount of Securities to be
authenticated and the date on which the Securities are to
be authenticated. The aggregate principal amount of
Securities outstanding at any time may not exceed
$160,000,000, except as provided in Section 2.7. Upon the
written order of the Company in the form of an Officers'
Certificate, the Trustee shall authenticate Securities in
substitution of Securities originally issued to reflect any
name change of the Company.
The Trustee may appoint an authenticating agent
acceptable to the Company to authenticate Securities.
Unless otherwise provided in the appointment, an
authenticating agent may authenticate Securities 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 the Company, an Affiliate of the
Company or any of their respective Subsidiaries.
Securities shall be issuable only in registered
form without coupons in denominations of $1,000 and any
integral multiple thereof.
SECTION 2.3 Registrar and Paying Agent.
<PAGE>
The Company shall maintain an office or agency in
the Borough of Manhattan, The City of New York, where
Securities may be presented for registration of transfer or
for exchange ("Registrar") and an office or agency where
Securities may be presented for payment ("Paying Agent")
and an office or agency where notices and demands to or
upon the Company in respect of the Securities may be
served. The Company may act as its own Registrar or Paying
Agent, except that, for the purposes of Articles III, VIII,
XI and Section 4.9, neither the Company nor any Affiliate
of the Company shall act as Paying Agent. The Registrar
shall keep a register of the Securities and of their
transfer and exchange. The Company may have one or more
co-Registrars and one or more additional Paying Agents.
The term "Paying Agent" includes any additional Paying
Agent. The Company hereby initially appoints the Trustee
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as the initial Registrar and Paying Agent, and the Trustee
hereby initially agrees so to act.
The Company shall enter into an appropriate
written agency agreement with any Agent not a party to this
Indenture, which agreement shall implement the provisions
of this Indenture that relate to such Agent. The Company
shall promptly notify the Trustee in writing of the name
and address of any such Agent. If the Company fails to
maintain a Registrar or Paying Agent, the Trustee shall act
as such.
SECTION 2.4. Paying Agent to Hold Assets in
Trust.
The Company shall require each Paying Agent other
than the Trustee to agree in writing that each Paying Agent
shall hold in trust for the benefit of holders or the
Trustee all assets held by the Paying Agent for the payment
of principal of, or interest on, the Securities (whether
such assets have been distributed to it by the Company or
any other obligor on the Securities), and shall notify the
Trustee in writing of any Default by the Company (or any
other obligor on the Securities) in making any such
payment. If the Company or a Subsidiary of the Company
acts as Paying Agent, it shall segregate such assets and
hold them as a separate trust fund for the benefit of the
holders or the Trustee. The Company at any time may
require a Paying Agent to distribute all assets held by it
to the Trustee and account for any assets disbursed and the
Trustee may at any time during the continuance of any
payment Default, upon written request to a Paying Agent,
require such Paying Agent to distribute all assets held by
it to the Trustee and to account for any assets
distributed. Upon distribution to the Trustee of all
assets that shall have been delivered by the Company to the
Paying Agent, the Paying Agent (if other than the Company)
shall have no further liability for such assets.
SECTION 2.5. Securityholder Lists.
The Trustee shall preserve in as current a form
as is reasonably practicable the most recent list available
to it of the names and addresses of holders. If the
Trustee is not the Registrar, the Company shall furnish to
the Trustee in writing on or before the third Business Day
preceding each Interest Payment Date and at such other
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times as the Trustee may request a list in such form and as
of such date as the Trustee reasonably may require of the
names and addresses of holders.
<PAGE>
SECTION 2.6. Transfer and Exchange.
When Securities are presented to the Registrar or
a co-Registrar with a request to register the transfer of
such Securities or to exchange such Securities for an equal
principal amount of Securities of other authorized
denominations, the Registrar or co-Registrar shall register
the transfer or make the exchange as requested if its
reasonable requirements for such transaction are met;
provided, however, that the Securities surrendered for
transfer or exchange shall be duly endorsed or accompanied
by a written instrument of transfer in form reasonably
satisfactory to the Company and the Registrar or co-
Registrar, duly executed by the holder thereof or his
attorney duly authorized in writing. To permit
registrations of transfers and exchanges, the Company shall
execute and the Trustee shall authenticate Securities at
the Registrar's or co-Registrar's request. No service
charge shall be made for any registration of transfer or
exchange, but the Company may require payment of a sum
sufficient to cover any transfer tax, assessments or
similar governmental charges payable in connection
therewith (other than any such transfer taxes, assessments
or similar governmental charges payable upon exchanges or
transfers pursuant to Section 2.10, 3.7, 4.9, 9.5 or 11.1).
The Registrar or co-Registrar shall not be required to
register the transfer of or exchange of (a) any security
selected for redemption in whole or in part pursuant to
Article III, except the unredeemed portion of any Security
being redeemed in part, or (b) any Security for a period
beginning 15 Business Days before the mailing of a notice
of an offer to repurchase or redeem Securities and ending
at the close of business on the day of such mailing.
SECTION 2.7. Replacement Securities.
If a mutilated Security is surrendered to the
Trustee or if the holder of a Security claims and submits
an affidavit or other evidence, satisfactory to the Company
and the Trustee, to the effect that the Security has been
lost, destroyed or wrongfully taken, the Company shall
issue and the Trustee shall authenticate a replacement
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Security if the requirements of the Company and the Trustee
are met. If required by the Company or the Trustee, such
holder must provide an indemnity bond or other security,
sufficient in the judgment of both the Company and the
Trustee, to protect the Company, the Trustee or any Agent
from any loss which any of them may suffer if a Security is
replaced. The Company may charge such holder for its
reasonable, out-of-pocket expenses in replacing a Security.
Every replacement Security is an additional
obligation of the Company.
SECTION 2.8. Outstanding Securities.
Securities outstanding at any time are all the
Securities that have been authenticated by the Trustee
except those cancelled by it, those delivered to it for
cancellation and those described in this Section 2.8 as not
outstanding. A Security does not cease to be outstanding
because the Company or an Affiliate of the Company holds
the Security, except as provided in Section 2.9.
<PAGE>
If a Security is replaced pursuant to Section 2.7
(other than a mutilated Security surrendered for
replacement), it ceases to be outstanding unless the
Company and the Trustee receive proof satisfactory to them
that the replaced Security is held by a bona fide
purchaser. A mutilated Security ceases to be outstanding
upon surrender of such Security and replacement thereof
pursuant to Section 2.7.
If on a Redemption Date or the Maturity Date the
Paying Agent (other than the Company or an Affiliate of the
Company) holds U.S. Legal Tender or U.S. Government
Obligations sufficient to pay all of the principal and
interest due on the Securities payable on that date and
payment of the Securities called for redemption is not
otherwise prohibited, then on and after that date such
Securities cease to be outstanding and interest on them
ceases to accrue.
SECTION 2.9. Treasury Securities.
In determining whether the holders of the
required principal amount of Securities have concurred in
any direction, amendment, supplement, waiver or consent,
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Securities owned by the Company and Affiliates of the
Company shall be disregarded, except that, for the purposes
of determining whether the Trustee shall be protected in
relying on any such direction, amendment, supplement,
waiver or consent, only Securities that the Trustee knows
are so owned shall be disregarded.
SECTION 2.10. Temporary Securities.
Until definitive Securities are ready for
delivery, the Company may prepare and the Trustee shall
authenticate temporary Securities. Temporary Securities
shall be substantially in the form of definitive securities
but may have variations that the Company reasonably and in
good faith considers appropriate for temporary Securities.
Without unreasonable delay, the Company shall prepare and
the Trustee shall authenticate definitive Securities in
exchange for temporary Securities. Until so exchanged, the
temporary Securities shall in all respects be entitled to
the same benefits under this Indenture as permanent
Securities authenticated and delivered hereunder.
SECTION 2.11. Cancellation.
The Company at any time may deliver Securities to
the Trustee for cancellation. The Registrar and the Paying
Agent shall forward to the Trustee any Securities
surrendered to them for transfer, exchange or payment. The
Trustee, or at the direction of the Trustee, the Registrar
or the Paying Agent (other than the Company or an Affiliate
of the Company) and no one else, shall cancel and, at the
written direction of the Company, shall dispose of all
Securities surrendered for transfer, exchange, payment or
cancellation. Subject to Section 2.7, the Company may not
issue new Securities to replace Securities it has paid or
delivered to the Trustee for cancellation. No Securities
shall be authenticated in lieu of or in <PAGE>
exchange for any Securities cancelled as provided in this
Section 2.11, except as expressly permitted in the form of
Securities and as permitted by this Indenture.
SECTION 2.12 Defaulted Interest.
If the Company defaults in a payment of interest
on the Securities, it shall pay the defaulted interest,
plus (to the extent lawful) interest on the defaulted
interest, to the persons who are holders on a subsequent
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special record date, which date shall be the fifteenth day
next preceding the date fixed by the Company for the
payment of defaulted interest, whether or not the
subsequent record date is a Business Day. At least 15 days
before the subsequent special record date, the Company
shall mail to the Trustee and each holder a notice that
states the subsequent special record date, the payment date
and the amount of defaulted interest, and interest payable
on such defaulted interest, if any, to be paid.
SECTION 2.13 Persons Deemed Owners.
Except as otherwise required by law, prior to the
presentment of a Security for registration of transfer, the
Company, the Trustee and any Agents shall treat the person
in whose name such Security is registered as the owner of
such Security for the purpose of receiving payment of
principal of, and interest on, said Security and for all
other purposes whatsoever, whether or not such Security be
overdue, and neither the Company, the Trustee nor any Agent
shall be affected by any notice to the contrary.
ARTICLE III
REDEMPTION
SECTION 3.1. Right of Redemption.
The Securities may be redeemed at the election of
the Company, as a whole or from time to time in part, at
any time on or after August 1, 1998, at the Redemption
Prices specified in Paragraph 5 of the form of Securities,
in each case, together with accrued and unpaid interest to
the Redemption Date. The election by the Company to redeem
any Securities pursuant to this Section 3.1 shall be
evidenced by a Board Resolution of the Company.
SECTION 3.2. Notices to Trustee.
If the Company elects to redeem Securities
pursuant to Paragraph 5 of the Securities, it shall notify
the Trustee in writing of the Redemption Date and the
principal amount of Securities to be redeemed and whether
it wants the Trustee to give notice of redemption to the
holders.
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<PAGE> The Company shall give each notice to the Trustee
provided for in this Section 3.2 at least 60 days before
the Redemption Date (unless a shorter notice shall be
satisfactory to the Trustee).
SECTION 3.3. Selection of Securities to Be
Redeemed.
If less than all of the Securities are to be
redeemed pursuant to Paragraph 5 of the Securities, the
Trustee shall select the Securities to be redeemed pro rata
or by lot or by such other method as the Trustee shall
determine to be fair and appropriate and in such manner as
complies with any applicable legal and stock exchange
requirements.
The Trustee shall make the selection from the
Securities outstanding and not previously called for
redemption and shall promptly notify the Company in writing
of the Securities selected for redemption and, in the case
of any Security selected for partial redemption, the
principal amount thereof to be redeemed. Securities in
denominations of $1,000 may be redeemed only in whole. The
Trustee may select for redemption portions (equal to $1,000
or any integral multiple thereof) of the principal of
Securities that have denominations larger than $1,000.
Provisions of this Indenture that apply to Securities
called for redemption also apply to portions of Securities
called for redemption.
SECTION 3.4. Notice of Redemption.
At least 30 days but not more than 60 days before
a Redemption Date, the Company shall mail a notice of
redemption by first class mail, postage prepaid, to the
Trustee and each holder whose Securities are to be
redeemed. At the Company's request, the Trustee shall give
the notice of redemption in the Company's name and at the
Company's expense. Each notice of redemption shall
identify the Securities to be redeemed and shall state:
(1) the Redemption Date;
(2) the Redemption Price,
including the amount of accrued and unpaid
interest to be paid upon such redemption;
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(3) the name, address and
telephone number of the Paying Agent;
(4) that Securities called for
redemption must be surrendered to the Paying
Agent at the address specified in such
notice to collect the Redemption Price;
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<PAGE>
(5) that, unless (a) the Company
defaults in its obligation to deposit U.S. Legal
Tender sufficient to pay the Redemption Price and
accrued and unpaid interest on the Securities
called for redemption with the Paying Agent in
accordance with Section 3.5 hereof or (b) the
payment of the Redemption Price and accrued and
unpaid interest is prohibited, interest on the
Securities called for redemption ceases to accrue
on and after the Redemption Date and thereafter
the only remaining right of the holders of such
Securities is to receive payment of the
Redemption Price and accrued and unpaid interest
upon surrender to the Paying Agent of the
Securities called for redemption;
(6) if any Security is being
redeemed in part, the portion of the
principal amount, equal to $1,000 or any
integral multiple thereof, of such Security
to be redeemed and that, after the
Redemption Date, and upon surrender of such
Security, a new Security or Securities in
aggregate principal amount equal to the
unredeemed portion thereof will be issued;
(7) if less than all the
Securities are to be redeemed, the
identification of the particular Securities
(or portion thereof) to be redeemed, as well
as the aggregate principal amount of such
Securities to be redeemed and the aggregate
principal amount of Securities to be
outstanding after such partial redemption;
(8) the CUSIP number of the
Securities to be redeemed; and
(9) that the notice is being sent
pursuant to this Section 3.4 and pursuant to
the optional redemption provisions of
Paragraph 5 of the Securities.
SECTION 3.5. Deposit of Redemption Price.
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At least two Business Days prior to the
Redemption Date, the Company shall deposit with the Paying
Agent (other than the Company or an Affiliate of the
Company) U.S. Legal Tender sufficient to pay the Redemption
Price of all Securities to be redeemed on such Redemption
Date and accrued and unpaid interest on such Securities to
the Redemption Date. The Paying Agent shall promptly
return to the Company any U.S. Legal Tender so deposited
which is not required for that purpose upon the written
request of the Company.
If the Company complies with the preceding
paragraph and payment of the Redemption Price for the
Securities called for redemption and accrued and unpaid
<PAGE>
interest thereon is not prohibited, interest on the
Securities to be redeemed will cease to accrue on the
applicable Redemption Date, whether or not such Securities
are presented for payment. Notwithstanding anything herein
to the contrary, if any Security surrendered for redemption
in the manner provided in the Securities shall not be so
paid upon surrender for redemption because of the failure
of the Company to comply with the preceding paragraph,
interest shall continue to accrue and be paid from the
Redemption Date until such payment is made on the unpaid
principal, and, to the extent lawful, on any interest not
paid on such unpaid principal, in each case at the rate and
in the manner provided in Section 4.1 hereof and the
Security.
SECTION 3.6. Payment of Securities on
Redemption Date.
Once notice of redemption is mailed in accordance
with Section 3.4, Securities called for redemption become
due and payable on the Redemption Date and at the
Redemption Price, together with accrued and unpaid interest
to such date. Upon surrender to the Trustee or Paying
Agent, such Securities called for redemption shall be paid
at the Redemption Price, together with accrued and unpaid
interest thereon to the Redemption Date; provided, however,
that if the Redemption Date is after a regular Record Date
and on or prior to the next succeeding Interest Payment
Date, the accrued interest shall be payable to the holder
of the redeemed Securities registered on the relevant
Record Date; and provided, further, that if a Redemption
Date is a Legal Holiday, payment shall be made on the next
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succeeding Business Day and no interest shall accrue for
the period from such Redemption Date to such succeeding
Business Day.
SECTION 3.7. Securities Redeemed in Part.
Upon surrender of a Security that is to be
redeemed in part, the Company shall execute and the Trustee
shall authenticate and deliver to the holder, without
service charge, a new Security or Securities equal in
principal amount to the unredeemed portion of the Security
surrendered.
ARTICLE IV
COVENANTS
SECTION 4.1. Payment of Securities.
The Company shall pay the principal of and
interest on the Securities on the dates and in the manner
provided in the Securities. An installment of principal of
or interest on the Securities shall be considered paid on
the date it is due if the Trustee or Paying Agent (other
than the Company or an Affiliate of the Company) holds for
the benefit of the holders, on or before 10:00 a.m., New
York City time, on that date, U.S. Legal Tender deposited
and designated for and sufficient to pay such installment
of principal or interest.
The Company shall pay interest on overdue
principal and on overdue installments of interest at the
rate specified in the Securities compounded semi-annually,
to the extent lawful.
SECTION 4.2. Maintenance of Office or Agency.
<PAGE>
The Company shall maintain in the Borough of
Manhattan, The City of New York, an office or agency where
Securities may be presented or surrendered for payment,
where Securities may be surrendered for registration of
transfer or exchange and where notices and demands to or
upon the Company in respect of the Securities and this
Indenture may be served. The Company hereby initially
designates the office of the Trustee located at 5 Hanover
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Square, 10th Floor, New York, New York 10004 as such office
or agency. The Company 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 the
Company shall fail to maintain any such required office or
agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices
and demands may be made or served at the address of the
Trustee set forth in Section 12.2.
The Company may also from time to time designate
one or more other offices or agencies where the Securities
may be presented or surrendered for any or all such
purposes and may from time to time rescind such
designations; provided, however, that no such designation
or rescission shall in any manner relieve the Company of
its obligation to maintain an office or agency in the
Borough of Manhattan, The City of New York, for such
purposes. The Company 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.
SECTION 4.3. Corporate Existence.
Subject to Article V, the Company shall do or
cause to be done all things necessary to preserve and keep
in full force and effect its corporate existence and the
corporate or other existence of each of its Subsidiaries in
accordance with the respective organizational documents of
each of them and the rights (charter and statutory) and
corporate franchises of the Company and each of its
Subsidiaries; provided, however, that the Company shall not
be required to preserve, with respect to itself, any right
or franchise, and with respect to any of its Subsidiaries,
any such existence, right or franchise, if (a) the Board of
Directors of the Company shall determine that the
preservation thereof is no longer desirable in the conduct
of the business of the Company and (b) the loss thereof is
not disadvantageous in any material respect to the holders.
SECTION 4.4. Payment of Taxes and Other Claims.
The Company shall, and shall cause each of its
Subsidiaries to, pay or discharge or cause to be paid or
discharged, before the same shall become delinquent,
(i) all taxes, assessments and governmental charges
L1103/WP88/03AV18
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(including withholding taxes and any penalties, interest
and additions to taxes) levied or imposed upon the Company
or any of its Subsidiaries or the properties and assets of
the Company or any of its Subsidiaries and (ii) all lawful
claims, whether for labor, materials, supplies, services or
anything else, which have become due and payable and which
by law have or may become a Lien upon the property and
assets of the Company or any of its
<PAGE>
Subsidiaries; provided, however, that the Company shall not
be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim whose
amount, applicability or validity is being contested in
good faith by appropriate proceedings and for which
disputed amounts adequate reserves have been established
and are maintained on the books of the Company or a
Subsidiary of the Company in accordance with GAAP so long
as no item or portion of property of the Company or any of
its subsidiaries subject thereto is in jeopardy of being
seized, levied upon or forfeited.
SECTION 4.5. Maintenance of Properties and
Insurance.
The Company shall cause all properties used or
useful to the conduct of its business and the business of
each of its Subsidiaries to be maintained and kept in good
condition, repair and working order (reasonable wear and
tear excepted) and supplied with all necessary equipment
and shall cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as
in its reasonable judgment may be necessary, so that the
business carried on in connection therewith may be properly
and advantageously conducted at all times; provided,
however, that nothing contained in this Section 4.5 shall
prevent the Company from discontinuing any operation or
maintenance of any of such properties, or disposing of any
of them, if such discontinuance or disposal is (a) in the
judgment of the Board of Directors of the Company,
desirable in the conduct of the business of the Company,
and (b) not disadvantageous in any material respect to the
holders.
The Company shall provide, or cause to be
provided, for itself and each of its Subsidiaries,
insurance (including appropriate self-insurance) against
loss or damage of the kinds that, in the reasonable, good
L1103/WP88/03AV18
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faith opinion of the Company, are adequate and appropriate
for the conduct of the business of the Company and such
Subsidiaries in a prudent manner, with reputable insurers
or with the government of the United States of America or
an agency or instrumentality thereof, in such amounts, with
such deductibles, and by such methods as shall be
customary, in the reasonable, good faith opinion of the
Company, and adequate and appropriate for the conduct of
the business of the Company and such Subsidiaries in a
prudent manner for corporations similarly situated in the
industry.
SECTION 4.6. Limitations on Incurrence of
Additional Indebtedness
(a) Except as set forth in this Section 4.6, the
Company shall not, and the Company shall not permit any of
its Subsidiaries to, directly or indirectly, issue, incur,
assume, Guarantee, become directly or indirectly liable
with respect to (including as a result of an Asset
Acquisition), or otherwise become responsible for,
contingently or otherwise (individually and collectively,
to "Incur," or, as appropriate, an "Incurrence"), any
Indebtedness (including Acquired Indebtedness) from and
after the Issue Date. For purposes of this Indenture,
Indebtedness of any person, which Indebtedness is
outstanding at the time such person becomes a Subsidiary of
the Company or is merged or consolidated with the Company
or a <PAGE>
Subsidiary of the Company, shall (subject to the provisions
set forth in the definition of the term "Consolidated
EBITDA Coverage Ratio" contained in Section 1.1) be deemed
to have been Incurred by the Company or its Subsidiaries,
as the case may be, at the time such person becomes a
Subsidiary of the Company or is merged or consolidated with
the Company or a Subsidiary of the Company.
(b) If (i) no Default or Event of Default shall
exist and be continuing at the time of, or would occur, on
a pro forma basis, after giving effect to the Incurrence of
such Indebtedness, and (ii) on the date of the Incurrence
of such Indebtedness (the "Incurrence Date"), the
Consolidated EBITDA Coverage Ratio of the Company for the
Reference Period immediately preceding the Incurrence Date,
on a pro forma basis, after giving effect to the Incurrence
of such Indebtedness, would have been (A) at any time prior
to August 1, 1995, at least 2.0 to 1 and (B) at any time on
L1103/WP88/03AV18
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or after August 1, 1995, 2.25 to 1, then the Company may
Incur such Indebtedness.
(c) The Company or any of its Subsidiaries may
Incur Indebtedness evidenced by the Securities and other
obligations under this Indenture up to the amounts
specified herein as of the date hereof.
(d) The Company or any of its Subsidiaries may
Incur Indebtedness under the Old Debentures; provided,
however, that, on the Issue Date, the Company or the
trustee for the Old Debentures on behalf of the Company
shall have given irrevocable notice of redemption of all
the outstanding Old Debentures in accordance with the terms
of the Old Debenture Indenture and shall have deposited the
funds necessary to effect such redemption with the trustee
for the Old Debentures.
(e) The Company may Incur Indebtedness under any
Working Capital Facility; provided, however, that the
amount of Working Capital Financing at any time outstanding
shall not exceed the greater of (i) the aggregate amount of
the commitments under the New Credit Facility on the Issue
Date or (ii) the sum of (A) 85% of the net book value of
the Eligible Receivables of the Company and its
Consolidated Subsidiaries, determined on a consolidated
basis for the Company and its Consolidated Subsidiaries in
accordance with GAAP, and (B) 65% of the net book value of
the Inventory of the Company and its Consolidated
Subsidiaries, determined on a consolidated basis for the
Company and its Consolidated Subsidiaries in accordance
with GAAP, less in the case of clauses (i) and (ii) above,
the aggregate amount applied by the Company to the
permanent reduction of Working Capital Financing pursuant
to clause (C)(y) of Section 4.9(a).
(f) Any Subsidiary of the Company may Incur
Indebtedness consisting of Guarantees of Working Capital
Financing; provided, however, that the obligation of any
Subsidiary of the Company in respect of such Guarantees
shall not at any time exceed the net book value of the
Accounts Receivable and Inventory of such Subsidiary
pledged to secure such Working Capital Financing.
<PAGE>
(g) Subject to the limitations set forth in
paragraph (d) above, the Company or any of its Subsidiaries
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may Incur Indebtedness outstanding on the Issue Date, after
giving effect to (i) the repayment by the Company of the
Indebtedness outstanding under the Old Financing Agreements
and (ii) the redemption by the Company of the Old
Debentures, in each case as contemplated by the
Recapitalization.
(h) The Company may Incur Indebtedness to any
Wholly Owned Subsidiary of the Company and any Subsidiary
of the Company may Incur Indebtedness to the Company or to
a Wholly Owned Subsidiary of the Company; provided,
however, that the Company or such Subsidiary of the
Company, as the case may be, shall not become liable to any
person other than the Company or a Wholly Owned Subsidiary
of the Company in respect of Indebtedness permitted to be
Incurred pursuant to this paragraph (h).
(i) The Company or any of its Subsidiaries may
Incur Indebtedness consisting of (i) Purchase Money
Obligations for property used in a Permitted Business, (ii)
Indebtedness Incurred for the purpose of financing the
construction of properties or fixed improvements used in a
Permitted Business, (iii) Capitalized Lease Obligations
Incurred in connection with a Permitted Business and (iv)
Acquired Indebtedness Incurred in connection with a
Permitted Business; provided, however, that the amount of
Indebtedness Incurred by the Company and its Subsidiaries
in any fiscal year pursuant to this paragraph (i) shall not
exceed $25,000,000; and provided, further, that any portion
of such $25,000,000 which is not so Incurred by the Company
and its Subsidiaries in any fiscal year may be carried
forward to subsequent fiscal years. Notwithstanding the
foregoing, in no event shall the maximum amount that may be
Incurred by the Company and its Subsidiaries in any fiscal
year pursuant to this paragraph (i) exceed $50,000,000.
(j) The Company or any of its Subsidiaries may
Incur Indebtedness so long as such Indebtedness is Incurred
in the ordinary course of business under (i) Interest Rate
Agreements, (ii) Currency Agreements, (iii) appeal bonds,
performance bonds, or letters of credit or reimbursement
obligations in respect thereof, (iv) letter of credit
obligations related to insurance (including self-insurance)
or (v) bank over-drafts that are repaid within three
Business Days.
L1103/WP88/03AV18
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(k) The Company may Incur Indebtedness other
than that permitted under paragraphs (b), (c), (d), (e),
(f), (g), (h), (i) and (j) above; provided, however, that
the aggregate principal amount of Indebtedness outstanding
at any time permitted to be Incurred pursuant to this
paragraph (k) shall not exceed $20,000,000; and, provided,
further that such Indebtedness will rank pari passu with or
subordinate in right of payment to the Securities.
(l) The Company may extend the final maturity or
any mandatory redemption date of outstanding Indebtedness
permitted under paragraphs (c), (g) or (i) above and may
Incur Indebtedness in exchange for, or the proceeds of
which are used to refinance, such outstanding Indebtedness
in an amount (or, if such new
<PAGE>
Indebtedness is issued at a price less than the principal
amount thereof, with an original issue price) not to exceed
the amount so exchanged or refinanced (plus accrued
interest and fees and expenses related thereto); provided,
however, that the Indebtedness being extended or exchanged
for, or the proceeds of which are used to refinance, the
Securities or other Indebtedness of the Company which is
pari passu with or subordinate in right of payment to the
Securities shall only be permitted (a) if, in case the
Indebtedness to be extended, exchanged or refinanced is
subordinated in right of payment to the Securities, each
new Indebtedness is subordinated in right of payment to the
Securities at least to the same extent and in the same
manner as the Indebtedness to be extended, exchanged or
refinanced and (b) if, in case the Securities are extended,
exchanged or refinanced in part or the Indebtedness to be
extended, exchanged or refinanced is pari passu with or
subordinated to the Securities, no payments of principal of
such Indebtedness by way of sinking fund, amortization,
mandatory redemption or otherwise (including defeasance)
may be made or required (including, but not limited to, at
the option of the holder thereof) in an amount greater than
or at the time prior to the amounts and times specified in
the Indebtedness being extended, exchanged or refinanced
and the Weighted Average Life to Maturity of such
Indebtedness is greater than the Weighted Average Life to
Maturity of the Indebtedness being extended, exchanged or
refinanced; and provided, further, that in no event may
Indebtedness of the Company be refinanced by means of the
Incurrence of Indebtedness by any Subsidiary pursuant to
this paragraph (l). The Company may Incur Indebtedness
L1103/WP88/03AV18
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pursuant to this paragraph (l) not more than three months
prior to the application of the proceeds to repay the
Indebtedness to be exchanged or refinanced.
SECTION 4.7. Limitation on Restricted Payments.
The Company shall not, and the Company shall not
permit any of its Subsidiaries to, directly or indirectly,
make any Restricted Payment, if, after giving effect
thereto, (a) a Default or an Event of Default shall have
occurred and be continuing, (b) the Company would not be
entitled to Incur $1.00 of additional Indebtedness pursuant
to Section 4.6(b) or (c) the aggregate amount of all
Restricted Payments made by the Company and its
Subsidiaries, including such proposed Restricted Payment
(the amount of any Restricted Payment not made in cash to
be the fair market value of any property used therefor, as
determined in good faith by the Board of Directors of the
Company and evidenced by a Board Resolution), from and
after the Issue Date, shall exceed the sum, if positive, of
(i) 50% of Consolidated Net Income of the Company accrued
for the period (taken as one accounting period), commencing
on the first day of the first full fiscal quarter which
commenced after the Issue Date to and including the last
day of the first fiscal quarter ended immediately prior to
the date of each calculation (or, in the event Consolidated
Net Income for such period is a deficit, then minus 100% of
such deficit), minus 100% of the amount of any writedowns,
writeoffs, other negative evaluations and other negative
extraordinary charges not otherwise reflected in
Consolidated Net Income during such period; (ii) the
aggregate net proceeds, including the fair market value of
property other than cash (as determined in good faith by
the Board of Directors of the Company) received by the
Company from the substantially concurrent sale or issuance
<PAGE>
(other than to a Subsidiary of the Company) of its Capital
Stock, but excluding the proceeds from the sale or issuance
of (x) any Capital Stock convertible into or exchangeable
for (whether at the option of the Company or the holder
thereof or upon the happening of any event) any security
other than its Capital Stock and (y) any Disqualified
Capital Stock; and (iii) $5,000,000. The foregoing
provisions of this Section 4.7 will not prohibit the
payment of any dividend on Capital Stock within 60 days
after the date of its declaration or authorization if such
dividend or redemption could have been made on the date of
L1103/WP88/03AV18
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such declaration or authorization in compliance with the
foregoing provisions; provided, however, that the full
amount of such dividend will be deducted in the calculation
of the aggregate amount of Restricted Payments available to
be made by the Company and its Subsidiaries referred to in
clause (c) above.
SECTION 4.8. Limitation on Liens.
The Company shall not, and shall not permit any
of its Subsidiaries to, create, incur or assume or suffer
to exist any Lien upon any of their respective property or
assets, whether now owned or hereafter acquired, except for
Permitted Liens, unless prior thereto or contemporaneously
therewith, the Securities are secured equally and ratably
with, or prior to, any other Indebtedness secured by such
Lien for so long as such other Indebtedness shall be so
secured.
SECTION 4.9. Limitations on Sales of Assets.
(a) Neither the Company nor any of its
Subsidiaries shall in one or a series of related
transactions convey, sell, transfer, assign or otherwise
dispose of, directly or indirectly (including by way of
merger, consolidation or sale and leaseback transaction),
any of its property, business or assets (including any sale
or other transfer or issuance of any Capital Stock of any
Subsidiary of the Company whether by the Company or through
the issuance, sale or transfer of Capital Stock by a
Subsidiary of the Company) whether owned (or conducted) on
the Issue Date, or thereafter acquired (or conducted) (an
"Asset Sale"), unless (A) the Company or such Subsidiary
receives consideration at the time of such Asset Sale at
least equal to the fair market value of the Capital Stock
or assets sold or otherwise disposed of (as determined, in
the case of any Asset Sale involving Capital Stock or
assets with a fair market value in excess of $1,000,000, in
good faith by the Board of Directors of the Company, as
evidenced by a Board Resolution delivered to the Trustee);
(B) at least 80% of the value of the consideration for such
Asset Sale consists of U.S. Legal Tender; provided,
however, that (x) any note or other obligation received by
the Company or such Subsidiary for such Asset Sale shall be
deemed to be in U.S. Legal Tender, if such note or other
obligation is converted into U.S. Legal Tender immediately
L1103/WP88/03AV18
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following such Asset Sale, and (y) any liabilities of the
Company or any of its Wholly Owned Subsidiaries (as shown
on the most recent balance sheet of the Company or such
Wholly Owned Subsidiary) that are assumed upon the transfer
of any asset pursuant to such Asset Sale, other than
Indebtedness under the Securities or this Indenture or any
Indebtedness that is subordinated (whether by contract or
by <PAGE>
operation of law, or otherwise) in right of payment to the
Securities, shall be deemed to be in the form of U.S. Legal
Tender; and (C) within 180 days from the date of the Asset
Sale, the Net Cash Proceeds of such Asset Sale are either
(x) invested in a Permitted Business; provided, however,
that such an investment may be made at any time prior to
360 days from the date of such Asset Sale, if no later than
180 days from the date of such Asset Sale, the Board of
Directors of the Company commits to make such investment
within such time period, as evidenced by a Board Resolution
delivered to the Trustee; or (y) applied to the payment of
the principal amount of any Working Capital Financing, if
in connection with any such payment, any related
commitment, standby obligation or the like under the
applicable Working Capital Facility shall be permanently
reduced by an amount equal to the principal amount so
repaid. If such Net Cash Proceeds are not actually applied
in accordance with clause (x) or (y) above, or if after the
application thereof there remain any Net Cash Proceeds, the
Company shall make an Offer to Purchase (as defined below)
the Securities.
Notwithstanding the immediately preceding
paragraph:
(i) the Company may convey, sell,
lease, transfer, assign, or otherwise dispose of
any or all of its assets, business or property to
a Wholly Owned Subsidiary of the Company and any
Subsidiary of the Company may convey, sell,
lease, transfer, assign, or otherwise dispose of
any or all of its assets, business and property
(upon voluntary liquidation or otherwise) to the
Company or a Wholly Owned Subsidiary of the
Company, in each case, so long as upon the
completion of such transaction, no item or
portion of any assets, business or property
involved in such transaction which is material to
the Company and its Subsidiaries taken as a whole
L1103/WP88/03AV18
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is in jeopardy of being seized, levied upon or forfeited;
(ii) the Company and any Subsidiary of
the Company may in the ordinary course of
business, consistent with past practice, convey,
sell, lease, transfer, assign or otherwise
dispose of assets acquired and held for resale in
the ordinary course of business;
(iii) the Company may convey, sell,
lease, transfer or otherwise dispose of assets
pursuant to and in accordance with the provisions
of Article V;
(iv) the Company and its Subsidiaries
may, for value, convey, sell, lease, transfer, or
assign damaged, worn out or other obsolete
property in the ordinary course of business or
other property no longer necessary for the proper
conduct of their businesses;
(v) the Company and any of its
Subsidiaries may abandon assets and properties
which are no longer useful in their businesses
and cannot be sold; and
<PAGE>
(vi) the Company and its Subsidiaries
may convey, sell, lease, transfer, assign or
otherwise dispose of assets to the extent that
the aggregate Net Cash Proceeds from all such
Asset Sales not otherwise permitted pursuant to
clause (i), (ii), (iii), (iv) or (v) above do not
exceed $3,000,000 in any fiscal year.
The Company shall accumulate all Net Cash
Proceeds in excess of the amount provided in clause (vi) of
the immediately preceding paragraph, and the aggregate
amount of such accumulated Net Cash Proceeds not used for
the purposes permitted by this Section 4.9(a) and within
the time period provided by this Section 4.9(a) shall be
referred to as the "Accumulated Amount." For the purposes
of this Section 4.9, the term "Minimum Accumulation Date"
means each date on which the Accumulated Amount first
exceeds $5,000,000.
L1103/WP88/03AV18
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(b) Following each Minimum Accumulation Date,
the Company shall make an unconditional offer (an "Offer to
Purchase") to the holders pursuant to the notice referred
to below to purchase, on a pro rata basis, Securities
having a principal amount (the "Offer Amount") equal to the
Accumulated Amount, at a purchase price (the "Offer Price")
equal to 100% of principal amount of such Securities, plus
accrued and unpaid interest to and including the date the
Securities tendered are purchased and paid for in
accordance with this Section 4.9 and including any premium
that would be payable if the Company were to have, on such
date (or, on the earliest date thereafter on which the
Securities may be redeemed by the Company as provided in
Paragraph 5 of the Securities), redeemed the Securities
pursuant to Article III and Paragraph 5 of the Securities
(the "Purchase Date"). Notice of an Offer to Purchase
shall be sent, at least 20 Business Days prior to the Final
Put Date (as hereinafter defined), by first-class mail, by
the Company to each holder at its registered address, with
a copy to the Trustee. The notice to the holders shall
contain all information, instructions and materials
required by applicable law or otherwise material to such
holders' decision to tender Securities pursuant to the
Offer to Purchase. The notice, which shall govern the
terms of the Offer to Purchase, shall state:
(1) that the Offer to Purchase is being
made pursuant to such notice and this Section
4.9;
(2) the Offer Amount, the Offer Price
(including the amount of accrued and unpaid
interest) and the Final Put Date and the
purchase date (the "Purchase Date"), which shall
be on or prior to 40 Business Days following the
Minimum Accumulation Date;
(3) that any Security or portion thereof
not tendered and accepted for payment will
continue to accrue interest, if interest is then
accruing;
<PAGE>
(4) that, unless the Company defaults in
depositing U.S. Legal Tender with the Paying
Agent in accordance with the last paragraph of
this clause (b), any Security or portion thereof
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accepted for payment pursuant to the Offer to
Purchase shall cease to accrue interest after the
Purchase Date;
(5) that holders electing to have a
Security or portion thereof purchased pursuant to
an Offer to Purchase will be required to
surrender the Security, with the form entitled
"Election of Holder to Require Purchase" on the
reverse of the Security completed, to the Paying
Agent (which may not for purposes of this
Section 4.9, notwithstanding any other provision
of this Indenture, be the Company or any
Affiliate of the Company) at the address
specified in the notice prior to the close of
business on the third Business Day prior to the
Purchase Date (the "Final Put Date");
(6) that holders will be entitled to
withdraw their elections, in whole or in part, if
the Paying Agent (which may not for purposes of
this Section 4.9, notwithstanding any other
provision of this Indenture, be the Company or
any Affiliate of the Company) receives, prior to
the close of business on the Final Put Date, a
telegram, telex, facsimile transmission or letter
setting forth the name of the holder, the
principal amount of the Securities the holder is
withdrawing and a statement containing a manual
or facsimile signature that such holder is
withdrawing his election to have such principal
amount of Securities purchased;
(7) that, if Securities in a principal
amount in excess of the Offer Amount are tendered
and not withdrawn, the Company shall purchase
Securities on a pro rata basis (with such
adjustments as may be deemed appropriate by the
Company so that only Securities in denominations
of $1,000 or integral multiples thereof shall be
acquired);
(8) that holders whose Securities were
purchased only in part will be issued a new
Security in principal amount equal to the
unpurchased portion of the Securities
surrendered; and
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(9) a brief description of the
circumstances and relevant facts regarding the
Asset Sales.
Any such Offer to Purchase shall comply with all
applicable provisions of Federal and state laws, including
Rule 14e-1 under the Exchange Act and other laws regulating
tender offers, if applicable, and any provisions of this
Indenture that conflict with such laws shall be deemed to
be superseded by the provisions of such laws.
<PAGE>
On or before a Purchase Date, the Company shall
(i) accept for payment Securities or portions thereof
properly tendered pursuant to the Offer to Purchase on or
prior to the Final Put Date (on a pro rata basis if
required pursuant to Paragraph (7) above), (ii) deposit
with the Paying Agent U.S. Legal Tender sufficient to pay
the Offer Price (together with accrued and unpaid interest)
for all Securities or portions thereof so accepted and
(iii) deliver to the Trustee Securities so accepted
together with an Officers' Certificate setting forth the
Securities or portions thereof being purchased by the
Company. The Paying Agent shall promptly mail or deliver
to holders of Securities or portions thereof so accepted
payment in an amount equal to the Offer Price (together
with accrued and unpaid interest) for such Securities or
portions thereof, and the Trustee shall promptly
authenticate and mail or deliver to such holders a new
Security equal in principal amount to any unpurchased
portion of the Security surrendered. Any Securities not so
accepted shall be promptly mailed or delivered by the
Company to the holder thereof. The Company will issue a
public announcement of the results of the Offer to Purchase
on or as soon as practicable after the Purchase Date and
will furnish a copy of such announcement to the Trustee.
(c) If the amount required to acquire all
Securities tendered by holders pursuant to the Offer to
Purchase (the "Acceptance Amount") shall be less than the
Offer Amount, the excess of the Offer Amount over the
Acceptance Amount may be (i) invested in a Permitted
Business or (ii) applied to the repayment, redemption or
repurchase of the principal amount of Indebtedness that
ranks pari passu in right of payment with the Securities
or, in the case of an Asset Sale by a Subsidiary, any
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Indebtedness of such Subsidiary or of any Wholly Owned
Subsidiary of the Company (other than Indebtedness owed to
the Company or another Subsidiary), and in connection with
any such payment any related loan commitment, standby
facility or the like shall be permanently reduced by an
amount equal to the principal amount so repaid, redeemed or
repurchased. Upon consummation of any Offer to Purchase
made in accordance with the terms of this Section 4.9, the
Accumulated Amount as of the Minimum Accumulation Date
shall be reduced to zero and accumulations thereof shall be
deemed to recommence from the day next following such
Minimum Accumulation Date.
SECTION 4.10. Limitation on Transactions with
Affiliates.
Neither the Company nor any of its Subsidiaries
shall make, effect or enter into any Affiliate Transaction,
except for transactions evidenced by an Officers'
Certificate addressed and delivered to the Trustee stating
that (i) such Affiliate Transaction is made in good faith
and (ii) the terms of such Affiliate Transaction are fair
and reasonable to the Company or such Subsidiary, as the
case may be, or, with respect to Affiliate Transactions
between the Company and its Subsidiaries, to the Company,
and are at least as favorable as the terms which could be
obtained by the Company or such Subsidiary, as the case may
be, or, with respect to Affiliate Transactions between the
Company and its Subsidiaries, by the Company in a
comparable transaction made on an arm's length basis with
persons who are not affiliated with the Company or such
Subsidiary; provided, however, that with respect to any
Affiliate Transaction with an aggregate value (to either
party) in excess of <PAGE>
$1,000,000, a majority of the Board of Directors of the
Company (including a majority of the directors who are not
employees, officers or Affiliates of the Company) must
approve such transaction and such approval shall be
evidenced by a Board Resolution to the effect set forth in
clause (ii) above; and provided, further, that with respect
to any Affiliate Transaction with an aggregate value (to
either party) in excess of $5,000,000, the Company must,
prior to the consummation thereof, obtain a written
favorable opinion as to the fairness of such transaction to
the Company or such Subsidiary, as the case may be, from a
financial point of view from an Independent Financial
Advisor. Notwithstanding the foregoing, the provisions of
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this Section 4.10 shall not apply to (w) transactions
effected pursuant to an agreement that is in effect on the
Issue Date in accordance with the terms thereof as in
effect on such date, (x) transactions exclusively between
or among the Company and any of its Wholly Owned
Subsidiaries, (y) Restricted Payments made in compliance
with Section 4.7 and (z) transactions permitted by, and
complying with, the provisions of Article V.
SECTION 4.11. Limitations on Restricting
Subsidiary Dividends.
Neither the Company nor any of its Subsidiaries
may, directly or indirectly, create, assume or suffer to
exist any consensual encumbrance or restriction on the
ability of any Subsidiary of the Company to pay dividends
or make other distributions on the Capital Stock of any
Subsidiary of the Company or pay dividends or any other
obligation to the Company or any of its Subsidiaries or
otherwise transfer assets or make or pay loans or advances
to the Company or any of its Subsidiaries, except for
restrictions (a) imposed by this Indenture, (b) existing on
the Issue Date pursuant to the express terms of the New
Credit Facility as in effect on such date or are existing
thereafter under the terms of any other Working Capital
Facility; provided, however, that the restrictions imposed
by any such other Working Capital Facility shall not be in
any respect more restrictive than those existing on the
Issue Date pursuant to the express terms of the New Credit
Facility as in effect on such date; or (c) customary
provisions in instruments or agreements, entered into in
the ordinary course of business, relating to a Lien
created, incurred, or assumed in accordance with Section
4.8 prohibiting the transfer of the property subject to
such Lien.
SECTION 4.12 Limitation on Issuance of
Preferred Stock by Subsidiaries.
The Company will not permit any Subsidiary to
issue, create, assume or otherwise cause or suffer to be
outstanding or otherwise exist any Preferred Stock of such
Subsidiary, except Preferred Stock held of record and
beneficially by the Company or a Wholly Owned Subsidiary of
the Company.
SECTION 4.13. SEC Reports.
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(a) The Company shall file with the Trustee,
simultaneously with any filing of the same with the SEC,
copies of the quarterly and annual reports and <PAGE>
the information, documents, and other reports (or copies of
such portions of any of the foregoing as the SEC may by
rules and regulations prescribe), if any, which it is
required to file with the SEC pursuant to Section 13 or
15(d) of the Exchange Act. If the Company is not subject
to the requirements of Section 13 or 15(d) of the Exchange
Act, the Company shall file with the Trustee, at the time
it would have been required to file such information with
the SEC were it required to do so, financial statements,
including any notes thereto (and, in the case of a fiscal
year end, an auditors' report by an independent certified
public accounting firm of established national reputation),
comparable to those which it would have been required to
include in such quarterly or annual reports, information,
documents or other reports if it had been subject to the
requirements of Section 13 or 15(d) of the Exchange Act.
The Company shall also comply with the other provisions of
Section 314(a) of the TIA.
(b) The Company shall cause its annual reports
to stockholders containing audited consolidated financial
statements and any quarterly or other financial reports
furnished by it to stockholders pursuant to the Exchange
Act, if any, to be mailed to the holders (no later than the
date such materials are mailed or made available to its
stockholders) at their addresses appearing in the register
of Securities maintained by the Registrar and shall cause
to be disclosed in financial statements in each such report
the amount available for Restricted Payments pursuant to
Section 4.7 hereof. If the Company is not required to
furnish annual or quarterly reports to its stockholders
pursuant to the Exchange Act, the Company shall cause its
financial statements referred to in Section 4.13(a) above,
including any notes thereto (and, in the case of a fiscal
year end, an auditors' report by an independent certified
public accounting firm of established national reputation),
to be so mailed to the holders within 125 days after the
end of each of its fiscal years and within 50 days after
the end of each of the first three fiscal quarters of each
fiscal year. If the Trustee (at the Company's request and
expense) is to mail the foregoing information to the
holders, the Company shall supply such information to the
Trustee at least three Business Days prior thereto.
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SECTION 4.14. Compliance Certificate; Notice of
Default.
(a) The Company shall deliver to the Trustee
within 120 days after the end of its fiscal year an
Officers' Certificate complying with Section 314(a)(4) of
the TIA and stating that a review of its activities and the
activities of its Subsidiaries during the preceding fiscal
year has been made under the supervision of the signing
Officers with a view to determining whether the Company has
kept, observed, performed and fulfilled its obligations
under this Indenture and further stating, as to each such
Officer signing such certificate, whether or not the signer
knows of any failure by the Company or any Subsidiary of
the Company to comply with any conditions or covenants in
this Indenture and, if such signer does know of such a
failure to comply, the certificate shall describe such
failure with particularity. The Officers' Certificate
shall also notify the Trustee should the relevant fiscal
year end on any date other than the current year end date.
<PAGE>
(b) The Company shall deliver to the Trustee
within 120 days after the end of each of its fiscal years a
written report of a firm of independent certified public
accountants with an established national reputation stating
that in conducting their audit for such fiscal year,
nothing has come to their attention that caused them to
believe that the Company or any Subsidiary of the Company
was not in compliance with the provisions set forth in
Sections 4.6, 4.7, 4.9 and 4.10 of this Indenture.
(c) The Company shall, so long as any of the
Securities are outstanding, deliver to the Trustee,
immediately upon becoming aware of any Default or Event of
Default under this Indenture, an Officers' Certificate
specifying such Default or Event of Default and what action
the Company is taking or proposes to take with respect
thereto. The Trustee shall not be deemed to have knowledge
of a Default or an Event of Default unless one of its Trust
Officers receives notice of the Default giving rise thereto
from the Company or any of the holders.
SECTION 4.15. Waiver of Stay, Extension or Usury
Laws.
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The Company covenants (to the extent that it may
lawfully do so) that it will not at any time insist upon,
plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law or any
usury law or other law, wherever enacted, how or at any
time hereafter in force which would prohibit or forgive the
Company from paying all or any portion of the principal of
or interest on the Securities as contemplated herein or
which may affect the covenants or the performance of this
Indenture; and (to the extent that it may lawfully do so)
the Company hereby expressly waives all benefit or
advantage of any such law insofar as such law applies to
the Securities, and covenants that it shall not hinder,
delay or impede the execution of any power herein granted
to the Trustee, and will suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE V
SUCCESSOR CORPORATION
SECTION 5.1. When Company May Merge, Etc.
(a) The Company may not, in a single transaction
or through a series of related transactions,
(i) consolidate with or merge with or into any other person
or, directly or indirectly, sell, lease, assign, transfer
or convey all or substantially all of its properties and
assets as an entirety or substantially as an entirety to
another person or group of affiliated persons, or
(ii) adopt a Plan of Liquidation, unless, in either case:
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<PAGE> (1) the Company shall be the
continuing person, or the person (if other
than the Company) formed by such
consolidation or into which the Company is
merged or to which all or substantially all
of the properties and assets of the Company
are transferred as an entirety or
substantially as an entirety (or, in the
case of a Plan of Liquidation, any person to
whom assets are transferred) (the Company or
such other person being hereinafter referred
to as the "Surviving Person") shall be a
corporation organized and validly existing
under the laws of the United States, any
State thereof or the District of Columbia,
and shall expressly assume, by an indenture
supplemental hereto, executed and delivered
to the Trustee, in form satisfactory to the
Trustee, all the obligations of the Company
under the Securities and this Indenture;
(2) on a pro forma basis, immediately
after giving effect to such transaction and
the assumption of the obligations
contemplated by clause (1) above, and the
Incurrence or issuance or anticipated
Incurrence or issuance of any Indebtedness
or Disqualified Capital Stock to be Incurred
or issued in connection therewith, the
Surviving Person (x) shall have a
Consolidated Net Worth equal to not less
that 100% of the Consolidated Net Worth of
the Company immediately preceding the
transaction, and (y) could Incur $1.00 of
additional Indebtedness pursuant to
Section 4.6(b); provided, however, that in
the case of a merger of a Consolidated
Subsidiary of the Company with and into the
Company or a Wholly Owned Subsidiary of the
Company or a sale, lease, assignment,
transfer or conveyance by a Consolidated
Subsidiary of all or substantially all of
its properties and assets to the Company or
a Wholly Owned Subsidiary of the Company,
the foregoing provisions of this clause (2)
shall not apply if on a pro forma basis,
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immediately after giving effect to such
merger or such sale, lease, assignment,
transfer or conveyance, as the case may be,
the Consolidated EBITDA Coverage Ratio of
the Company is equal to or greater than the
Consolidated EBITDA Coverage Ratio of the
Company immediately prior to such merger or
such sale, lease, assignment, transfer or
conveyance, as the case may be;
L1103/WP88/03AV18
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<PAGE> (3) immediately before and, on a pro
forma basis, immediately after giving effect
to such transaction and the assumption of
the obligations as set forth in clause
(1) above, and to the Incurrence or issuance
or anticipated Incurrence or issuance of any
Indebtedness to be Incurred or Disqualified
Capital Stock to be issued in connection
therewith, no Default or Event of Default
shall have occurred and be continuing; and
(4) the Company shall have delivered
to the Trustee an Officers' Certificate and
an Opinion of Counsel, each stating that
such consolidation, merger, assignment, or
transfer and such supplemental indenture
comply with this Article V and that all
conditions precedent herein provided
relating to such transaction have been
satisfied.
(b) For purposes of clause (a), the sale, lease,
conveyance, assignment, transfer, or other disposition of
all or substantially all of the properties and assets of
one or more Subsidiaries of the Company, which properties
and assets, if held by the Company instead of such
Subsidiaries, would constitute all or substantially all of
the properties and assets of the Company on a consolidated
basis, shall be deemed to be the transfer of all or
substantially all of the properties and assets of the
Company.
SECTION 5.2. Successor Corporation Substituted.
Upon any consolidation or merger, or any transfer
of assets in accordance with Section 5.1, the Surviving
Person formed by such consolidation or into which the
Company is merged or to which such transfer is made shall
succeed to, and be substituted for, and may exercise every
right and power of, the Company under this Indenture with
the same effect as if such Surviving Person had been named
as the Company herein. When a Surviving Person duly
assumes all of the obligations of the Company pursuant
hereto and pursuant to the Securities, the predecessor
shall be released from such obligations.
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ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES
SECTION 6.1. Events of Default.
The term "Event of Default," wherever used
herein, means any one of the following events (whatever the
reason for such Event of Default and whether it shall be
caused voluntarily or involuntarily or effected, without
limitation, by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule
or regulation of any administrative or governmental body):
<PAGE>
(1) a default in the payment of
any installment of interest upon any
Security as and when the same becomes due
and payable, and the continuance of such
default for a period of 30 days;
(2) a default in the payment of
all or any part of the principal of the
Securities when and as the same becomes due
and payable at maturity, upon redemption, by
declaration or otherwise, including a
default in the payment of the Change of
Control Purchase Price in accordance with
Article XI or the Offer Price in accordance
with Section 4.9;
(3) a default in the observance
or performance of, or breach of, any
covenant, agreement or warranty of the
Company contained in Article XI or Sections
4.6, 4.7 and 4.9;
(4) a default in the observance
or performance of, or breach of, any
covenant, agreement or warranty of the
Company contained in the Securities or in
this Indenture (other than a default in the
performance of any covenant, agreement or
warranty which is specifically dealt with
elsewhere in this Section 6.1), and
continuance of such default or breach for a
period of 30 days after there has been
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given, by registered or certified mail,
return receipt requested, to the Company by
the Trustee, or to the Company and the
Trustee by holders of at least 25% in
aggregate principal amount of the
outstanding Securities, a written notice
specifying such default or breach, requiring
it to be remedied and stating that such
notice is a "Notice of Default" hereunder;
(5) a default in the payment of
all or any part of the principal of or
interest on, or a default under any bond,
debenture, note, mortgage, indenture or
instrument under which there is then
outstanding any Indebtedness of the Company
or any of its Subsidiaries, whether now
existing or hereafter created, aggregating
in excess of $5,000,000 at any one time, if
(i) in the case of a failure to pay
principal of, or interest on, such
Indebtedness, such a failure would permit
the holders of such Indebtedness to
accelerate the same so that it becomes due
and payable prior to the date on which it
would otherwise have been due and payable or
(ii) in the case of any default (other than
a failure to pay principal of, or interest
on, such Indebtedness) under any bond,
debenture, note, mortgage, indenture or
other instrument under which such
Indebtedness was issued, such a failure has
resulted in the acceleration of the
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<PAGE> same so that it has become due and payable
prior to the date on which it would
otherwise have been due and payable;
(6) final judgments for the
payment of money which, in the aggregate,
exceed $5,000,000 at any one time shall be
entered against the Company or any of its
Subsidiaries or any of their respective
properties by a court of competent
jurisdiction and shall remain in effect and
undischarged for a period (during which
execution shall not be effectively stayed)
of 60 days (or, in the case of any such
final judgment which provides for payment
over time, which shall so remain
undischarged beyond any applicable payment
date provided therein);
(7) a decree, judgment, or order
by a court of competent jurisdiction shall
have been entered adjudging the Company or
any Significant Subsidiary as bankrupt or
insolvent, or approving as properly filed a
petition seeking reorganization of the
Company or any Significant Subsidiary under
any Bankruptcy Law, and such decree or order
shall have continued in effect and
undischarged for a period (during which such
decree or order shall not be effectively
stayed) of 60 consecutive days; or a decree
or order of a court of competent
jurisdiction for the appointment of a
Custodian of the Company or any Significant
Subsidiary, or any substantial part of its
assets or property, for the winding up or
liquidation of the affairs of any such
person, shall have been entered, and such
decree or order shall have remained in
effect and undischarged for a period (during
which such decree or order shall not be
effectively stayed) of 60 consecutive days;
or
(8) the Company or any
Significant Subsidiary shall institute
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proceedings to be adjudicated a voluntary
bankrupt, or shall consent to the filing of
a bankruptcy proceeding against it, or shall
file a petition or answer or consent seeking
reorganization under any Bankruptcy Law, or
shall consent to the filing of any such
petition, or shall consent to the
appointment of a Custodian of the Company or
any Significant Subsidiary, or any
substantial part of its assets or property,
or shall make a general assignment for the
benefit of creditors, or shall admit in
writing its inability to pay its debts
generally as they become due, or shall take
any corporate action in furtherance of any
of the foregoing.
SECTION 6.2. Acceleration of Maturity Date;
Rescission and Annulment.
<PAGE>
If an Event of Default (other than an Event of
Default specified in Section 6.1(7) and (8)) occurs and is
continuing, then, and in every such case, unless the
principal of all of the Securities shall have already
become due and payable, either the Trustee or the holders
of not less than 25% in aggregate principal amount of then
outstanding Securities, by a notice in writing to the
Company (and to the Trustee if given by holders) (an
"Acceleration Notice"), may declare all of the principal of
the Securities determined as set forth below, together with
accrued interest thereon, to be due and payable
immediately. If an Event of Default specified in
Section 6.1(7) or (8) occurs, all principal of, premium
applicable to, and accrued interest on, the Securities
shall ipso facto be immediately due and payable on all
outstanding Securities without any declaration or other act
on the part of the Trustee or the holders.
At any time after such acceleration and before a
judgment or decree for payment of the money due has been
obtained by the Trustee as hereinafter provided in this
Article VI, the holders of a majority in aggregate
principal amount of then outstanding Securities, by written
notice to the Company and the Trustee, may waive, on behalf
of all holders, a Default or Event of Default if:
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(1) the Company has paid or deposited
with the Trustee a sum sufficient to pay
(A) all overdue interest on all
Securities,
(B) the principal of any
Securities which would become due otherwise
than by such declaration of acceleration,
and interest thereon at the rate borne by
the Securities,
(C) to the extent that payment of
such interest is lawful, interest upon
overdue interest at the rate borne by the
Securities,
(D) all sums paid or advanced by
the Trustee hereunder and the compensation,
expenses, disbursements and advances of the
Trustee, its agents and counsel, and
(2) all Defaults and Events of
Default, other than the non-payment of the
principal of Securities which have become
due solely by such declaration of
acceleration, have been cured or waived as
provided in Section 6.12.
<PAGE>
SECTION 6.3. Collection of Indebtedness and
Suits for Enforcement by Trustee.
The Company covenants that if an Event of Default
in payment of principal or interest specified in clauses
(1) or (2) of Section 6.1 occurs and is continuing, the
Company shall, upon demand of the Trustee, pay to it, for
the benefit of the holders of such Securities, the whole
amount then due and payable on such Securities for
principal and interest, and, to the extent that payment of
such interest shall be legally enforceable, interest on any
overdue principal and on any overdue interest, at the rate
borne by the Securities, and, in addition thereto, such
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further amount as shall be sufficient to cover the costs
and expenses of collection, including compensation to, and
expenses, disbursements and advances of the Trustee, its
agents and counsel.
If the Company fails to pay such amounts
forthwith upon such demand, the Trustee, in its own name
and as trustee of an express trust in favor of the holders,
may institute a judicial proceeding for the collection of
the sums so due and unpaid, may prosecute such proceeding
to judgment or final decree and may enforce the same
against the Company or any other obligor upon the
Securities and collect the moneys adjudged or decreed to be
payable in the manner provided by law out of the property
of the Company or any other obligor upon the Securities,
wherever situated.
If an Event of Default occurs and is continuing,
the Trustee may in its discretion proceed to protect and
enforce its rights and the rights of the holders by such
appropriate judicial proceedings as the Trustee shall deem
most effective to protect and enforce any such rights,
whether for the specific enforcement of any covenant or
agreement in this Indenture or in aid of the exercise of
any power granted herein, or to enforce any other proper
remedy.
SECTION 6.4. Trustee May File Proofs of Claim.
In case of the pendency of any receivership,
insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition or other judicial
proceeding relative to the Company or any other obligor
upon the Securities or the property of the Company or of
such other obligor or their creditors, the Trustee
(irrespective of whether the principal of the Securities
shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the
Trustee shall have made any demand on the Company for the
payment of overdue principal or interest) shall be entitled
and empowered, by intervention in such proceeding or
otherwise to take any and all actions under the TIA,
including
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<PAGE> (i) to file and prove a claim for the
whole amount of principal and interest owing and
unpaid in respect of the Securities and to file
such 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
agent and counsel) and of the holders allowed in
such judicial proceeding, and
(ii) to collect and receive any moneys
or other property payable or deliverable on any
such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator,
sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each holder to make such
payments to the Trustee and in the event that the Trustee
shall consent to the making of such payments directly to
the holders, to pay to the Trustee any amount due it for
the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any
other amounts due the Trustee under Section 7.7.
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 Securities or the rights of any holder
thereof or to authorize the Trustee to vote in respect of a
claim of any holder in any such proceeding.
SECTION 6.5. Trustee May Enforce Claims Without
Possession of Securities.
All rights of action and claims under this
Indenture or the Securities may be prosecuted and enforced
by the Trustee without the possession of any of the
Securities or the production thereof in any proceeding
relating thereto, and any such proceeding instituted by the
Trustee shall be brought in its own name as trustee of an
express trust in favor of the holders, and any recovery of
judgment shall, after provision for the payment of
compensation to, and expenses, disbursements and advances
of the Trustee, its agents and counsel, be for the ratable
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benefit of the holders of the Securities in respect of
which such judgment has been recovered.
SECTION 6.6. Priorities.
Any money collected by the Trustee pursuant to
this Article VI shall be applied in the following order, at
the date or dates fixed by the Trustee and, in case of the
distribution of such money on account of principal, upon
presentation of the Securities and the notation thereon of
the payment if only partially paid and upon surrender
thereof if fully paid:
<PAGE>
FIRST: To the Trustee in payment of all amounts
due pursuant to Section 7.7;
SECOND: To the holders in payment of the amounts
then due and unpaid for principal of, and interest on, the
Securities in respect of which or for the benefit of which
such money has been collected, ratably, without preference
or priority of any kind, according to the amounts due and
payable on such Securities for principal and interest,
respectively; and
THIRD: To whomsoever may be lawfully entitled
thereto, the remainder, if any.
SECTION 6.7. Limitation on Suits and Remedies.
No holder or holders of any Securities shall have
any right to order or direct the Trustee to institute any
proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee,
or to direct the Trustee in the conduct of any proceeding
for any remedy available to the Trustee, unless
(A) such holder has previously
given written notice to the Trustee of a
continuing Event of Default;
(B) the holders of not less than
25% in principal amount of then outstanding
Securities shall have made written request
to the Trustee to institute proceedings in
respect of such Event of Default in its own
name as Trustee hereunder;
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(C) such holder or holders have
furnished to the Trustee security or
indemnity reasonably satisfactory to the
Trustee against the costs, expenses and
liabilities to be incurred or reasonably
probable to be incurred in compliance with
such request;
(D) the Trustee for 60 days after
its receipt of such notice and request and
the furnishing of such security or indemnity
has failed to institute any such proceeding;
and
(E) no direction inconsistent
with such written request has been given to
the Trustee during such 60-day period by the
holders of a majority in principal amount of
the outstanding Securities;
it being understood and intended that no one or more
holders shall have any right in any manner
whatever by virtue of, or by availing of,
any provision of this Indenture to affect,
disturb or prejudice the rights of any other
holders, or to obtain or to seek to obtain
priority or preference over any other
holders or to enforce any right under this
<PAGE>
Indenture, except in the manner herein provided and for the
equal and ratable benefit of all the holders.
SECTION 6.8. Unconditional Right of Holders to
Receive Principal, Premium and Interest.
Notwithstanding any other provision of this
Indenture, the holder of any Security shall have the right,
which is absolute and unconditional, to receive payment of
the principal of, and interest on, such Security on the
Maturity Dates of such payments as expressed in such
Security and to institute suit for the enforcement of any
such payment, and such rights shall not be impaired without
the consent of such holder.
SECTION 6.9. Rights and Remedies Cumulative.
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Except as otherwise provided with respect to there
placement or payment of mutilated, destroyed, lost or
stolen Securities in Section 2.7, no right or remedy herein
conferred upon or reserved to the Trustee or to the holders
is intended to be exclusive of any other right or remedy,
and every right and remedy shall, to the extent permitted
by law, be cumulative and in addition to every other right
and remedy given hereunder or now or hereafter existing at
law or in equity or otherwise. The assertion or employment
of any right or remedy hereunder, or otherwise, shall not
prevent the concurrent assertion or employment of any other
appropriate right or remedy.
SECTION 6.10. Delay or Omission Not Waiver.
No delay or omission by the Trustee or by any
holder of any Security to exercise any right or remedy
arising upon any Event of Default shall impair the exercise
of any such right or remedy or constitute a waiver of any
such Event of Default. Every right and remedy given by
this Article VI or by law to the Trustee or to the holders
may be exercised from time to time, and as often as may be
deemed expedient, by the Trustee or by the holders, as the
case may be.
SECTION 6.11. Control by Holders.
Subject to Section 6.7, the holder or holders of
a majority in aggregate principal amount of then
outstanding Securities shall have the right to direct the
time, method and place of conducting any proceeding for any
remedy available to the Trustee or exercising any trust or
power conferred upon the Trustee; provided, however, that
(1) such direction shall not be
in conflict with any rule of law or with
this Indenture,
<PAGE>
(2) the Trustee shall not
determine that the action so directed would
be unjustly prejudicial to the holders not
taking part in such direction, and
(3) the Trustee may take any
other action deemed proper by the Trustee
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which is not inconsistent with such
direction.
SECTION 6.12. Waiver of Default.
The holder or holders of not less than a majority
in aggregate principal amount of the outstanding Securities
may, on behalf of all holders, prior to the declaration of
the maturity of the Securities, waive any Default or Event
of Default hereunder and its consequences, except a Default
or Event of Default
(A) in respect of the payment of
the principal of, or interest on, any
Security as specified in clauses (1) and (2)
of Section 6.1, or
(B) in respect of a covenant or
provision hereof which, under Article IX,
cannot be modified or amended without the
consent of the holder of each outstanding
Security affected.
Upon any such waiver, such Default shall cease to
exist, and any Event of Default arising therefrom shall be
deemed to have been cured, for every purpose of this
Indenture; but no such waiver shall extend to any
subsequent or other Default or impair the exercise of any
right arising therefrom.
SECTION 6.13. Undertaking for Costs.
All parties to this Indenture agree, and
each holder of any Security by his
acceptance thereof shall be deemed to have
agreed, that any court may in its discretion
require, in any suit for the enforcement of
any right or remedy under this Indenture, or
in any suit against the Trustee for any
action taken, suffered or omitted to be
taken by it as Trustee, the filing by any
party litigant in such suit of an
undertaking to pay the costs of such suit,
and that such court may in its discretion
assess reasonable costs, including
reasonable attorneys' fees, against any
party litigant in such suit, having due
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regard to the merits and good faith of the
claims or defenses made by such party
litigant; but the provisions of this Section
shall not apply to any suit instituted by
the Company, to any suit instituted by the
Trustee, to any suit instituted by any
holder, or group of holders, holding in the
aggregate more than 10% in aggregate
principal amount of the outstanding
Securities, or to any suit instituted by any
holder for enforcement of the payment of
principal of, or interest on, any
<PAGE>
Security on or after the respective Stated Maturities
expressed in such Security (or, in the case of redemption,
on or after the Redemption Date).
SECTION 6.14. Restoration of Rights and
Remedies.
If the Trustee or any holder has instituted any
proceeding to enforce any right or remedy under this
Indenture and such proceeding has been discontinued or
abandoned for any reason, or has been determined adversely
to the Trustee or to such holder, then and in every case,
subject to any determination in such proceeding, the
Company, the Trustee and the holders shall be restored
severally and respectively to their former positions
hereunder and thereafter all rights and remedies of the
Trustee and the holders shall continue as though no such
proceeding had been instituted.
ARTICLE VII
TRUSTEE
The Trustee hereby accepts the trust imposed upon
it by this Indenture and covenants and agrees to perform
the same, as herein expressed.
SECTION 7.1. Duties of Trustee.
(a) If a Default or 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 their exercise as
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a prudent person would exercise or use under the
circumstances in the conduct of his own affairs.
(b) Except during the continuance of a Default
or an Event of Default:
(1) The Trustee need perform only
those duties as are specifically set forth
in this Indenture and no others, and no
covenants or obligations shall be implied in
or read into this Indenture which are
adverse to the Trustee.
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<PAGE> (2) 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
liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that:
(1) This paragraph does not limit
the effect of paragraph (b) of this Section
7.1.
(2) The Trustee shall not be
liable for any error of judgment made in
good faith by a Trust Officer, unless it is
proved that the Trustee was negligent in
ascertaining the pertinent facts.
(3) 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 6.11.
(d) No provision of this Indenture shall require
the Trustee to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of
its duties hereunder or to take or omit to take any action
under this Indenture or at the request, order or direction
of the holders 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.
(e) Every provision of this Indenture that in
any way relates to the Trustee is subject to paragraphs
(a), (b), (c), (d) and (f) of this Section 7.1.
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(f) The Trustee shall not be liable for interest
on any assets received by it except as the Trustee may
agree in writing with the Company. Assets held in trust by
the Trustee need not be segregated from other assets except
to the extent required by law.
SECTION 7.2. Rights of Trustee.
Subject to Section 7.1:
<PAGE>
(a) The Trustee may rely on 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 consult with counsel and may require an
Officers' Certificate or an Opinion of Counsel, which shall
conform to Sections 12.4 and 12.5. The Trustee shall not
be liable for any action it takes or omits to take in good
faith in reliance on such certificate or opinion.
(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 which it
believes to be authorized or within its rights or powers.
(e) The Trustee shall not be bound to make any
investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
notice, request, direction, consent, order, bond,
debenture, or other paper or document, but the Trustee, in
its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit.
(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, order or direction of any of the
holders, pursuant to the provisions of this Indenture,
unless such holders shall have furnished to the Trustee
security or indemnity reasonably satisfactory to the
Trustee against the costs, expenses and liabilities which
may be incurred therein or thereby.
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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 Securities and
may otherwise deal with the Company, its Subsidiaries, or
their respective Affiliates with the same rights it would
have if it were <PAGE>
not Trustee. Any Agent may do the same with like rights.
However, the Trustee must comply with Sections 7.10 and
7.11.
SECTION 7.4. Trustee's Disclaimer.
The Trustee makes no representation as to the
validity or adequacy of this Indenture or the Securities
and it shall not be accountable for the Company's use of
the proceeds from the Securities, and it shall not be
responsible for any statement in the Securities, other than
the Trustee's certificate of authentication, or the use or
application of any funds received by a Paying Agent other
than the Trustee.
SECTION 7.5. Notice of Default.
If a Default or an Event of Default occurs and is
continuing and if it is known to the Trustee, the Trustee
shall mail to each holder of Securities notice of the
uncured Default or Event of Default within 90 days after
such Default or Event of Default occurs. Except in the
case of a Default or an Event of Default in payment of
principal of, or interest on, any Security (including the
payment of the Change of Control Purchase Price on the
Change of Control Purchase Date, the payment of the
Redemption Price on the Redemption Date and the Offer Price
on the Purchase Date), the Trustee may withhold the notice
if and so long as a Trust Officer in good faith determines
that withholding the notice is in the interest of the
holder of Securities.
SECTION 7.6. Reports by Trustee to Holders.
If required by the TIA, within 60 days after each
May 15, beginning with the May 15 following the date of
this Indenture, the Trustee shall mail to each holder of
Securities a brief report dated as of such May 15 that
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complies with TIA Section 313(a). The Trustee also shall comply
with TIA Sections 313(b) and 313(c).
The Company shall promptly notify the Trustee in
writing if the Securities become listed on any stock
exchange or automatic quotation system.
A copy of each report, at the time of its mailing
to holder of Securities, shall be mailed to the Company and
filed with the SEC and each stock exchange, if any, on
which the Securities are listed.
SECTION 7.7. Compensation and Indemnity.
The Company shall pay to the Trustee, from time
to time, reasonable compensation for its services. The
Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Company
shall reimburse the Trustee upon request for all reasonable
disbursements, expenses and advances incurred or made by
it. Such expenses shall include the reasonable
compensation, disbursements and expenses of the Trustee's
agents, accountants, experts and counsel.
<PAGE>
The Company shall indemnify the Trustee (in its
capacity as Trustee) and each of its officers, directors,
attorneys-in-fact and agents for, and hold it harmless
against, any claim, demand, expense (including but not
limited to reasonable compensation, disbursements and
expenses of the Trustee's agents and counsel), loss or
liability incurred by it without negligence or willful
misconduct on its part, arising out of or in connection
with the administration of this trust and its rights or
duties hereunder including the reasonable costs and
expenses of defending itself against any claim or liability
in connection with the exercise or performance of any of
its powers or duties hereunder. The Trustee shall notify
the Company promptly of any claim asserted against the
Trustee for which it may seek indemnity. The Company shall
defend the claim and the Trustee shall provide reasonable
cooperation at the Company's expense in the defense. The
Trustee may have separate counsel and the Company shall pay
the reasonable fees and expenses of such counsel; provided,
that the Company will not be required to pay such fees and
expenses if it assumes the Trustee's defense with counsel
reasonably acceptable to the Trustee and there is no
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conflict of interest between the Company and the Trustee in
connection with such defense. The Company need not pay for
any settlement made without its written consent. The
Company need not reimburse any expense or indemnify against
any loss or liability to the extent incurred by the Trustee
through its negligence or willful misconduct.
To secure the Company's payment obligations in
this Section 7.7, the Trustee shall have a lien prior to
the Securities on all assets held or collected by the
Trustee, in its capacity as Trustee, except assets held in
trust to pay principal of or interest on particular
Securities.
When the Trustee incurs expenses or renders
services after an Event of Default specified in Section
6.1(7) or (8) occurs, the expenses and the compensation for
the services are intended to constitute expenses of
administration under any Bankruptcy Law.
The Company's obligations under this Section 7.7
and any lien arising hereunder shall survive the
resignation or removal of the Trustee, the discharge of the
Company's obligations pursuant to Article VIII of this
Indenture and any rejection or termination of this
Indenture under any Bankruptcy Law.
SECTION 7.8. Replacement of Trustee.
The Trustee may resign by so notifying the
Company in writing. The holder or holders of a majority in
principal amount of the outstanding Securities may remove
the Trustee by so notifying the Company and the Trustee in
writing and may appoint a successor trustee with the
Company's consent. The Company may remove the Trustee if:
(1) the Trustee fails to comply with
Section 7.10;
<PAGE>
(2) the Trustee is adjudged
bankrupt or insolvent;
(3) a receiver, Custodian, or
other public officer takes charge of the
Trustee or its property; or
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(4) 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, the
Company shall promptly appoint a successor Trustee. Within
one year after the successor Trustee takes office, the
holder or holders of a majority in principal amount of the
Securities may appoint a successor Trustee to replace the
successor Trustee appointed by the Company.
A successor Trustee shall deliver a written
acceptance of its appointment to the retiring Trustee and
to the Company. Immediately after that and provided that
all sums owing to the Trustee provided for in Section 7.7
have been paid, the retiring Trustee shall transfer all
property held by it as Trustee to the successor Trustee,
subject to the lien provided in Section 7.7, 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. A successor Trustee shall mail notice of its
succession to each holder.
If a successor Trustee does not take office
within 60 days after the retiring Trustee resigns or is
removed, the retiring Trustee, the Company or the holder or
holders of at least 10% in principal amount of the
outstanding Securities may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10,
any holder of Securities may petition any court of
competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee
pursuant to this Section 7.8, the Company's obligations
under Section 7.7 shall continue for the benefit of the
retiring Trustee.
SECTION 7.9. Successor Trustee by Merger, Etc.
If the Trustee 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
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further act shall, if such resulting, surviving or
transferee corporation is otherwise eligible hereunder, be
the successor Trustee.
SECTION 7.10. Eligibility; Disqualification.
<PAGE>
The Trustee shall at all times satisfy the
requirements of TIA Section 310(a)(1) and TIA Section 310(a)(5). The
Trustee shall have a combined capital and surplus of at
least $50,000,000 as set forth in its most recent published
annual report of condition. The Trustee shall comply with
TIA Section 310(b).
SECTION 7.11. Preferential Collection of Claims
against Company.
The Trustee shall comply with TIA Section 311(a),
excluding any creditor relationship listed in TIA Section 311(b).
A Trustee who has resigned or been removed shall be subject
to TIA Section 311(a) to the extent indicated.
ARTICLE VIII
SATISFACTION AND DISCHARGE
SECTION 8.1. Satisfaction, Discharge of the
Indenture and Defeasance of the Securities.
The Company shall be deemed to have paid and
discharged the entire Indebtedness on the Securities and
the provisions of this Indenture shall cease to be of
further effect (subject to Section 8.3), if:
(1) The Company irrevocably
deposits in trust with the Trustee, pursuant
to an irrevocable trust and security
agreement in form and substance reasonably
satisfactory to the Trustee, (i) U.S. Legal
Tender, (ii) U.S. Government Obligations, or
(iii) a combination thereof which, after
payment of all Federal, state and local
taxes or other charges or assessments in
respect thereof payable by the Trustee, are
in an amount sufficient to pay, or which
will provide, through the payment of
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principal and interest, not later than one
day before the due date of payment in
respect of the Securities, U.S. Legal Tender
in an amount which, in the opinion of a
nationally recognized firm of independent
certified public accountants expressed in a
written certification thereof (in form and
substance reasonably satisfactory to the
Trustee) delivered to the Trustee, is
sufficient to pay, the principal of, and
each installment of interest on, the
Securities then outstanding on the dates on
which any such payments are due and payable
in accordance with the terms of this
Indenture and of the Securities;
(2) Such deposits shall not cause
the Trustee to have a conflicting interest
as defined in and for purposes of the TIA;
(3) No Default or Event of
Default shall have occurred or be continuing
on the date of such deposit or shall occur
on or before the 91st day (or one day after
such other greater period of time in which
any such deposit of trust funds may remain
subject to bankruptcy or insolvency laws)
after the date of such deposit, and such
deposit will not result in a Default or
Event of Default under this Indenture or a
breach or violation of, or constitute a
default under, any other instrument to which
the Company or any Subsidiary of the Company
is a party or by which it or its property is
bound;
<PAGE>
(4) The deposit, defeasance and
discharge will not be deemed, or result in,
a Federal income taxable event to the
holders of the Securities and the holders
will be subject to Federal income tax in the
same amounts and in the same manner and at
the same times as would have been the case
if such deposit and defeasance had not
occurred;
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(5) The deposit shall not result
in the Company, the Trustee or the trust
becoming an "investment company" under the
Investment Company Act of 1940;
(6) After the passage of 90 days
(or any greater period of time in which any
such deposit of trust funds may remain
subject to Bankruptcy Laws insofar as those
laws apply to the Company) following the
deposit of the trust funds, such funds will
not be subject to any Bankruptcy Laws
affecting creditors' rights generally;
(7) Holders of the Securities
will have a valid, perfected and non-
avoidable first-priority security interest
in the trust funds; and
(8) The Company has delivered to
the Trustee an Officers' Certificate and an
Opinion of Counsel (who may be outside
counsel to the Company, but not an employee
of the Company), each in form and substance
satisfactory to the Trustee, stating that
all conditions precedent specified herein
relating to the defeasance contemplated by
this Section 8.1 have been complied with.
In the event all or any portion of the Securities
are to be redeemed through such irrevocable trust, the
Company must make arrangements satisfactory to the Trustee,
at the time of such deposit, for the giving of the notice
of such redemption or redemptions by the Trustee in the
name and at the expense of the Company.
In the event that the Company takes the necessary
action to comply with the provisions described in this
Section 8.1 and the Securities are declared due and payable
because of the occurrence of an Event of Default, the
Company will remain liable for all amounts due on the
Securities at the time of acceleration resulting from such
Event of Default in excess of the amount of U.S. Legal
Tender and U.S obligations deposited with the Trustee
pursuant to this Section 8.1 at the time of such
acceleration.
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<PAGE> SECTION 8.2. Termination of Obligations Upon
Cancellation of the Securities.
In addition to the Company's rights under Section
8.1, the Company may terminate all of their respective
obligations under this Indenture (subject to Section 8.3)
when:
(1) all Securities theretofore
authenticated and delivered (other than
Securities which have been destroyed, lost
or stolen and which have been replaced or
paid as provided in Section 2.7) have been
delivered to the Trustee for cancellation;
(2) the Company has paid or
caused to be paid all sums payable hereunder
by the Company; and
(3) the Company has delivered to
the Trustee an Officers' Certificate and an
Opinion of Counsel, each stating that all
conditions precedent specified herein
relating to the satisfaction and discharge
of this Indenture have been complied with.
SECTION 8.3. Survival of Certain Obligations.
Notwithstanding the satisfaction and discharge of
this Indenture and of the Securities referred to in Section
8.1 or 8.2, the respective obligations of the Company and
the Trustee under Sections 2.2, 2.3, 2.4, 2.5, 2.6, 2.7,
2.11, 2.12, Article III, 4.1, 4.2, 4.3, 6.7, 6.8, 7.7, 7.8,
8.5, 8.6, 8.7, 12.1, 12.2, 12.7, 12.8, and this Section 8.3
shall survive until the Securities are no longer
outstanding, and thereafter the obligations of the Company
and the Trustee under Sections 6.8, 7.7, 7.8, 8.5, 8.6, 8.7
and this Section 8.3 shall survive. Nothing contained in
this Article VIII shall abrogate any of the obligations or
duties of the Trustee under this Indenture.
SECTION 8.4. Acknowledgement of Discharge by
Trustee.
After (i) the conditions of Section 8.1 or 8.2
have been satisfied, (ii) the Company has paid or caused to
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be paid all other sums payable hereunder by the Company and
(iii) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that
all conditions precedent referred to in clause (i), above,
relating to the satisfaction and discharge of this
Indenture have been complied with, the Trustee upon request
shall acknowledge in writing the discharge of the Company's
obligations under this Indenture except for those surviving
obligations specified in Section 8.3.
SECTION 8.5. Application of Trust Assets.
<PAGE>
The Trustee shall hold any U.S. Legal Tender or
U.S. Government Obligations deposited with it in the
irrevocable trust established pursuant to Section 8.1. The
Trustee shall apply the deposited U.S. Legal Tender or U.S.
Government Obligations, together with earnings thereon,
through the Paying Agent (other than the Company or any
Subsidiary of the Company), in accordance with this
Indenture and the terms of the irrevocable trust agreement,
to the payment of principal of and interest on the
Securities.
SECTION 8.6. Repayment to the Company.
Upon termination of the trust established
pursuant to Section 8.1, the Trustee and the Paying Agent
shall promptly pay to the Company upon request any excess
U.S. Legal Tender or U.S. Government Obligations held by
them.
The Trustee and the Paying Agent shall pay to the
Company upon request, and, if applicable, in accordance
with the irrevocable trust established pursuant to
Section 8.1, any U.S. Legal Tender or U.S. Government
Obligations held by them for the payment of principal of or
interest on the Securities that remain unclaimed for two
years after the date on which such payment shall have
become due; provided, however, that the Trustee or such
Paying Agent, before being required to make any such
repayment, may, at the expense of the Company, cause to be
published once, in a newspaper customarily published on
each Business Day and of general circulation in the Borough
of Manhattan, The City of New York, notice that such money
remains unclaimed and that, after a date specified therein,
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which shall not be less than 30 days from the date of such
publication, any unclaimed balance of such money then
remaining shall be repaid to the Company. After payment to
the Company, holders entitled to such payment must look to
the Company for such payment as general creditors unless an
applicable abandoned property law designates another
person.
SECTION 8.7. Reinstatement.
If the Trustee or Paying Agent is unable to apply
any U.S. Legal Tender or U.S. Government Obligations in
accordance with Section 8.1 or 8.2 by reason of any legal
proceeding or by reason of any order or judgment of any
court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's
obligations under this Indenture and the Securities shall
be revived and reinstated as though no deposit had occurred
pursuant to Section 8.1 or 8.2 until such time as the
Trustee or Paying Agent is permitted to apply all such U.S.
Legal Tender or U.S. Government Obligations in accordance
with Section 8.1 or 8.2; provided, however, that if the
Company has made any payment of principal of or interest on
any Securities because of the reinstatement of its
obligations, the Company shall be subrogated to the rights
of the holders of such Securities to receive such payment
from the U.S. Legal Tender or U.S. Government Obligations
held by the Trustee or Paying Agent.
<PAGE>
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.1. Supplemental Indentures Without
Consent of Holders.
Without the consent of any holder, the Company,
when authorized by Board Resolutions, and the Trustee, at
any time and from time to time, may enter into one or more
indentures supplemental hereto, in form satisfactory to the
Trustee, for any of the following purposes:
(1) to cure any ambiguity,
defect, or inconsistency, or to make any
other provisions with respect to matters or
questions arising under this Indenture which
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shall not be inconsistent with the
provisions of this Indenture, provided such
action pursuant to this clause (1) shall not
adversely affect the interests of any holder
in any respect;
(2) to add to the covenants of
the Company for the benefit of the holders,
or to surrender any right or power herein
conferred upon the Company or to make any
other change that does not adversely affect
the rights of any holder, provided, that the
Company has delivered to the Trustee an
Opinion of Counsel stating that such change
does not adversely affect the rights of any
holder;
(3) to provide for collateral for
the Securities;
(4) to evidence the succession of
another person to the Company, and the
assumption by any such successor of the
obligations of the Company, herein and in
the Securities in accordance with Article V;
or
(5) to comply with the TIA.
SECTION 9.2. Amendments, Supplemental
Indentures and Waivers with Consent of Holders.
Subject to Section 6.8, with the consent of the
holders of a majority in aggregate principal amount of then
outstanding Securities, by written act of said holders
delivered to the Company and the Trustee, the Company, when
authorized by Board Resolutions, and the Trustee may amend
or supplement this Indenture or the Securities or enter
into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this
Indenture or the Securities or of modifying in any manner
the rights of the holders under this Indenture or the
Securities. Subject to Section 6.8, the <PAGE>
holder or holders of a majority in aggregate principal
amount of then outstanding Securities may waive compliance
by the Company with any provision of this Indenture or the
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Securities. Notwithstanding any of the above, however, no
such amendment, supplemental indenture or waiver shall,
without the consent of the holder of each outstanding
Security affected thereby:
(1) change the percentage of
principal amount of Securities whose holders
must consent to an amendment, supplement or
waiver of any provision of this Indenture or
the Securities;
(2) reduce the rate or extend the
time for payment of interest on any
Security;
(3) reduce the principal amount
of any Security, or reduce the Change of
Control Purchase Price, the Offer Price or
the Redemption Price;
(4) change the Stated Maturity or
the Change of Control Payment Date or the
Purchase Date of any Security;
(5) alter the redemption
provisions of Article III or the terms or
provisions of Section 4.9 or the terms or
provisions of Article XI, in any case, in a
manner adverse to any holder;
(6) make any changes in the
provisions concerning waivers of Defaults or
Events of Default by holders of the
Securities or the rights of holders to
recover the principal of, interest on, or
redemption payment with respect to, any
Security;
(7) make any changes in Section
6.4, 6.7 or this third sentence of this
Section 9.2;
(8) make the principal of, or the
interest on, any Security payable with
anything or in any manner other than as
provided for in this Indenture and the
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Securities as in effect on the date hereof; or
(9) make the Securities
subordinated in right of payment to any
extent or under any circumstances to any
other indebtedness.
It shall not be necessary for the consent of the
holders under this Section to approve the particular form
of any proposed amendment, supplement or waiver, but it
shall be sufficient if such consent approves the substance
thereof.
<PAGE>
After an amendment, supplement or waiver under
this Section becomes effective, the Company shall mail to
the holders affected thereby a notice briefly describing
the amendment, supplement or waiver. Any failure of the
Company to mail such notice, or any defect therein, shall
not, however, in any way impair or affect the validity of
any such supplemental indenture.
After an amendment, supplement or waiver under
this Section 9.2 or 9.4 becomes effective, it shall bind
each holder.
In connection with any amendment, supplement or
waiver under this Article IX, the Company may, but shall
not be obligated to, offer to any holder who consents to
such amendment, supplement or waiver, or to all holders,
consideration for such holder's consent to such amendment,
supplement or waiver.
SECTION 9.3. Compliance with TIA.
Every amendment, waiver or supplement of this
Indenture or the Securities shall comply with the TIA as
then in effect.
SECTION 9.4. Revocation and Effect of Consents.
Until an amendment, waiver or supplement becomes
effective, a consent to it by a holder is a continuing
consent by the holder and every subsequent holder of a
Security or portion of a Security that evidences the same
debt as the consenting holder's Security, even if notation
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of the consent is not made on any Security. However, any
such holder or subsequent holder may revoke the consent as
to his Security or portion of his Security by written
notice to the Company or the person designated by the
Company as the person to whom consents should be sent
received before the date on which the Trustee receives an
Officers' Certificate certifying that the holders of the
requisite principal amount of Securities have consented
(and not theretofore revoked such consent) to the
amendment, supplement or waiver.
The Company may, but shall not be obligated to,
fix a record date for the purpose of determining the
holders entitled to consent to any amendment, supplement or
waiver, which record date shall be the date so fixed by the
Company notwithstanding the provisions of the TIA. If a
record date is fixed, then notwithstanding the last
sentence of the immediately preceding paragraph, those
persons who were holders at such record date, and only
those persons (or their duly designated proxies), shall be
entitled to revoke any consent previously given, whether or
not such persons continue to be holders after such record
date. No such consent shall be valid or effective for more
than 90 days after such record date.
After an amendment, supplement or waiver becomes
effective, it shall bind every holder of Securities, unless
it makes a change described in any of clauses (1) through
(9) of Section 9.2, in which case, the amendment,
supplement or waiver <PAGE>
shall bind only each holder of a Security who has consented
to it and every subsequent holder of a Security or portion
of a Security that evidences the same debt as the
consenting holder's Security; provided, however, that any
such waiver shall not impair or affect the right of any
holder to receive payment of principal of and interest on a
Security, on or after the respective dates set for such
amounts to become due and payable expressed in such
Security, or to bring suit for the enforcement of any such
payment on or after such respective dates.
SECTION 9.5. Notation on or Exchange of
Securities.
If an amendment, supplement or waiver changes the
terms of a Security, the Trustee may require the holder of
the Security to deliver it to the Trustee or require the
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holder to put an appropriate notation on the Security. The
Trustee may place an appropriate notation on the Security
about the changed terms and return it to the holder.
Alternatively, if the Company or the Trustee so determines,
the Company in exchange for the Security shall issue and
the Trustee shall authenticate a new Security that reflects
the changed terms. Any failure to make the appropriate
notation or to issue a new Security shall not affect the
validity of such amendment, supplement or waiver.
SECTION 9.6. Trustee to Sign Amendments, Etc.
The Trustee shall execute any amendment,
supplement or waiver authorized pursuant to this Article
IX; provided, that the Trustee may, but shall not be
obligated to, execute any such amendment, supplement or
waiver which affects the Trustee's own rights, duties or
immunities under this Indenture. The Trustee shall be
entitled to receive, and shall be fully protected in
relying upon, an Opinion of Counsel stating that the
execution of any amendment, supplement or waiver authorized
pursuant to this Article IX is authorized or permitted by
this Indenture.
ARTICLE X
MEETINGS OF HOLDERS OF SECURITIES
SECTION 10.1. Purposes for Which Meetings May Be
Called.
A meeting of holders of Securities may be called
at any time and from time to time pursuant to the
provisions of this Article X for any of the following
purposes:
(a) to give any notice to the Company or to the
Trustee, or to give any directions to the Trustee, or to
waive or to consent to the waiving of any Default or Event
of Default hereunder and its consequences, or to take any
other action authorized to be taken by the holders of
Securities pursuant to any of the provisions of Article VI;
<PAGE>
(b) to remove the Trustee or appoint a successor
Trustee pursuant to the provisions of Article VII;
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(c) to consent to an amendment, supplement or
waiver pursuant to the provisions of Section 9.2; or
(d) to take any other action (i) authorized to
be taken by or on behalf of the holder or holders of any
specified aggregate principal amount of the Securities
under any other provision of this Indenture, or authorized
or permitted by law or (ii) which the Trustee deems
necessary or appropriate in connection with the
administration of this Indenture.
SECTION 10.2. Manner of Calling Meetings.
The Trustee may at any time call a meeting of
holders of Securities to take any action specified in
Section 10.1, to be held at such time and at such place in
the City of New York, New York or elsewhere as the Trustee
shall determine. Notice of every meeting of holders of
Securities, setting forth the time and place of such
meeting and in general terms the action proposed to be
taken at such meeting, shall be mailed by the Trustee,
first-class postage prepaid, to the Company and to the
holders at their last addresses as they shall appear on the
registration books of the Registrar, not less than 10 nor
more than 60 days prior to the date fixed for a meeting.
Any meeting of holders of Securities shall be
valid without notice if the holders of all Securities then
outstanding are present in person or by proxy, or if notice
is waived before or after the meeting by the holders of all
Securities outstanding, and if the Company and the Trustee
are either present by duly authorized representatives or
have, before or after the meeting, waived notice.
SECTION 10.3. Call of Meetings by Company or
Holders.
In case at any time the Company, pursuant to a
Board Resolution, or the holders of not less than 10% in
aggregate principal amount of the Securities then
outstanding, shall have requested the Trustee to call a
meeting of holders of Securities to take any action
specified in Section 10.1, by written request setting forth
in reasonable detail the action proposed to be taken at the
meeting, and the Trustee shall not have mailed the notice
of such meeting within 20 days after receipt of such
request, then the Company or the holders of Securities in
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the amount above specified may determine the time and place
in the City of New York, New York or elsewhere for such
meeting and may call such meeting for the purpose of taking
such action, by mailing or causing to be mailed notice
thereof as provided in Section 10.2, or by causing notice
thereof to be published at least once in each of two
successive calendar weeks (on any Business Day during such
week) in a newspaper or newspapers printed in the English
language, customarily published at least five days a week,
of a general circulation in the City of New York, State of
New York, the first such publication to be not less than 10
nor more than 60 days prior to the date fixed for the
meeting.
<PAGE>
SECTION 10.4. Who May Attend a Vote at Meetings.
To be entitled to vote at any meeting of holders
of Securities, a person shall (a) be a registered holder of
one or more Securities or (b) be a person appointed by an
instrument in writing as proxy for the registered holder or
holders of Securities. The only persons who shall be
entitled to be present or to speak at any meeting of
holders of Securities shall be the persons entitled to vote
at such meeting and their counsel and any representatives
of the Trustee and its counsel and any representatives of
the Company and its counsel.
SECTION 10.5. Regulations May Be Made by
Trustee; Conduct of the Meeting; Voting Rights;
Adjournment.
Notwithstanding any other provision of this
Indenture, the Trustee may make such reasonable regulations
as it may deem advisable for any action by or any meeting
of holders of Securities, in regard to proof of the holding
of Securities and of the appointment of proxies, and in
regard to the appointment and duties of inspectors of
votes, and submission and examination of proxies,
certificates and other evidence of the right to vote, and
such other matters concerning the conduct of the meeting as
it shall think appropriate. Such regulations may fix a
record date and time for determining the holders of record
of Securities entitled to vote at such meeting, in which
case those and only those persons who are holders of
Securities at the record date and time so fixed, or their
proxies, shall be entitled to vote at such meeting whether
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or not they shall be such holders at the time of themeeting.
The Trustee shall, by an instrument in writing,
appoint a temporary chairman of the meeting, unless the
meeting shall have been called by the Company or by holders
of Securities as provided in Section 10.3, in which case
the Company or the holders of Securities calling the
meeting, as the case may be, shall in like manner appoint a
temporary chairman. A permanent chairman and a permanent
secretary of the meeting shall be elected by vote of the
holders of a majority in principal amount of the Securities
represented at the meeting and entitled to vote.
At any meeting each holder of Securities or proxy
shall be entitled to one vote for each $1,000 principal
amount of Securities held or represented by him; provided,
however, that no vote shall be cast or counted at any
meeting in respect of any Securities challenged as not
outstanding and ruled by the chairman of the meeting to be
not then outstanding. The chairman of the meeting shall
have no right to vote other than by virtue of Securities
held by him or instruments in writing as aforesaid duly
designating him as the proxy to vote on behalf of other
holders of Securities. <PAGE>
Any meeting of holders of Securities duly called pursuant
to the provisions of Section 10.2 or Section 10.3 may be
adjourned from time to time by vote of the holder or
holders of a majority in aggregate principal amount of the
Securities represented at the meeting and entitled to vote,
and the meeting may be held as so adjourned without further
notice.
SECTION 10.6. Voting at the Meeting and Record
to Be Kept.
The vote upon any resolution submitted to any
meeting of holders of Securities shall be by written
ballots on which shall be subscribed the signatures of the
holders of Securities or of their representatives by proxy
and the principal amount of the Securities voted by the
ballot. The permanent chairman of the meeting shall
appoint two inspectors of votes, who shall count all votes
cast at the meeting for or against any resolution and who
shall make and file with the secretary of the meeting their
verified written reports in duplicate of all votes cast at
the meeting. A record in duplicate of the proceedings of
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each meeting of holders of Securities shall be prepared by
the secretary of the meeting and there shall be attached to
such record the original reports of the inspectors of votes
on any vote by ballot taken thereat and affidavits by one
or more persons having knowledge of the facts, setting
forth a copy of the notice of the meeting and showing that
such notice was mailed as provided in Section 10.2 or
published as provided in Section 10.3. The record shall be
signed and verified by the affidavits of the permanent
chairman and the secretary of the meeting and one of the
duplicates shall be delivered to the Company and the other
to the Trustee to be preserved by the Trustee, the latter
to have attached thereto the ballots voted at the meeting.
Any record so signed and verified shall be
conclusive evidence of the matters therein stated.
SECTION 10.7. Exercise of Rights of Trustee or
holders of Securities May Not Be Hindered or Delayed by
Call of Meeting.
Nothing contained in this Article X shall be
deemed or construed to authorize or permit, by reason of
any call of a meeting of holders of Securities or any
rights expressly or impliedly conferred hereunder to make
such call, any hindrance or delay in the exercise of any
right or rights conferred upon or reserved to the Trustee
or to the holders of Securities under any of the provisions
of this Indenture or of the Securities.
ARTICLE XI
RIGHT TO REQUIRE REPURCHASE
UPON A CHANGE OF CONTROL
SECTION 11.1. Repurchase of Securities at Option
of the Holder Upon a Change of Control.
<PAGE>
(a) In the event that a Change of Control
occurs, each holder of Securities shall have the right, at
option of such holder and in accordance with the provisions
of this Section 11.1, to require the Company to repurchase
all or any part of such holder's Securities on the date
that is no later than 40 Business Days after the occurrence
of a Change of Control (the "Change of Control Payment
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Date"), at a cash purchase price (the "Change of Control
Purchase Price") equal to 101% of the principal amount
thereof, plus accrued and unpaid interest, if any, to and
including the Change of Control Payment Date (as defined
below).
(b) Following a Change of Control, the Company
shall make an unconditional offer (a "Change of Control
Offer") to the holders pursuant to the notice referred to
below to purchase all of the Securities pursuant to the
offer described in clause (c) of this Section 11.1 at the
Change of Control Purchase Price. Within five days after
each date upon which a Change of Control shall occur
requiring the Company to make a Change of Control Offer
pursuant to this Section 11.1, the Company shall so notify
the Trustee. Notice of a Change of Control Offer shall be
sent, at least 20 Business Days prior to the Final Change
of Control Put Date (as hereinafter defined), by first
class mail, by the Company to each holder at its registered
address, with a copy to the Trustee. The notice to the
holders shall contain all instructions and materials
required by applicable law or otherwise material to such
holders' decision to tender Securities pursuant to the
Change of Control Offer. The notice, which shall govern
the terms of the Change of Control Offer, shall state:
(1) that the Change of Control
Offer is being made pursuant to such notice
and this Section 11.1 and that all
Securities, or portions thereof, tendered
will be accepted for payment;
(2) the Change of Control
Purchase Price (including the amount of
accrued and unpaid interest), the Change of
Control Payment Date and the Final Change of
Control Put Date (as defined below);
(3) that any Security or portion
thereof not tendered and accepted for
payment will continue to accrue interest, if
interest is then accruing;
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<PAGE> (4) that, unless the Company
defaults in depositing U.S. Legal Tender
with the Paying Agent in accordance with the
last paragraph of this clause (b), any
Security or portion thereof accepted for
payment pursuant to the Change of Control
Offer shall cease to accrue interest after
the Change of Control Payment Date;
(5) that holders electing to have
a Security or portion thereof purchased
pursuant to a Change of Control Offer will
be required to surrender the Security, with
the form entitled "Election of Holder to
Require Purchase" on the reverse of the
Security completed, to the Paying Agent
(which may not for purposes of this
Section 11.1, notwithstanding anything in
this Indenture to the contrary, be the
Company or any Affiliate of the Company) at
the address specified in the notice prior to
the close of business on the third Business
Day prior to the Change of Control Payment
Date (the "Final Change of Control Put
Date");
(6) that holders will be entitled
to withdraw their election, in whole or in
part, if the Paying Agent receives, prior to
the close of business on the Final Change of
Control Put Date, a telegram, telex,
facsimile transmission or letter setting
forth the name of the holder, the principal
amount of the Securities the holder is
withdrawing and a statement containing a
manual or facsimile signature that such
holder is withdrawing his election to have
such principal amount of Securities
purchased;
(7) that holders electing to have
a portion of a Security purchased pursuant
to a Change of Control Offer will be issued
a new Security in a principal amount equal
to the unpurchased portion of the Securities
surrendered; and
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(8) a brief description of the
events resulting in such Change of Control.
Any such Change of Control Offer shall comply
with all applicable provisions of Federal and state laws,
including Rule 14e-1 under the Exchange Act and any other
laws regulating tender offers, if applicable, and any
provisions of this Indenture which conflict with such laws
shall be deemed to be superseded by the provisions of such
laws.
On or before the Change of Control Payment Date,
the Company shall (i) accept for payment Securities or
portions thereof properly tendered pursuant to the Change
of Control Offer prior to the close of business on the
Final Change of Control <PAGE>
Put Date, (ii) deposit with the Paying Agent U.S. Legal
Tender sufficient to pay the Change of Control Purchase
Price (together with accrued and unpaid interest) of all
Securities so tendered and (iii) deliver to the Trustee
Securities so accepted together with an Officers'
Certificate listing the Securities or portions thereof
being purchased by the Company. The Paying Agent shall
promptly mail or deliver to the holders of Securities or
portions thereof so accepted payment in an amount equal to
the Change of Control Purchase Price (together with accrued
and unpaid interest) for such Securities or portions
thereof, and the Trustee shall promptly authenticate and
mail or deliver to such holders a new Security equal in
principal amount to any unpurchased portion of the Security
surrendered. Any Securities not so accepted shall be
promptly mailed or delivered by the Company to the holder
thereof. The Company shall issue a public announcement of
the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date and
will furnish a copy of such announcement to the Trustee.
ARTICLE XII
MISCELLANEOUS
SECTION 12.1. TIA Controls.
If any provision of this Indenture limits,
qualifies, or conflicts with the duties imposed by
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operation of the TIA, the imposed duties, upon
qualification of this Indenture under the TIA, shall
control.
SECTION 12.2. Notices.
Any notices or other communications to the
Company or the Trustee required or permitted hereunder
shall be in writing, and shall be sufficiently given if
made by hand delivery, by telex, by telecopier or
registered or certified mail, postage prepaid, return
receipt requested, addressed as follows:
if to the Company:
Triangle Pacific Corp.
16803 Dallas Parkway
Dallas, Texas 75248
Attention: Darryl T. Marchand
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<PAGE> if to the Trustee:
Ameritrust Texas National Association
1201 Elm Street
Suite 300
Dallas, Texas 75201
Attention: Corporate Trust Administration
The Company or the Trustee by notice to the other
party may designate additional or different addresses as
shall be furnished in writing by such party. Any notice or
communication to the Company or the Trustee shall be deemed
to have been given or made as of the date so delivered, if
personally delivered; when the appropriate answer back is
received, if telexed; when receipt is acknowledged, if
telecopied; and five Business Days after mailing, if sent
by registered or certified mail, postage prepaid (except
that a notice of change of address shall not be deemed to
have been given until actually received by the addressee).
Any notice or communication mailed to a holder of
Securities shall be mailed to him by first class mail or
other equivalent means at his address as it appears on the
register of the Registrar and shall be sufficiently given
to him if so mailed within the time period prescribed.
Failure to mail a notice or communication to a
holder of Securities 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, it
is duly given, whether or not the addressee receives it.
SECTION 12.3. Communications by Holders with
Other Holders.
Holders of Securities may communicate pursuant to
Section 312(b) of the TIA with other holders with respect
to their rights under this Indenture or the Securities.
The Company, the Trustee, the Registrar and any other
person shall have the protection of Section 312(c) of the
TIA.
SECTION 12.4. Certificate and Opinion as to
Conditions Precedent.
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Upon any request or application by the Company to
the Trustee to take any action under this Indenture, the
Company shall furnish to the Trustee:
(1) an Officers' Certificate (in
form and substance reasonably satisfactory
to the Trustee) stating that, in the opinion
of the signers, all conditions precedent, if
any, provided for in this Indenture relating
to the proposed action have been complied
with; and
<PAGE>
(2) an Opinion of Counsel (in
form and substance reasonably satisfactory
to the Trustee) stating that, in the opinion
of such counsel, all such conditions
precedent have been complied with.
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 shall include:
(1) a statement that the person
making such certificate or opinion has read
such covenant or condition;
(2) a brief statement as to the
nature and scope of the examination or
investigation upon which the statements or
opinions contained in such certificate or
opinion are based;
(3) a statement that, in the
opinion of such person, he has made such
examination or investigation as is necessary
to enable him to express an informed opinion
as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether or
not, in the opinion of each such person,
such condition or covenant has been complied
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with; provided, however, that with respect
to matters of fact an Opinion of Counsel may
rely on an Officers' Certificate or
certificates of public officials.
SECTION 12.6. Rules by Trustee, Paying Agent,
Registrar.
The Trustee may make reasonable rules for action
by or at a meeting of holders of Securities. The Paying
Agent or Registrar may make reasonable rules for its
functions.
SECTION 12.7. Legal Holidays.
The term "Legal Holiday" means any day other than
a Business Day. 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.
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<PAGE> SECTION 12.8. Governing Law.
THIS INDENTURE AND THE SECURITIES SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND
PERFORMED WITHIN THE STATE OF NEW YORK AND WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW. THE COMPANY HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK
STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY
OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF
MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF ANY SUIT,
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
INDENTURE OR THE SECURITIES, AND IRREVOCABLY ACCEPTS FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. THE
COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY
EFFECTIVELY DO SO UNDER APPLICABLE LAW, TRIAL BY JURY AND
ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. NOTHING HEREIN SHALL
AFFECT THE RIGHT OF THE TRUSTEE OR ANY HOLDER TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE
LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY
IN ANY OTHER JURISDICTION.
SECTION 12.9. No Adverse Interpretation of Other
Agreements.
This Indenture may not be used to interpret
another indenture, loan or debt agreement of any of the
Company or any of its Subsidiaries. Any such indenture,
loan or debt agreement may not be used to interpret this
Indenture.
SECTION 12.10. No Recourse against Others.
A director, officer, employee, stockholder or
incorporator, as such, of the Company shall not have any
liability for any obligations of the Company under the
Securities or 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 Security waives and
releases all such liability. Such waiver and release are
L1103/WP88/03AV18
-99-
part of the consideration for the issuance of theSecurities.
SECTION 12.11. Successors.
<PAGE>
All agreements of the Company in this Indenture
and the Securities shall bind its successor. All
agreements of the Trustee in this Indenture shall bind its
successor.
SECTION 12.12. Duplicate Originals.
All parties may sign any number of copies or
counterparts of this Indenture. Each signed copy or
counterpart shall be an original, but all of them together
shall represent the same agreement.
SECTION 12.13. Severability.
In case of any one or more of the provisions in
this Indenture or in the Securities shall be held invalid,
illegal or unenforceable, in any respect for any reason,
the validity, legality and enforceability of any such
provision in every other respect and of the remaining
provisions shall not in any way be affected or impaired
thereby, it being intended that all of the provisions
hereof shall be enforceable to the full extent permitted by
law.
SECTION 12.14. Table of Contents, Headings, Etc.
The Table of Contents and Cross-Reference Table
and the headings of the Articles and the Sections of this
Indenture have been inserted for convenience of reference
only, are not to be considered a part hereof and shall in
no way modify or restrict any of the terms or provisions
hereof.
L1103/WP88/03AV18
-100-
<PAGE> SIGNATURES
IN WITNESS WHEREOF, the parties hereto have
caused this Indenture to be duly executed as of the date
first written above.
TRIANGLE PACIFIC CORP.
By: /s/ M.J. McHugh
Name: M. J. McHugh
Title: Sr. Executive Vice
President
[SEAL]
Attest: /s/ Darryl T. Marchand
AMERITRUST TEXAS
NATIONAL ASSOCIATION
By: /s/ J. Gary Jones
Name: J. Gary Jones
Title: Vice President
Attest: /s/ Steve Shmell
L1103/WP88/03AV18
-101-
EXHIBITS
Exhibit A - Form of Note
L1103/WP88/03AV18
<PAGE> EXHIBIT A
TRIANGLE PACIFIC CORP.
10-1/2% SENIOR NOTE
DUE 2003
No. $
CUSIP No. 895912 AC 7
Triangle Pacific Corp., a Delaware corporation
(hereinafter called the "Company," which term includes any
successor corporation under the Indenture hereinafter
referred to), for value received, hereby promises to pay to
, or registered assigns, the principal sum of
, on August 1, 2003.
Interest Payment Dates: August 1 and February 1.
Record Dates: July 15 and January 15.
Reference is made to the further provisions of
this Security on the reverse side, which will, for all
purposes, have the same effect as if set forth at this
place. Terms used herein which are defined in the
Indenture shall have the meanings assigned to them in the
Indenture.
IN WITNESS WHEREOF, the Company has caused this
Instrument to be duly executed under its corporate seal.
Dated:
TRIANGLE PACIFIC CORP.
By:
Senior Executive Vice
President
Attest:
Corporate Secretary
[Seal]
<PAGE>
This is one of the Securities described in the
within-mentioned Indenture.
AMERITRUST TEXAS
NATIONAL ASSOCIATION,
as Trustee
By:
Authorized
Signatory
Dated:
L1103/WP88/03AV18
A-2
<PAGE> TRIANGLE PACIFIC CORP.
10-1/2% Senior Note
due 2003
1. Interest.
Triangle Pacific Corp., a Delaware corporation
(the "Company"), promises to pay interest on the principal
amount of this Security at a rate of 10-1/2% per annum. To
the extent it is lawful, the Company promises to pay
interest on any interest payment due but unpaid on such
principal amount at a rate of 10-1/2% per annum compounded
semi-annually.
The Company will pay interest semi-annually on
August 1 and February 1 of each year (each, an "Interest
Payment Date"), commencing February 1, 1994. Interest on
the Securities will accrue from the most recent date to
which interest has been paid or, if no interest has been
paid, from . Interest will be computed on the
basis of a 360-day year for the actual number of days
elapsed.
2. Method of Payment.
The Company shall pay interest on the Securities
(except defaulted interest) to the persons who are the
registered holders at the close of business on the July 15
or January 15 (each, a "Record Date") immediately preceding
the Interest Payment Date. Holders must surrender
Securities to a Paying Agent to collect principal payments.
Except as provided below, the Company shall pay principal
and interest in such coin or currency of the United States
of America as at the time of payment shall be legal tender
for payment of public and private debts ("U.S. Legal
Tender"). However, the Company may pay interest by wire
transfer of Federal funds or by its check payable in such
U.S. Legal Tender. The Company may deliver any such
interest payment to the Paying Agent or the Company may
mail any such interest payment to a holder at the holder's
registered address.
3. Paying Agent and Registrar.
L1103/WP88/03AV18
A-3
Ameritrust Texas National Association will act as
the initial Paying Agent and Registrar. The Company may
change any Paying Agent, Registrar or co-Registrar without
notice to the holders. The Company or any of its
Subsidiaries may, subject to certain exceptions, act as
Paying Agent, Registrar or co-Registrar.
4. Indenture.
This Security is issued under an Indenture, dated
as of August 1, 1993 (the "Indenture"), between the Company
and Ameritrust Texas National Association, as Trustee (the
"Trustee"). The terms of the Securities include those
stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture <PAGE>
Act, as in effect on the date of the Indenture. The
Securities are subject to all such terms, and holders of
Securities are referred to the Indenture and said Act for a
statement thereof. The Securities are unsecured
obligations of the Company limited in aggregate principal
amount to $160,000,000.
5. Redemption.
The Securities may be redeemed in whole or from
time to time in part at any time on and after August 1,
1998, at the option of the Company, at the Redemption Price
(expressed as a percentage of principal amount) set forth
below with respect to the indicated Redemption Date, in
each case, together with any accrued and unpaid interest to
the Redemption Date. The Securities may not be so redeemed
before August 1, 1998.
Redemption
Year Price _
1998..........................103.938%
1999..........................102.625%
2000..........................101.313%
2001 and thereafter........... 100.000%
Any such redemption will comply with Article III
of the Indenture.
6. Notice of Redemption.
L1103/WP88/03AV18
A-4
Notice 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 of Securities to
be redeemed. Securities in denominations larger than
$1,000 may be redeemed in part.
Except as set forth in the Indenture, from and
after any Redemption Date, if monies for the redemption of
Securities called for redemption shall have been deposited
with the Paying Agent on such Redemption Date, the
Securities called for redemption will cease to bear
interest and the only right of the holders of such
Securities will be to receive payment of the Redemption
Price for such securities and accrued and unpaid interest
thereon to the Redemption Date.
7. Denominations; Transfer; Exchange.
The Securities are in registered form, without
coupons, in denominations of $1,000 and integral multiples
thereof. A holder may register the transfer of or exchange
Securities in accordance with the Indenture. The Registrar
may require a holder, among other things, to furnish
appropriate endorsements and transfer documents and to pay
any taxes and fees required by law or permitted by the
Indenture. The Registrar need not register the transfer of
or exchange any Securities selected for redemption.
<PAGE>
8. Persons Deemed Owners.
The registered holder of a Security shall be
treated as the owner thereof for all purposes.
9. Unclaimed Money.
To the extent lawful, if money for the payment of
principal or interest remains unclaimed for two years, the
Trustee and the Paying Agent will return such money to the
Company at its written request. Upon the return thereof,
all liability of the Trustee and the Paying Agent with
respect to such money shall cease.
10. Discharge Prior to Redemption of Maturity.
If the Company at any time deposits into an
irrevocable trust with the Trustee U.S. Legal Tender or
L1103/WP88/03AV18
A-5
U.S. Government Obligations sufficient to pay the principal
of and interest on the Securities to redemption or maturity
and complies with the other provisions of the Indenture
relating thereto, the Company will be discharged from
certain provisions of the Indenture and the Securities
(including certain restrictive covenants contained in the
Indenture, but excluding its obligation to pay the
principal of and interest on the Securities).
11. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or
the Securities may be amended or supplemented with the
written consent of the holders of at least a majority in
aggregate principal amount of the Securities then
outstanding, and any existing Default or Event of Default
or compliance with any provision may be waived with the
consent of the holders of a majority in aggregate principal
amount of the Securities then outstanding. Any such
consent or waiver by the holder of a Security shall be
conclusive and binding upon such holder and all future
holders of such Security and any Security issued upon the
transfer of or in exchange for such Security, whether or
not notation of such consent or waiver is made upon such
Security. Without notice to or consent of any holder, the
parties thereto may amend or supplement the Indenture or
the Securities to, among other things, cure any ambiguity,
defect or inconsistency or make any other change that does
not adversely affect the rights of any holder of a
Security.
12. Restrictive Covenants.
The Indenture imposes certain limitations on the
ability of the Company and its Subsidiaries to, among other
things, Incur additional Indebtedness, make Restricted
Payments, enter into Affiliate Transactions, incur Liens,
sell assets, merge or consolidate with any other person and
sell, lease, transfer or otherwise dispose of all or
substantially all of its properties or assets. These
limitations are <PAGE>
subject to a number of important qualifications and
exceptions. The Company must annually report to the
Trustee on compliance with such limitations.
13. Change of Control.
L1103/WP88/03AV18
A-6
In the event there shall occur any Change of
Control, each holder of Securities shall have the right, at
such holder's option, but subject to the limitations and
conditions set forth in the Indenture, to require the
Company to purchase on the Change of Control Payment Date
and in the manner specified in the Indenture, all or any
part (in integral multiples of $1,000) of such holder's
Securities at a Change of Control Purchase Price equal to
101% of the principal amount thereof, plus accrued and
unpaid interest, if any, to the Change of Control Payment
Date.
14. Successors.
When a successor assumes all the obligations of
its predecessor under the Securities and the Indenture, the
predecessor will be released from those obligations.
15. Defaults and Remedies.
If an Event of Default occurs and is continuing,
the Trustee or the holders of at least 25% in aggregate
principal amount of the then outstanding Securities may
declare all the Securities to be due and payable
immediately in the manner and with the effect provided in
the Indenture. The Indenture provides that no holder of
any Securities may enforce any remedy under the Indenture
except in the case of failure of the Trustee to act after
its receipt of (i) notice of default, (ii) a written
request by the holders of 25% in principal amount of the
then outstanding Securities and (iii) security and
indemnity reasonably satisfactory to the Trustee. The
Trustee may require security and indemnity reasonably
satisfactory to it before it enforces the Indenture or the
Securities. Subject to certain limitations, holders of a
majority in aggregate principal amount of the then
outstanding Securities may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold
from holders of Securities notice of any continuing Default
or Event of Default (except a Default in payment of
principal or interest), if it determines that withholding
notice is in their interest.
16. Trustee Dealings with Company.
The Trustee under the Indenture, in its
individual or any other capacity, may make loans to, accept
L1103/WP88/03AV18
A-7
deposits from, and perform services for the Company or its
Affiliates, and may otherwise deal with the Company or its
Affiliates as if it were not the Trustee.
17. No Recourse Against Others.
<PAGE>
No stockholder, director, officer, employee or
incorporator, as such, past, present or future, of the
Company or any successor corporation shall have any
liability for any obligation of the Company under the
Securities or the Indenture or for any claim based on, in
respect of or by reason of, such obligations or their
creation. The holder of this Security by accepting this
Security waives and releases all such liability. The
waiver and release are part of the consideration for the
issuance of the Securities.
18. Interest Limitation.
If any usury law now or at any time hereafter in
force shall be applicable to the Securities or the
Indenture or any other document or instrument related
hereto or thereto, it is the intention of the Company and
each holder of the Securities to conform strictly to any
such usury laws and any subsequent revisions or repeals
thereof. In furtherance thereof, the Company and each
holder of the Securities stipulate and agree that none of
the terms and provisions contained in the Securities or the
Indenture or any other document or instrument related
hereto or thereto shall ever be construed to give rise to a
contract or obligation to pay interest in excess of the
maximum amount permitted to be contracted for, taken,
reserved, charged, collected or received under any
applicable law, and the provisions of this paragraph 18
shall control in the event of any conflict between such
provisions and any other provisions contained in the
Securities or the Indenture or any other document or
instrument related hereto or thereto. Accordingly, if the
transactions contemplated by the Securities or the
Indenture or any other document or instrument related
hereto or thereto would be usurious under any applicable
law, then, in such event, all amounts that constitute
interest under applicable law that are contracted for,
taken, reserved, charged, collected or received under the
Securities or the Indenture or any other document or
instrument shall under no circumstances exceed the maximum
L1103/WP88/03AV18
A-8
amount allowed by applicable law, and the excess, if any,
shall be credited to the principal amount of the Securities
(or, if the principal amount of the Securities shall have
been paid or deemed to be paid in full, shall be refunded
to the Company).
19. Authentication.
This Security shall not be valid until the
Trustee or authenticating agent signs the certificate of
authentication on the face of this Security.
20. Abbreviations and Defined Terms.
Customary abbreviations may be used in the name
of a holder of a Security 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).
21. CUSIP Numbers.
<PAGE>
Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures,
the Company will cause CUSIP numbers to be printed on the
Securities as a convenience to the holders of the
Securities. No representation is made as to the accuracy
of such numbers as printed on the Securities and reliance
may be placed only on the other identification numbers
printed hereon.
L1103/WP88/03AV18
A-9
<PAGE> FORM OF ASSIGNMENT
I or we assign this Security to:
(Print or type name, address and zip code of assignee)
Please insert Social Security or other
identifying
number of assignee:
and irrevocably appoint
agent to transfer this Security on the books of the
Company. The agent may substitute another to act for him.
Date: Signature: _
(Sign exactly as name appears on
the other side of this Security)
Signature guarantee:
(Signatures must be guaranteed by a
bank, a trust company
or a member firm of the New York Stock
Exchange, Inc.)
L1103/WP88/03AV18
A-10
<PAGE> ELECTION OF HOLDER TO REQUIRE PURCHASE
If you want to elect to have this Security
purchased by the Company pursuant to Section 4.9 or Article
XI of the Indenture, check the appropriate box:
o Section 4.9 o Article XI
If you want to elect to have only part of this
Security purchased by the Company pursuant to Section 4.9
or Article XI of the Indenture, as the case may be, state
the amount you want to be purchased: $__________.
Date: Signature:
(Sign exactly as your name
appears on the other side of
this Security)
Signature guarantee:
(Signatures must be guaranteed by a
bank, a trust company
or a member firm of the New York Stock
Exchange, Inc.)
L1103/WP88/03AV18
A-11
<PAGE>
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our reports included in this Form 10-K, into the
Company's previously filed Registration Statements Nos. 33-69682 and 33-
69684 on Form S-8 for Triangle Pacific Corp. 1993 Long-Term Incentive
Compensation Plan and the Triangle Pacific Corp. Nonemployee Director
Stock Option Plan.
Arthur Andersen & Co.
Dallas, Texas
March 29, 1994
