<PAGE>
[As filed with the Securities and Exchange Commission on June 15, 1994]
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended May 1, 1994
-----------
or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________________to___________________
Commission File Number: 1-9474
FORSTMANN & COMPANY, INC.
(Exact name of registrant as specified in its charter)
GEORGIA 58-1651326
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1185 Avenue of the Americas
New York, New York 10036
(Address of principal executive offices)
(212) 642-6900
(Registrant's telephone number, including area code)
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. X Yes No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
There were 5,589,392 shares of common stock, $.001 par value,
outstanding as of June 14, 1994.
Total number of pages: 162
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PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements
FORSTMANN & COMPANY, INC.
CONDENSED STATEMENTS OF OPERATIONS
FOR THE THIRTEEN WEEKS ENDED May 1, 1994 AND May 2, 1993 AND
THE TWENTY-SIX WEEKS ENDED MAY 1, 1994 AND MAY 2, 1993
(unaudited)
<TABLE>
<CAPTION>
Thirteen Weeks Ended Twenty-Six Weeks Ended
------------------------- --------------------------
May 1, May 2, May 1, May 2,
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $76,508,000 $71,649,000 $113,960,000 $114,773,000
Cost of goods sold 57,942,000 54,552,000 86,625,000 89,346,000
----------- ----------- ------------ ------------
Gross profit 18,566,000 17,097,000 27,335,000 25,427,000
Selling, general and
administrative expenses 5,367,000 5,329,000 10,945,000 9,784,000
Provision for uncollectible
accounts 200,000 1,015,000 1,419,000 1,159,000
Loss from disposal and
impairment of machinery
and equipment - 962,000 - 962,000
----------- ----------- ------------ ------------
Operating income 12,999,000 9,791,000 14,971,000 13,522,000
Interest expense 4,261,000 4,042,000 8,115,000 7,792,000
----------- ----------- ------------ ------------
Income before income taxes 8,738,000 5,749,000 6,856,000 5,730,000
Income tax provision -
principally deferred 3,452,000 2,203,000 2,708,000 2,206,000
----------- ----------- ------------ ------------
Net income 5,286,000 3,546,000 4,148,000 3,524,000
Preferred stock in-kind
dividends and accretion
to redemption value 57,000 53,000 115,000 104,000
----------- ----------- ------------ ------------
Income applicable to
common shareholders $ 5,229,000 $ 3,493,000 $ 4,033,000 $ 3,420,000
=========== =========== ============ ============
Per share and share
information:
Income per common share $ .94 $ .63 $ .72 $ .61
=========== =========== ============ ============
Weighted average common
shares outstanding 5,586,795 5,585,014 5,588,035 5,585,014
=========== =========== ============ ============
</TABLE>
See notes to financial statements.
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FORSTMANN & COMPANY, INC.
CONDENSED BALANCE SHEETS
MAY 1, 1994 AND OCTOBER 31, 1993
(unaudited)
<TABLE>
<CAPTION>
May 1, October 31,
1994 1993
---- ----
<S> <C> <C>
ASSETS
Current Assets:
Cash $ 53,000 $ 53,000
Accounts receivable, net of allowance of
$3,457,000 and $2,195,000, respectively 72,278,000 48,816,000
Inventories 87,368,000 76,936,000
Current deferred tax assets 2,867,000 2,869,000
Other current assets 2,083,000 2,298,000
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Total current assets 164,649,000 130,972,000
Property, plant and equipment, net 77,952,000 76,521,000
Deferred financing costs, net of accumulated
amortization of $1,035,000 and $629,000,
respectively 3,358,000 3,024,000
Other assets 6,259,000 5,850,000
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Total $252,218,000 $216,367,000
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 3,054,000 $ 2,821,000
Accounts payable 18,526,000 24,580,000
Accrued compensation and payroll taxes 3,440,000 5,457,000
Accrued interest payable 689,000 648,000
Other accrued liabilities 4,397,000 4,805,000
------------ ------------
Total current liabilities 30,106,000 38,311,000
Long-term debt, plus unamortized premium
of $4,658,000 and $5,036,000, respectively,
and less current maturities 173,554,000 136,038,000
Deferred tax liabilities 6,606,000 4,033,000
Accrued additional pension liability in
excess of accumulated benefit obligation 1,900,000 1,900,000
Senior preferred stock 2,310,000 2,195,000
Shareholders' Equity:
Common stock 5,595 5,585
Additional paid-in capital 28,389,405 28,570,415
Excess of additional pension liability
over unrecognized prior service cost, net (1,101,000) (1,101,000)
Retained earnings since November 2, 1992 10,448,000 6,415,000
------------ ------------
Total shareholders' equity 37,742,000 33,890,000
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Total $252,218,000 $216,367,000
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</TABLE>
See notes to financial statements.
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FORSTMANN & COMPANY, INC.
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE TWENTY-SIX WEEKS ENDED MAY 1, 1994
AND MAY 2, 1993
(unaudited)
<TABLE>
<CAPTION>
May 1, May 2,
1994 1993
---- ----
<S> <C> <C>
Net income $ 4,148,000 $ 3,524,000
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Adjustments to reconcile net loss to net
cash used by operating activities:
Depreciation and amortization 6,801,000 4,531,000
Income tax provision 2,708,000 2,206,000
Provision for uncollectible accounts 1,419,000 1,196,000
(Gain)loss from disposal and
impairment of machinery
and equipment (70,000) 962,000
Changes in current assets and current
liabilities:
Accounts receivable (24,881,000) (25,613,000)
Inventories (10,432,000) (6,184,000)
Other current assets (99,000) (1,196,000)
Accounts payable (6,054,000) 2,723,000
Accrued liabilities (2,748,000) (6,045,000)
Accrued interest payable 41,000 38,000
Investment in notes receivable, net 316,000 (536,000)
Deferred financing costs (739,000) (2,735,000)
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Total adjustments (33,738,000) (30,653,000)
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Net cash used by operating activities (29,590,000) (27,129,000)
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Cash flows used in investing activities:
Capital expenditures (7,504,000) (7,354,000)
Investment in other assets, principally
computer information systems (1,168,000) (1,030,000)
Net proceeds from disposal of machinery
and equipment 128,000 42,000
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Net cash used by investing activities (8,544,000) (8,342,000)
----------- -----------
Cash flows from financing activities:
Net borrowings under the Citibank Facility - 1,500,000
Repayment of the Citibank Facility - (57,987,000)
Net borrowings under the Revolving
Line of Credit 28,468,000 70,180,000
Proceeds from the Term Loan - 15,000,000
Repayment of the Term Loan - (15,000,000)
Proceeds from sale of Senior Secured Notes 10,000,000 20,000,000
Borrowings under the CIT Equipment Facility
and other financing arrangements 1,469,000 2,584,000
Repayment of other financing arrangements (1,828,000) (806,000)
Incentive stock options exercised 25,000 -
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Net cash provided by financing activities 38,134,000 35,471,000
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Net increase in cash - -
Cash at beginning of period 53,000 52,000
----------- -----------
Cash at end of period $ 53,000 $ 52,000
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</TABLE>
See notes to financial statements.
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FORSTMANN & COMPANY, INC.
CONDENSED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE TWENTY-SIX WEEKS ENDED MAY 1, 1994
(unaudited)
<TABLE>
<CAPTION>
Pension
Additional Liability Total
Common Paid-In Over Prior Retained Shareholders'
Stock Capital Service Cost Earnings Equity
------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance, October 31,
1993 $5,585 $28,570,415 $(1,101,000) $6,415,000 $33,890,000
Incentive stock
options exercised 10 24,990 - - 25,000
Quasi-reorganization
adjustment - (206,000) - - (206,000)
Income applicable to
common shareholders - - - 4,033,000 4,033,000
------ ----------- ----------- ----------- -----------
Balance, May 1, 1994 $5,595 $28,389,405 $(1,101,000) $10,448,000 $37,742,000
====== =========== =========== =========== ===========
</TABLE>
See notes to financial statements.
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FORSTMANN & COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
MAY 1, 1994
(Unaudited)
1. Forstmann & Company, Inc. ("the Company") designs, manufactures and markets
woolen, worsted and other fabrics primarily used in the production of apparel
for men and women, as well as for specialty products and commercial interior
products. A majority of the Company's common stock is owned by Odyssey Partners,
L.P.
The condensed financial statements presented herein are unaudited and have
been prepared by the Company pursuant to the rules and regulations of the
Securities and Exchange Commission. In the opinion of management, all
adjustments (consisting of normal recurring adjustments) necessary for a fair
presentation of such information have been made. These financial statements
should be read in conjunction with the financial statements and related notes
contained in the Company's Annual Report on Form 10-K for the fiscal year ended
October 31, 1993 (the "1993 Form 10-K"), to which reference is made. Certain
information normally included in financial statements and related notes prepared
in accordance with generally accepted accounting principles has been condensed
or omitted. Because of the seasonal nature of the Company's business, the
results for the interim periods presented are not indicative of the results for
a full fiscal year.
Certain prior year's financial statement balances have been reclassified to
conform with the current year's presentations.
2. Inventories are stated at the lower of cost, determined principally by the
LIFO method, or market and consist of:
<TABLE>
<CAPTION>
May 1, October 31,
1994 1993
---- ----
<S> <C> <C>
Raw materials and supplies $18,073,000 $18,073,000
Work-in-process 51,180,000 45,165,000
Finished products 19,795,000 15,601,000
Less market reserves (1,680,000) (1,903,000)
----------- -----------
Total 87,368,000 76,936,000
Difference between LIFO
carrying value and current
replacement cost (1,547,000) (1,565,000)
----------- -----------
Current replacement cost $85,821,000 $75,371,000
=========== ===========
</TABLE>
Although current replacement cost for inventories at May 1, 1994 and October
31, 1993 was less than LIFO carrying value, the Company's management believes
that the carrying value will be recovered through future sales which will yield
normal profit margins.
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3. Per share and share information for the thirteen and twenty-six weeks ended
May 1, 1994 and May 2, 1993 are based upon actual income applicable to common
shareholders and the weighted average shares outstanding during the periods.
4. As discussed in Note 10 to the Company's annual financial statements in the
1993 Form 10-K, the Company has accrued certain estimated costs for
environmental matters. Based upon the advice of outside environmental
consultants, management believes that such accrual, after adjustment, is
appropriate and reasonable. During the thirteen and twenty-six weeks ended May
1, 1994, an additional $341,000 was accrued for such environmental matters.
Because the additional environmental accrual relates to contingencies arising
prior to and existing at November 2, 1992, the related charge, net of tax, was
applied against additional paid-in capital as a quasi-reorganization adjustment.
Pursuant to Georgia Hazardous Site Response Act (the "Response Act"), property
owners in Georgia were required to notify the Environmental Protection Division
of the Georgia Department of Natural Resources (the "Division") of known
releases of regulated substances on their properties above certain levels by
March 22, 1994. Pursuant to the Response Act, the Company notified the Division
of two releases at the Dublin facility (both occurring prior to November 2,
1992), one relating to the presence of trichloroethylene at the facility and one
near the southern property boundary. The Division will evaluate the
notifications submitted by property owners and determine which sites should be
placed on a listing of sites to be created, called the Hazardous Site Inventory
("HSI"). The Division intends to evaluate the sites on the HSI to determine
which sites need corrective action. The Division has issued for public comment,
but has not finalized, cleanup standards and procedures for determining when
corrective action is necessary under the Response Act. Management considered the
proposed standards when addressing the additional environmental accrual
discussed above and, accordingly, management does not believe the proposed
standards, if adopted, would have a material adverse effect on the financial
condition or liquidity of the Company.
5. As discussed in Note 10 to the Company's annual financial statements in the
1993 Form 10-K, the Company is involved in legal proceedings with certain
shareholders who dissented from a 1992 merger with an affiliated company (the
"Dissenters' Proceeding"). The Company believes that any payment in respect
thereof should not have a material adverse effect on the results of operations,
financial condition or liquidity of the Company. However, there is no certainty
as to the ultimate outcome of the Dissenters' Proceeding or the amounts, if any,
the court will assess against any of the parties. If the Company is required to
pay a cash amount in excess of $500,000, such payment, in the absence of a
consent by GECC (hereinafter defined), would constitute an event of default
under the GECC Facility (hereinafter defined). The parties to the Dissenters'
Proceeding have completed discovery. The court has granted the Company's motion
for an independent court approved appraiser to assist in the judicial
determination of fair value. The trial date has not yet been set.
6. The Equipment Facility (hereinafter defined, see Item 2) contains a covenant
whereby the Company may not permit its adjusted leverage ratio (the ratio of
total liabilities to tangible net worth) to exceed a certain ceiling. On June
13, 1994, the Equipment Facility was amended to increase this maximum permitted
adjusted leverage ratio from 160% to 170% for the period from January 31, 1994
through July 31, 1994. Thereafter, the maximum permitted adjusted leverage ratio
is 160% until October 30, 1994 and declines annually. The Company's adjusted
leverage ratio as of May 1, 1994 was 166%. This higher ratio is attributable to
an adjustment in the Company's assumed discount rate used to measure the
accumulated benefit obligation for its hourly and salaried pension plans under
Statement of Financial Accounting Standards No. 87, "Employers' Accounting for
Pensions", and the additional debt the Company incurred to fund an increase in
inventories. Absent the amendment to the Equipment Facility, an adjusted
leverage ratio of more than 160% during the 1994 Second Quarter would have been
an event of default under the Equipment Facility. In addition, such an event
of default would have triggered a cross default under the terms of the Loan
Agreement (hereinafter defined, see Item 2). The lender under the Loan Agreement
has consented to the amendment to the Equipment Facility and acknowledged that
no event of default under the Loan Agreement exists as a result of the events
giving rise to such amendment.
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Item 2.
- - -------
FORSTMANN & COMPANY, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Reference is made to Item 7 - "Management's Discussion and Analysis of
Financial Condition and Results of Operations" contained in the 1993 Form 10-K
for a discussion of the Company's financial condition as of October 31, 1993,
including a discussion of the Company's anticipated liquidity and working
capital requirements during its 1994 fiscal year.
Financial Condition and Liquidity
- - ---------------------------------
Net cash used by operating activities during the twenty-six weeks ended May
1, 1994 (the "1994 Period) was $29.6 million, an increase of $2.5 million from
the twenty-six weeks ended May 2, 1993 (the "1993 Period"). Historically, during
the first half of its fiscal year, the Company utilizes cash to fund operations,
whereas operations provide cash during the second half of the Company's fiscal
year. Net cash used in investing activities during the 1994 Period, primarily
for capital expenditures, was $8.5 million, an increase of $0.2 million from the
1993 Period. Cash utilized to fund the Company's operations and investing
activities during the 1994 Period was obtained primarily from borrowings, net of
repayments, under the Revolving Line of Credit (hereinafter defined) ($28.5
million), proceeds from the sale of Additional Senior Secured Notes (hereinafter
defined) ($9.7 million, net of underwriter's fee of $0.3 million) and the CIT
Equipment Facility (hereinafter defined) ($1.1 million).
Historically, the Company experiences an increase in accounts receivable
during the first three quarters of its fiscal year (primarily during the second
and third quarters), due to the seasonal increase in sales which typically occur
in January through July of each year. This seasonal pattern is influenced by the
industry practice of providing coating fabric customers with favorable billing
terms (referred to as "dating"), which permit payment 60 days beyond July 1 for
invoices billed in January through June. Accounts receivable at May 1, 1994
included $22.8 million of receivables with dating, a decrease of $0.8 million
compared to May 2, 1993.
The Company's business is seasonal, with the vast majority of orders for
woolen fabrics placed from December through April for manufacturers to produce
apparel for retail sale during the fall and winter months. As a result of normal
payment terms for sale of such fabrics, the Company receives the major portion
of its payments thereon during July through October. The Company's worsted
fabric sales tend to be less seasonal because the weight of worsted fabrics
makes them suitable for retail sales in the spring as well as in the fall and
winter months.
Inventories increased $10.4 million from October 31, 1993 to May 1, 1994
due to the manufacture of certain fabric components and fabrics in advance of
the traditionally strong selling period in the Company's second and third fiscal
quarters. As a result, the Company utilized available manufacturing capacity,
which is expected to enable the Company to continue to provide a high level of
service to its customers and to reduce further manufacturing lead times. The
Company expects its inventories to decrease by the end of the third fiscal
quarter as sales levels continue at seasonally high levels.
The Company entered into a five-year loan agreement as of October 30, 1992
with General Electric Capital Corporation ("GECC"), as agent and lender (the
"Loan Agreement") which provides a revolving line of credit up to a maximum of
$85 million (the "Revolving Line of Credit"). Borrowings under the Revolving
Line of Credit bear interest, at the Company's option, at a floating rate (which
is based on the higher of the prime lending rates or 90 day commercial paper
rates, in either case as defined) or a fixed rate (which is based on LIBOR),
payable monthly. The Company benefited from the use of the fixed interest rate
option during the 1994 Period and expects such benefit to continue for the
remainder of fiscal year 1994. The fixed interest rate was approximately 1.0%
less than the floating interest rate during the 1994 Period. On April 29, 1994,
the Company selected for the Revolving Line of Credit a two-month fixed rate
option, which set the fixed rate at 7.1875%. The Company entered into an
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interest rate cap agreement with a bank on January 31, 1994 that effectively
caps the interest rate at 10.5% on borrowings up to $35.0 million. Such
agreement, which cost $150,500, is effective through October 31, 1997.
On April 5, 1993, the Company issued an aggregate of $20 million Senior
Secured Floating Rate Notes due October 30, 1997 (the "Original Senior Secured
Notes") under an Indenture dated as of April 5, 1993 between the Company and
Shawmut Bank Connecticut, National Association, as trustee (the "Original Senior
Note Indenture"), which requires principal payments of $3.0 million on October
31, 1994, $4.0 million on October 31, 1995, $5.0 million on October 31, 1996 and
a final payment of the unpaid principal balance on October 30, 1997. On March
30, 1994, the Company amended and restated the Original Senior Note Indenture
(as so amended and restated, the "Senior Note Indenture") and issued $10 million
of additional Senior Secured Notes due October 30, 1997 (the "Additional Senior
Secured Notes"; together with the Original Senior Secured Notes, the "Senior
Secured Notes") under the Senior Note Indenture which requires that the
Additional Senior Secured Notes be paid in full on October 30, 1997. The
proceeds (net of underwriting fees) from the issuance of the Additional Senior
Secured Notes were used to repay borrowings outstanding under the Loan
Agreement. Borrowings under the Senior Secured Notes bear interest, at the
Company's option, at a floating rate (which is based on the prime rate, as
defined) or a fixed rate (which is based on LIBOR), payable quarterly. The
floating rate is 1.75% per annum above the prime rate, as defined, and the fixed
rate is 3.25% per annum above LIBOR. The Senior Secured Notes bear interest at
the fixed rate of 7.50% per annum from April 29, 1994 through July 29, 1994.
Proceeds from the Company's ordinary operations are applied to reduce the
principal amount of borrowings outstanding under the Revolving Line of Credit.
Unused portions of the Revolving Line of Credit may be borrowed and reborrowed,
subject to availability in accordance with the then applicable commitment and
borrowing base limitations. The Company's obligations under the Loan Agreement
and the Senior Secured Notes are secured by liens on substantially all of the
Company's assets. Both the Loan Agreement and the Senior Note Indenture contain
certain restrictive covenants, including financial covenant restrictions and
limitations on the payment of cash dividends.
The Company is a party to a loan and security agreement (the "Equipment
Facility") with The CIT Group/Equipment Financing, Inc. ("CIT") which provided
financing for the acquisition of, and to refinance borrowings incurred to
acquire, various textile machinery and equipment. Pursuant to the Equipment
Facility, which is secured with the financed equipment, the Company has an
aggregate of $8.2 million of outstanding borrowings at May 1, 1994 at interest
rates ranging from 7.36% to 8.61% per annum.
On June 13, 1994, the Equipment Facility was amended to increase the maximum
permitted adjusted leverage ratio (the ratio of total liabilities to tangible
net worth) from 160% to 170% for the period commencing January 31, 1994 through
July 31, 1994. The Company requested such amendment to account for an
adjustment in the Company's assumed discount rate used to measure the
accumulated benefit obligation for its hourly and salaried pension plans under
Statement of Financial Accounting Standards No. 87, "Employers' Accounting for
Pensions", and the additional debt the Company incurred to fund the increase in
inventories. The Company has entered into negotiations with CIT to increase the
maximum permitted adjusted leverage ratio for other periods covered under the
Equipment Facility.
Long-term debt at May 1, 1994 was $173.6 million, an increase of $37.5
million from October 31, 1993. Such increase was primarily a result of
borrowings, net of repayments, under the Loan Agreement, proceeds from the sale
of Senior Secured Notes and borrowings under the Equipment Facility, which were
used to fund the Company's working capital needs and to acquire certain
machinery and equipment.
The Company's cash requirements, including capital expenditures and working
capital, during the 1994 Period were funded from the proceeds from borrowings
under the Revolving Line of Credit and the sale of the Additional Senior Secured
Notes. At May 1, 1994, the aggregate amount of revolving loans and letters of
credit outstanding under the Revolving Line of Credit was approximately $78.6
million and loan availability, in excess of the Company's outstanding borrowings
and letters of credit, was approximately $6.4 million.
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Capital additions, including capital lease obligations, for plant and
equipment were $7.5 million in the 1994 Period. The Company expects spending for
capital expenditures, primarily machinery and equipment, to be approximately
$22.0 million during the 1994 fiscal year. The Company believes that cash
generated from operations during the remaining portion of the 1994 fiscal year,
borrowings under the Revolving Line of Credit and permitted operating and
capital leases will be sufficient to fund its ongoing working capital and
capital expenditure requirements in the 1994 fiscal year.
Working capital at May 1, 1994 was $134.5 million, an increase of $41.9
million from October 31, 1993. This increase resulted, in part, from a $33.7
million increase in current assets, primarily attributable to an increase in
inventories of $10.4 million and accounts receivable of $23.5 million. Further,
working capital increased as a result of a $8.2 million decrease in current
liabilities, primarily accounts payable. Such increase in working capital was
funded primarily from borrowings under the Revolving Line of Credit and proceeds
from the sale of the Additional Senior Secured Notes.
The increase in inventories primarily occurred in work-in-process and
finished products, which increased by $6.0 million and $4.2 million,
respectively. The increase in work-in-process and finished products precedes the
seasonal increase in sales, which primarily occurs in the Company's second and
third fiscal quarters.
The Company's sales order backlog at May 29, 1994 was $62.6 million compared
to a sales order backlog of $64.5 million at May 30, 1993. The decrease in the
sales order backlog includes a decline for womenswear and outerwear, which was
somewhat offset by an increase in orders for menswear and government products.
The decline in the womenswear and outerwear backlog is attributable to the
industry trend toward a later season and in product mix due to changing fashion
trends. Unfilled government orders included in the May 29, 1994 backlog were
$5.8 million as compared with $0.7 at May 30, 1993.
RESULTS OF OPERATIONS
- - ---------------------
THE 1994 TWENTY-SIX WEEK PERIOD COMPARED TO THE 1993 TWENTY-SIX WEEK PERIOD
Net sales for the 1994 Period were $114.0 million, a decline of less than 1%
from the 1993 Period. Total yards of fabric sold decreased 4.1% during the 1994
Period, which was somewhat offset by sales of styles with per yard selling
prices above last year's average. The decline in sales is attributable primarily
to a decline in the sale of womenswear fabrics, due to a shift in product mix
resulting from changing fashion trends.
Cost of goods sold decreased to $86.6 million in the 1994 Period from $89.3
million in the 1993 Period. Gross profit increased 7.5% in the 1994 Period to
$27.3 million, and gross profit margin for the 1994 Period was 24.0% compared to
22.2% for the 1993 Period. This improvement was attributable to the effects of
lower wool prices, improved manufacturing efficiencies and a shift in product
mix to styles with higher per yard selling prices. The twenty-six weeks ended
May 1, 1994 and May 2, 1993 include the effects of the Company's quasi
reorganization which was effected as of the beginning of the Company's 1993
fiscal year. Gross profit for the twenty-six weeks ended May 2, 1993 includes a
one-time benefit of $2.8 million ($1.7 million net of income taxes or $0.31 per
share). Such one-time benefit related to the reversal in the 1993 Period of
unfavorable wool purchase commitments recorded as a liability in connection with
the quasi reorganization which resulted in a reduction in cost of goods sold in
the 1993 Period.
Selling, general and administrative expenses, excluding the provision for
uncollectible accounts, increased 11.9% to $10.9 million in the 1994 Period,
compared to $9.8 million in the 1993 Period. Over half of the increase is
attributable to human resources-related expenses primarily associated with
salary increases and the hiring of additional personnel for marketing and in-
house legal counsel. Due to the modernization and computerization of the
Company's styling, sales and marketing operations in New York, coupled with
other computer equipment upgrades, facility, depreciation and amortization
expenses were higher in the 1994 Period than in the 1993 Period.
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The provision for uncollectible accounts increased from $1.2 million in the
1993 Period to $1.4 million in the 1994 Period. Such increase primarily is
attributable to one of the Company's outerwear customers, which owed the Company
$2.4 million, filing for protection under the Federal Bankruptcy Code in
February 1994. Prior to such filing, the Company had reserved approximately 50%
of the aggregate amount due from such customer and, based on information
currently available, has reserved as of May 1, 1994, 100% of the aggregate
amount due. The provision for uncollectible accounts in the 1993 Period includes
the effect of several of the Company's customers filing for protection under the
Federal Bankruptcy Code, which customers, at the time of such filings, owed the
Company an aggregate of approximately $2.5 million.
Interest expense for the 1994 Period was $8.1 million. The $0.3 million
increase in interest expense in the 1994 Period primarily was due to the
additional borrowings under the Revolving Line of Credit, the Senior Secured
Notes and the Equipment Facility. Further, recently announced increases in
the Federal Reserve discount rates have resulted in the Company's interest rates
applicable to borrowings under the Revolving Line of Credit and Senior Secured
Notes increasing by approximately 1% per annum.
In the 1994 Period, the Company recognized an income tax provision of $2.7
million. The Company's effective tax rate was 39.5% on income before income
taxes for the 1994 Period, while the effective tax rate for the 1993 Period was
38.5%. The increase in the Company's effective income tax rate is attributable
to the Omnibus Budget Reconciliation Act of 1993 (the "Tax Act") which was
signed into law by the President on August 10, 1993. The Tax Act increased the
corporate income tax rate from 34% to 35%, as well as made certain other changes
to the corporate tax law. As a result of the foregoing, the Company's net income
was $4.1 million in the 1994 Period compared to net income of $3.5 million in
the 1993 Period.
Preferred stock in-kind dividends and accretion to redemption value was
$115,000 in the 1994 Period. As a result of the foregoing, the Company's income
applicable to common shareholders was $4.0 million in the 1994 Period, compared
to income applicable to common shareholders of $3.4 million in the 1993 Period.
THE THIRTEEN WEEKS ENDED MAY 1, 1994 (THE "1994 SECOND QUARTER") COMPARED TO THE
THIRTEEN WEEKS ENDED MAY 2, 1993 (THE "1993 SECOND QUARTER")
Net sales for the 1994 Second Quarter were $76.5 million, an increase of
6.8% from the 1993 Second Quarter. Total yards of fabric sold increased
approximately 5.1% during the 1994 Second Quarter. Such increase is primarily
attributable to an increase in the sale of womenswear worsted fabrics, due to a
shift in product mix resulting from changing fashion trends. Cost of goods sold
increased 6.2% in the 1994 Second Quarter to $57.9 million from $54.6 million in
the 1993 Second Quarter.
Gross profit increased 8.6% in the 1994 Second Quarter to $18.6 million and
gross profit margin for the 1994 Second Quarter was 24.3%, compared to 23.9% for
the 1993 Second Quarter.
Reference is made to the discussion regarding sales, sales mix, cost of
goods sold and gross profit in the previous comparison of operations for the
1994 Period and the 1993 Period for an explanation of the foregoing variations.
The 1993 Second Quarter includes a one-time benefit of $0.9 million ($0.6
million net of income taxes or $0.10 per share). Such one-time benefit related
to the reversal in the 1993 Second Quarter of unfavorable wool purchase
commitments recorded as a liability in connection with the quasi reorganization
which resulted in a reduction in cost of goods sold in such quarter.
Selling, general and administrative expense, excluding the provision for
doubtful accounts, increased less than 1% to $5.4 million during the 1994 Second
Quarter, compared to $5.3 million during the 1993 Second Quarter, primarily due
to the same factors that contributed to the increase in such expense during the
1994 Period.
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<PAGE>
The provision for uncollectible accounts decreased from $1.0 million in the
1993 Second Quarter to $0.2 million in the 1994 Second Quarter. The provision
for uncollectible accounts in the 1993 Second Quarter includes the effect of
several of the Company's customers filing for protection under the Federal
Bankruptcy Code, which customers, at the time of such filings, owed the Company
an aggregate of approximately $2.5 million.
Interest expense for the 1994 Second Quarter increased 5.4% to $4.3
million, primarily due to the same factors that contributed to the increase in
interest expense during the 1994 Period.
In the 1994 Second Quarter, the Company recognized an income tax provision
at an effective tax rate of 39.5% on income before income taxes, while in the
1993 Second Quarter, the Company recognized an income tax provision at an
effective rate of 38.3%. As a result of the foregoing, the Company's net income
increased $1.7 million to $5.3 million for the 1994 Second Quarter, compared to
net income of $3.5 million for the 1993 Second Quarter.
Preferred stock in-kind dividends and accretion to redemption value was
$57,000 in the 1994 Second Quarter. As a result of the foregoing, the Company's
income applicable to common shareholders increased $1.7 million to $5.2 million
in the 1994 Second Quarter, compared to income applicable to common shareholders
of $3.5 million in the 1993 Second Quarter.
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<PAGE>
PART II -- OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
(a) Date and type of meeting: March 30, 1994 -- Annual Meeting of
Shareholders
(b) Name of each director elected at the meeting:
Michael Barker
Stephen Berger
Cameron Clark, Jr.
Steven Friedman
F. Peter Libassi
Christopher Schaller
No persons other than the above had a term of office as director continuing
after the meeting.
(c) Matters voted upon at the Annual Meeting of Shareholders:
<TABLE>
<CAPTION>
Abstentions
Votes Against and Broker
Matter Votes For or Withheld Non-Votes
<S> <C> <C> <C>
Ratification of 4,700,045 14,493 1,860
Amendment of By-Laws
to increase size of Board
of Directors to six persons
Amendment of Articles of 4,480,628 235,770 -
Incorporation to increase
authorized shares by
10,000,000
Amendment of Common Stock 4,038,138 678,260 -
Incentive Plan to add 250,000
shares of Common Stock available
for grant
Ratification of selection of 4,711,198 5,200 -
Deloitte & Touche as independent
auditors for fiscal year 1994
Election of directors:
Michael Barker 4,709,087 5,311 -
Stephen Berger 4,687,277 24,011 -
Cameron Clark, Jr. 4,709,297 5,101 -
Steven Friedman 4,709,287 5,111 -
F. Peter Libassi 4,709,097 5,301 -
Christopher Schaller 4,709,297 5,101 -
</TABLE>
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<PAGE>
Item 6. Exhibits and Reports on Form 8-K:
(a) Exhibits
4.1 Amended and Restated Indenture, dated as of March
30,1994, between the Company and Shawmut Bank
Connecticut,National Association, as trustee,
relating to the Senior Secured Notes
4.2 Form of Original Senior Secured Note (incorporated
herein by reference to Exhibit 4.1)
4.3 Form of Additional Senior Secured Note (incorporated
herein by reference to Exhibit 4.1)
4.4 Form of First Amendment to Deed to Secure Debt,
Assignments of Leases and Rents, Security Agreements
and Fixture Filings, dated as of March 30, 1994,
between the Company and Shawmut Bank Connecticut,
National Association, as trustee
4.5 First Amendment to Pledge and Security Agreement,
dated as of March 30, 1994, between the Company and
Shawmut Bank Connecticut, National Association, as
trustee
4.6 First Amendment to Trademark Security Agreement
(foreign), dated as of March 30, 1994,between the
Company and Shawmut Bank Conneticut, National
Association, as trustee
4.7 First Amendment to Trademark Security Agreement
(U.S.),dated as of March 30, 1994, between the
Company and Shawmut Bank Connecticut, National
Association, as trustee
4.8 First Amendment to Patent Security Agreement, dated
as of March 30, 1994, between the Company and
Shawmut Bank Connecticut, National Association, as
trustee
4.9 Seventh Amendment, dated as of March 30, 1994, to
the Loan Agreement, dated as of October 30, 1992,
among the Company and General Electric Capital
Corporation, as lender and agent for the lenders
named therein
11.1 Computation of per share earnings
15.1 Independent Accountants' Report, dated May 25, 1994,
from Deloitte & Touche to Forstmann & Company, Inc.
23.1 Letter of Deloitte & Touche, independent public
accountants
99 Press release, dated June 1, 1994
(b) Current Reports on Form 8-K -- no reports on Form 8-K were filed
during the quarter for which this report is filed.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FORSTMANN & COMPANY, INC.
-------------------------
(Registrant)
/s/ William B. Towne
-------------------------
William B. Towne
Executive Vice President &
Chief Financial Officer
Date: June 14, 1994
- - -------------------
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<PAGE>
EXHIBIT INDEX
Exhibit Sequential
No. Description Page No.
- - ------- ----------- ----------
4.1 Amended and Restated Indenture, dated
as of March 30, 1994
4.2 Original Senior Secured Note (incorporated
herein by referrence to Exhibit 4.1)
4.3 Additional Senior Secured Note (incorporated
herein by reference to Exhibit 4.1)
4.4 Form of First Amendment to Deed to Secure Debt,
dated as of March 29, 1994
4.5 First Amendment to Pledge and Security
Agreement
4.6 First Amendment to Trademark Security Agreement
(foreign)
4.7 First Amendment to Trademark Security
Agreement (U.S.), dated as of March 30, 1994
4.8 First Amendment to Patent Security Agreement,
dated as of March 30, 1994
4.9 Seventh Amendment, dated as of March 30, 1994
11.1 Computation of per share earnings
15.1 Independent Accountants' Report, dated
May 25, 1994, from Deloitte & Touche to
Forstmann & Company, Inc.
23.1 Consent of Deloitte & Touche
99 Press release, dated June 1, 1994
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<PAGE>
Exhibit 4.1
FORSTMANN & COMPANY, INC.
$20,000,000
Senior Secured Floating Rate Notes
due October 30, 1997
and
$10,000,000
Senior Secured Floating Rate Notes
due October 30, 1997
-------------------
AMENDED AND RESTATED INDENTURE
Dated as of March 30, 1994
which amends and restates the
INDENTURE
Dated as of April 5, 1993
-------------------
Shawmut Bank Connecticut, National Association,
as Trustee
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions........................................... 1
Section 1.02. Other Definitions..................................... 13
Section 1.03. Rules of Construction................................. 14
ARTICLE 2
THE NOTES
Section 2.01. Form and Dating....................................... 15
Section 2.02. Execution and Authentication.......................... 15
Section 2.03. Registrar and Paying Agent............................ 16
Section 2.04. Paying Agent to Hold Money in Trust................... 16
Section 2.05. Noteholder Lists...................................... 16
Section 2.06. Transfer and Exchange................................. 16
Section 2.07. Replacement Notes..................................... 18
Section 2.08. Outstanding Notes..................................... 18
Section 2.09. Treasury Notes........................................ 18
Section 2.10. Temporary Notes....................................... 19
Section 2.11. Cancellation.......................................... 19
Section 2.12. Defaulted Interest.................................... 19
ARTICLE 3
REDEMPTION
Section 3.01. Notices to Trustee.................................... 19
Section 3.02. Selection of Notes to Be Redeemed..................... 20
Section 3.03. Notice of Redemption.................................. 21
Section 3.04. Effect of Notice of Redemption........................ 22
Section 3.05. Deposit of Redemption Price........................... 22
Section 3.06. Notes Redeemed in Part................................ 22
Section 3.07. Mandatory Redemption Provision........................ 22
Section 3.08. Optional Redemption................................... 22
Section 3.09. Offer to Redeem by Application of Net Proceeds........ 23
</TABLE>
<PAGE>
<TABLE>
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ARTICLE 4
COVENANTS
Section 4.01. Payment of Notes...................................... 24
Section 4.02. Maintenance of Office or Agency....................... 24
Section 4.03. SEC Reports; Financial Statements..................... 25
Section 4.04. Compliance Certificate................................ 25
Section 4.05. Taxes................................................. 26
Section 4.06. Stay, Extension and Usury Laws........................ 26
Section 4.07. Limitation on Restricted Payments..................... 26
Section 4.08. Limitation on Additional Indebtedness................. 28
Section 4.09. Maintenance of Adjusted Tangible Net Worth............ 30
Section 4.10. Maintenance of the Company's EBITDA................... 30
Section 4.11. Maintenance of Fixed Charge Coverage Ratio............ 31
Section 4.12. Maintenance of Interest Coverage Ratio................ 32
Section 4.13. Sale of Assets; Application of Net Proceeds........... 32
Section 4.14. Limitation on Transactions with Affiliates............ 35
Section 4.15. Liens................................................. 35
Section 4.16. Corporate Existence................................... 37
Section 4.17. Liquidation........................................... 37
Section 4.18. Change of Control..................................... 38
Section 4.19. Maintenance of Properties............................. 40
Section 4.20. Additional Real Property Collateral................... 41
Section 4.21. Maintenance of Insurance.............................. 41
Section 4.22. Limitation on Dividend and Other Payment Restrictions
Affecting Subsidiaries................................ 41
ARTICLE 5
SUCCESSORS
Section 5.01. When Company May Merge, etc........................... 42
Section 5.02. Successor Corporation Substituted..................... 43
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default..................................... 43
Section 6.02. Acceleration.......................................... 45
Section 6.03. Other Remedies........................................ 45
Section 6.04. Waiver of Past Defaults............................... 46
Section 6.05. Control by Majority................................... 46
Section 6.06. Limitation on Suits................................... 46
Section 6.07. Rights of Holders to Receive Payment.................. 47
Section 6.08. Collection Suit by Trustee............................ 47
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
Section 6.09. Trustee May File Proofs of Claim...................... 47
Section 6.10. Priorities............................................ 48
Section 6.11. Undertaking for Costs................................. 48
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee..................................... 49
Section 7.02. Rights of Trustee..................................... 50
Section 7.03. Individual Rights of Trustee.......................... 50
Section 7.04. Trustee's Disclaimer.................................. 50
Section 7.05. Notice of Defaults.................................... 51
Section 7.06. Reports by Trustee to Holders......................... 51
Section 7.07. Compensation and Indemnity............................ 51
Section 7.08. Replacement of Trustee................................ 52
Section 7.09. Successor Trustee by Merger, etc...................... 53
Section 7.10. Eligibility; Disqualification......................... 53
ARTICLE 8
DISCHARGE OF INDENTURE
Section 8.01. Termination of Company's Obligations.................. 53
Section 8.02. Application of Trust Money............................ 55
Section 8.03. Repayment to Company.................................. 55
Section 8.04. Reinstatement......................................... 55
ARTICLE 9
AMENDMENTS
Section 9.01. Without Consent of Holders............................ 56
Section 9.02. With Consent of Holders............................... 56
Section 9.03. Revocation and Effect of Consents..................... 57
Section 9.04. Notation on or Exchange of Notes...................... 58
Section 9.05. Trustee to Sign Amendments, etc....................... 58
ARTICLE 10
SECURITY
Section 10.01. Security.............................................. 58
Section 10.02. Security Documents and the Intercreditor Agreement.... 58
Section 10.03. Authorization of Actions to be Taken by the Trustee
Under the Security Documents and the Intercreditor
Agreement............................................. 59
Section 10.04. Authorization of Receipt of Funds by the Trustee Under
the Security Documents and the Intercreditor Agreement 59
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
Section 10.05. Investment of Trust Moneys............................ 59
Section 10.06. Conflicts............................................. 60
ARTICLE 11
MISCELLANEOUS
Section 11.01. Notices............................................... 60
Section 11.02. Officer's Certificate and Opinion of Counsel as to
Conditions Precedent.................................. 61
Section 11.03. Statements Required in Officer's Certificate or
Opinion of Counsel.................................... 62
Section 11.04. Rules by Trustee and Agents........................... 62
Section 11.05. Legal Holidays........................................ 62
Section 11.06. No Recourse Against Others............................ 63
Section 11.07. Duplicate Originals................................... 63
Section 11.08. Governing Law......................................... 63
Section 11.09. No Adverse Interpretation of Other Agreements......... 63
Section 11.10. Successors............................................ 63
Section 11.11. Severability.......................................... 63
Section 11.12. Counterpart Originals................................. 63
Section 11.13. Variable Provisions................................... 63
Section 11.14. Restrictions on Transfer.............................. 64
Section 11.15. Table of Contents, Headings, etc...................... 64
</TABLE>
EXHIBIT A FORM OF SECURITY
EXHIBIT B FORM OF ADDITIONAL SECURITY
-iv-
<PAGE>
AMENDED AND RESTATED INDENTURE, dated as of March 30, 1994, between
Forstmann & Company, Inc., a Georgia corporation (the "Company"), and Shawmut
Bank Connecticut, National Association, as Trustee (the "Trustee") which amends
and restates the Indenture dated as of April 5, 1993, between the Company and
the Trustee.
Each party agrees as follows for the benefit of the other party and for the
equal and ratable benefit of the Holders of the Company's Senior Secured
Floating Rate Notes due October 30, 1997 of which $20,000,000 in aggregate
principal amount were initially issued on April 5, 1993 and $10,000,000
aggregate principal amount were initially issued on March 30, 1994
(collectively, the "Notes"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions.
- - ------------ -----------
"Additional Securities" means the Company's Senior Secured Floating Rate
---------------------
Notes due October 30, 1997, initially issued on March 30, 1994 in the original
aggregate principal amount of $10,000,000 and any replacement thereof issued
under this Indenture.
"Adjusted Tangible Net Worth" means, as of the last day of the most
---------------------------
recently completed fiscal quarter of the Company, the Net Worth of the Company
as of the last day of the most recently completed fiscal quarter, plus (x) and
----
minus (y) (without duplication), where (x) equals the sum of (i) extraordinary
- - -----
losses on a cumulative basis from and after August 3, 1992 and (ii) negative
LIFO adjustments on a cumulative basis from and after August 3, 1992, and (y)
equals the sum of (i) extraordinary gains on a cumulative basis from and after
August 3, 1992, (ii) positive LIFO adjustments on a cumulative basis from and
after August 3, 1992, (iii) organizational expenses which are capitalized,
goodwill, covenants not to compete, research and development costs, deferred
financing costs and other like intangible assets and (iv) amounts due from, or
Investments in, Affiliates (other than Subsidiaries), all as determined in
accordance with generally accepted accounting principles.
"Affiliate" means any person directly or indirectly controlling or
---------
controlled by or under direct or indirect common control with the Company.
"Agent" means any Registrar, Paying Agent or co-registrar.
-----
"Asset Sale" means the sale, lease, conveyance, disposition or other
----------
transfer by the Company or any of its Subsidiaries of any of their assets
(including the receipt of proceeds of insurance paid on account of the loss of
or damage to any asset and awards of compensation for any asset taken by
condemnation or eminent domain and including the receipt of proceeds of business
interruption insurance to the extent a portion of the proceeds thereof is to be
applied to the Notes in accordance with the Intercreditor Agreement); provided,
--------
that notwithstanding the foregoing, the term "Asset Sale" shall not include (i)
the sale, lease,
<PAGE>
conveyance, disposition or other transfer of all or substantially all of the
assets of the Company as permitted pursuant to Article 5 hereof, (ii) the sale
of inventory in the ordinary course of business or (iii) the sale of assets by
way of a sale-leaseback transaction.
"Board of Directors" means the Board of Directors of the Company or any
------------------
authorized committee of the Board of Directors.
"Business Day" means any day other than a Legal Holiday.
------------
"Capital Expenditures" means, with respect to any period, any cash
--------------------
expenditure for fixed or capital assets, including payments made by the Company
in connection with the acquisition of Capital Stock or assets of any person (to
the extent permitted hereunder), expenditures for maintenance and repairs during
such period which are required to be capitalized on the balance sheet of the
Company in accordance with generally accepted accounting principles and payments
made by the Company during such period under sale-leaseback transactions, but
excluding any of the foregoing consisting of Capital Lease Obligations,
obligations under operating leases or MIS Expenditures.
"Capital Lease" means, at the time any determination thereof is to be made,
-------------
any lease of property, real or personal, in respect of which the present value
of the minimum rental commitment would be capitalized on a balance sheet of the
lessee in accordance with generally accepted accounting principles.
"Capital Lease Obligation" means, at the time any determination thereof is
------------------------
to be made, the amount of the liability in respect of a Capital Lease which
would at such time be so required to be capitalized on a balance sheet of the
lessee in accordance with generally accepted accounting principles.
"Capital Stock" or "capital stock" means any and all shares, interests,
------------- -------------
participations or other equivalents (however designated) of corporate stock or
partnership interests.
"Cash Equivalent" means, (a) direct obligations issued or unconditionally
---------------
guaranteed by the United States government or issued by an agency thereof and
backed by the full faith and credit of the United States, in each case maturing
within one (1) year after the date of acquisition thereof, (b) direct
obligations issued by any state of the United States of America or any political
subdivision of any such state or any public instrumentality thereof maturing
within ninety (90) days after the date of acquisition thereof and, at the time
of acquisition, having one of the two highest ratings obtainable from either
Standard & Poor's Rating Group, a division of McGraw Hill, or Moody's Investors
Service, Inc. (or, if at any time neither Standard & Poor's Rating Group, a
division of McGraw Hill, nor Moody's Investors Service, Inc. shall be rating
such obligations, then from such other nationally recognized rating services
acceptable to the Trustee), (c) commercial paper, other than commercial paper
issued by the Company or any of its Affiliates, maturing no more than one year
after the
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<PAGE>
date of creation thereof and, at the time of acquisition, having a rating of at
least A-1 or P-1 from either Standard & Poor's Rating Group, a division of
McGraw Hill, or Moody's Investors Service, Inc. (or, if at any time neither
Standard & Poor's Rating Group, a division of McGraw Hill, nor Moody's Investors
Service, Inc. shall be rating such obligations, then the highest rating from
such other nationally recognized rating services acceptable to the Trustee), and
(d) domestic and Eurodollar certificates of deposit or time deposits or bankers'
acceptances maturing within ninety (90) days after the date of acquisition
thereof issued by any commercial bank organized under the Laws of the United
States of America or any state thereof or the District of Columbia or Canada
having combined capital and surplus of not less than $100,000,000.
"CIT Agreement" means the Loan and Security Agreement dated as of December
-------------
27, 1991, by and between the Company and the CIT Group/Equipment Financing,
Inc., as amended on September 2, 1992 and July 30, 1993, including any related
notes, collateral documents, instruments or agreements executed in connection
therewith, and in each case as amended, supplemented, modified, extended or
renewed or as any or all of the foregoing may be refunded or refinanced from
time to time.
"Collateral" means, collectively, all of the present and future right,
----------
title and interest of the Company and its Subsidiaries in and to the Property of
the Company and its Subsidiaries which is intended to be subject to Liens
created by the Security Documents, which Collateral shall include, but is not
limited to, accounts, inventory, equipment, instruments, patents, patent
licenses, trademarks, trademark licenses, other intellectual property, contract
rights, documents, general intangibles, Real Property and other Property, and
proceeds of any of the foregoing, except to the extent excluded from Liens
created by the Security Documents.
"Company" means Forstmann & Company, Inc., a Georgia corporation, or any
-------
other obligor hereunder and under the Notes, until a successor replaces it in
accordance with Article 5 hereof and thereafter means the successor.
"Consolidated Net Income" with respect to any person, means, for any
-----------------------
period, the aggregate of the Net Income of such person and its Subsidiaries for
such period, on a consolidated basis, determined in accordance with generally
accepted accounting principles, provided that (i) the Net Income of any person
--------
which is not a Subsidiary or is accounted for by the equity method of accounting
shall be included only to the extent of the amount of dividends or distributions
paid to the referent person or a Subsidiary (of which at least 80% of the
capital stock having ordinary voting power for the election of directors or
other governing body of such Subsidiary is owned by the referent person directly
or indirectly through one or more Subsidiaries), (ii) the Net Income of any
person which is a Subsidiary (other than a Subsidiary of which at least 80% of
the capital stock having ordinary voting power for the election of directors or
other governing body of such Subsidiary is owned by the referent person directly
or indirectly through one or more Subsidiaries) shall be included only to the
extent of the lesser of (a) the amount of dividends or distributions paid to the
referent person or a Subsidiary (of which at least 80% of the capital stock
having ordinary
-3-
<PAGE>
voting power for the election of directors or other governing body of such
Subsidiary is owned by the referent person directly or indirectly through one or
more Subsidiaries), or (b) the Net Income of such person, and (iii) the Net
Income of any person acquired in a pooling of interests transaction for any
period prior to the date of such acquisition shall be excluded.
"Contractual Obligation" means, as to any person, any obligation under any
----------------------
outstanding securities issued by that person or any agreement, indenture, loan
agreement, credit agreement, instrument or undertaking to which that person is a
party or by which it or any of its property is bound.
"Contributions" means (i) any loans, cash advances or capital
-------------
contributions from the Company to any Subsidiary or any other Affiliate, (ii)
any transfer of Property from the Company to any Subsidiary and (iii) any
guarantee and the assumption of any liability (primary or contingent) by the
Company with respect to any obligations of any kind of any Subsidiary or any
other Affiliate.
"Corporate Trust Office of the Trustee" shall be at the address of the
-------------------------------------
Trustee specified in Section 11.01 or such other address as the Trustee may give
notice to the Company.
"Credit Agent" means General Electric Capital Corporation, as agent under
------------
the Loan Agreement, or any successor thereto.
"Default" means any event that, with the giving of notice or passage of
-------
time, or both, would be an Event of Default.
"Disqualified Stock" means any capital stock which, by its terms (or by the
------------------
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable
at the option of the holder thereof, in whole or in part on, or prior to, the
maturity date of the Notes; provided, however, that the Company's Senior
-------- -------
Preferred Stock shall not constitute Disqualified Stock.
"EBITDA" means, with respect to any period, the Company's Net Income for
------
such period, plus (x) and minus (y) (without duplication), where (x) equals the
---- -----
sum of (i) the Company's depreciation and amortization for such period, (ii)
Interest Expense for such period, (iii) any provision for taxes based on income
or profits that was deducted in computing Net Income for such period, (iv)
losses from sales of Real Property, machinery and equipment during such period,
(v) negative LIFO adjustments with respect to such period and (vi) extraordinary
losses during such period, and (y) equals the sum of (i) positive LIFO
adjustments with respect to such period, (ii) gains from sales of Real Property,
machinery and equipment during such period and (iii) extraordinary gains during
such period, all as determined in accordance with generally accepted accounting
principles.
-4-
<PAGE>
"Environmental Indemnity Agreement" means the Environmental Indemnity
---------------------------------
Agreement dated as of April 5, 1993 between the Company and the Trustee, as
amended and restated on March 30, 1994 and as may be amended, supplemented or
modified from time to time.
"Equity Interests" means capital stock or warrants, options or other rights
----------------
to acquire capital stock (but excluding any debt security which is convertible
into, or exchangeable for, capital stock).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
------------
"Exempted Payment" shall mean any payment made in connection with (i) the
----------------
payment of any amounts in cash in connection with the dissenters' rights
proceeding in the United States District Court for the Northern District of
Georgia, Atlanta Division, or (ii) the purchase, redemption or acquisition or
retirement of any Equity Interests issued to any of the Company's or its
Subsidiaries employees pursuant to any bonus or employee stock option plan or
incentive; provided, that the foregoing exempted payments shall not exceed
--------
$2,000,000 in any fiscal year and shall not exceed $4,000,000 in the aggregate.
"fair market value" or "fair value" means, with respect to any asset or
----------------- ----------
property, the price which could be negotiated in an arm's-length transaction
between a willing seller and a willing buyer, neither of whom is under undue
pressure or compulsion to complete the transaction. Fair market value or fair
value shall be determined by the Board of Directors acting in good faith and
shall be evidenced by a resolution of the Board of Directors.
"Fixed Charge Coverage Ratio" means, as of the last day of any fiscal
---------------------------
quarter of the Company, the ratio of (a) the Company's EBITDA for the period of
four fiscal quarters of the Company ending on such day to (b) the Company's
Fixed Charges for such four-quarter period.
"Fixed Charges" means, with respect to any period, the sum (without
-------------
duplication) of (a) Interest Expense for such period, plus (b) any decrease in
the Company's deferred interest payable account during such period, plus (c)
principal amortization of Indebtedness during such period (excluding any
mandatory prepayments required to be paid (and actually paid) under the Loan
Agreement with respect to the Revolving Credit Facility whether or not such
prepayments reduce the commitment amount thereunder) plus (d) Capital
Expenditures, principal payments under Capital Leases and MIS Expenditures made
during such period, plus (e) income taxes payable in cash during such period,
plus (f) dividends payable in cash by the Company during such period.
"Guaranty" means any Contractual Obligation, contingent or otherwise, of
--------
any person with respect to any Indebtedness, obligation or liability of another,
if the primary purpose or intent thereof by the person incurring the Contractual
Obligation is to provide assurance to the obligee of such Indebtedness,
obligation or liability of another person that such Indebtedness, obligation or
liability will be paid or discharged, or that any agreements
-5-
<PAGE>
relating thereto will be complied with, or that the holders thereof will be
protected (in whole or in part) against loss in respect thereof including,
without limitation, direct and indirect guarantees, endorsements (except for
collection or deposit in the ordinary course of business), notes co-made or
discounted, recourse agreements, take-or-pay agreements, keep-well agreements,
agreements to purchase or repurchase such Indebtedness, obligation or liability
or any security therefor or to provide funds for the payment or discharge
thereof, agreements to maintain another person's solvency, assets, level of
income, or other financial condition, and agreements to make payment other than
for value received.
"Hedging Obligations" means the obligations of the Company under the
-------------------
interest rate protection agreements required to be obtained and maintained
pursuant to Section 5.13 of the Loan Agreement and under any other interest rate
protection agreement, interest rate future, interest rate option, interest rate
swap, interest rate cap or other interest rate hedge agreement, to or under
which the Company is or becomes a party or beneficiary.
"Holder" or Noteholder" means a person in whose name a Note is registered.
------ ----------
"Indebtedness" with respect to any person, means any indebtedness, whether
------------
or not contingent, in respect of borrowed money or evidenced by bonds, notes,
debentures or similar instruments or letters of credit (or reimbursement
agreements in respect thereof), or with respect to sale-leaseback transactions
or representing the balance deferred and unpaid of the purchase price of any
property (including pursuant to capital leases), except any such balance that
constitutes an accrued expense or a trade payable, if and to the extent any of
the foregoing indebtedness would appear or does appear as a liability upon a
balance sheet of such person prepared on a consolidated basis in accordance with
generally accepted accounting principles, and shall also include (to the extent
not otherwise included) the guaranty of items which would be included within
this definition.
"Indenture" means this Amended and Restated Indenture as further amended or
---------
supplemented from time to time.
"Intercreditor Agreement" means the Amended and Restated Intercreditor
-----------------------
Agreement dated as of March 30, 1994 between the Credit Agent and the Trustee
and as may be amended, supplemented or modified from time to time with the
consent of the Company.
"Interest Coverage Ratio" means, as of the last day of any fiscal quarter
-----------------------
of the Company, the ratio of (a) the Company's EBITDA for the period of four
fiscal quarters of the Company ending on such day to (b) the Company's Interest
Expense for such four-quarter period.
"Interest Expense" means, with respect to any period, the amount which, in
----------------
conformity with generally accepted accounting principles, would be set forth
opposite the caption "interest expense" (or any like caption) on the Company's
income statement for such period, including all fees owed in respect of letters
of credit and net costs under Hedging
-6-
<PAGE>
Obligations, but excluding amortization of deferred financing costs and debt
discounts, all as determined in accordance with generally accepted accounting
principles.
"Interest Payment Date" means April 30, July 31, October 31 or January 31.
---------------------
"Interest Period" means a period of three consecutive calendar months
---------------
beginning on January 31 and ending on April 30, beginning on April 30 and ending
on July 31, beginning on July 31 and ending on October 31 or beginning on
October 31 and ending on January 31, provided that the final Interest Period
--------
hereunder shall be the three consecutive calendar months beginning on July 31,
1997 and ending on October 30, 1997.
"Investment" means, when used in connection with any person, any investment
----------
by that person, by means of a purchase or other acquisition of capital stock or
other securities of any other person or by means of a loan, advance, capital
contribution, Guaranty or other debt or equity participation or interest in any
other person, including any partnership or joint venture interest in any other
person. The amount of any Investment shall be the amount actually invested,
without adjustment for subsequent increases or decreases in the market value or
book value of such Investment.
"LIBOR Business Day" means a Business Day on which banks may accept
------------------
deposits of United States dollars in the London Interbank Market.
"LIBOR Determination Date" for any Interest Period means the second LIBOR
------------------------
Business Day next preceding the first day of such Interest Period.
"LIBOR Rate" means, for any Interest Period, the rate, as determined by the
----------
Company, equal to the average (rounded upwards, if necessary, to the nearest
1/16 of 1%) of the offered rates for deposits in U.S. dollars for a period of
three months, as set forth on the Reuters Screen LIBO Page as of 11:00 a.m.,
London time, on the LIBOR Determination Date for such Interest Period; provided,
--------
that if only one such offered rate appears on the Reuters Screen LIBO Page, the
LIBOR Rate for such Interest Period shall mean such offered rate. If such rate
is not available at 11:00 a.m., London time on the LIBOR Determination Date for
such Interest Period, then the LIBOR Rate for such Interest Period shall equal
the arithmetic mean (rounded upwards, if necessary, to the nearest 1/16 of 1%)
of the interest rates per annum at which deposits in amounts equal to $1,000,000
in U.S. dollars are offered by the Reference Banks to leading banks in the
London Interbank Market for a period of three months as of 11:00 a.m., London
time, on the LIBOR Determination Date for such Interest Period. If on any LIBOR
Determination Date only one of the Reference Banks provides such offered
quotation, then the LIBOR Rate for such Interest Period shall mean such offered
quotation; provided, further, that if none of the Reference Banks provide such
-------- -------
quotations, then the LIBOR Rate for such Interest Period shall be determined by
reference to the LIBOR Rate as quoted in the most recent available Wall Street
Journal in which such quotes are available. If none of the rates or quotations
referred to above are available in respect of any Interest Period, then the
LIBOR Rate shall be unavailable unless an alternative
-7-
<PAGE>
method of determining the LIBOR Rate shall be mutually agreed by the Company and
the holders of at least a majority in principal amount of the then outstanding
Notes.
"Lien" means any mortgage, deed of trust, deed to secure debt, pledge,
----
hypothecation, assignment for security, security interest, encumbrance, lien or
charge of any kind, whether voluntarily incurred or arising by operation of law,
by statute, by contract, or otherwise, affecting any property, including any
agreement to grant any of the foregoing, any conditional sale or other title
retention agreement, any lease in the nature of a security interest, and/or the
filing of or agreement to give any financing statement (other than a
precautionary financing statement with respect to a lease that is not in the
nature of a security interest) under the Uniform Commercial Code or comparable
law of any jurisdiction with respect to any property.
"Loan Agreement" means the Loan Agreement dated as of October 30, 1992
--------------
among Forstmann & Company, Inc., the Lenders named therein, and the Credit
Agent, including any related notes, collateral documents, instruments or
agreements executed in connection therewith, and in each case as amended,
supplemented, modified, extended or renewed or as any or all of the foregoing
may be refunded or refinanced from time to time, or a refunding or refinancing
of such refunding or refinancing from time to time.
"Lockbox and Lockbox Account Agreement" means the Lockbox and Lockbox
-------------------------------------
Account Agreement dated as of May 5, 1993 among the Company, the Trustee and
Citibank, N.A. as may be amended, modified or supplemented from time to time.
"MIS Expenditures" means all deferred and capitalized cash expenditures
----------------
made by the Company or any of its Subsidiaries in connection with the
acquisition and development of computer software for the Company's or any of its
Subsidiaries' management information systems which are capitalized as intangible
assets on the Company's balance sheet.
"Mortgage" means, collectively the Deeds to Secure Debt, each dated as of
--------
April 5, 1993, and amended as of the date hereof, relating to four parcels of
property located in Georgia, and any other mortgage instrument (or deed of trust
or deed to secure debt), together with related security agreements, fixture
filings and assignments of leases and rents covering Real Property of the
Company, which secure the Obligations under this Indenture, the Notes, the
Security Documents and the documents related hereto and thereto, as the same may
be amended, supplemented or otherwise modified from time to time.
"Mortgaged Property" means any Real Property that is subject to a Mortgage.
------------------
"Net Income" means, with respect to any person for any period, the net
----------
income (or loss) after taxes of such person, as determined in accordance with
generally accepted accounting principles.
"Net Proceeds" with respect to any Asset Sale, means cash (freely
------------
convertible into U.S. dollars), Cash Equivalents or promissory notes received by
the Company or any
-8-
<PAGE>
Subsidiary from any Asset Sale, as the case may be (but in the case of Cash
Equivalents or promissory notes, only in amounts equal to cash received on
account of the liquidation or payment of such Cash Equivalents or promissory
notes when and as received), after (a) provision for all income or other taxes
measured by or resulting from such Asset Sale, (b) payment of all brokerage
commissions, underwriting fees and other fees and expenses related to such Asset
Sale, (c) deduction of appropriate amounts to be provided by the Company or any
Subsidiary as a reserve, in accordance with generally accepted accounting
principles, against any liabilities associated with the assets or business which
are the subject of such Asset Sale and retained by the Company or any Subsidiary
after such Asset Sale including, without limitation, pension and other post-
employment benefit liabilities and liabilities related to environmental matters
or against any indemnification obligations associated with such Asset Sale and
(d) payment of all amounts required to be applied to Indebtedness secured by a
Lien on the assets which are the subject of such Asset Sale, which Lien is and
is permitted hereunder or under the Security Documents to be prior to the Lien
on such assets in favor of the Trustee (if such assets are or are required to be
subject to a Lien in favor of the Trustee).
"Net Worth" means, as of the last day of any fiscal quarter of the Company,
---------
the Company's shareholders' equity (deficiency), as determined on a consolidated
basis in accordance with generally accepted accounting principles.
"Notes" means, collectively, the Securities and the Additional Securities.
-----
"Obligations" means any principal, interest, penalties, fees,
-----------
indemnifications, reimbursement, damages and other liabilities payable under the
documentation governing any Indebtedness.
"Odyssey" means Odyssey Partners, L.P., a Delaware limited partnership.
-------
"Officer" means the President, the Chief Financial Officer, the Secretary
-------
or Treasurer of the Company.
"Officer's Certificate" means a certificate signed by an Officer of the
---------------------
Company.
"Opinion of Counsel" means a written opinion from legal counsel who is
------------------
reasonably acceptable to the Trustee, which may be an employee of, or counsel
to, the Company or the Trustee.
"person" means any individual, corporation, partnership, joint venture,
-------
association, joint stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Prime Rate" shall mean, as of any given date, the average of the prime,
----------
base, or equivalent rates of interest as are publicly announced, or published,
by Morgan Guaranty Trust Company of New York, Citibank, N.A., Chemical Bank and
The Chase Manhattan Bank (National Association), or the successor by merger or
consolidation to any of such
-9-
<PAGE>
banks (with the understanding that such rates may merely serve as a basis upon
which effective rates of interest are calculated for loans making reference
thereto and that such rates are not necessarily the lowest or best rates at
which such banks calculate interest or extend credit). Any change in the Prime
Rate will be effective on the date such change is announced by each of, or any
of, such banks.
"principal" of a debt security means the principal of the security plus the
---------
premium, if any, on the security.
"Prior Liens" shall have the meaning set forth in Section 4.15(m) below.
-----------
"Proceeds Account" shall mean the bank account maintained by the Trustee at
----------------
Shawmut Bank Connecticut, National Association to hold the Net Proceeds of Asset
Sales or any other Trust Moneys.
"Property" means any interest in any kind of property or asset, whether
--------
real, personal or mixed, tangible or intangible.
"Purchase Agreement" means, collectively, those certain Purchase
------------------
Agreements, each dated as of April 5, 1993, between the Company and the
respective initial purchasers of the Securities and those certain Purchase
Agreements, each dated as of March 30, 1994, between the Company and the
respective initial purchasers of the Additional Securities, as such Purchase
Agreements may be amended, modified or supplemented from time to time.
"Quasi Reorganization" means the revaluation of the Company's assets and
--------------------
liabilities to fair value as of the beginning of fiscal year 1993 pursuant to
the principles of quasi-reorganization accounting.
"Real Property" means any interest in real property or any portion thereof
-------------
whether owned in fee or leased or otherwise owned.
"Reference Banks" means each of Bank of Tokyo, Ltd. (London office),
---------------
Barclays Bank, PLC (London office), Bankers Trust Company (London office) and
National Westminster Bank, PLC (London office), and any such replacement bank
thereof as listed on the Reuters Screen LIBO Page and their respective
successors (or if such Banks are not listed thereon or such page shall not be
available, as determined from a Replacement Service), and if any of such banks
are not at the applicable time providing interest rates as contemplated within
the definition of "LIBOR Rate," Reference Banks shall mean the remaining bank or
banks so providing such rates. In the event that less than two of such banks
are providing such rates, the Company shall use reasonable efforts to appoint
additional Reference Banks so that there are at least two such banks providing
such rates; provided that such banks appointed by the Company shall be London
--------
offices of leading banks engaged in the London Interbank Market.
-10-
<PAGE>
"Remedial Action" means any claim or action to foreclose upon, take
---------------
possession of, sell, lease or otherwise dispose of, or in any other manner
realize or seek to realize upon, the whole or any part of any Property or Real
Property of the Company, whether pursuant to the Uniform Commercial Code, by
foreclosure, by setoff, by self-help repossession, by deed in lieu of
foreclosure, by exercise of any other remedies with respect to any Property or
Real Property of the Company available under any of the Security Documents, or
under applicable law.
"Replacement Service" means Telerate News Service or such other financial
-------------------
reporting service or information as the Company determines and as shall not be
reasonably objected to by the holders of a majority of the outstanding amount of
the Notes within 30 days after receipt of notice of such determination by the
Company.
"Restricted Encumbrance" shall mean a Permitted Encumbrance of the type
----------------------
referred to in clause (d)(ii), (h), (i), (k) or (to the extent the Prior Lien
constitutes a Lien of any such type) (m) of Section 4.15 below.
"Reuters Screen LIBO Page" means the display designated as page "LIBO" on
------------------------
the Reuter Monitor Money Rates Service (or such other page as may replace the
LIBO page on that service for the purpose of displaying London interbank offered
rates of major banks).
"Revolving Credit Facility" means the revolving credit facility provided
-------------------------
under the Loan Agreement.
"SEC" means the Securities and Exchange Commission.
---
"Securities" means the Company's Senior Secured Floating Rate Notes due
----------
October 30, 1997, initially issued on April 5, 1993 in the original aggregate
principal amount of $20,000,000 and any replacements thereof issued under this
Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
--------------
"Security Agreement" means the Pledge and Security Agreement, dated as of
------------------
April 5, 1993, between the Company and the Trustee, as amended on March 30, 1994
and as may be further modified or supplemented from time to time.
"Security Documents" means, collectively, (i) the Mortgages, (ii) the
------------------
Security Agreement, (iii) the Patent Security Agreement dated as of April 5,
1993, between the Company and the Trustee, as amended on March 30, 1994, (iv)
the Trademark Security Agreement (U.S.) dated as of April 5, 1993 between the
Company and the Trustee, as amended on March 30, 1994, (v) the Trademark
Security Agreement (Foreign) dated as of April 5, 1993 between the Company and
the Trustee, as amended on March 30, 1994, (vi) the Lockbox and Lockbox Account
Agreement, (vii) the Environmental Indemnity Agreement, and (viii) any other
pledge agreement, security agreement, assignment or similar instrument executed
by the Company or any of its Subsidiaries in favor of the Trustee for the
-11-
<PAGE>
equal and ratable benefit of the Holders to secure the Obligations under this
Indenture, the Notes and the documents related hereto and thereto, as any of the
instruments referred to in clauses (i) through (viii) may be amended,
supplemented or otherwise modified from time to time.
"Securityholder" means a person in whose name a Security is registered.
--------------
"Senior Preferred Stock" means the 5% Senior (Pay-in-kind) Preferred Stock,
----------------------
$1.00 par value per share, of the Company, and any shares issued in payment of
dividends thereon.
"Significant Subsidiary" means any subsidiary which would be a "significant
----------------------
subsidiary" as defined in Rule 1-02 of Regulation S-X under the Securities Act,
and the Exchange Act.
"Subordinated Notes" means the Company's 14-3/4% Senior Subordinated Notes
------------------
due April 15, 1999 and the Company's Amended Split-Coupon Senior Subordinated
Notes due April 15, 1999.
"Subsidiary" means any person of which at least a majority of the capital
----------
stock having ordinary voting power for the election of directors or other
governing body of such person is owned by the Company directly and/or through
one or more Subsidiaries.
"Tangible Net Worth" with respect to any person means, as of any date, the
------------------
consolidated equity of the common shareholders of such person (excluding the
cumulated foreign currency translation adjustment) less their consolidated
Intangible Assets, all determined on a consolidated basis in accordance with
generally accepted accounting principles. For purposes of this definition,
"Intangible Assets" means the amount (to the extent reflected in determining
such consolidated equity of the common shareholders) of (i) all write-ups,
deferred expenses and transaction fees (other than write-ups, deferred expenses
and transaction fees (x) resulting from foreign currency translations, (y) of
tangible assets of a going business concern made within twelve months after the
acquisition of such business and (z) resulting from the Quasi Reorganization)
subsequent to April 27, 1989 in the book value of any asset owned by such person
or a consolidated Subsidiary, (ii) all investments in unconsolidated
Subsidiaries and in persons which are not Subsidiaries (other than marketable
securities and other assets held for sale outside of the ordinary course of
business and long-term receivables resulting from the sale of assets or
businesses), (iii) all unamortized debt discount and expense and unamortized
deferred charges (excluding deferred income taxes), and (iv) to the extent
incurred or acquired after April 27, 1989, all goodwill, patents, trademarks,
service marks, trade names, copyrights, organizational and developmental
expenses and other intangible items, all of the foregoing as determined in
accordance with generally accepted accounting principles; provided, however,
-------- -------
that with respect to the Company, "Tangible Net Worth" shall not include the
amounts reported on the Company's most recent balance sheet (on the date of
calculation) with respect to any series of the Company's preferred stock.
-12-
<PAGE>
"TIA" with respect to any Notes, means the Trust Indenture Act of 1939 (15
---
U.S.C. (S)(S) 77aaa-77bbbb) as in effect on April 5, 1993.
"Trustee" means the party named as such above until a successor replaces it
-------
in accordance with the applicable provisions of this Indenture and thereafter
means the successor serving hereunder.
"Trust Moneys" means all cash or Cash Equivalents received by the Trustee
------------
(a) as compensation for, or proceeds of an Asset Sale of, all or any part of the
Collateral; (b) pursuant to the provisions of the Security Documents; or (c) as
proceeds of any Asset Sale or other disposition of all or any part of the
Collateral by or on behalf of the Trustee or any collection, recovery receipt,
appropriation or other realization of or from all or any part of the Collateral
pursuant to the Security Documents or otherwise.
"Trust Officer" means any officer or assistant officer of the Trustee
-------------
assigned by the Trustee to administer its corporate trust matters.
"Voluntary Asset Sale" shall mean an Asset Sale consisting of the voluntary
--------------------
sale, lease, conveyance, disposition or other transfer by the Company or any of
its Subsidiaries of any of their assets, and shall not include the receipt of
proceeds of insurance or of any condemnation, eminent domain or similar award
with respect to such assets.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
---------------------------------
at any date, the number of years obtained by dividing (i) the then outstanding
aggregate principal amount of such Indebtedness into (ii) the sum of the product
obtained by multiplying (a) the amount of each then remaining installment,
sinking fund, serial maturity or other required payment of principal, including
payment at final maturity, in respect thereof, by (b) the number of years
(calculated to the nearest one-twelfth) that will elapse between such date and
the making of such payment; provided, however, that with respect to the Notes
-------- -------
"payment at final maturity" for purposes of this definition shall be deemed to
be made on October 30, 1997.
Section 1.02. Other Definitions.
- - ------------ -----------------
<TABLE>
<CAPTION>
Defined in
Term Section
---- ----------
<S> <C>
"Affiliate Transaction".......................................... 4.14
"Asset Sale Offer"............................................... 3.09
"Bankruptcy Law"................................................. 6.01
"Change of Control".............................................. 4.18
"Change of Control Date"......................................... 4.18
"Custodian"...................................................... 6.01
"Event of Default"............................................... 6.01
"Legal Holiday".................................................. 11.05
</TABLE>
-13-
<PAGE>
<TABLE>
<S> <C>
"Paying Agent"................................................... 2.03
"Permitted Encumbrances"......................................... 4.15
"Refinancing Indebtedness"....................................... 4.08(c)
"Registrar"...................................................... 2.03
"Remaining Net Proceeds"......................................... 4.13
"Replacement Collateral"......................................... 4.13
"Restricted Payments"............................................ 4.07
"U.S. Government Obligations".................................... 8.01
</TABLE>
Section 1.03. Rules of Construction.
- - ------------- ----------------------
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined herein has the meaning
assigned to it in accordance with generally accepted accounting principles in
the United States;
(3) references to "generally accepted accounting principles" shall mean
generally accepted accounting principles in effect in the United States on April
5, 1993;
(4) all financial tests or computations hereunder shall be determined in
accordance with generally accepted accounting principles, giving effect to the
Quasi Reorganization; provided, that if any changes or modifications are made by
--------
the Company after March 30, 1994 to the accounting policies as to which it
determines the value of any of its assets, such changes or modifications in
accounting policies shall not be given effect for purposes of any such financial
tests or computations hereunder;
(5) "or" is not exclusive;
(6) words in the singular include the plural, and in the plural include
the singular; and
(7) provisions apply to successive events and transactions.
-14-
<PAGE>
ARTICLE 2
THE NOTES
Section 2.01. Form and Dating.
- - ------------- ---------------
The Securities and the Trustee's certificate of authentication shall
be substantially in the form of Exhibit A, the terms of which are incorporated
in and made a part of this Indenture. The Additional Securities and the
Trustee's certificate of authentication shall be substantially in the form of
Exhibit B, the terms of which are incorporated in and made part of this
Indenture. The Notes may have notations, legends or endorsements required by
law, stock exchange rule, agreements to which the Company is subject or usage.
Each Note shall be dated the date of its authentication. The Notes shall be
initially issued in denominations of $1,000,000 and integral multiples of
$1,000,000 in excess thereof.
Section 2.02. Execution and Authentication.
- - ------------ ----------------------------
An Officer shall sign the Notes for the Company by manual or facsimile
signature. The Company's seal shall be reproduced on the Notes.
If an Officer whose signature is on a Note no longer holds that office
at the time the Note is authenticated, the Note shall nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature
of the Trustee. The signature of the Trustee shall be conclusive evidence that
the Note has been authenticated under this Indenture. The form of Trustee's
certificate of authentication to be borne by the Notes shall be substantially
as set forth in Exhibit A or Exhibit B, as the case may be.
The Trustee shall, upon a written order of the Company signed by two
Officers, authenticate Securities for original issue up to an aggregate
principal amount stated in paragraph 4 of the Securities. The aggregate
principal amount of Securities outstanding at any time may not exceed the amount
set forth herein except as provided in Section 2.07. The Trustee shall, upon a
written order of the Company signed by two Officers, authenticate Additional
Securities for original issue up to an aggregate principal amount stated in
paragraph 4 of the Additional Securities. The aggregate principal amount of
Additional Securities outstanding at any time may not exceed the amount set
forth herein except as provided in Section 2.07.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate the Notes. Unless limited by the terms of such
appointment, an authenticating agent may authenticate the Notes whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with the Company or an Affiliate.
-15-
<PAGE>
Section 2.03. Registrar and Paying Agent.
- - ------------ --------------------------
The Company shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Notes and of their transfer and exchange.
The Company may appoint one or more co-registrars and one or more additional
paying agents. The term "Paying Agent" includes any additional paying agent.
The Company may change any Paying Agent, Registrar or co-registrar without
notice to any Noteholder. The Company shall notify the Trustee of the name and
address of any Agent not a party to this Indenture. If the Company fails to
appoint or maintain another entity as Registrar or Paying Agent, the Trustee
shall act as such. The Company or any of its subsidiaries may act as Paying
Agent, Registrar or co-registrar.
The Company initially appoints the Trustee as Registrar, Paying Agent
and agent for service of notices and demands in connection with the Notes, and
the Trustee agrees to act in such capacities.
Section 2.04. Paying Agent to Hold Money in Trust.
- - ------------ -----------------------------------
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Noteholders or the Trustee all money held by the Paying Agent for the payment of
principal or interest on the Notes, and will notify the Trustee of any default
by the Company in making any such payment. While any such default continues,
the Trustee may require a Paying Agent to pay all money held by it to the
Trustee. The Company at any time may require a Paying Agent to pay all money
held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent
(if other than the Company) shall have no further liability for the money
delivered to the Trustee. If the Company acts as Paying Agent, it shall
segregate and hold in a separate trust fund for the benefit of the Noteholders
all money held by it as Paying Agent.
Section 2.05. Noteholder 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
Noteholders. If the Trustee is not the Registrar, the Company shall furnish to
the Trustee at least five Business Days before each Interest Payment Date and at
such other times as the Trustee may request in writing a list in such form and
as of such date as the Trustee may reasonably require of the names and addresses
of Noteholders.
Section 2.06. Transfer and Exchange.
- - ------------ ---------------------
When Notes are presented to the Registrar or a co-registrar with a
request to register, transfer or exchange them for an equal principal amount of
Notes of other denominations, the Registrar shall register the transfer or make
the exchange if its requirements for such transactions are met; provided,
--------
however, that (a) any Note presented or surrendered for
- - -------
-16-
<PAGE>
registration of transfer or exchange shall be duly endorsed or accompanied by a
written instruction of transfer in form satisfactory to the Registrar and the
Trustee duly executed by the Holder thereof or by his attorney duly authorized
in writing; (b) the Company, the Trustee and the Registrar shall have received
from the transferee of such Notes evidence, including an opinion of counsel of
such transferee, reasonably satisfactory to them that Section 11.14 hereof has
been complied with and that such transfer is in compliance with applicable
Federal and state securities laws, the rules and regulations promulgated
thereunder and the provisions of the applicable Purchase Agreement; and (c) with
respect to the registration, transfer or exchange of Notes, only Securities
shall be issued for Securities and only Additional Securities shall be issued
for Additional Securities. To permit registrations of transfer and exchanges,
the Company shall issue and the Trustee shall authenticate Notes at the
Registrar's request, subject to such rules as the Trustee may reasonably
require.
The Company shall not be required (i) to issue, register the transfer
of or exchange Notes during a period beginning at the opening of business on a
Business Day 15 days before the day of any selection of Notes for redemption
under Section 3.02 and ending at the close of business on the day of selection,
(ii) to register the transfer of or exchange any Note so selected for redemption
in whole or in part, except the unredeemed portion of any Note being redeemed in
part or (iii) to register the transfer or exchange of a Note between the record
date and the next succeeding Interest Payment Date.
No service charge shall be made to any Noteholder for any registration
of transfer or exchange (except as otherwise expressly permitted herein), but
the Company may require payment of a sum sufficient to cover any transfer tax or
similar governmental charge payable in connection therewith (other than such
transfer tax or similar governmental charge payable upon exchanges pursuant to
Sections 2.10, 3.06 or 9.05 hereof, which shall be paid by the Company).
Prior to due presentment for registration of transfer of any Note, the
Trustee, any Paying Agent and the Company may deem and treat the person in whose
name any Note is registered as the absolute owner of such Note for the purpose
of receiving payment of principal of and interest on such Note and for all other
purposes whatsoever, whether or not such Note is overdue, and neither the
Trustee, any Paying Agent nor the Company shall be affected by notice to the
contrary.
Without the prior consent of the Company, (a) no Holder shall be
entitled to transfer Securities if, as a result thereof, such Holder or the
transferee would hold Securities in principal amount less than $1,000,000 and
(b) no Holder shall be entitled to transfer Additional Securities if, as a
result thereof, such Holder or the transferee would hold Additional Securities
in principal amount less than $1,000,000; provided that the foregoing shall not
--------
apply to (i) transfers in accordance with the provisions of this Indenture
regarding optional and mandatory redemptions and offers in connection with Asset
Sales or a Change of Control and (ii) transfers by a Holder which holds less
than $1,000,000 principal amount of Securities or Additional Securities if all
of the Securities or Additional Securities held by such Holder are transferred
to a single transferee.
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<PAGE>
Section 2.07. Replacement Notes.
- - ------------ -----------------
If any mutilated Note is surrendered to the Trustee, or the Company
and the Trustee receive evidence to their satisfaction of the destruction, loss
or theft of any Note, the Company shall issue and the Trustee, upon the written
order of the Company signed by two Officers, shall authenticate a replacement
Note if the Trustee's requirements for replacements of Notes are met. The
Company shall issue and the Trustee shall authenticate a replacement Security in
the case of the mutilation, destruction, loss or theft of any Security, and a
replacement Additional Security in the case of the mutilation, destruction, loss
or theft of any Additional Security. If required by the Trustee or the Company,
an indemnity bond must be supplied by the Holder that is sufficient in the
judgment of the Trustee and the Company to protect the Company, the Trustee, any
Paying Agent and any authenticating agent from any loss which any of them may
suffer if a Note is replaced. The Company and the Trustee may charge for its
expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company.
Section 2.08. Outstanding Notes.
- - ------------ -----------------
The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those cancelled by it, those delivered to it for
cancellation and those described in this Section as not outstanding.
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section
4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue.
Subject to Section 2.09 hereof, a Note does not cease to be
outstanding because the Company or an Affiliate holds the Note.
Section 2.09. Treasury Notes.
- - ------------ --------------
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company or an Affiliate shall be considered as though not outstanding, except
that for the purposes of determining whether the Trustee shall be protected in
relying on any such direction, waiver or consent, only Notes which the Trustee
knows to be so owned shall be so disregarded.
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<PAGE>
Section 2.10. Temporary Notes.
- - ------------ ---------------
Until definitive Notes are ready for delivery, the Company may prepare
and the Trustee shall authenticate temporary Notes. Temporary Notes shall be
substantially in the form of definitive Notes but may have variations that the
Company considers appropriate for temporary Notes. Without unreasonable delay,
the Company shall prepare and the Trustee, upon receipt of the written order of
the Company signed by two Officers, shall authenticate definitive Notes in
exchange for temporary Notes. Until such exchange, temporary Notes shall be
entitled to the same rights, benefits and privileges as definitive Notes.
Section 2.11. Cancellation.
- - ------------ ------------
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment.
The Trustee shall cancel all Notes surrendered for registration of transfer,
exchange, payment, replacement or cancellation and shall destroy cancelled Notes
(subject to the record retention requirement of the Exchange Act), and
certification of their destruction will be delivered by the Trustee to the
Company, unless the Company directs such cancelled Notes to be returned to it.
The Company may not issue new Notes to replace Notes that it has redeemed or
paid or that have been delivered to the Trustee for cancellation.
Section 2.12. Defaulted Interest.
- - ------------ ------------------
If the Company defaults in a payment of interest on the Notes, it
shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the persons who are
Noteholders on a subsequent special record date, which date shall be at the
earliest practicable date but in all events at least five Business Days prior to
the payment date, in each case at the rate provided in the Notes and in Section
4.01 hereof. The Company shall, with the consent of the Trustee, fix or cause
to be fixed each such special record date and payment date. At least 15 days
before the special record date, the Company (or the Trustee, in the name of and
at the expense of the Company) shall mail to Noteholders a notice that states
the special record date, the related payment date and the amount of such
interest to be paid.
ARTICLE 3
REDEMPTION
Section 3.01. Notices to Trustee.
- - ------------ ------------------
If the Company elects to redeem Securities pursuant to the optional
redemption provision of paragraph 5 of the Securities or Additional Securities
pursuant to the optional redemption provision of paragraph 5 of the Additional
Securities it shall furnish to the Trustee, at least 30 days but not more than
60 days before a redemption date, an Officers'
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Certificate setting forth the Section of this Indenture pursuant to which the
redemption shall occur, the redemption date, the principal amount of Notes to be
redeemed and the redemption price.
If the Company is required to make an offer to redeem Notes pursuant
to the provisions of Section 3.09 hereof, it shall notify the Trustee in
writing, at least 60 days before the related redemption date, of the Section of
this Indenture pursuant to which the redemption shall occur, the redemption
date, the principal amount of Notes to be redeemed and the redemption price and
shall furnish to the Trustee an Officer's Certificate to the effect that a
redemption pursuant to Section 4.13 is required.
If the Company elects to reduce the principal amount of Securities to
be redeemed pursuant to the mandatory redemption provisions of paragraph 6 of
the Securities it shall notify the Trustee of the amount of the reduction and
the basis for it.
If the Registrar is not the Trustee, the Company shall, concurrently
with each notice of redemption, cause the Registrar to deliver to the Trustee a
certificate (upon which the Trustee may rely) setting forth the principal amount
of Securities or Additional Securities, as the case may be, held by any Holder.
Section 3.02. Selection of Notes to Be Redeemed.
- - ------------ ---------------------------------
(a) With respect to a mandatory redemption of Securities pursuant to
Section 3.07 and paragraph 6 of the Securities, if less than all the Securities
are to be redeemed, the Trustee shall select the Securities to be redeemed pro
rata or by lot or by a method that complies with the requirements of any
exchange on which the Securities are listed and that the Trustee considers fair
and appropriate.
(b) With respect to an optional redemption pursuant to Section 3.08,
if less than all the Notes are to be redeemed, the Trustee shall select the
Notes to be redeemed first from the Securities. The Trustee shall select the
Securities to be redeemed pro rata or by lot or by a method that complies with
the requirements of any exchange on which the Securities are listed and that the
Trustee considers fair and appropriate. Only after all of the outstanding
Securities have been so selected for redemption may the Trustee select Notes to
redeemed from the Additional Securities. The Trustee shall select the
Additional Securities to be redeemed pro rata or by lot or by a method that
complies with the requirements of any exchange on which the Additional
Securities are listed and that the Trustee considers fair and appropriate.
(c) With respect to an offer to redeem pursuant to Section 3.09, the
Trustee shall select the Notes to which an offer to redeem shall be extended pro
rata between the then outstanding Securities and the then outstanding Additional
Securities. If such an offer is to be made to less than all the Securities, the
Trustee shall select the Securities to which such offer shall be extended pro
rata or by lot or by a method that complies with the requirements of any
exchange on which the Securities are listed and that the Trustee considers fair
and
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<PAGE>
appropriate. If such an offer is to be made to less than all the Additional
Securities, the Trustee shall select the Additional Securities to which such
offer shall be extended pro rata or by lot or by a method that complies with the
requirements of any exchange on which the Additional Securities are listed and
that the Trustee considers fair and appropriate.
(d) The Trustee shall make the selection not more than 60 days and
not less than 30 days before the redemption date from Securities or the
Additional Securities, as applicable, outstanding and not previously called for
redemption and shall thereafter notify the Company in writing of the Securities
or Additional Securities, or portions thereof, to be redeemed. The Trustee may
select for redemption portions of the principal of the Notes and portions of
them the Trustee selects shall be in amounts of $1,000 or integral multiples of
$1,000. Provisions of this Indenture that apply to Notes called for redemption
also apply to portions of Notes called for redemption. The Trustee shall notify
the Company promptly in writing of the Notes or portions of Notes to be called
for redemption.
Section 3.03. 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 to each Holder whose Notes are to
be redeemed.
The notice shall identify the Notes to be redeemed and shall state:
(1) the redemption date;
(2) the redemption price;
(3) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the redemption
date, upon surrender of such Note, a new Security or Additional Security, as the
case may be, in principal amount equal to the unredeemed portion will be issued;
(4) the name and address of the Paying Agent;
(5) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price;
(6) that, unless the Company defaults in making such redemption
payment, interest on Notes (or portion thereof) called for redemption ceases to
accrue on and after the redemption date; and
(7) the paragraph of the Notes and/or Section of this Indenture
pursuant to which the Notes called for redemption are being redeemed.
At the Company's request, the Trustee shall give the notice of redemption
in the Company's name and at its expense; provided, however, that the Company
-------- -------
shall deliver to
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the Trustee, at least 45 days prior to the redemption date, an Officers'
Certificate requesting that the Trustee give such notice and setting forth the
information to be stated in such notice as provided in the preceding paragraph.
Section 3.04. Effect of Notice of Redemption.
- - ------------ ------------------------------
Once notice of redemption is mailed, Notes called for redemption become due
and payable on the redemption date at the applicable redemption price, including
any accrued interest thereon.
Section 3.05. Deposit of Redemption Price.
- - ------------ ---------------------------
One Business Day prior to the redemption date, the Company shall deposit
with the Trustee or with the Paying Agent money sufficient to pay the redemption
price of, including any accrued interest on, all Notes to be redeemed on that
date. The Trustee or the Paying Agent shall return to the Company any money
deposited with the Trustee or the Paying Agent by the Company in excess of the
amounts necessary to pay the redemption price of, and accrued interest on, all
Notes to be redeemed.
If the Company complies with the preceding paragraph, interest on the Notes
to be redeemed will cease to accrue on the applicable redemption date, whether
or not such Notes are presented for payment. If any Note called for redemption
shall not be so paid upon surrender for redemption because of the failure of the
Company to comply with the preceding paragraph, interest will be paid on the
unpaid principal, from the redemption date until such principal is paid, and to
the extent lawful on any interest not paid on such unpaid principal, in each
case at the rate provided in the Notes and in Section 4.01 hereof.
Section 3.06. Notes Redeemed in Part.
- - ------------ ----------------------
Upon surrender of a Note that is redeemed in part, the Company shall issue
and the Trustee shall authenticate for the Holder at the expense of the Company
a new Security or Additional Security, as the case may be, equal in principal
amount to the unredeemed portion of the Security or Additional Security
surrendered.
Section 3.07. Mandatory Redemption Provision.
- - ------------ ------------------------------
The Company shall redeem the principal amount of the Securities on the
dates and upon the terms and subject to the conditions set forth in paragraph 6
of the Securities. Any redemption pursuant to this Section 3.07 shall be made
pursuant to the provisions of Sections 3.01 through 3.06 hereof.
Section 3.08. Optional Redemption.
- - ------------ -------------------
The Company may redeem all or any portion of the Securities, upon the terms
and at the redemption prices set forth in paragraph 5 of the Securities. The
Company may redeem
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<PAGE>
all or any portion of the Additional Securities, upon the terms and at the
redemption prices set forth in paragraph 5 of the Additional Securities. Any
redemption pursuant to this Section 3.08 shall be made pursuant to the
provisions of Sections 3.01 through 3.06 hereof.
Section 3.09. Offer to Redeem by Application of Net Proceeds.
- - ------------ ----------------------------------------------
Upon the occurrence of any event requiring the Company to offer to redeem
Notes pursuant to the provisions of Section 4.13(c) hereof, the Company shall
deliver to the Trustee a notice of redemption pursuant to Section 3.01 hereof.
Within 20 days thereafter, the Trustee shall select the Notes to be offered to
be redeemed in accordance with Section 3.02 hereof. Within 10 days thereafter,
the Company shall mail or cause the Trustee to mail (in the Company's name and
at its expense and pursuant to an Officer's Certificate as required by Section
3.03 hereof) an offer to redeem (the "Asset Sale Offer") to each Holder of Notes
whose Notes are to be offered to be redeemed. The Asset Sale Offer shall
identify the Notes to which it relates and shall contain the information
required by clauses (1) through (7) of Section 3.03 hereof and shall provide for
a redemption date on the next succeeding Interest Payment Date which is at least
65 days after the giving of the Asset Sale Offer. The redemption price shall be
100% of the principal amount of the Notes, plus accrued interest thereon to the
redemption date.
A Holder receiving an Asset Sale Offer may elect to have redeemed the Notes
to which the Asset Sale Offer relates by providing written notice thereof to the
Trustee and the Company at least 35 days preceding the redemption date. A
Holder may not elect to have redeemed less than all of the Notes to which the
Asset Sale Offer relates. In the event that less than all of the Holders
receiving an Asset Sale Offer elect to have Notes redeemed, the Company or the
Trustee (in the Company's name and at its expense and pursuant to an Officer's
Certificate as required by Section 3.03 hereof) shall, no later than 25 days
preceding the redemption date, mail an additional Asset Sale Offer to the
Holders of the Notes, if any, who have provided written notice of election to
redeem Notes and whose Notes have not been completely redeemed and such
additional Asset Sale Offer shall be made in accordance with the provisions of
Section 3.02 hereof. Such additional Asset Sale Offer shall be deemed accepted
by any Holder unless such Holder provides written notice of non-acceptance to
the Trustee and to the Company on or before 15 days preceding the redemption
date. The Trustee shall thereafter mail a notice of redemption in accordance
with Section 3.03 hereof at least 10 days prior to the redemption date.
Other than as specifically provided in this Section 3.09, any redemption
pursuant to this Section 3.09 shall be made pursuant to the provisions of
Sections 3.01 through 3.06 hereof. In addition, the obligations of the Company
pursuant to the provisions of Sections 3.01 through 3.06 hereof are subject to
this Section 3.09.
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<PAGE>
ARTICLE 4
COVENANTS
Section 4.01. Payment of Notes.
- - ------------ ----------------
The Company shall pay the principal of and interest on the Notes on
the dates and in the manner provided in the Notes. Principal and interest shall
be considered paid on the date due if the Paying Agent, other than the Company
or a Subsidiary of the Company, at least one Business Day before that date holds
money deposited by the Company in available funds and designated for and
sufficient to pay all principal and interest then due. Such Paying Agent shall
return to the Company, no later than five days following the date of payment,
any money (including accrued interest) that exceeds such amount of principal and
interest paid on the Notes.
The Company shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal at the rate equal
to 2% per annum in excess of the interest rate then applicable to the Notes to
the extent lawful; it shall pay interest (including post-petition interest in
any proceeding under Bankruptcy Law) on overdue installments of interest
(without regard to any applicable grace period) at the same rate to the extent
lawful.
Section 4.02. Maintenance of Office or Agency.
- - ------------ -------------------------------
The Company shall maintain in the Borough of Manhattan, The City of
New York, an office or agency (which may be an office of the Trustee, Registrar
or co-registrar) where Notes may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Company in respect of the
Notes and Indenture may be served. 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
Corporate Trust Office of the Trustee.
The Company from time to time also may designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
--------
however, that no such designation or rescission shall in any manner relieve 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.
The Company hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with Section
2.03.
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<PAGE>
Section 4.03. SEC Reports; Financial Statements; Other Reports.
- - ------------ ------------------------------------------------
(a) The Company shall file with the Trustee, within 15 days after it
files them with the SEC, copies of the annual reports and of the information,
documents and other reports (or copies of such portion of any of the foregoing
as the SEC may by rules and regulations prescribe) which the Company 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 such Section 13 or 15(d) of the
Exchange Act, the Company shall file with the Trustee, within 15 days after it
would have been required to file with the SEC, financial statements, including
any notes thereto, and a "Management's Discussion and Analysis of Financial
Condition and Results of Operations," both comparable to that which the Company
would have been required to include in such annual report, information,
documents or other reports if the Company was subject to the requirements of
Section 13 or 15(d) of the Exchange Act. The Company shall timely comply with
its reporting and filing obligations under the applicable federal securities
laws.
(b) If the Company is required to furnish annual or quarterly reports
to its shareholders pursuant to the Exchange Act, the Company shall promptly
cause any annual report furnished to its shareholders generally and any
quarterly or other financial reports furnished by it to its shareholders
generally to be filed with the Trustee and mailed by the Trustee to the holders
of Notes at their addresses appearing in the register of Notes maintained by the
Registrar. If the Company is not required to furnish annual or quarterly reports
to its shareholders pursuant to the Exchange Act, the Company shall cause its
financial statements referred to in clause (a) above, including any notes
thereto (and with respect to annual reports, an auditors' report by a firm of
established national reputation), and a "Management's Discussion and Analysis of
Financial Condition and Results of Operations", to be so mailed to the holders
of Notes within 120 days after the end of each fiscal year of the Company and
within 60 days after the end of each of the Company's first three fiscal
quarters.
(c) The Company shall deliver to the Trustee, promptly after the same
are generally made available to the public, copies of all press releases issued
by the Company concerning material developments in the Company's business or
financial condition.
Section 4.04. Compliance Certificate.
- - ------------ ----------------------
(a) The Company shall deliver to the Trustee, within 120 days after
the end of each fiscal year of the Company, an Officer's Certificate stating
that a review of the activities of the Company 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 the Indenture, and further stating, as to each such officer
signing such certificate, that to the best of his knowledge the Company has
kept, observed, performed and fulfilled each and every covenant contained in
this Indenture and is not in default in the performance or observance of any of
the terms, provisions and conditions hereof (or, if a Default or Event of
Default shall have occurred,
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<PAGE>
describing all such Defaults or Events of Default of which he may have knowledge
and what action the Company is taking or proposes to take with respect thereto).
(b) The Company, so long as any of the Notes are outstanding, shall
deliver to the Trustee, forthwith upon any Officer becoming aware of (i) any
Default or Event of Default or (ii) any event of default under the Loan
Agreement or any mortgage, indenture or instrument described in clause (3) of
Section 6.01 hereof, an Officer's Certificate specifying such Default, Event of
Default or other event of default and what action the Company is taking or
proposes to take with respect thereto.
Section 4.05. Taxes.
- - ------------ -----
The Company shall, and shall cause each of its Subsidiaries to, pay
prior to delinquency all taxes, assessments, and governmental levies, other than
those taxes, assessments or governmental levies the inadvertent non-payment of
which would not have a material adverse effect on the Company, and except as
contested in good faith and by appropriate proceedings.
Section 4.06. Stay, Extension and Usury Laws.
- - ------------ ------------------------------
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, extension or usury law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not, by resort to any such law, hinder, delay or
impede the execution of any power herein granted to the Trustee, but will suffer
and permit the execution of every such power as though no such law had been
enacted.
Section 4.07. Limitation on Restricted Payments.
- - ------------ ---------------------------------
Subject to the other provisions of this Section 4.07 the Company shall
not, and will not permit any of its Subsidiaries to:
(a) declare or pay any dividend or make any distribution on account
of the Company's or any Subsidiary's capital stock or other Equity Interests
(other than dividends or distributions payable in Equity Interests (other than
Disqualified Stock) of the Company or such Subsidiary or dividends or
distributions payable to the Company or a Subsidiary); or
(b) purchase, redeem or otherwise acquire or retire for value any
Equity Interests of the Company, any Subsidiary or other Affiliate of the
Company (other than any such Equity Interests owned by the Company or any
Subsidiary);
-26-
<PAGE>
(c) voluntarily purchase, redeem or otherwise acquire or retire for
value any Indebtedness of the Company that is subordinated in right of payment
to the Notes other than as specifically permitted by the terms of this
Indenture; or
(d) make any Contributions
(all of the foregoing dividends, distributions, purchases, redemptions or other
acquisitions, retirements, prepayments or Contributions set forth in clauses (a)
through (d) above being collectively referred to as "Restricted Payments"), if
at the time of such Restricted Payment:
(i) a Default or Event of Default shall have occurred and be continuing or
shall occur as a consequence thereof, or
(ii) immediately after such Restricted Payment and after giving effect
thereto on a pro forma basis, the Tangible Net Worth of the Company shall be
less than $27,493,000, or
(iii) such Restricted Payment, together with the aggregate of all other
Restricted Payments (valued as set forth below) made after April 5, 1993,
exceeds (x) 50% of the amount of the Consolidated Net Income of the Company for
the period (taken as one accounting period) from the beginning of the first
quarter immediately after the first date on which the Company's Tangible Net
Worth exceeds $27,493,000 to the end of the Company's most recently ended fiscal
quarter at or prior to the time of such Restricted Payment plus (y) 100% of the
aggregate net cash proceeds and the fair market value of marketable securities
received by the Company from the issue or sale, after April 5, 1993, of capital
stock of the Company (other than capital stock issued or sold to a Subsidiary of
the Company, other than Disqualified Stock and other than net proceeds of
capital stock applied as provided in clause (x) below), or any Indebtedness or
other security of the Company convertible into such capital stock of the Company
which has been so converted.
For purposes of determining under clause (iii) above the amount expended
for Restricted Payments, cash distributed shall be valued at the face amount
thereof and property other than cash shall be valued at its fair market value as
determined in good faith by the Board of Directors.
The provisions of this Section 4.07 shall not prohibit:
(v) any Exempted Payments;
(w) the payment of any dividend within 60 days after the date of
declaration thereof, if at said date of declaration such payment would comply
with the provisions hereof; or
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<PAGE>
(x) the retirement of any shares of the Company's or a Subsidiary's
capital stock in exchange for, or out of the net proceeds of the substantially
concurrent sale (other than to a Subsidiary of the Company) of, other shares of
the Company's or Subsidiary's capital stock, other than any Disqualified Stock;
or
(y) the prepayment of any Indebtedness with respect to the Subordinated
Notes if such Indebtedness concurrently is refunded or refinanced in accordance
with the provisions of Section 4.08(c) hereunder; or
(z) the payment of cash dividends on the Senior Preferred Stock if the
Company's Interest Coverage Ratio for the four full fiscal quarters immediately
preceding the date on which such dividend is made, on a pro forma basis as if
such dividend had been paid at the beginning of such four full fiscal quarter
period, is at least 3.0 to 1.
Section 4.08. Limitation on Additional Indebtedness.
- - ------------ -------------------------------------
(a) Subject to the other provisions of this Section, the Company will not,
and will not permit any of its Subsidiaries to, create, incur, issue, assume,
guarantee or otherwise become liable with respect to any Indebtedness (other
than Indebtedness between the Company and a Subsidiary or between Subsidiaries
of the Company) unless:
(i) the Company's Interest Coverage Ratio for its four full fiscal
quarters next preceding the date such additional Indebtedness is created,
incurred, assumed or guaranteed, is at least (a) 2.61 to 1, if such date is on
or prior to October 31, 1994, (b) 2.71 to 1, if such date is between November 1,
1994 and October 31, 1995, (c) 2.76 to 1, if such date is between November 1,
1995 and October 31, 1996 and (d) 2.94 to 1 if such date is on or after November
1, 1996; in each case determined on a pro forma basis (including a pro forma
application of the net proceeds of such Indebtedness) as if the additional
Indebtedness had been created, incurred, assumed or guaranteed at the beginning
of such four-quarter period; provided, if such Indebtedness is expressly
--------
subordinated in right of payment to the Notes, then the Company or its
Subsidiaries may create, incur, issue, assume, guaranty or otherwise become
liable for such additional Indebtedness if the Company's pro forma Interest
Coverage Ratio, determined as set forth above, is at least (a) 2.35 to 1, if
such date is on or prior to October 31, 1994, (b) 2.44 to 1, if such date is
between November 1, 1994 and October 31, 1995, (c) 2.48 to 1, if such date is
between November 1, 1995 and October 31, 1996 and (d) 2.65 to 1 if such date is
on or after November 1, 1996; and
(ii) the Weighted Average Life to Maturity of such additional Indebtedness
is greater than the Weighted Average Life to Maturity of the Notes;
provided, however, that the limitations of this Section 4.08 shall not apply to
- - -------- -------
any Indebtedness or other Obligations of the Company existing as of April 5,
1993 or the incurrence by the Company of:
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<PAGE>
(w) Indebtedness incurred pursuant to the Loan Agreement; provided,
--------
however, that the principal amount of such Indebtedness for the purposes of this
- - -------
clause (w) shall not exceed $85,000,000, which amount will be reduced from time
to time by the amount of all permanent reductions, pursuant to the Loan
Agreement, of the commitments for revolving loans under the Loan Agreement;
(x) any Indebtedness incurred pursuant to the CIT Agreement up to
$10,755,648 in the aggregate principal amount at any time outstanding;
(y) any Indebtedness represented by the Subordinated Notes or the Notes;
or
(z) in the case of each of clauses (w), (x) and (y), the Obligations with
respect to such Indebtedness.
(b) The limitations of this Section 4.08 hereof notwithstanding, the
Company may also create, incur, assume or guarantee (in addition to the
Indebtedness otherwise permitted hereunder) additional Indebtedness pursuant to
the Loan Agreement, the CIT Agreement, or otherwise: (i) in connection with or
arising out of sale and lease-back transactions, capital lease obligations,
purchase money obligations for property acquired in the ordinary course of
business or other similar financing transactions, or in connection with capital
expenditures, but not more than $5,000,000 in the aggregate in any fiscal year
may be borrowed under this clause (i); (ii) in connection with Hedging
Obligations entered into as required by the Loan Agreement; provided that such
--------
Hedging Obligations do not increase the principal amount (or notional principal
amount) of Indebtedness on which the Company is required to make interest
payments; and (iii) additional Indebtedness in an aggregate principal amount not
to exceed the difference between (x) $30,000,000 and (y) the then outstanding
principal amount of the Notes plus the then outstanding principal amount of any
other Indebtedness to the extent that the proceeds thereof were applied to
reduce the outstanding principal amount of the Notes.
(c) The limitations of this Section 4.08 hereof notwithstanding, the
Company may create, incur or assume any Indebtedness (the "Refinancing
Indebtedness") which serves to refund or refinance (including any extensions of
maturity) its Indebtedness under the Notes or any other Indebtedness; provided
--------
that (i) such Refinancing Indebtedness bears an interest rate per annum that is
equal to or less than the interest rate per annum then payable under such
Indebtedness being refunded or refinanced (calculated in accordance with any
formula set forth in the documents evidencing any such Indebtedness); (ii) such
Refinancing Indebtedness has a Weighted Average Life to Maturity at the time
such Refinancing Indebtedness is incurred which is not less than the Weighted
Average Life to Maturity of such Indebtedness being refunded or refinanced;
(iii) if the Indebtedness being refinanced or refunded is subordinated to the
Notes, such Refinancing Indebtedness is subordinated to the Notes to at least
the same extent as the Indebtedness being refinanced or refunded; and (iv) the
aggregate principal amount of such Refinancing Indebtedness is not in excess of
the aggregate principal amount of the Indebtedness being refinanced or refunded,
plus the reasonable expenses and any premiums or penalties incurred or required
to be paid by the Company in connection
-29-
<PAGE>
with the refinancing or refunding; provided, further, that clauses (i), (ii),
-------- -------
(iii) and (iv) above shall not apply to any refunding or refinancing of any
Indebtedness outstanding pursuant to the Loan Agreement (provided that the
principal amount at any one time outstanding under the Loan Agreement shall not
exceed the limitations in clause (w) above plus any additional amounts permitted
under clause (b)(i) above) or the CIT Agreement (provided that the outstanding
principal amount at any time outstanding under the CIT Agreement shall not
exceed $10,755,648 plus any additional amounts permitted under clause (b)(i)
above).
Section 4.09. Maintenance of Adjusted Tangible Net Worth.
- - ------------ ------------------------------------------
The Company shall not permit its Adjusted Tangible Net Worth, calculated as
of the last day of the Company's fiscal quarters set forth below, to be less
than the amount set forth below next to such respective fiscal quarter:
<TABLE>
<CAPTION>
Company's Fiscal Adjusted Tangible
Quarter Net Worth
- - ---------------- -----------------
<S> <C>
1st Quarter 1994 $19,240,000
2nd Quarter 1994 22,710,000
3rd Quarter 1994 25,235,000
4th Quarter 1994 25,465,000
1st Quarter 1995 24,940,000
2nd Quarter 1995 28,725,000
3rd Quarter 1995 31,570,000
4th Quarter 1995 32,295,000
1st Quarter 1996 31,810,000
2nd Quarter 1996 35,785,000
3rd Quarter 1996 38,670,000
4th Quarter 1996 39,625,000
1st Quarter 1997 38,980,000
2nd Quarter 1997 43,360,000
3rd Quarter 1997 46,610,000
4th Quarter 1997 47,965,000
</TABLE>
Section 4.10. Maintenance of the Company's EBITDA.
- - ------------ -----------------------------------
The Company shall not permit its EBITDA for the period of four consecutive
fiscal quarters ending on the last day of the Company's fiscal quarters set
forth below to be less than the amount set forth below next to such respective
fiscal quarter:
-30-
<PAGE>
<TABLE>
<CAPTION>
Company's Fiscal
Quarter EBITDA
- - ---------------- ------
<S> <C>
1st Quarter 1994 $28,710,000
2nd Quarter 1994 29,385,000
3rd Quarter 1994 30,105,000
4th Quarter 1994 30,600,000
1st Quarter 1995 31,185,000
2nd Quarter 1995 31,860,000
3rd Quarter 1995 32,490,000
4th Quarter 1995 33,435,000
1st Quarter 1996 33,930,000
2nd Quarter 1996 34,515,000
3rd Quarter 1996 35,010,000
4th Quarter 1996 35,775,000
1st Quarter 1997 36,270,000
2nd Quarter 1997 36,900,000
3rd Quarter 1997 37,575,000
4th Quarter 1997 38,295,000
</TABLE>
Section 4.11. Maintenance of Fixed Charge Coverage Ratio.
- - ------------ ------------------------------------------
The Company will not permit its Fixed Charge Coverage Ratio for the period
of four consecutive fiscal quarters ending on the last day of the Company's
fiscal quarters set forth below to be less than the ratio set forth below next
to such respective fiscal quarter:
<TABLE>
<CAPTION>
Company's Fiscal Fixed Charge
Quarter Coverage Ratio
- - ---------------- --------------
<S> <C>
1st Quarter 1994 0.72
2nd Quarter 1994 0.72
3rd Quarter 1994 0.70
4th Quarter 1994 0.69
1st Quarter 1995 0.75
2nd Quarter 1995 0.76
3rd Quarter 1995 0.73
4th Quarter 1995 0.70
1st Quarter 1996 0.73
2nd Quarter 1996 0.68
3rd Quarter 1996 0.74
4th Quarter 1996 0.75
1st Quarter 1997 0.76
2nd Quarter 1997 0.77
3rd Quarter 1997 0.77
4th Quarter 1997 0.80
</TABLE>
-31-
<PAGE>
Section 4.12. Maintenance of Interest Coverage Ratio.
- - ------------ --------------------------------------
The Company will not permit its Interest Coverage Ratio for the period of
four consecutive fiscal quarters ending on the last day of the Company's fiscal
quarters set forth below to be less than the ratio set forth below next to such
respective fiscal quarter:
<TABLE>
<CAPTION>
Company's Fiscal Interest Coverage
Quarter Ratio
- - ---------------- -----------------
<S> <C>
1st Quarter 1994 1.73
2nd Quarter 1994 1.75
3rd Quarter 1994 1.76
4th Quarter 1994 1.77
1st Quarter 1995 1.77
2nd Quarter 1995 1.79
3rd Quarter 1995 1.80
4th Quarter 1995 1.84
1st Quarter 1996 1.84
2nd Quarter 1996 1.85
3rd Quarter 1996 1.85
4th Quarter 1996 1.86
1st Quarter 1997 1.89
2nd Quarter 1997 1.89
3rd Quarter 1997 1.89
4th Quarter 1997 1.89
</TABLE>
Section 4.13. Sale of Assets; Application of Net Proceeds.
- - ------------ -------------------------------------------
(a) Neither the Company nor any of its Subsidiaries shall consummate a
Voluntary Asset Sale of any asset unless (i) if the fair market value of the
assets subject to such Voluntary Asset Sale and any related series of Asset
Sales is in excess of $10,000, at least 80% of the consideration therefor
received by the Company or such Subsidiary is in the form of cash; provided,
--------
however, that the amount of (A) any liabilities (that would be reflected on a
- - -------
balance sheet of the Company or such Subsidiary or in the notes thereto prepared
in accordance with generally accepted accounting principles) of the Company or
any Subsidiary that are assumed by the transferee of any such assets and (B) any
notes or other obligations received by the Company or any Subsidiary from such
transferee which are immediately converted by the Company or such Subsidiary
into cash shall be deemed to be cash for purposes of this Section 4.13(a);
provided further, however, that the 80% limitation referred to above shall not
- - -------- ------- -------
apply to any Asset Sale in which the cash portion of the consideration received
therefor is equal to or greater than what the net after-tax proceeds would have
been had such Asset Sale complied with the aforementioned 80% limitation; and
(ii) except as may otherwise be provided in the Intercreditor Agreement, any
non-cash Proceeds (as defined in the Security Documents) of such Asset Sale
received by the Company or its Subsidiaries in consideration of such Asset Sale
(net of amounts relating to such sale referred to in clauses
-32-
<PAGE>
(a) through (c) of the definition of Net Proceeds) are subjected to a perfected
Lien in favor of the Trustee, for the benefit of the Holders, having at least
the same priority as the Lien on the assets which were the subject of such Asset
Sale. Notwithstanding the foregoing, the provisions of the preceding sentence
shall not apply to any Asset Sale the Net Proceeds of which are not required to
be deposited in the Proceeds Account in accordance with the last sentence of
Section 4.13(b) below. Concurrently with the consummation of any Asset Sale
and, if required by this Section 4.13,(x) the satisfaction of the conditions set
forth in the first sentence of this Section 4.13(a) and (y) the deposit of the
Net Proceeds thereof in the Proceeds Account to the extent required by Section
4.13(b) below, the Trustee shall release its Lien on the assets subject to such
Asset Sale (if such asset is otherwise subject to such Lien).
(b) Upon the receipt by the Company or a Subsidiary of the Company of the
Net Proceeds of any Asset Sale, the Company shall, and shall cause such
Subsidiary to, deposit in the Proceeds Account (i) to the extent that the assets
subject to such Asset Sale constitute Noteholders' Primary Collateral (as
defined in the Intercreditor Agreement), 100% of the Net Proceeds of the Asset
Sale relating to such assets, (ii) to the extent that the assets subject to such
Asset Sale constitute Lenders' Primary Collateral (as defined in the
Intercreditor Agreement), the Net Proceeds of the Asset Sale relating to such
assets remaining after application of the proceeds of such sale to Indebtedness
outstanding pursuant to the Loan Agreement in full and (iii) with respect to any
other assets, a portion of the Net Proceeds of the Asset Sale relating to such
assets equal to the product of such Net Proceeds and a fraction, the numerator
of which is the principal amount of the Notes then outstanding (determined as of
the close of business on the day immediately preceding the closing date of the
Asset Sale) and the denominator of which is the principal amount of the Notes
then outstanding plus the maximum amount of the line of credit established for
the Company and its Subsidiaries under the Loan Agreement (as limited by Section
4.08(a)(w)), each determined as of the close of business on the day immediately
preceding the closing date of the Asset Sale; provided that if, after giving
--------
effect to such application of Net Proceeds under this clause (iii), the
outstanding balance of the Indebtedness under the Loan Agreement is reduced to
zero, then any remaining Net Proceeds otherwise allocable to such Indebtedness
shall be applied to the Notes. Notwithstanding the foregoing, the Company and
its Subsidiaries shall be entitled to retain the Net Proceeds of any Asset Sale
(and need not either deposit such Net Proceeds in the Proceeds Account or redeem
or make an offer to redeem Notes therewith) if the Net Proceeds of such Asset
Sale and any related series of Asset Sales shall not exceed $100,000; provided
--------
that the aggregate amount of all Net Proceeds retained by the Company and its
Subsidiaries pursuant to this sentence shall not exceed $1,000,000.
(c) To the extent that any Net Proceeds shall be deposited in the Proceeds
Account and shall remain in such account for at least one year (taking into
account withdrawals permitted pursuant to Section 4.13(e) below) (the amount so
remaining after one year being hereinafter referred to as the "Remaining Net
Proceeds"), an offer to redeem Notes shall be made pursuant to this Section 4.13
and Section 3.09 above; provided that the Company may make such offer to redeem
--------
Notes, at its sole option, within such one-year period. Any such
-33-
<PAGE>
offer to redeem shall be for an amount of Notes having an aggregate redemption
price equal to the amount of such Remaining Net Proceeds (or, if such offer to
redeem is made at the Company's option pursuant to the proviso to the preceding
sentence, such portion of such Remaining Net Proceeds as the Company shall
determine). The redemption price for any such offer shall be funded solely out
of the relevant Remaining Net Proceeds held in the Proceeds Account, and the
Trustee shall apply such proceeds in accordance with the provisions of this
Section 4.13(c). Notwithstanding the foregoing, the Company shall not be
required to make any such offer to redeem unless and until the aggregate
Remaining Net Proceeds required to be applied to such redemption as set forth in
the first sentence of this Section 4.13(c) is at least $1,000,000.
(d) An offer to redeem the Notes pursuant to this Section 4.13 shall be
made pursuant to the provisions of Section 3.09 hereof. Simultaneously with the
notification of such offer of redemption to the Trustee as required by Sections
3.01, 3.03 and 3.09 hereof, the Company shall provide the Trustee with an
Officer's Certificate setting forth the information required to be included
therein by Section 3.01 hereof and, in addition, setting forth the calculations
used in determining the amount of Remaining Net Proceeds to be applied to the
redemption of Notes.
(e) Notwithstanding the foregoing, at any time after any Net Proceeds
shall be deposited into the Proceeds Account, the Company shall be entitled to
instruct the Trustee to deliver to it out of the Proceeds Account, and the
Trustee shall (promptly following receipt by the Trustee of such instructions in
writing) deliver to the Company out of the Proceeds Account, all or any portion
of such Net Proceeds; provided that such Net Proceeds are to be concurrently
--------
applied by the Company or any of its Subsidiaries in any one or more of the
following manners:
(i) (A) to reinvest in, or purchase or otherwise acquire, any asset,
property or business in (or that will be used in) the same or similar line of
business as the Company and its Subsidiaries or (B) with respect to any Net
Proceeds consisting of the proceeds of insurance paid on account of the loss of
or damage to any property, or compensation or other proceeds for any property
taken by condemnation, eminent domain or similar proceedings, as provided in
clause (A) above or to reimburse the Company or any of its Subsidiaries for
expenditures made, or to pay costs incurred, to repair, rebuild, replace or
restore the property subject to such loss, damage or taking; provided that to
--------
the extent the assets that were the subject of the Asset Sale giving rise to
such Net Proceeds were Collateral, the assets or property referred to in clauses
(A) and (B) above acquired with such proceeds (the "Replacement Collateral")
shall be subject to a Lien in favor of the Trustee having at least as favorable
a priority as the assets that were the subject of such Asset Sale and,
concurrently with the acquisition of such Replacement Collateral, the Company
shall take such steps as are necessary to perfect such Lien; or
-34-
<PAGE>
(ii) to redeem all or a portion of the Securities or Additional
Securities, on a pro rata basis, pursuant to this Section 4.13, Section 4.18
hereof or paragraph 5 of the Notes.
(f) Notwithstanding any provision of this Section 4.13 to the contrary,
neither the Company nor any of its Subsidiaries shall consummate or cause the
consummation of, a Voluntary Asset Sale if, as a result thereof, the Company
would be required pursuant to the indenture governing the Subordinated Notes to
apply any portion of the Net Proceeds of such Asset Sale to an offer to redeem
the Subordinated Notes.
(g) The Company will not sell all or substantially all of the assets of
any of the manufacturing plants of the Company other than the Tifton, Georgia
plant.
(h) If the Company or any of its Subsidiaries shall receive any non-cash
Proceeds (as defined in the Security Documents) of an Asset Sale other than a
Voluntary Asset Sale, such non-cash Proceeds (net of amounts relating to such
sale referred to in clauses (a) through (c) of the definition of Net Proceeds)
shall be subjected to a perfected Lien in favor of the Trustee, for the benefit
of the Holders, having the same priority as the Lien on the assets which were
the subject of such Asset Sale (except as may otherwise be provided in the
Intercreditor Agreement).
Section 4.14. Limitation on Transactions with Affiliates.
- - ------------ ------------------------------------------
Neither the Company nor any Subsidiary shall sell, lease, transfer or
otherwise dispose of any of its properties or assets to or purchase any property
or assets from, or enter into any contract, agreement, understanding, loan,
advance or guarantee with, or for the benefit of, an Affiliate (an "Affiliate
Transaction"), unless (i) the terms of such Affiliate Transaction are no less
favorable to the Company or the Subsidiary, as the case may be, than those that
would have been obtained in a comparable transaction by the Company or the
Subsidiary, as the case may be, with an unrelated person and (ii) if the
Affiliate Transaction involves or has a value of greater than $500,000, such
Affiliate Transaction has been approved by a majority of the Board of Directors
who are unaffiliated with such Affiliate; provided, however, that (x) any
-------- -------
transaction between the Company and any wholly-owned Subsidiary or between
wholly-owned Subsidiaries of the Company, and (y) any Restricted Payment
permitted pursuant to Section 4.07 hereof, shall not be deemed to be Affiliate
Transactions.
Section 4.15. Liens.
- - ------------ -----
The Company shall not, create, incur, assume or permit to exist any Lien on
or with respect to any of its property in each case to secure Indebtedness
except the following (collectively, "Permitted Encumbrances"):
(a) Subject to terms of the Intercreditor Agreement, Liens created by the
Loan Agreement;
-35-
<PAGE>
(b) Liens created or permitted by this Indenture, the Notes and the
Security Documents;
(c) Liens existing on April 5, 1993;
(d) (i) Liens incurred or pledges and deposits in connection with worker's
compensation, unemployment insurance and other social security benefits, or
securing performance bids, tenders, leases, contracts (other than for the
repayment of borrowed money), statutory obligations or progress payments
and other obligations of like nature, incurred in the ordinary course of
business and (ii) surety and appeal bonds and other obligations of like
nature, incurred in the ordinary course of business;
(e) Liens securing Indebtedness permitted under subsection (b) of Section
4.08 to the extent the Lien covers New Equipment (as defined in the
Security Agreement), is granted in favor of a secured party other than the
Trustee at the time of, or within one year after, the Company's purchase of
the New Equipment, and the Indebtedness is incurred to purchase (or
refinance the Indebtedness incurred to purchase) the New Equipment;
(f) Any interest or title of a lessor, or secured by a lessor's interest,
under any lease;
(g) Liens granted to the Trustee pursuant to Sections 6.09 and 7.07 hereof;
(h) Liens for taxes or assessments and similar charges either (x) not
delinquent or (y) contested in good faith by appropriate proceedings and as
to which the Company shall have set aside on its books adequate reserves;
(i) Liens imposed by law, such as mechanics', carriers', warehousemen's,
materialmen's and vendors' Liens, incurred in good faith in the ordinary
course of business;
(j) zoning restrictions, easements, licenses, covenants, reservations,
restrictions on the use of real property or minor irregularities of title
incident thereto which do not in the aggregate materially detract from the
value of the property or assets of the Company, or impair the use of such
property in the operation of the Company's business;
(k) Liens on raw materials or on manufactured products as security for any
drafts or bills of exchange drawn in connection with the importation of
such raw materials or manufactured products in the ordinary course of
business;
(l) Liens arising from legal proceedings, so long as such proceedings are
being contested in good faith by appropriate proceeding diligently
conducted and so
-36-
<PAGE>
long as execution thereon is stayed on all judgments resulting from any
such proceedings; and
(m) Liens granted in connection with the refinancing of any Indebtedness
secured by Liens ("Prior Liens") permitted to be incurred or to exist
pursuant to this clause or any of the foregoing clauses;
provided, however, that any such Permitted Encumbrance constituting a Restricted
- - -------- -------
Encumbrance shall not be created, incurred, assumed or permitted to exist on or
with respect to any Collateral unless (i) such Lien is not being enforced
against the Collateral in a legal proceeding or by legal process that has as its
goal the foreclosure of the Lien, (ii) such Lien is on Lenders' Primary
Collateral (as defined in the Intercreditor Agreement) and is not prohibited by
the Loan Agreement or (iii) the Company is contesting in good faith, by proper
legal actions or proceedings, the validity, amount or application of the Lien;
provided, further, that the Company may contest such Lien only so long as (A)
- - -------- -------
adequate reserves with respect to the contested Lien are maintained on the
Company's books in accordance with generally accepted accounting principles and
(B) such contest operates to suspend enforcement of, payment of or compliance
with the contested Lien, such contest is maintained and prosecuted in good faith
to completion and, upon completion of such contest, such Lien is not enforced in
a matter resulting in the Company's loss of the Collateral covered by such Lien.
Section 4.16. Corporate Existence.
- - ------------ -------------------
Subject to Section 4.17 and Article 5 hereof, the Company will do or cause
to be done all things necessary to preserve and keep in full force and effect
its corporate existence and the corporate, partnership or other existence of
each Significant Subsidiary in accordance with the respective organizational
documents of each Significant Subsidiary and the rights (charter and statutory),
licenses and franchises of the Company and its Significant Subsidiaries;
provided, however, that the Company shall not be required to preserve any such
- - -------- -------
right, license or franchise, or the corporate, partnership or other existence of
any Subsidiary, if the Board of Directors shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Company and
its Subsidiaries taken as a whole and that the loss thereof is not adverse in
any material respect to the Holders.
Section 4.17. Liquidation.
- - ------------ -----------
The Board of Directors or the shareholders of the Company shall not adopt a
plan of liquidation which provides for, contemplates or the effectuation of
which is preceded by (a) the sale, lease, conveyance or other disposition of all
or substantially all of the assets of the Company otherwise than substantially
as an entirety (Article 5 of this Indenture being the Article hereof which
governs any such sale, lease, conveyance or other disposition substantially as
an entirety) and (b) the distribution of all or substantially all of the
proceeds of such sale, lease, conveyance or other disposition and of the
remaining assets of the Company to the holders of capital stock of the Company,
unless the Company, prior to
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<PAGE>
making any liquidating distribution pursuant to such plan, makes provision for
the satisfaction of the Company's obligations hereunder and under the Notes as
to the payment of principal and interest. The Company shall be deemed to make
provision for such payments only if (i) the Company delivers in trust to the
Trustee or Paying Agent (other than the Company) money or U.S. Government
Obligations maturing as to principal and interest in such amounts and at such
times as are sufficient without consideration of any reinvestment of such
interest to pay, when due, the principal of and interest on the Notes and also
delivers to the Trustee an Opinion of Counsel to the effect that holders of the
Notes will not recognize income, gain or loss for federal income tax purposes as
a result of such action and will be subject to federal income tax on the same
amount and in the same manner and at the same times as would have been the case
if such action has not been taken or (ii) there is an express assumption and
observance of all covenants and conditions to be performed by the Company
hereunder by the execution and delivery of a supplemental indenture in form
satisfactory to the Trustee by a person that acquires or will acquire (otherwise
than pursuant to a lease) a portion of the assets of the Company, and which
person will have Tangible Net Worth (immediately after the acquisition) and
Consolidated Net Income (for such person's four full fiscal quarters immediately
preceding the acquisition) not less than the Tangible Net Worth of the Company
immediately preceding the acquisition and the Consolidated Net Income of the
Company (for its four full fiscal quarters immediately preceding such
acquisition), respectively, and which is organized and existing under the laws
of the United States, any State thereof or the District of Columbia; provided,
--------
however, that the Company shall not make any liquidating distribution until
- - -------
after an Officer of the Company shall have certified to the Trustee with an
Officer's Certificate at least five days prior to the making of any liquidating
distribution that it has complied with the provisions of this Section 4.17 and
that no Default or Event of Default then exists or would occur as a result of
any such liquidating distribution.
Section 4.18. Change of Control.
- - ------------ -----------------
If, at any time (the "Change of Control Date"), (i) all or substantially
all of the Company's assets are sold as an entirety to any person or related
group of persons other than an Affiliate or Affiliates of the Company or a
Permitted Transferee (as defined herein), (ii) the Company is merged with or
into another corporation or another corporation is merged with or into the
Company with the effect that immediately after such transaction the shareholders
of the Company immediately prior to such transaction hold less than a majority
in interest of the total voting power entitled to vote in the election of
directors, managers or trustees of the person surviving such transaction, (iii)
any person or related group of persons other than a Permitted Transferee
acquires a majority in interest of the voting power or voting stock of the
Company (other than as a result of a bona fide pledge of the common stock of the
Company) or (iv) any person other than Odyssey acquires, by way of merger,
consolidation or other business combination, greater than 50% of the total
voting power entitled to vote in the election of directors, managers or trustees
of the Company or such other person surviving the transaction (each, a "Change
of Control"), then the Company shall notify the Holders in writing of such
occurrence and shall make an offer to purchase (the "Change of Control Offer")
on the second Interest Payment Date following the Change of
-38-
<PAGE>
Control Date (the "Change of Control Payment Date") all Notes then outstanding
at a purchase price equal to the optional redemption price thereof then in
effect as set forth in paragraph 5 of the Notes, including accrued and unpaid
interest to the Change of Control Payment Date, if any; provided, however, that
-------- -------
the Company shall not be obligated to purchase any Notes unless holders of
greater than 50% of the principal amount of the Notes outstanding at the Change
of Control Date shall have tendered such Notes to the Company for repurchase.
Notice of a Change of Control Offer shall be mailed by the Company not less
than 30 days nor more than 60 days before the last day of such following fiscal
quarter of the Company to the Holders at their last registered addresses with a
copy to the Trustee and the Paying Agent. The Change of Control Offer shall
remain open from the time of mailing until the fifth Business Day preceding the
Change of Control Payment Date. 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 this Section
4.18 and that all Notes tendered will be accepted for payment;
(2) the purchase price and the Change of Control Payment Date;
(3) that any Notes not tendered will continue to be outstanding and accrue
interest;
(4) that any Notes 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 Notes purchased pursuant to the Change of
Control Offer shall be required to surrender their Notes, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Notes
completed, to the Company prior to the close of business on the Change of
Control Payment Date;
(6) that Holders will be entitled to withdraw their election if the Company
receives, not later than the close of business on the Business Day three
Business Days preceding the Change of Control Payment Date, a telegram,
telex, facsimile transmission or letter setting forth the name of the
Holder, the principal amount of the Notes the Holder delivered for purchase
and a statement that such Holder is withdrawing his election to have such
Note purchased;
(7) that Holders whose Notes are purchased only in part will be issued
Notes representing the unpurchased portion of the Notes surrendered;
(8) the instructions that Holders must follow in order to tender their
Notes; and
-39-
<PAGE>
(9) the circumstances and relevant facts regarding such Change of Control
(including but not limited to information with respect to pro forma
historical and projected financial information after giving effect to such
Change of Control, information regarding the persons acquiring control and
such person's business plans going forward).
On the Change of Control Payment Date, the Company shall, unless holders of
50% or greater of the principal amount of the Notes outstanding at the Change of
Control Date have not tendered such Notes to the Company for repurchase, (i)
accept for payment Notes or portions thereof tendered pursuant to the Change of
Control Offer, (ii) deposit with the Paying Agent money sufficient to pay the
purchase price of all Notes or portions thereof so tendered and (iii) deliver to
the Trustee Notes so accepted together with an Officer's Certificate stating the
Notes or portions thereof tendered to the Company. The Paying Agent shall
promptly mail to the Holders of Notes so accepted payment in an amount equal to
the purchase price, and the Trustee shall promptly authenticate and mail to such
Holders a new Security or Additional Security, as the case may be, equal in
principal amount to any unpurchased portion of the Security or Additional
Security surrendered.
For the purposes of this Section 4.18 "Permitted Transferees" shall mean
(A) Odyssey, and corporations, partnerships or other entities controlled by,
controlling or under common control with Odyssey (collectively, the "Odyssey
Affiliates") (the term "control" being the same as that term is defined under
the Securities Act), (B) any managing director, general partner, director,
limited partner, officer or employee of Odyssey (collectively, "Odyssey
Associates"), (C) the heirs, executors, administrators, testamentary trustees,
legatees or beneficiaries of any Odyssey Associate, (D) a trust, the
beneficiaries of which, or a corporation or partnership, the stockholders or
general or limited partners of which, include only an Odyssey Associate, his
spouse or his lineal descendants, to whom Odyssey, an Odyssey Affiliate or an
Odyssey Associate has transferred securities of the Company and (E) any person
or entity, as pledgee, from whom any Odyssey Associate has borrowed funds to
make its investment in securities of the Company (or any refinancing thereof).
Section 4.19. Maintenance of Properties.
- - ------------ -------------------------
The Company will cause all properties used or useful in the conduct of its
business or the businesses of any Subsidiary to be maintained and kept in good
condition, repair and working order and supplied with all necessary equipment
and will cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of the Company may
be necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; provided, however, that
-------- -------
nothing in this Section 4.19 shall prevent the Company or any Subsidiary from
discontinuing the operation or maintenance of any such properties if such
discontinuance is, in the judgment of the Company, desirable in the conduct of
its business or the business of any Subsidiary and not disadvantageous in any
material respect to the Holders.
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Section 4.20. Additional Real Property Collateral.
- - ------------ -----------------------------------
The Company shall notify the Trustee in writing promptly upon its
acquisition or leasing of any Real Property, and, at the Trustee's request,
shall promptly thereafter execute and deliver to the Trustee, for the benefit of
the Noteholders, a Mortgage with respect to such Real Property, together with
such title insurance policies (mortgagee's form), certified surveys, appraisals
and local counsel opinions with respect thereto and such other agreements,
documents and instruments which the Trustee deems reasonably necessary or
desirable, the same to be in form and substance substantially the same as the
Mortgages (with appropriate state law variations) and to be subject only to (a)
Permitted Encumbrances and (b) such other Liens as the Trustee may reasonably
approve.
Section 4.21. Maintenance of Insurance.
- - ------------ ------------------------
The Company shall (a) maintain liability, casualty and other insurance
(subject to customary deductibles and retentions) with responsible insurance
companies in such amounts and against such risks as is carried by responsible
companies engaged in similar businesses and owning similar assets in the general
areas in which the Company operates; (b) provide to the Trustee an endorsement
to such insurance providing that the insurance companies issuing such policies
will give the Trustee at least thirty (30) days prior written notice of
cancellation, non-renewal or any other material change; and (c) maintain the
Trustee for the benefit of the Noteholders as co-loss payee, as its interest
appears, with respect to insurance covering the Collateral.
Section 4.22. Limitation on Dividend and Other Payment Restrictions Affecting
- - ------------ ---------------------------------------------------------------
Subsidiaries.
------------
The Company will not permit any of its Subsidiaries to create or otherwise
cause or suffer to exist or become effective any encumbrance or restriction on
the ability of any Subsidiary to (a) pay dividends or make any other
distributions on its capital stock or any other interest or participation in, or
measured by, its profits, owned by the Company or any Subsidiary of the Company,
or pay any Indebtedness owed to, the Company or a Subsidiary of the Company, (b)
make loans or advances to the Company or a Subsidiary of the Company or (c)
transfer any of its properties or assets to the Company, except for such
encumbrances or restrictions existing under or by reason of (i) applicable law,
(ii) this Indenture, (iii) the Loan Agreement, (iv) the CIT Agreement, (v) the
indenture with respect to the Subordinated Notes, (vi) customary provisions
restricting subletting or assignment of any lease governing a leasehold interest
of the Company or a Subsidiary of the Company, (vii) any instrument governing
Indebtedness of a person acquired by the Company or any Subsidiary of the
Company at the time of such acquisition, which encumbrance or restriction is not
applicable to any person, or the properties or assets of any person, other than
the person, or the property or assets of the person, so acquired, (viii) with
respect to clause (c) above, purchase money obligations for property acquired in
the ordinary course of business.
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ARTICLE 5
SUCCESSORS
Section 5.01. When Company May Merge, etc.
- - ------------ ---------------------------
The Company shall not consolidate or merge with or into, or sell,
lease, convey or otherwise dispose of all or substantially all of its assets, in
one or more related transactions, to any person unless:
(1) the person formed by or surviving any such consolidation or merger (if
other than the Company), or to which such sale, lease conveyance or other
disposition shall have been made, is a corporation organized and existing under
the laws of the United States, any state thereof or the District of Columbia;
(2) the corporation formed by or surviving any such consolidation or
merger (if other than the Company), or to which such sale, lease, conveyance or
other disposition shall have been made, assumes by supplemental indenture in a
form reasonably satisfactory to the Trustee all the obligations of the Company
under the Notes and this Indenture;
(3) immediately after the transaction no Default or Event of Default
exists; and
(4) the Company or any corporation formed by or surviving any such
consolidation or merger, or to which such sale, lease conveyance or other
disposition shall have been made, (a) shall have Tangible Net Worth (immediately
after the transaction but prior to any purchase accounting adjustments resulting
from the transaction) equal to or greater than the Tangible Net Worth of the
Company immediately preceding the transaction and (b) shall be permitted
immediately after the transaction to incur at least $1.00 of additional
Indebtedness pursuant to the Interest Coverage Ratio test set forth in Section
4.08(a)(i) hereof; provided, however, that for purposes of this provision, the
-------- -------
Interest Coverage Ratio provisions of Section 4.08(a)(i) hereof shall be
calculated after giving pro forma effect to such consolidation or merger, or
such sale, lease, conveyance or other disposition or assignment as if the same
had occurred at the beginning of the applicable four quarter period.
The Company shall deliver to the Trustee prior to the consummation of the
proposed transaction an Officer's Certificate to the foregoing effect and an
Opinion of Counsel stating that the proposed transaction and such supplemental
indenture comply with this Indenture. The Trustee shall be entitled to
conclusively rely upon such Officer's Certificate and Opinion of Counsel.
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Section 5.02. Successor Corporation Substituted.
- - ------------ ---------------------------------
Upon any consolidation or merger, or any sale, lease, conveyance or other
disposition of all or substantially all of the assets of the Company in
accordance with Section 5.01, the successor corporation formed by such
consolidation or into or with which the Company is merged or to which such sale,
lease, conveyance or other disposition 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 successor person has been named
as the Company herein; provided, however, that the predecessor Company in the
-------- -------
case of a sale, lease, conveyance or other disposition shall not be released
from the obligation to pay the principal of and interest on the Notes.
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default.
- - ------------ -----------------
An "Event of Default" occurs if:
----------------
(1) the Company defaults in the payment of (a) interest on any of the
Notes when the same becomes due and payable or (b) the principal of any of the
Notes when the same becomes due and payable at maturity, upon redemption or
otherwise;
(2) the Company fails to observe or perform any covenant, condition or
agreement on the part of the Company to be observed or performed pursuant to
provisions of the Notes, this Indenture, the Purchase Agreement, the
Environmental Indemnity Agreement, or the Security Documents; or any
representation or warranty contained in such documents is untrue in any material
respect and, in either case, such Default continues for the period and after the
notice of the Default is provided as specified below;
(3) the Company or a Subsidiary defaults under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company or any Subsidiary
(or the payment of which is guaranteed by the Company or a Subsidiary), other
than the Notes and the Loan Agreement, whether such Indebtedness or guarantee
now exists or shall be created hereafter, if such default consists of a failure
to pay principal or interest after the applicable grace period thereon or if as
a result of such default, the maturity of such Indebtedness has been accelerated
prior to its expressed maturity; provided that the principal amount of such
--------
Indebtedness, together with the principal amount of any other such Indebtedness
in default for failure to pay principal or interest thereon, or the maturity of
which has been so accelerated, aggregates $2,500,000 or more;
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(4) the occurrence and continuance of an event of default under the
Loan Agreement (after any applicable grace period or waiver); provided, that a
--------
Default or Event of Default hereunder shall not be deemed to occur until 120
days from the date the Company becomes aware of such event of default under the
Loan Agreement but only to the extent that neither the Credit Agent nor the
Lenders under the Loan Agreement have taken Remedial Action or accelerated the
maturity of the Indebtedness thereunder within such 120-day period; provided,
--------
further that if the Credit Agent and the Lenders have, prior to any acceleration
- - -------
hereunder, waived the event of default, or amended, supplemented or modified the
Loan Agreement such that as a result of such waiver or amendment, supplement or
modification an event of default would no longer exist under the Loan Agreement,
then no Default or Event of Default will be deemed to occur hereunder;
(5) a final judgment or final judgments for the payment of money are
entered by a court or courts of competent jurisdiction against the Company or
any Subsidiary of the Company and such judgment or judgments remain undischarged
for a period (during which execution shall not be effectively stayed) of 30
days, provided that the aggregate of all such judgments exceeds $2,000,000;
(6) the Company or any Significant Subsidiary pursuant to or within the
meaning of any Bankruptcy Law:
(a) commences a voluntary case;
(b) consents to the entry of an order for relief against it in an
involuntary case;
(c) consents to the appointment of a Custodian of it or for all or
substantially all of its property;
(d) makes a general assignment for the benefit of its creditors;
(e) admits in an official public document or statement its current
inability to pay its debts as the same become due; or
(7) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
(a) is for relief against the Company or any Significant Subsidiary
in an involuntary case; or
(b) appoints a Custodian of the Company or any Significant Subsidiary
or for all or substantially all of its property; or
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(c) orders the liquidation of the Company or any Significant
Subsidiary;
and the order or decree remains unstayed and in effect for 60 days.
The term "Bankruptcy Law" means title 11, U.S. Code or any similar Federal
or state law for the relief of debtors. The term "Custodian" means any
receiver, trustee, assignee, liquidator or similar official under any Bankruptcy
Law.
A Default under clause (2), is not an Event of Default until the Trustee
notifies the Company, or the Holders of at least 33 1/3% in principal amount of
the then outstanding Notes notify the Company and the Trustee, of the Default
and, the Company does not cure the Default within 20 days after receipt of the
notice. The notice must specify the Default and state that the notice is a
"Notice of Default."
In the case of any Event of Default (other than as a result of a failure to
comply with Sections 4.09, 4.10, 4.11, 4.12 or 4.18) pursuant to the provisions
of this Section 6.01 occurring by reason of any willful action (or inaction)
taken (or not taken) by or on behalf of the Company with the intention and for
the purpose of avoiding payment of the premium which the Company would have to
pay if the Company then had elected to redeem the Notes pursuant to paragraph 5
of the Notes, an equivalent premium shall also become and be immediately due and
payable to the extent permitted by law, anything in this Indenture or in the
Notes contained to the contrary notwithstanding.
Section 6.02. Acceleration.
- - ------------ ------------
If an Event of Default (other than an Event of Default specified in clauses
(6) and (7) of Section 6.01) occurs and is continuing, the Trustee by notice to
the Company, or the Holders of at least 33-1/3% in principal amount of the then
outstanding Notes by written notice to the Company and the Trustee, may declare
the unpaid principal of and any accrued interest on all the Notes to be due and
payable. Upon such declaration the principal and interest shall be due and
payable immediately. If an Event of Default specified in clause (6) or (7) of
Section 6.01 occurs, such an amount shall ipso facto become and be immediately
---- -----
due and payable without any declaration or other act on the part of the Trustee
or any Holder. The Holders of a majority in principal amount of the then
outstanding Notes by written notice to the Trustee may rescind an acceleration
and its consequences if the rescis-sion would not conflict with any judgment or
decree and if all existing Events of Default (except nonpayment of principal or
interest that has become due solely because of the acceleration) have been cured
or waived. No such rescission shall affect any subsequent Default or Event of
Default or impair any right consequent thereto.
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Section 6.03. Other Remedies.
- - ------------ --------------
If an Event of Default occurs and is continuing, the Trustee may pursue any
available remedy to collect the payment of principal or interest on the Notes or
to enforce the performance of any provision of the Notes, this Indenture or the
Security Documents.
The Trustee may maintain a proceeding even if it does not possess any of
the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Noteholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies
are cumulative to the extent permitted by law.
Section 6.04. Waiver of Past Defaults.
- - ------------ -----------------------
Subject to Section 9.02 hereof, Holders of a majority in principal amount
of the then outstanding Notes by notice to the Trustee may waive an existing
Default or Event of Default and its consequences except a continuing Default or
Event of Default in the payment of the principal of or interest on any Note.
Upon any such waiver, such Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereon.
Section 6.05. Control by Majority.
- - ------------ -------------------
The Holders of a majority in principal amount of the then outstanding Notes
may direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee or exercising any trust or power conferred on
it. However, the Trustee may refuse to follow any direction that conflicts with
law or this Indenture, that the Trustee determines may be unduly prejudicial to
the rights of other Noteholders, or that may involve the Trustee in personal
liability.
Section 6.06. Limitation on Suits.
- - ------------ -------------------
A Noteholder may pursue a remedy with respect to this Indenture or the
Notes only if:
(1) the Holder gives to the Trustee written notice of a continuing Event
of Default;
(2) the Holders of at least 33 1/3% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer and, if requested, provide to the Trustee
indemnity satisfactory to the Trustee against any loss, liability or expense;
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(4) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
(5) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Notes do not give the Trustee a direction
inconsistent with the request.
A Noteholder may not use this Indenture to prejudice the rights of another
Noteholder or to obtain a preference or priority over another Noteholder.
Section 6.07. Rights of Holders to Receive Payment.
- - ------------ ------------------------------------
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal and interest on the Note, on or
after the respective due dates expressed in the Note, or to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of the Holder; except that no Holder
shall have the right to institute any such suit if and to the extent that the
institution or prosecution thereof or the entry of judgment therein would under
applicable law result in the surrender, impairment, waiver, or loss of the Lien
of the Security Documents upon any property subject to such Lien.
Section 6.08. Collection Suit by Trustee.
- - ------------ --------------------------
If an Event of Default specified in Section 6.01(1) occurs and is
continuing, the Trustee is authorized to recover judgment in its own name and as
trustee of an express trust against the Company for the whole amount of
principal and interest remaining unpaid on the Notes and interest on overdue
principal and, to the extent lawful, interest and such further amount as shall
be sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
Section 6.09. Trustee May File Proofs of Claim.
- - ------------ --------------------------------
The Trustee is authorized to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Noteholders allowed in any judicial proceedings relative to the Company (or any
other obligor upon the Notes), its creditors or its property and shall be
entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Noteholder 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 Noteholders, to pay to the Trustee any
amount due to it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 7.07 hereof. To the extent that the payment of any
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such compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel, and any other amounts due the Trustee under Section 7.07
hereof out of the estate in any such proceeding, shall be denied for any reason,
payment of the same shall be secured by a Lien on, and shall be paid out of, any
and all distributions, dividends, money, securities and other properties which
the Holders of the Notes may be entitled to receive in such proceeding whether
in liquidation or under any plan of reorganization or arrangement or otherwise.
Nothing herein contained shall be deemed to authorize the Trustee to authorize
or consent to or accept or adopt on behalf of any Noteholder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof, or to authorize the Trustee to vote in respect
of the claim of any Noteholder in any such proceeding.
Section 6.10. Priorities.
- - ------------ ----------
If the Trustee collects any money pursuant to this Article, it shall pay
out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due under
Section 7.07, including payment of all compensation, expense and liabilities
incurred, and all advances made, by the Trustee and the costs and expenses of
collection;
Second: to Noteholders for amounts due and unpaid on the Notes for
principal and interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Notes for principal and
interest, respectively; and
Third: to the Company.
The Trustee may fix a record date and payment date for any payment to
Noteholders.
Section 6.11. Undertaking for Costs.
- - ------------ ---------------------
In any suit for the enforcement of any right or remedy under this Indenture
or in any suit against the Trustee for any action taken or omitted by it as a
Trustee, a court in its discretion may require the filing by any party litigant
in the suit of an undertaking to pay the costs of the suit, and the court in its
discretion may assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant. This Section does
not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07
or Section 6.13, or a suit by Holders of more than 10% in principal amount of
the then outstanding Notes.
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ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee.
- - ------------ -----------------
(1) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in their exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
(2) Except during the continuance of an Event of Default:
(a) The duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the Trustee need perform only those
duties that are specifically set forth in this Indenture and no others, and no
implied covenants or obligations shall be read into this Indenture against the
Trustee.
(b) 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.
(3) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(a) This paragraph does not limit the effect of paragraph (2) of
this Section.
(b) 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.
(c) 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 6.05.
(4) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(1), (2) and (3) of this Section.
(5) The Trustee may refuse to perform any duty or exercise any right or
power unless it receives indemnity satisfactory to it against any loss,
liability or expense.
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(6) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
Section 7.02. Rights of Trustee.
- - ------------ -----------------
(1) The Trustee may conclusively rely and shall be protected from acting
or refraining from acting based upon any document believed by it to be genuine
and to have been signed or presented by the proper person. The Trustee need not
investigate any fact or matter stated in the document.
(2) Before the Trustee acts or refrains from acting, it may require an
Officer's Certificate or an Opinion of Counsel or both. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
such Officer's Certificate or Opinion of Counsel. The Trustee may consult with
counsel and the written advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection from liability in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
(3) The Trustee may act through agents and shall not be responsible for
the misconduct or negligence of any agent appointed with due care.
(4) 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 conferred upon it by this Indenture.
(5) Unless otherwise specifically provided in this Indenture, any demand,
request, direction or notice from the Company shall be sufficient if signed by
an Officer of the Company.
Section 7.03. Individual Rights of Trustee.
- - ------------ ----------------------------
The Trustee in its individual or any other capacity may become the owner or
pledgee of Notes and may otherwise deal with the Company or an Affiliate thereof
with the same rights it would have if it were not Trustee. Any Agent may do the
same with like rights. However, the Trustee is subject to Section 7.10.
Section 7.04. Trustee's Disclaimer.
- - ------------ --------------------
The Trustee shall not be responsible for and makes no representation as to
the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company or upon the Company's direction under
any provision hereof, it shall not be responsible for the use or application of
any money received by any Paying Agent other than the Trustee and it shall not
be responsible for any statement or recital herein or any statement in the Notes
or
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any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.
Section 7.05. Notice of Defaults.
- - ------------ ------------------
If a Default occurs and is continuing and if it is known to a trust officer
of the Trustee, the Trustee shall mail to Noteholders a notice of the Default
within 90 days after such Default becomes known to such trust officer. Except
in the case of a Default in payment on any Note (including the failure to make a
mandatory redemption pursuant hereto), the Trustee may withhold the notice if
and so long as a committee of its Trust Officers in good faith determines that
withholding the notice is in the interests of Noteholders.
The Trustee shall not be deemed to owe any fiduciary duty to the Credit
Agent.
Section 7.06. Reports by Trustee to Holders.
- - ------------ -----------------------------
Within 60 days after each May 15 beginning with the May 15 following the
date of this Indenture, the Trustee shall mail to Noteholders a brief report
dated as of such reporting date that complies with TIA (S) 313(a). The Trustee
also shall comply with TIA (S) 313(b). The Trustee shall also transmit by mail
all reports as required by TIA (S) 313(c).
Section 7.07. Compensation and Indemnity.
- - ------------ --------------------------
The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee promptly
upon request for all reasonable disbursements, advances and expenses incurred or
made by it in addition to the compensation for its services. Such expenses
shall include the reasonable compensation, disbursements and expenses of the
Trustee's agents and counsel.
The Company shall indemnify the Trustee, its directors, officers,
employees, agents and stockholders against any and all losses, liabilities or
expenses incurred by it arising out of or in connection with the acceptance or
administration of its duties under this Indenture, except as set forth in the
next paragraph. The Trustee shall notify the Company promptly of any claim for
which it may seek indemnity. Failure by the Trustee to so notify the Company
shall not relieve the Company of its obligations hereunder. The Company shall
defend the claim and the Trustee shall cooperate in the defense. The Trustee
may have separate counsel and the Company shall pay the reasonable fees and
expenses of such counsel. The Company need not pay for any settlement made
without its consent, which consent shall not be unreasonably withheld. The
obligation of the Company under this Section 7.07 shall survive the satisfaction
and discharge of this Indenture.
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The Company need not reimburse any expense or indemnify against any loss or
liability incurred by the Trustee through its own negligence or bad faith.
To secure the Company's payment obligations in this Section, the Trustee
shall have a Lien prior to the Notes on all money or property held or collected
by the Trustee, except that held in trust to pay principal and interest on
particular Notes. Such Lien shall survive the satisfaction and discharge of the
Indenture. The Trustee shall not have any liability for any obligations of the
Company under the Notes or the Indenture or for any claim based on, in respect
of or by reason of such obligations or their creation.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(6) or (7) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
Section 7.08. Replacement of Trustee.
- - ------------ ----------------------
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
The Trustee may resign and be discharged from the trust hereby created by
so notifying the Company. The Holders of a majority in principal amount of the
then outstanding Notes may remove the Trustee by so notifying the Trustee and
the Company. The Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(3) a Custodian or public officer takes charge of the Trustee or its
property; or
(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 Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
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
Holders of at least 10% in principal amount of the then outstanding Notes may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
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If the Trustee after written request by any Noteholder who has been a
Noteholder for at least six months fails to comply with Section 7.10, such
Noteholder may petition any court of competent jurisdiction for the removal of
the Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Thereupon the resignation or
removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. The successor Trustee shall mail a notice of its succession to
Noteholders. The retiring Trustee shall promptly transfer all property held by
it as Trustee to the successor Trustee, provided all sums owing to the Trustee
hereunder have been paid and subject to the Lien provided for in Section 7.07.
Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the
Company's obligations under Section 7.07 hereof shall continue for the benefit
of the retiring Trustee.
Section 7.09. Successor Trustee by Merger, etc.
- - ------------ --------------------------------
If the Trustee consolidates, merges or converts into, or transfers all or
substantially all of its corporate trust business to, another corporation, the
successor corporation without any further act shall be the successor Trustee.
Section 7.10. Eligibility; Disqualification.
- - ------------ -----------------------------
There shall at all times be a Trustee hereunder which shall be a
corporation organized and doing business under the laws of the United States of
America or of any state thereof authorized under such laws to exercise corporate
trustee power, shall be subject to supervision or examination by Federal or
state authority and shall have a combined capital and surplus of at least
$25,000,000 as set forth in its most recent published annual report of
condition.
ARTICLE 8
DISCHARGE OF INDENTURE
Section 8.01. Termination of Company's Obligations.
- - ------------ ------------------------------------
This Indenture shall cease to be of further effect (except that the
Company's obligations under Section 7.07 and the Company's, Trustee's and Paying
Agent's obligations under Section 8.03 shall survive) when all outstanding Notes
theretofore authenticated and issued have been delivered (other than destroyed,
lost or stolen Notes which have been replaced or paid) to the Trustee for
cancellation and the Company has paid all sums payable hereunder. In addition,
the Company may terminate all of its obligations under this Indenture if:
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<PAGE>
(1) the Company irrevocably deposits in trust with the Trustee or at
the option of the Trustee, with a trustee reasonably satisfactory to the Trustee
and the Company under the terms of an irrevocable trust agreement in form and
substance satisfactory to the Trustee, money or U.S. Government Obligations
sufficient to pay principal and interest on the Notes to maturity or redemption,
as the case may be, and to pay all other sums payable by it hereunder, provided
that (i) the trustee of the irrevocable trust shall have been irrevocably
instructed to pay such money or the proceeds of such U.S. Government Obligations
to the Trustee and (ii) the Trustee shall have been irrevocably instructed to
apply such money or the proceeds of such U.S. Government Obligations to the
payment of said principal and interest with respect to the Notes;
(2) the Company delivers to the Trustee an Officers' Certificate
stating that all conditions precedent to satisfaction and discharge of this
Indenture have been complied with, and an Opinion of Counsel to the same effect;
and
(3) no Event of Default or event (including such deposit) which, with
notice or lapse of time, or both, would become an Event of Default with respect
to the Notes shall have occurred and be continuing on the date of such deposit.
Then, this Indenture shall cease to be of further effect (except as provided in
this paragraph), and the Trustee, on demand of the Company, shall execute proper
instruments acknowl-edging confirmation of and discharge under this Indenture.
However, the Company's obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07,
4.01, 4.06, 7.07, 7.08, 8.03 and 8.04 and in the Security Documents and the
Trustee's and Paying Agent's obligations in Section 8.03 shall survive until the
Notes are no longer outstanding. Thereafter, only the Company's obligations in
Section 7.07 and the Company's, Trustee's and Paying Agent's obligations in
Section 8.03 shall survive.
After such irrevocable deposit made pursuant to this Section 8.01 and
satisfaction of the other conditions set forth herein, the Trustee upon request
shall acknowledge in writing the discharge of the Company's obligations under
this Indenture (except for those surviving obligations specified above) and
shall provide a certificate to that effect to the Company, the Credit Agent and
all other parties who have entered into, are subject to, or are the
beneficiaries of, the terms of the Security Documents.
In order to have money available on a payment date to pay principal or
interest on the Notes, the U.S. Government Obligations shall be payable as to
principal or interest at least one Business Day before such payment date in such
amounts as will provide the necessary money. U.S. Government Obligations shall
not be callable at the issuer's option.
"U.S. Government Obligations" means direct obligations of the United States
of America, or any agency or instrumentality thereof for the payment of which
the full faith and credit of the United States of America is pledged.
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<PAGE>
Section 8.02. Application of Trust Money.
- - ------------ --------------------------
The Trustee or a trustee satisfactory to the Trustee and the Company shall
hold in trust money or U.S. Government Obligations deposited with it pursuant to
Section 8.01. It shall apply the deposited money and the money from U.S.
Government Obligations through the Paying Agent and in accordance with this
Indenture to the payment of principal and interest on the Notes.
Section 8.03. Repayment to Company.
- - ------------ --------------------
The Trustee and the Paying Agent shall promptly pay to the Company upon
written request any excess money or securities held by them at any time.
The Trustee and the Paying Agent shall pay to the Company upon written
request any money held by them for the payment of principal or interest that
remains unclaimed for two years after the date upon which such payment shall
have become due; provided, however, that the Company shall have either caused
-------- -------
notice of such payment to be mailed to each Noteholder entitled thereto no less
than 30 days prior to such repayment or within such period shall have published
such notice in a financial newspaper of widespread circulation published in The
City of New York. After payment to the Company, Noteholders entitled to the
money must look to the Company for payment as general creditors unless an
applicable abandoned property law designates another person, and all liability
of the Trustee and such Paying Agent with respect to such money shall cease.
Section 8.04. Reinstatement.
- - ------------ -------------
If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with Section 8.02 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 Notes shall be revived and
reinstated as though no deposit had occurred pursuant to Section 8.01 until such
time as the Trustee or Paying Agent is permitted to apply all such money or U.S.
Government Obligations in accordance with Section 8.02; provided, however, that
-------- -------
if the Company has made any payment of interest on or principal of any Notes
because of the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Notes to receive such payment from the
money or U.S. Government Obligations held by the Trustee or Paying Agent.
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<PAGE>
ARTICLE 9
AMENDMENTS
Section 9.01. Without Consent of Holders.
- - ------------ --------------------------
The Company and the Trustee may amend this Indenture, the Security
Documents, the Intercreditor Agreement or the Notes without the consent of any
Noteholder:
(1) to cure any ambiguity, defect or inconsistency;
(2) to comply with Section 5.01;
(3) to provide for uncertificated Notes in addition to certificated Notes;
or
(4) to make any change that does not adversely affect the legal rights
hereunder of any Noteholder.
Upon the request of the Company, accompanied by a resolution of the Board
of Directors authorizing the execution of any such supplemental indenture, and
upon receipt by the Trustee of the documents described in Section 9.05 hereof,
the Trustee shall join with the Company in the execution of any supplemental
indenture authorized or permitted by the terms of this Indenture and to make any
further appropriate agreements and stipulations which may be therein contained,
but the Trustee shall not be obligated to enter into such supplemental indenture
which affects its own rights, duties or immunities under this Indenture or
otherwise.
Section 9.02. With Consent of Holders.
- - ------------ -----------------------
The Company and the Trustee may amend this Indenture, the Security
Documents, the Intercreditor Agreement or the Notes with the written consent of
the Holders of at least a majority in principal amount of the then outstanding
Notes.
Upon the request of the Company, accompanied by a resolution of the Board
of Directors authorizing the execution of any such supplemental indenture, and
upon the filing with the Trustee of evidence satisfactory to the Trustee of the
necessary consents of the Noteholders as aforesaid, and upon receipt by the
Trustee of the documents described in Section 9.05 hereof, the Trustee shall
join with the Company in the execution of such supplemental indenture unless
such supplemental indenture affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise, in which case the Trustee may in
its discretion, but shall not be obligated to, enter into such supplemental
indenture.
It shall not be necessary for the consent of the Holders under this Section
to approve the particular form of any proposed amendment or waiver, but it shall
be sufficient if such consent approves the substance thereof.
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<PAGE>
After an amendment or waiver under this Section 9.02 becomes effective, the
Company shall mail to the Holders of each Note affected thereby a notice briefly
describing the amendment 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 or waiver. The Holders of a
majority in principal amount of the Notes then outstanding may waive compliance
in a particular instance by the Company with any provision of this Indenture,
the Security Documents, the Intercreditor Agreement or the Notes. However,
without the consent of each Noteholder affected, an amendment or waiver under
this Section may not:
(1) reduce the principal amount of Notes whose Holders must consent to an
amendment or waiver;
(2) reduce the rate of or change the time for payment of interest,
including default interest, on any Note;
(3) reduce the principal of or change the fixed maturity of any Note or
alter the provisions with respect to mandatory redemption pursuant to Section
3.07 hereof;
(4) make any Note payable in money other than that stated in the Security;
(5) make any change in Section 6.04 or 6.07 hereof or in this sentence of
this Section 9.02; or
(6) waive a Default in the payment of principal of or interest on, or
redemption payment with respect to, any Note.
Section 9.03. Revocation and Effect of Consents.
- - ------------ ---------------------------------
Until an amendment or waiver becomes effective, a consent to it by a Holder
of a Note is a continuing consent by the Holder and every subsequent Holder of a
Note or portion of a Note that evidences the same debt as the consenting
Holder's Note, even if notation of the consent is not made on any Note.
However, any such Holder or subsequent Holder may revoke the consent as to his
Note or portion of a Note if the Trustee receives the notice of revocation
before the date on which the Trustee receives an Officer's Certificate
certifying that the Holders of the requisite principal amount of Notes have
consented to the amendment 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 or
waiver. If a record date is fixed, then notwithstanding the provisions of the
immediately preceding paragraph, those persons who were Holders at such record
date (or their duly designated proxies), and only those persons, shall be
entitled to consent to such amendment or waiver or to revoke any consent
previously given, whether or not such persons continue to be Holders after such
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<PAGE>
record date. No consent shall be valid or effective for more than 90 days after
such record date unless consents from Holders of the principal amount of Notes
required hereunder for such amendment or waiver to be effective shall have also
been given and not revoked within such 90-day period.
After an amendment or waiver becomes effective it shall bind every
Noteholder, unless it is of the type described in any of clauses (1) through (6)
of Section 9.02. In such case, the amendment or waiver shall bind only each
Holder of a Note who has consented to it.
Section 9.04. Notation on or Exchange of Notes.
- - ------------ --------------------------------
The Trustee may place an appropriate notation about an amendment or waiver
on any Note thereafter authenticated. The Company in exchange for all Notes may
issue and the Trustee shall authenticate new Notes that reflect the amendment or
waiver.
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment or waiver.
Section 9.05. Trustee to Sign Amendments, etc.
- - ------------ -------------------------------
The Trustee shall sign any amendment or Supplemental Indenture authorized
pursuant to this Article 9 if the amendment does not adversely affect the
rights, duties, liabilities or immunities of the Trustee. If it does, the
Trustee may, but need not, sign it. In signing or refusing to sign such
amendment or Supplemental Indenture, the Trustee shall be entitled to receive,
if requested, an indemnity reasonably satisfactory to it and to receive and,
subject to Section 7.01, shall be fully protected in relying upon, an Officer's
Certificate and an Opinion of Counsel as conclusive evidence that such amendment
or Supplemental Indenture is authorized or permitted by this Indenture, that it
is not inconsistent herewith, and that it will be valid and binding upon the
Company in accordance with its terms.
ARTICLE 10
SECURITY
Section 10.01. Security.
- - ------------- --------
The Company hereby agrees to grant security interests in, and Liens on, the
Collateral to the Trustee for the equal and ratable benefit of the Noteholders
pursuant to the terms of (and to the extent required by) this Indenture and the
Security Documents.
Section 10.02. Security Documents and the Intercreditor Agreement.
- - ------------- --------------------------------------------------
Each Noteholder, by accepting a Note, agrees to all of the terms and
provisions of the Security Documents and the Intercreditor Agreement (including
terms of any thereof
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<PAGE>
providing for the release of Collateral), as the same may be in effect or may be
amended from time to time. The due and punctual payment of the principal, and
premium, if any, of and interest on the Notes when and as the same shall be due
and payable, whether on an interest payment date, at maturity, by acceleration,
call for redemption or otherwise, and interest on the overdue principal,
premium, if any, and interest, if any, of the Notes and payment and performance
of all other Obligations of the Company to the Holders or the Trustee under this
Indenture and the Notes, according to the terms hereunder or thereunder, shall
be secured as provided in the Security Documents.
Section 10.03. Authorization of Actions to be Taken by the Trustee Under the
- - ------------- -------------------------------------------------------------
Security Documents and the Intercreditor Agreement.
--------------------------------------------------
Subject to the terms of the Security Documents and the Intercreditor
Agreement, and if not prohibited thereby, the Trustee may, in its sole
discretion and without the consent of the Noteholders, take all actions it deems
necessary or appropriate in order to (a) enforce or effect the Security
Documents and the Intercreditor Agreement and (b) collect and receive any and
all amounts payable in respect of the Obligations of the Company hereunder,
provided, however, that the provisions of Section 6.05 shall be applicable.
- - -------- -------
Subject to the provisions of the Security Documents and the Intercreditor
Agreement and if not prohibited thereby, the Trustee shall have power to
institute and to maintain such suits and proceedings as it may deem expedient to
prevent any impairment of the Collateral by any acts which may be unlawful or in
violation of the Security Documents and the Intercreditor Agreement, or this
Indenture, and such suits and proceedings as the Trustee may deem expedient to
preserve or protect its interests and the interests of the Noteholders in the
Collateral (including power to institute and maintain suits or proceedings to
restrain the enforcement of or compliance with any legislative or other
governmental enactment, rule or order that may be uncon-stitutional or otherwise
invalid if the enforcement of, or compliance with, such enactment, rule or order
would impair the security hereunder or be prejudicial to the interests of the
Noteholders or of the Trustee).
Section 10.04. Authorization of Receipt of Funds by the Trustee Under the
- - ------------- ----------------------------------------------------------
Security Documents and the Intercreditor Agreement.
--------------------------------------------------
The Trustee is authorized to receive any funds for the benefit of
Noteholders distributed under the Security Documents and the Intercreditor
Agreement, and to make further distributions of such funds to the Holders or as
otherwise provided in, and according to the provisions of, this Indenture, the
Security Documents and the Intercreditor Agreement.
Section 10.05. Investment of Trust Moneys.
- - ------------- --------------------------
All or any part of any Trust Moneys held by the Trustee hereunder or under
the Security Documents or the Intercreditor Agreement (except such as may be
held for the account of any particular Notes) shall from time to time be
invested or reinvested by the Trustee in any Cash Equivalents. All cash or Cash
Equivalents shall be held by the Trust as a part of the Collateral.
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The Trustee shall not be liable or responsible for any loss resulting from
such investment or sales except for its own gross negligence or willful
misconduct in complying with this Section 10.05.
Section 10.06. Conflicts.
- - ------------- ---------
As between the Credit Agent and the Trustee, each of this Indenture and the
other Security Documents is expressly made subject to the Intercreditor
Agreement. Additionally, as between themselves and the Company, each
Noteholder, by accepting a Note, agrees that notwithstanding anything contained
herein or in any of the Security Documents to the contrary, to the extent that
pursuant to the terms of this Indenture or any of the Security Documents and the
Loan Agreement or the security documents thereunder, the Company is required to
deliver over the same property to the Credit Agent and the Trustee, to make a
payment of the same funds to the Credit Agent and to the Trustee, to give
direction or authorization for the benefit of the Credit Agent and the Trustee
which cannot be given for the benefit of both the Credit Agent and the Trustee,
or to take any other action in favor of both the Credit Agent and the Trustee
which cannot be taken in favor of both the Agent and the Trustee, then the
Company shall make such delivery or payment, give such direction or
authorization or take such action (a) in favor of the Credit Agent if such
payment, delivery, direction, authorization or action relates to the "Lenders'
Primary Collateral" (as that term is defined in the Intercreditor Agreement) and
(b) in favor of the Trustee if such payment, delivery, direction, authorization
or action relates to the "Noteholders' Primary Collateral" (as that term is
defined in the Intercreditor Agreement).
Each Noteholder by accepting a Note ratifies the execution and delivery by
the Trustee of the Intercreditor Agreement on its behalf and agrees, so long as
such Noteholder holds Notes, to be bound thereby as to each and every provision
thereof applicable to each Noteholder as fully as if such person were a party
thereto and further represents and warrants that the Trustee has all requisite
authority to bind such Noteholder by the Trustee's execution and delivery of the
Intercreditor Agreement.
ARTICLE 11
MISCELLANEOUS
Section 11.01. Notices.
- - ------------- -------
Any notice or communication by the Company and the Trustee to the other is
duly given if in writing and delivered in person or mailed by first-class mail
(registered or certified, return receipt requested), telex, telecopier or
overnight air courier guaranteeing next day delivery, to the other's address:
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<PAGE>
If to the Company:
Forstmann & Company, Inc.
1185 Avenue of the Americas
New York, New York 10036
Attention: Chief Financial Officer
Telecopier No.: (212) 642-6992
If to the Trustee:
Shawmut Bank Connecticut, National Association
MSN 238
777 Main Street
Hartford, Connecticut 06115
Attention: Corporate Trust Administration
Telecopier No.: (203) 986-7920
The Company or the Trustee by notice to the others may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Noteholders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Noteholder shall be mailed by first-
class mail, certified or registered, return receipt requested, to his address
shown on the register kept by the Registrar. Failure to mail a notice or
communication to a Noteholder or any defect in it shall not affect its
sufficiency with respect to other Noteholders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Noteholders, it
shall mail a copy to the Trustee and each Agent at the same time.
Section 11.02. Officer's Certificate and Opinion of Counsel as to Conditions
-------------------------------------------------------------
Precedent.
---------
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:
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<PAGE>
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably satisfactory to
the Trustee stating that, in the opinion of such counsel, all conditions
precedent and covenants have been complied with.
Section 11.03. Statements Required in Officer's Certificate or Opinion of
- - ------------- ----------------------------------------------------------
Counsel.
-------
Each Officer's Certificate or Opinion of Counsel 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 Officer's
Certificate or Opinion of Counsel 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 such person, such
condition or covenant has been complied with.
Section 11.04. Rules by Trustee and Agents.
- - ------------- ---------------------------
The Trustee may make reasonable rules for action by or at a meeting of
Noteholders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
Section 11.05. Legal Holidays.
- - ------------- --------------
A "Legal Holiday" is a Saturday, a Sunday or a day on which banking
institutions in The City of New York or at a place of payment are authorized or
obligated by law, regulation or executive order to remain closed. If a payment
date is a Legal Holiday at a place of payment, payment may be made at that place
on the next succeeding day that is not a Legal Holiday, and interest shall
accrue for the intervening period.
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<PAGE>
Section 11.06. No Recourse Against Others.
- - ------------- --------------------------
A director, officer, employee or stockholder of the Company, as such, shall
not have any liability for any obligations of the Company under the Notes or the
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. Each Noteholder by accepting a Note waives and
releases all such liability.
Section 11.07. Duplicate Originals.
- - ------------- -------------------
The parties may sign any number of copies of this Indenture. One signed
copy is enough to prove this Indenture.
Section 11.08. Governing Law.
- - ------------- -------------
The laws of the State of New York shall govern and be used to construe this
Indenture and the Notes.
Section 11.09. No Adverse Interpretation of Other Agreements.
- - ------------- ---------------------------------------------
This Indenture may not be used to interpret another indenture, loan or debt
agreement of the Company or a Subsidiary. Any such indenture, loan or debt
agreement may not be used to interpret this Indenture.
Section 11.10. Successors.
- - ------------- ----------
All agreements of the Company in this Indenture and the Notes shall bind
its successor. All agreements of the Trustee in this Indenture shall bind its
successor.
Section 11.11. Severability.
- - ------------- ------------
In case any provision in this Indenture or in the Notes shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
Section 11.12. Counterpart Originals.
- - ------------- ---------------------
The parties may sign any number of copies of this Indenture. Each signed
copy shall be an original, but all of them together represent the same
agreement.
Section 11.13. Variable Provisions.
- - ------------- -------------------
The Company initially appoints the Trustee as Paying Agent, Registrar and
authenticating agent.
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Section 11.14. Restrictions on Transfer.
- - ------------- ------------------------
Until such time as one or more Notes shall be transferred pursuant to Rule
144 or Rule 144A (or any successor rules) under the Securities Act, the Notes to
the extent not so transferred, shall bear a legend to the effect that transfer
of such Notes shall be subject to the Company and the Trustee receiving an
Opinion of Counsel, reasonably satisfactory in form and substance to the Company
and to the Trustee, that an exemption from registration under the Securities Act
is available with respect to the transfer of such Notes.
Section 11.15. Table of Contents, Headings, etc.
- - ------------- --------------------------------
The Table of Contents and Headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not to be
considered a part hereof and shall in no way modify or restrict any of the terms
or provisions hereof.
[Remainder of page intentionally left blank]
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<PAGE>
SIGNATURES
Dated as of March 30, 1994 FORSTMANN & COMPANY, INC.
By:_____________________________________
Title:__________________________________
Attest:
- - ---------------------------- (SEAL)
Title:
Dated as of March 30, 1994 SHAWMUT BANK CONNECTICUT,
NATIONAL ASSOCIATION, as Trustee
By: ____________________________
Title:__________________________
(SEAL)
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<PAGE>
EXHIBIT A
---------
SENIOR SECURED FLOATING RATE NOTE
DUE OCTOBER 30, 1997
THE NOTES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES OR "BLUE SKY" LAWS.
SUCH NOTES MAY NOT BE SOLD, PLEDGED, TRANSFERRED OR OTHERWISE ASSIGNED IN THE
ABSENCE OF REGISTRATION UNLESS AN EXEMPTION THEREFROM IS AVAILABLE AND, UPON
REQUEST BY THE COMPANY, AN OPINION OF COUNSEL IS FURNISHED THAT IS REASONABLY
SATISFACTORY IN FORM AND SUBSTANCE TO THE COMPANY THAT AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, IS
AVAILABLE. THE NOTES ARE SUBJECT TO A CERTAIN AMENDED AND RESTATED
INTERCREDITOR AGREEMENT DATED MARCH 30, 1994, AS AMENDED FROM TIME TO TIME,
BETWEEN THE TRUSTEE AND THE CREDIT AGENT UNDER THE LOAN AGREEMENT.
No. $_________
FORSTMANN & COMPANY, INC.
promises to pay to
or registered assigns,
the principal sum of
Dollars on October 30, 1997
Interest Payment Dates: April 30, July 31, October 31 and January 31.
Record Dates: April 15, July 15, October 15 and January 15 (whether or not a
Business Day).
Dated:
FORSTMANN & COMPANY, INC.
By ________________________
By ________________________
(SEAL)
<PAGE>
This is one of the
Securities referred to in
the within-mentioned Indenture:
Shawmut Bank Connecticut, National Association
as Trustee
By __________________________
Authorized Signature
A-2
<PAGE>
(Back of Security)
----------------
SENIOR SECURED FLOATING
RATE NOTES DUE OCTOBER 30, 1997
1. Interest. (a) Forstmann & Company, Inc., a Georgia corporation
--------
(the "Company"), promises to pay interest on the principal amount of this Note
at a rate per annum equal to, at the election of the Company (as provided in
subparagraph (b) below), either the Prime Rate plus 1.75% (the "Applicable Prime
Rate") or the LIBOR Rate plus 3.25% (the "Applicable LIBOR Rate") from date of
issuance to maturity provided, that from April 5, 1993 to but not including
--------
April 30, 1993, this Note shall bear interest at a rate per annum equal to
6.50%. All interest will be calculated on the basis of a 360-day year and the
- - ----
actual number of days elapsed. Interest payments on the Securities will be made
quarterly in arrears to but not including the date of payment commencing on
April 30, 1993 and on each January 31, April 30, July 31 and October 31
thereafter, except for the final interest payment which will be made on October
30, 1997; provided, that if any such payment date is not a Business Day at a
--------
place of payment, payment may be made at that place on the next succeeding
Business Day and such extension of time shall be included in the computation of
the amount of interest to be paid on such Business Day; provided, however, that
-------- -------
if such extension would cause the payment of interest with respect to an
Interest Period during which the Notes bear interest at the Applicable LIBOR
Rate to be made in the next succeeding calendar month, such payment shall be
made on the next preceding Business Day. Interest on the Notes shall accrue (i)
from the most recent date to which interest has been paid or, if no interest has
been paid, from the date of issuance and (ii) with respect to the principal on
the Notes, to, but not including, the date of repayment of such principal;
provided, however, that if such principal repayment occurs after 12:00 noon, New
- - -------- -------
York City time, interest shall be deemed to accrue thereon until the following
Business Day. To the extent lawful, the Company shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
principal at a rate equal to 2% per annum in excess of the interest rate then
applicable to the Notes; it shall pay interest (including post-petition interest
in any proceeding under any Bankruptcy Law) on overdue installments of interest
(without regard to any applicable grace period) at the same rate to the extent
lawful.
(b) Except as set forth in the proviso to the first sentence of paragraph
(a) hereof, the Notes shall bear interest at a rate per annum equal to the
Applicable Prime Rate, unless and until such interest rate is changed as
provided below. At any time not later than the second LIBOR Business Day prior
to the commencement of an Interest Period, the Company may deliver to the
Trustee a LIBOR Rate Election Notice in accordance with paragraph (c) below. In
such event, the Notes shall bear interest at the Applicable LIBOR Rate from and
including the first day of such Interest Period to but excluding the last day of
such Interest Period. Upon the expiration of any Interest Period as to which a
LIBOR Rate Election Notice is in effect, the Notes shall thereafter bear
interest at the Applicable Prime Rate, unless and until a LIBOR Rate Election
Notice with respect to any subsequent Interest Period becomes effective as
provided herein.
A-3
<PAGE>
(c) A "LIBOR Rate Election Notice" means a notice in writing requesting
that the Notes bear interest at the Applicable LIBOR Rate during a specified
Interest Period. Unless the Trustee has, in its sole and absolute discretion,
notified the Company to the contrary, a LIBOR Rate Election Notice may also be
made pursuant to a request therefor by telephone by an Officer of the Company
received by the Trustee by the date required for delivery of a LIBOR Rate
Election Notice, in which case the Company shall confirm such request by
promptly mailing to the Trustee a LIBOR Rate Election Notice conforming to the
preceding sentence and concurrently telecopying to the Trustee a copy of such
LIBOR Rate Election Notice.
(d) Within five Business Days after the beginning of an Interest Period as
to which a LIBOR Rate Election Notice is in effect, the Company shall compute
the Applicable LIBOR Rate for such Interest Period, and the Company shall mail
(or cause to be mailed) notice of such Applicable LIBOR Rate to the Trustee and
each record holder of the Notes.
(e) Notwithstanding anything to the contrary contained herein, if the
"LIBOR Rate" for an Interest Period is unavailable in accordance with the
definition thereof, any LIBOR Rate Election Notice delivered by the Company with
respect to such Interest Period shall not be effective and the Notes shall bear
interest at the Applicable Prime Rate during such Interest Period.
(f) As used in this Note, the following terms shall have the following
meanings:
"Interest Period" means a period of three consecutive calendar months
beginning on January 31 and ending on April 30, beginning on April 30 and ending
on July 31, beginning on July 31 and ending on October 31 or beginning on
October 31 and ending on January 31, provided that the final Interest Period
--------
hereunder shall be the three consecutive calendar months beginning on July 31,
1997 and ending on October 30, 1997.
"LIBOR Business Day" means a Business Day on which banks may accept
deposits of United States dollars in the London Interbank Market.
"LIBOR Determination Date" for any Interest Period means the second LIBOR
Business Day next preceding the first day of such Interest Period.
"LIBOR Rate" means, for any Interest Period, the rate, as determined by the
Company, equal to the average (rounded upwards, if necessary, to the nearest
1/16 of 1%) of the offered rates for deposits in U.S. dollars for a period of
three months, as set forth on the Reuters Screen LIBO Page as of 11:00 a.m.,
London time, on the LIBOR Determination Date for such Interest Period; provided,
--------
that if only one such offered rate appears on the Reuters Screen LIBO Page, the
LIBOR Rate for such Interest Period shall mean such offered rate. If such rate
is not available at 11:00 a.m., London time on the LIBOR Determination Date for
such Interest Period, then the LIBOR Rate for such Interest Period shall equal
the arithmetic mean (rounded upwards, if necessary, to the nearest 1/16 of 1%)
of the interest rates per annum at which deposits in amounts equal to $1,000,000
in U.S. dollars are offered
A-4
<PAGE>
by the Reference Banks to leading banks in the London Interbank Market for a
period of three months as of 11:00 a.m., London time, on the LIBOR Determination
Date for such Interest Period. If on any LIBOR Determination Date only one of
the Reference Banks provides such offered quotation, then the LIBOR Rate for
such Interest Period shall mean such offered quotation; provided, further, that
-------- -------
if none of the Reference Banks provide such quotations, then the LIBOR Rate for
such Interest Period shall be determined by reference to the LIBOR Rate as
quoted in the most recent Wall Street Journal in which such quotes are
available. If none of the rates or quotations referred to above are available
in respect of any Interest Period, then the LIBOR Rate shall be unavailable
unless an alternative method of determining the LIBOR Rate shall be mutually
agreed by the Company and the holders of at least a majority in principal amount
of the then outstanding Notes.
"Prime Rate" shall mean, as of any given date, the average of the prime,
base, or equivalent rates of interest as are publicly announced, or published,
by Morgan Guaranty Trust Company of New York, Citibank, N.A., Chemical Bank and
The Chase Manhattan Bank (National Association), or the successor by merger or
consolidation to any of such banks (with the understanding that such rates may
merely serve as a basis upon which effective rates of interest are calculated
for loans making reference thereto and that such rates are not necessarily the
lowest or best rates at which such banks calculate interest or extend credit).
Any change in the Prime Rate will be effective on the date such change is
announced by each of, or any of, such banks.
"Reference Banks" means each of Bank of Tokyo, Ltd. (London office),
Barclays Bank, PLC (London office), Bankers Trust Company (London office) and
National Westminster Bank, PLC (London office), and any such replacement bank
thereof as listed on the Reuters Screen LIBO Page and their respective
successors (or if such Banks are not listed thereon or such page shall not be
available, as determined from a Replacement Service), and if any of such banks
are not at the applicable time providing interest rates as contemplated within
the definition of "LIBOR Rate," Reference Banks shall mean the remaining bank or
banks so providing such rates. In the event that less than two of such banks
are providing such rates, the Company shall use reasonable efforts to appoint
additional Reference Banks so that there are at least two such banks providing
such rates; provided that such banks appointed by the Company shall be London
--------
offices of leading banks engaged in the London Interbank Market.
"Replacement Service" means Telerate News Service or such other financial
reporting service or information as the Company determines and as shall not be
reasonably objected to by the holders of a majority of the outstanding amount of
the Notes within 30 days after receipt of notice of such determination by the
Company.
"Reuters Screen LIBO Page" means the display designated as page "LIBO" on
the Reuter Monitor Money Rates Service (or such other page as may replace the
LIBO page on that service for the purpose of displaying London interbank offered
rates of major banks).
A-5
<PAGE>
2. Method of Payment. The Company will pay interest on the Notes (except
-----------------
defaulted interest) to the persons who are registered Holders of Notes at the
close of business on the record date next preceding the Interest Payment Date,
even if such Notes are cancelled after such record date and on or before such
Interest Payment Date. The Holder must surrender this Note to a Paying Agent to
collect principal payments. The Company will pay principal, premium, if any,
and interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts. The Company, however, may pay
principal and interest by check payable in such money. It may mail an interest
check to a Holder's registered address.
3. Paying Agent and Registrar. Initially, the Trustee will act as Paying
--------------------------
Agent and Registrar. The Company may change any Paying Agent, Registrar or co-
registrar without notice to any Noteholder. The Company may act in any such
capacity.
4. Indenture. The Company issued (a) $20,000,000 in original aggregate
---------
principal amount of its Senior Secured Floating Rate Notes on April 5, 1993 (the
"Securities") and (b) $10,000,000 original aggregate principal amount of its
Senior Secured Floating Rate Notes on March 30, 1994 (the "Additional
Securities") under an Amended and Restated Indenture dated as of March 30, 1994
("Indenture") between the Company and the Trustee. The Securities and
Additional Securities are collectively referred to as the "Notes." THIS IS A
SECURITY. The Notes are subject to all terms of the Indenture, and Noteholders
are referred to the Indenture for a statement of such terms. The Securities are
limited to $20,000,000 in aggregate principal amount and the Additional
Securities are limited to $10,000,000 in aggregate principal amount except as
provided in Section 2.07.
5. Optional Redemption. The Company may redeem, on any interest payment
-------------------
date, all or any portion of the Securities at the redemption prices (expressed
in percentages of principal amount) set forth below, plus accrued interest to
the redemption date, if redeemed during the periods indicated below:
Period Percentage
------ ----------
Prior to December 1, 1994 100.5%
Thereafter 100.0%
To the extent such optional redemption is made using Net Proceeds delivered out
of the Proceeds Account, such redemption shall be made, pro rata among the
Securities and the Additional Securities, in accordance with Section 3.09 of the
Indenture. Any other such optional redemption shall be made pursuant to Section
3.08 of the Indenture. The Additional Securities may not be optionally redeemed
under Section 3.08 unless all of the outstanding Securities have become due and
payable or have been selected for redemption.
6. Mandatory Redemption. The Company will be required to redeem
--------------------
Securities on the dates and in the respective aggregate principal amounts (at a
redemption
A-6
<PAGE>
price equal to 100% of the principal amount), plus accrued interest to the
redemption date, as set forth below:
<TABLE>
<CAPTION>
Year Ending Principal Amount
- - ----------- ----------------
<S> <C>
October 31, 1994 $3,000,000
October 31, 1995 $4,000,000
October 31, 1996 $5,000,000
</TABLE>
The Company may reduce the principal amount of the Securities to be redeemed
pursuant to this paragraph 6 by subtracting 100% of the principal amount
(excluding premium) of any Securities that the Company has delivered to the
Trustee for cancellation or that the Company has redeemed other than pursuant to
this paragraph 6 or pursuant to an offer as required by Section 4.18 of the
Indenture. The Company may so subtract the same Security only once.
7. Notice of Redemption. Notice of redemption will be mailed at least 30
--------------------
days but not more than 60 days before the redemption date to each Holder of
Notes to be redeemed at his registered address. Notes may be redeemed in part
but only in whole multiples of $1,000, unless all of the Notes held by a Holder
are to be redeemed. On and after the redemption date interest ceases to accrue
on Notes or portions of them called for redemption.
8. Security. In order to secure the due and punctual payment of the
--------
principal of, premium, if any, and interest on the Notes and all other amounts
payable by the Company under the Indenture, the Security Documents and the Notes
when and as the same shall be due and payable, whether at maturity, by
acceleration or otherwise, according to the terms of the Notes, the Indenture
and the Security Documents, the Company has granted security interests in and
Liens on the Collateral to the Trustee for the equal and ratable benefit of the
Holders of Notes pursuant to the Indenture and the Security Documents. The
Notes will be secured by Liens and security interests in the Collateral that are
subject only to certain permitted encumbrances.
Each Noteholder, by accepting a Note, agrees to all of the terms and
provisions of the Security Documents, including a certain Intercreditor
Agreement, as the same may be amended from time to time pursuant to the
respective provisions thereof and the Indenture.
The Trustee and each Noteholder acknowledge that a release of any of the
Collateral or Lien in accordance with the terms and provisions of any of the
Security Documents and the terms and provisions of the Indenture will not be
deemed for any purpose to be an impairment of the security under the Indenture.
9. Denominations, Transfer, Exchange. The Notes are in registered form
---------------------------------
without coupons and were initially issued in denominations of $1,000,000 and
integral multiples of $1,000,000 in excess thereof. Without the prior consent
of the Company, no Holder shall be
A-7
<PAGE>
entitled to transfer Securities if, as a result thereof, such Holder or the
transferee would hold Securities in principal amount less than $1,000,000;
provided, that the foregoing shall not apply to (i) transfers in accordance with
- - --------
provisions of the Indenture regarding optional and mandatory redemptions and
offers in connection with Asset Sales or a Change of Control (as such terms are
defined) and (ii) transfers by a Holder which holds less than $1,000,000
principal amount of Securities if all of the Securities held by such Holder are
transferred to a single transferee. The transfer of Notes may be registered and
Notes may be exchanged as provided in the Indenture. The Registrar and the
Trustee may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not exchange or register
the transfer of any Note or portion of a Note selected for redemption. Also, it
need not exchange or register the transfer of any Notes for a period of 15 days
before a selection of Notes to be redeemed or during the period between a record
date and the corresponding interest payment date. All transfers of the Notes
are also subject to the restrictions contained in, and terms of, Sections 2.06
and 11.14 of the Indenture.
10. Persons Deemed Owners. Prior to due presentment to the Trustee for
---------------------
registration of the transfer of this Note, the Trustee, any Agent and the
Company may deem and treat the person in whose name this Note is registered as
its absolute owner for the purpose of receiving payment of principal of and
interest on this Note and for all other purposes whatsoever, whether or not this
Note is overdue, and neither the Trustee, any Agent nor the Company shall be
affected by notice to the contrary. The registered Holder of a Note shall be
treated as its owner for all purposes.
11. Amendments and Waivers. Subject to certain exceptions, the Indenture,
----------------------
the Security Documents, the Intercreditor Agreement or the Notes may be amended
with the consent of the Holders of at least a majority in principal amount of
the then outstanding Notes. Without the consent of the Noteholders, the
Indenture, the Security Documents, the Intercreditor Agreement or the Notes may
be amended to cure any ambiguity, defect or inconsistency, to provide for
assumption of Company obligations to Noteholders or to make any change that does
not adversely affect the rights of any Noteholder.
12. Defaults and Remedies. An Event of Default includes, among other
---------------------
things: default in payment of interest or principal on the Notes; failure by
the Company to comply with certain of its agreements in the Indenture, the
Notes, the Purchase Agreement or the Security Documents or a material breach of
representation and the continuance of such default or breach for 20 days after
notice; certain events of default under the Loan Agreement and the continuance
of such events of default for 120 days after the Company becomes aware of such
event of default (unless such event of default has been cured or waived by the
Credit Agent); certain payment defaults or acceleration with respect to certain
other indebtedness; certain final judgments which remain undischarged for a
period of 30 days; and certain events of bankruptcy or insolvency. If an Event
of Default occurs and is continuing, the Trustee or the holders of at least 33-
1/3% in principal amount of the then outstanding Notes may declare all the Notes
to be due and payable immediately (except in the case of an Event of Default
arising from certain events of bankruptcy or insolvency, in which
A-8
<PAGE>
event all outstanding Notes became due and payable immediately without further
action or notice). Noteholders may not enforce the Indenture, the Security
Documents or the Notes except as provided in the Indenture and the Security
Documents. The Trustee may require indemnity satisfactory to it before it
enforces the Indenture or the Notes. Subject to certain limitations, Holders of
a majority in principal amount of the then outstanding Notes may direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Noteholders notice of any continuing default (except a default in payment of
principal or interest) if it determines that withholding notice is in their
interest. The Company must furnish an annual compliance certificate to the
Trustee.
13. Trustee Dealings with Company. Shawmut Bank Connecticut, National
-----------------------------
Association, the Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept 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 Trustee.
14. No Recourse Against Others. A director, officer, employee or
--------------------------
stockholder, as such, of the Company or the Trustee, as the case may be, shall
not have any liability for any obligations of the Company under the Notes, the
Indenture or the Security Documents or for any claim based on, in respect of or
by reason of such obligations or their creation. Each Noteholder by accepting a
Note waives and releases all such liability. The waiver and release are part of
the consideration for the issuance of the Notes.
15. Authentication. This Note shall not be valid until authenticated by
--------------
the manual signature of the Trustee or an authenticating agent.
16. Abbreviations. Customary abbreviations may be used in the name of a
-------------
Noteholder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST ( = Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
17. Indenture. Each Noteholder, by accepting a Note, agrees to be bound
---------
to all of the terms and provisions of the Indenture and the Security Documents,
including the Intercreditor Agreement, as the same may be amended from time to
time. Certain capitalized terms used and not defined herein have the meanings
set forth in the Indenture.
The Company will furnish to any Noteholder upon written request and without
charge a copy of the Indenture and the Security Documents. Request may be made
to:
Forstmann & Company, Inc.
1185 Avenue of the Americas
New York, New York 10036
Attention: Chief Financial Officer
A-9
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: [I or We] assign and transfer
this Note to:
_________________________________________________________________
(Insert assignee's soc. sec. no. or tax I.D. no.)
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint _________________________________________
_____________________________________________ agent to
transfer this Note on the books of the Company. The agent may substitute
another to act for him.
_________________________________________________________________
Date: _____________
Your Signature:_________________________
(Sign exactly as your name appears on
the face of this Note)
Signature Guarantee.
A-10
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.13 or 4.18 of the Indenture, check the box: [_]
If you want to elect to have only part of this Note purchased by the
Company pursuant to Section 4.13 or 4.18 of the Indenture, state the amount:
$_________________________
Date:_______________ Your Signature ___________________________
(Sign exactly as your name
appears on the face of this
Note)
Signature Guarantee.
A-11
<PAGE>
EXHIBIT B
---------
SENIOR SECURED FLOATING RATE NOTE
DUE OCTOBER 30, 1997
THE NOTES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES OR "BLUE SKY" LAWS.
SUCH NOTES MAY NOT BE SOLD, PLEDGED, TRANSFERRED OR OTHERWISE ASSIGNED IN THE
ABSENCE OF REGISTRATION UNLESS AN EXEMPTION THEREFROM IS AVAILABLE AND, UPON
REQUEST BY THE COMPANY, AN OPINION OF COUNSEL IS FURNISHED THAT IS REASONABLY
SATISFACTORY IN FORM AND SUBSTANCE TO THE COMPANY THAT AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, IS
AVAILABLE. THE NOTES ARE SUBJECT TO A CERTAIN AMENDED AND RESTATED
INTERCREDITOR AGREEMENT DATED MARCH 30, 1994, AS AMENDED FROM TIME TO TIME,
BETWEEN THE TRUSTEE AND THE CREDIT AGENT UNDER THE LOAN AGREEMENT.
No. $_________
FORSTMANN & COMPANY, INC.
promises to pay to
or registered assigns,
the principal sum of
Dollars on October 30, 1997
Interest Payment Dates: April 30, July 31, October 31 and January 31.
Record Dates: April 15, July 15, October 15 and January 15 (whether or not a
Business Day).
Dated:
FORSTMANN & COMPANY, INC.
By ________________________
By ________________________
(SEAL)
<PAGE>
This is one of the
Additional Securities referred to in
the within-mentioned Indenture:
Shawmut Bank Connecticut, National Association
as Trustee
By __________________________
Authorized Signature
B-2
<PAGE>
(Back of Additional Security)
---------------------------
SENIOR SECURED FLOATING
RATE NOTES DUE OCTOBER 30, 1997
1. Interest. (a) Forstmann & Company, Inc., a Georgia corporation
--------
(the "Company"), promises to pay interest on the principal amount of this Note
at a rate per annum equal to, at the election of the Company (as provided in
subparagraph (b) below), either the Prime Rate plus 1.75% (the "Applicable Prime
Rate") or the LIBOR Rate plus 3.25% (the "Applicable LIBOR Rate") from date of
issuance to maturity provided, that from March 30, 1994 to but not including
--------
April 30, 1994, this Note shall bear interest at a rate per annum equal to
7.125%. All interest will be calculated on the basis of a 360-day year and the
actual number of days elapsed. Interest payments on the Additional Securities
will be made quarterly in arrears to but not including the date of payment
commencing on April 30, 1994 and on each January 31, April 30, July 31 and
October 31 thereafter, except for the final interest payment which will be made
on October 30, 1997; provided, that if any such payment date is not a Business
--------
Day at a place of payment, payment may be made at that place on the next
succeeding Business Day and such extension of time shall be included in the
computation of the amount of interest to be paid on such Business Day; provided,
--------
however, that if such extension would cause the payment of interest with respect
- - -------
to an Interest Period during which the Notes bear interest at the Applicable
LIBOR Rate to be made in the next succeeding calendar month, such payment shall
be made on the next preceding Business Day. Interest on the Notes shall accrue
(i) from the most recent date to which interest has been paid or, if no interest
has been paid, from the date of issuance and (ii) with respect to the principal
on the Notes, to, but not including, the date of repayment of such principal;
provided, however, that if such principal repayment occurs after 12:00 noon, New
- - -------- -------
York City time, interest shall be deemed to accrue thereon until the following
Business Day. To the extent lawful, the Company shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
principal at a rate equal to 2% per annum in excess of the interest rate then
applicable to the Notes; it shall pay interest (including post-petition interest
in any proceeding under any Bankruptcy Law) on overdue installments of interest
(without regard to any applicable grace period) at the same rate to the extent
lawful.
(b) Except as set forth in the proviso to the first sentence of paragraph
(a) hereof, the Notes shall bear interest at a rate per annum equal to the
Applicable Prime Rate, unless and until such interest rate is changed as
provided below. At any time not later than the second LIBOR Business Day prior
to the commencement of an Interest Period, the Company may deliver to the
Trustee a LIBOR Rate Election Notice in accordance with paragraph (c) below. In
such event, the Notes shall bear interest at the Applicable LIBOR Rate from and
including the first day of such Interest Period to but excluding the last day of
such Interest Period. Upon the expiration of any Interest Period as to which a
LIBOR Rate Election Notice is in effect, the Notes shall thereafter bear
interest at the Applicable Prime Rate, unless and until a
B-3
<PAGE>
LIBOR Rate Election Notice with respect to any subsequent Interest Period
becomes effective as provided herein.
(c) A "LIBOR Rate Election Notice" means a notice in writing requesting
that the Notes bear interest at the Applicable LIBOR Rate during a specified
Interest Period. Unless the Trustee has, in its sole and absolute discretion,
notified the Company to the contrary, a LIBOR Rate Election Notice may also be
made pursuant to a request therefor by telephone by an Officer of the Company
received by the Trustee by the date required for delivery of a LIBOR Rate
Election Notice, in which case the Company shall confirm such request by
promptly mailing to the Trustee a LIBOR Rate Election Notice conforming to the
preceding sentence and concurrently telecopying to the Trustee a copy of such
LIBOR Rate Election Notice.
(d) Within five Business Days after the beginning of an Interest Period as
to which a LIBOR Rate Election Notice is in effect, the Company shall compute
the Applicable LIBOR Rate for such Interest Period, and the Company shall mail
(or cause to be mailed) notice of such Applicable LIBOR Rate to the Trustee and
each record holder of the Notes.
(e) Notwithstanding anything to the contrary contained herein, if the
"LIBOR Rate" for an Interest Period is unavailable in accordance with the
definition thereof, any LIBOR Rate Election Notice delivered by the Company with
respect to such Interest Period shall not be effective and the Notes shall bear
interest at the Applicable Prime Rate during such Interest Period.
(f) As used in this Note, the following terms shall have the following
meanings:
"Interest Period" means a period of three consecutive calendar months
beginning on January 31 and ending on April 30, beginning on April 30 and ending
on July 31, beginning on July 31 and ending on October 31 or beginning on
October 31 and ending on January 31, provided that the final Interest Period
--------
hereunder shall be the three consecutive calendar months beginning on July 31,
1997 and ending on October 30, 1997.
"LIBOR Business Day" means a Business Day on which banks may accept
deposits of United States dollars in the London Interbank Market.
"LIBOR Determination Date" for any Interest Period means the second LIBOR
Business Day next preceding the first day of such Interest Period.
"LIBOR Rate" means, for any Interest Period, the rate, as determined by the
Company, equal to the average (rounded upwards, if necessary, to the nearest
1/16 of 1%) of the offered rates for deposits in U.S. dollars for a period of
three months, as set forth on the Reuters Screen LIBO Page as of 11:00 a.m.,
London time, on the LIBOR Determination Date for such Interest Period; provided,
--------
that if only one such offered rate appears on the Reuters Screen LIBO Page, the
LIBOR Rate for such Interest Period shall mean such offered rate. If such rate
is not available at 11:00 a.m., London time on the LIBOR Determination
B-4
<PAGE>
Date for such Interest Period, then the LIBOR Rate for such Interest Period
shall equal the arithmetic mean (rounded upwards, if necessary, to the nearest
1/16 of 1%) of the interest rates per annum at which deposits in amounts equal
to $1,000,000 in U.S. dollars are offered by the Reference Banks to leading
banks in the London Interbank Market for a period of three months as of 11:00
a.m., London time, on the LIBOR Determination Date for such Interest Period. If
on any LIBOR Determination Date only one of the Reference Banks provides such
offered quotation, then the LIBOR Rate for such Interest Period shall mean such
offered quotation; provided, further, that if none of the Reference Banks
-------- -------
provide such quotations, then the LIBOR Rate for such Interest Period shall be
determined by reference to the LIBOR Rate as quoted in the most recent Wall
Street Journal in which such quotes are available. If none of the rates or
quotations referred to above are available in respect of any Interest Period,
then the LIBOR Rate shall be unavailable unless an alternative method of
determining the LIBOR Rate shall be mutually agreed by the Company and the
holders of at least a majority in principal amount of the then outstanding
Notes.
"Prime Rate" shall mean, as of any given date, the average of the prime,
base, or equivalent rates of interest as are publicly announced, or published,
by Morgan Guaranty Trust Company of New York, Citibank, N.A., Chemical Bank and
The Chase Manhattan Bank (National Association), or the successor by merger or
consolidation to any of such banks (with the understanding that such rates may
merely serve as a basis upon which effective rates of interest are calculated
for loans making reference thereto and that such rates are not necessarily the
lowest or best rates at which such banks calculate interest or extend credit).
Any change in the Prime Rate will be effective on the date such change is
announced by each of, or any of, such banks.
"Reference Banks" means each of Bank of Tokyo, Ltd. (London office),
Barclays Bank, PLC (London office), Bankers Trust Company (London office) and
National Westminster Bank, PLC (London office), and any such replacement bank
thereof as listed on the Reuters Screen LIBO Page and their respective
successors (or if such Banks are not listed thereon or such page shall not be
available, as determined from a Replacement Service), and if any of such banks
are not at the applicable time providing interest rates as contemplated within
the definition of "LIBOR Rate," Reference Banks shall mean the remaining bank or
banks so providing such rates. In the event that less than two of such banks
are providing such rates, the Company shall use reasonable efforts to appoint
additional Reference Banks so that there are at least two such banks providing
such rates; provided that such banks appointed by the Company shall be London
--------
offices of leading banks engaged in the London Interbank Market.
"Replacement Service" means Telerate News Service or such other financial
reporting service or information as the Company determines and as shall not be
reasonably objected to by the holders of a majority of the outstanding amount of
the Notes within 30 days after receipt of notice of such determination by the
Company.
B-5
<PAGE>
"Reuters Screen LIBO Page" means the display designated as page "LIBO" on
the Reuter Monitor Money Rates Service (or such other page as may replace the
LIBO page on that service for the purpose of displaying London interbank offered
rates of major banks).
2. Method of Payment. The Company will pay interest on the Notes (except
-----------------
defaulted interest) to the persons who are registered Holders of Notes at the
close of business on the record date next preceding the Interest Payment Date,
even if such Notes are cancelled after such record date and on or before such
Interest Payment Date. The Holder must surrender this Note to a Paying Agent to
collect principal payments. The Company will pay principal, premium, if any,
and interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts. The Company, however, may pay
principal and interest by check payable in such money. It may mail an interest
check to a Holder's registered address.
3. Paying Agent and Registrar. Initially, the Trustee will act as Paying
--------------------------
Agent and Registrar. The Company may change any Paying Agent, Registrar or co-
registrar without notice to any Noteholder. The Company may act in any such
capacity.
4. Indenture. The Company issued (a) $20,000,000 in original aggregate
---------
principal amount of its Senior Secured Floating Rate Notes on April 5, 1993 (the
"Securities") and (b) $10,000,000 in original aggregate principal amount of its
Senior Secured Floating Rate Notes on March 30, 1994 (the "Additional
Securities") pursuant to an Amended and Restated Indenture dated as of March 30,
1994 ("Indenture") between the Company and the Trustee. The Securities and the
Additional Securities are collectively referred to as the "Notes." THIS IS AN
ADDITIONAL SECURITY. The Notes are subject to all terms of the Indenture, and
Noteholders are referred to the Indenture for a statement of such terms. The
Securities are limited to $20,000,000 in aggregate principal amount and the
Additional Securities are limited to $10,000,000 in aggregate principal amount
except as provided in Section 2.07.
5. Optional Redemption. The Company may redeem, on any interest payment
-------------------
date, all or any portion of the Additional Securities at the redemption prices
(expressed in percentages of principal amount) set forth below, plus accrued
interest to the redemption date, if redeemed during the periods indicated below:
Period Percentage
------ ----------
Prior to December 1, 1994 100.5%
Thereafter 100.0%
To the extent such optional redemption is made using Net Proceeds delivered out
of the Proceeds Account, such redemption shall be made, pro rata among the
Securities and the Additional Securities, in accordance with Section 3.09 of the
Indenture. Any other such optional redemption shall be made pursuant to Section
3.08 of the Indenture. The Additional
B-6
<PAGE>
Securities may not be optionally redeemed under Section 3.08 unless all of the
outstanding Securities have become due and payable or have been selected for
redemption.
6. No Mandatory Redemption. The Additional Securities are not subject to
-----------------------
mandatory redemption.
7. Notice of Redemption. Notice of redemption will be mailed at least 30
--------------------
days but not more than 60 days before the redemption date to each Holder of
Notes to be redeemed at his registered address. Notes may be redeemed in part
but only in whole multiples of $1,000, unless all of the Notes held by a Holder
are to be redeemed. On and after the redemption date interest ceases to accrue
on Notes or portions of them called for redemption.
8. Security. In order to secure the due and punctual payment of the
--------
principal of, premium, if any, and interest on the Notes and all other amounts
payable by the Company under the Indenture, the Security Documents and the Notes
when and as the same shall be due and payable, whether at maturity, by
acceleration or otherwise, according to the terms of the Notes, the Indenture
and the Security Documents, the Company has granted security interests in and
Liens on the Collateral to the Trustee for the equal and ratable benefit of the
Holders of Notes pursuant to the Indenture and the Security Documents. The
Notes will be secured by Liens and security interests in the Collateral that are
subject only to certain permitted encumbrances.
Each Noteholder, by accepting a Note, agrees to all of the terms and
provisions of the Security Documents, including a certain Intercreditor
Agreement, as the same may be amended from time to time pursuant to the
respective provisions thereof and the Indenture.
The Trustee and each Noteholder acknowledge that a release of any of the
Collateral or Lien in accordance with the terms and provisions of any of the
Security Documents and the terms and provisions of the Indenture will not be
deemed for any purpose to be an impairment of the security under the Indenture.
9. Denominations, Transfer, Exchange. The Notes are in registered form
---------------------------------
without coupons and were initially issued in denominations of $1,000,000 and
integral multiples of $1,000,000 in excess thereof. Without the prior consent
of the Company, no Holder shall be entitled to transfer Additional Securities
if, as a result thereof, such Holder or the transferee would hold Additional
Securities in principal amount less than $1,000,000; provided, that the
--------
foregoing shall not apply to (i) transfers in accordance with provisions of the
Indenture regarding optional and mandatory redemptions and offers in connection
with Asset Sales or a Change of Control (as such terms are defined) and (ii)
transfers by a Holder which holds less than $1,000,000 principal amount of
Additional Securities if all of the Additional Securities held by such Holder
are transferred to a single transferee. The transfer of Notes may be registered
and Notes may be exchanged as provided in the Indenture. The Registrar and the
Trustee may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the
B-7
<PAGE>
Indenture. The Registrar need not exchange or register the transfer of any Note
or portion of a Note selected for redemption. Also, it need not exchange or
register the transfer of any Notes for a period of 15 days before a selection of
Notes to be redeemed or during the period between a record date and the
corresponding interest payment date. All transfers of the Notes are also
subject to the restrictions contained in, and terms of, Sections 2.06 and 11.14
of the Indenture.
10. Persons Deemed Owners. Prior to due presentment to the Trustee for
---------------------
registration of the transfer of this Note, the Trustee, any Agent and the
Company may deem and treat the person in whose name this Note is registered as
its absolute owner for the purpose of receiving payment of principal of and
interest on this Note and for all other purposes whatsoever, whether or not this
Note is overdue, and neither the Trustee, any Agent nor the Company shall be
affected by notice to the contrary. The registered Holder of a Note shall be
treated as its owner for all purposes.
11. Amendments and Waivers. Subject to certain exceptions, the Indenture,
----------------------
the Security Documents, the Intercreditor Agreement or the Notes may be amended
with the consent of the Holders of at least a majority in principal amount of
the then outstanding Notes. Without the consent of the Noteholders, the
Indenture, the Security Documents, the Intercreditor Agreement or the Notes may
be amended to cure any ambiguity, defect or inconsistency, to provide for
assumption of Company obligations to Noteholders or to make any change that does
not adversely affect the rights of any Noteholder.
12. Defaults and Remedies. An Event of Default includes, among other
---------------------
things: default in payment of interest or principal on the Notes; failure by
the Company to comply with certain of its agreements in the Indenture, the
Notes, the Purchase Agreement or the Security Documents or a material breach of
representation and the continuance of such default or breach for 20 days after
notice; certain events of default under the Loan Agreement and the continuance
of such events of default for 120 days after the Company becomes aware of such
event of default (unless such event of default has been cured or waived by the
Credit Agent); certain payment defaults or acceleration with respect to certain
other indebtedness; certain final judgments which remain undischarged for a
period of 30 days; and certain events of bankruptcy or insolvency. If an Event
of Default occurs and is continuing, the Trustee or the holders of at least 33-
1/3% in principal amount of the then outstanding Notes may declare all the Notes
to be due and payable immediately (except in the case of an Event of Default
arising from certain events of bankruptcy or insolvency, in which event all
outstanding Notes became due and payable immediately without further action or
notice). Noteholders may not enforce the Indenture, the Security Documents or
the Notes except as provided in the Indenture and the Security Documents. The
Trustee may require indemnity satisfactory to it before it enforces the
Indenture or the Notes. Subject to certain limitations, Holders of a majority
in principal amount of the then outstanding Notes may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Noteholders
notice of any continuing default (except a default in payment of principal or
interest) if it determines that withholding notice is in their interest. The
Company must furnish an annual compliance certificate to the Trustee.
B-8
<PAGE>
13. Trustee Dealings with Company. Shawmut Bank Connecticut, National
-----------------------------
Association, the Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept 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 Trustee.
14. No Recourse Against Others. A director, officer, employee or
--------------------------
stockholder, as such, of the Company or the Trustee, as the case may be, shall
not have any liability for any obligations of the Company under the Notes, the
Indenture or the Security Documents or for any claim based on, in respect of or
by reason of such obligations or their creation. Each Noteholder by accepting a
Note waives and releases all such liability. The waiver and release are part of
the consideration for the issuance of the Notes.
15. Authentication. This Note shall not be valid until authenticated by
--------------
the manual signature of the Trustee or an authenticating agent.
16. Abbreviations. Customary abbreviations may be used in the name of a
-------------
Noteholder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST ( = Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
17. Indenture. Each Noteholder, by accepting a Note, agrees to be bound
---------
to all of the terms and provisions of the Indenture and the Security Documents,
including the Intercreditor Agreement, as the same may be amended from time to
time. Certain capitalized terms used and not defined herein have the meanings
set forth in the Indenture.
The Company will furnish to any Noteholder upon written request and without
charge a copy of the Indenture and the Security Documents. Request may be made
to:
Forstmann & Company, Inc.
1185 Avenue of the Americas
New York, New York 10036
Attention: Chief Financial Officer
B-9
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: [I or We] assign and transfer
this Note to:
_________________________________________________________________
(Insert assignee's soc. sec. no. or tax I.D. no.)
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint _________________________________________
_____________________________________________ agent to
transfer this Note on the books of the Company. The agent may substitute
another to act for him.
_________________________________________________________________
Date: _____________
Your Signature:_________________________
(Sign exactly as your name appears on
the face of this Note)
Signature Guarantee.
B-10
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.13 or 4.18 of the Indenture, check the box: [_]
If you want to elect to have only part of this Note purchased by the
Company pursuant to Section 4.13 or 4.18 of the Indenture, state the amount:
$_________________________
Date:_______________ Your Signature ___________________________
(Sign exactly as your name
appears on the face of this
Note)
Signature Guarantee.
B-11
<PAGE>
Exhibit 4.4
CROSS REFERENCE: BOOK 697, PAGE 219;
LAURENS COUNTY, GEORGIA RECORDS
FIRST AMENDMENT TO DEED TO SECURE DEBT, ASSIGNMENT OF
LEASES AND RENTS, SECURITY AGREEMENT AND FIXTURE FILING
-------------------------------------------------------
THIS FIRST AMENDMENT TO DEED TO SECURE DEBT, ASSIGNMENT OF LEASES AND
RENTS, SECURITY AGREEMENT AND FIXTURE FILING (this "First Amendment") is made
and entered into as of the 30th day of March, 1994 by and between FORSTMANN &
COMPANY, INC, a Georgia corporation ("Grantor"), and SHAWMUT BANK CONNECTICUT,
NATIONAL ASSOCIATION, a national banking association ("Shawmut"), as trustee for
the equal and ratable benefit of the Holders under the Indenture (as defined
herein) (Shawmut, in such capacity, is herein referred to as "Grantee").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, pursuant to that certain Indenture dated as of April 5, 1993,
between Grantor and Grantee (the "Original Indenture"), Grantor issued and
delivered to the purchasers thereof its Senior Secured Floating Rate Notes Due
October 30, 1997 (the "Securities"), in the aggregate principal amount of Twenty
Million Dollars ($20,000,000.00), all of which Securities are outstanding on the
date hereof; and
WHEREAS, as security for the obligations of Grantor under the Original
Indenture and the Securities, Grantor executed and delivered to Grantee, for the
benefit of the holders of the Securities, that certain Deed to Secure Debt,
Assignment of Leases and Rents, Security Agreement and Fixture Filing dated as
of April 5, 1993 and recorded in Deed Book 697, Page 219, Laurens County,
Georgia records (the "Security Deed"); and
WHEREAS, simultaneously herewith Grantor and Grantee have amended and
restated the Original Indenture by virtue of that certain Amended and Restated
Indenture (the "Amended Indenture"), which Amended Indenture provides, among
other things, for the issuance of additional securities (the "Additional
Securities") in the aggregate principal amount of $10,000,000 (the Original
Indenture and the Amended Indenture being hereinafter collectively referred to
as the "Indenture"); and
WHEREAS, Grantor and Grantee desire to amend the Security Deed in the
manner and for the purposes set forth herein.
NOW, THEREFORE, for and in consideration of the premises, for Ten and
No/100 ($10.00) in hand paid, and for other good and valuable consideration, the
receipt, adequacy and sufficiency of
<PAGE>
which are hereby acknowledged, Grantor and Grantee do hereby covenant and agree
as follows:
1. Additional Securities. (a) The first Whereas clause on page 1 of the
---------------------
Security Deed which did read:
"WHEREAS, pursuant to that certain Indenture dated as of April 5,
1993, between Grantor and Grantee (such Indenture, as it may be amended,
modified or supplemented, is hereinafter referred to as the "Indenture"),
---------
Grantor has issued and delivered to the purchasers thereof its Senior
Secured Floating Rate Notes Due October 30, 1997, in the aggregate
principal amount of Twenty Million Dollars ($20,000,000) (all such notes
issued pursuant to the Indenture, and any renewals, extensions,
substitutions or modifications thereof, or notes issued pursuant to the
Indenture in exchange therefor, are hereinafter referred to as the
"Securities"). The holders of the Securities from time to time are
referred to herein as the "Holders"; and"
-------
is hereby deleted in its entirety and the following substituted in lieu thereof:
"WHEREAS, pursuant to that certain Indenture (the "Original
Indenture") dated as of April 5, 1993, between Grantor and Grantee, as
amended and restated pursuant to that certain Amended and Restated
Indenture (the "Amended Indenture") dated as of March 30, 1994 (such
Original Indenture, as amended by the Amended Indenture and as it may be
further amended, modified or supplemented, is hereinafter referred to as
the "Indenture"), Grantor has issued and delivered to the purchasers
---------
thereof its Senior Secured Floating Rate Notes Due October 30, 1997, of
which $20,000,000 in the aggregate principal amount were initially issued
on April 5, 1993 (the "Securities") and of which $10,000,000 in the
aggregate principal amount were initially issued on March 30, 1994 (the
"Additional Securities") (all such notes issued pursuant to the Indenture,
and any renewals, extensions, substitutions or modifications thereof, or
notes issued pursuant to the Indenture in exchange therefor, are
hereinafter sometimes referred to as the "Notes"). The holders of the
Notes from time to time are referred to herein as the "Holders"; and
-------
, such that the term "Notes" shall include the "Securities" (as that term is
defined and used in the Security Deed) and the "Additional Securities" (as that
term is herein defined).
-2-
<PAGE>
Provided further, wherever subsequently used in the Security Deed the term
"Securities" shall be deemed deleted and the term "Notes" substituted in lieu
thereof, with the exception of Paragraph (a) on Page 1 of the Security Deed,
wherein the term "Securities" shall be retained.
2. Indebtedness. Paragraph (a) on page 1 of the Security Deed which did
------------
read:
"(a) the debt evidenced by (i) the Securities in the aggregate
principal amount of Twenty Million Dollars ($20,000,000), (ii) the
Indenture, which Indenture is incorporated by this reference and made a
part of this Deed, (iii) any and all other sums due or to become due under
the Indenture, the Securities, this Deed, the other Security Documents or
any other security agreements, Additional Mortgages (as hereinafter
defined), financing statements, patent and trademark security agreements,
lease assignments, guaranties and other agreements, instruments and written
indicia of contractual obligations between Grantor and Grantee pursuant to
or in connection with the transactions contemplated by the Indenture (the
Indenture, the Securities, this Deed, the other Security Documents and the
related documents described in this clause (iii), all as amended,
supplemented or otherwise modified from time to time, being, collectively,
the "Instruments"), (iv) any extensions, renewals, replacements,
-----------
substitutions or modifications of the Indenture or the Securities
(including, without limitation, any substitute or replacement Security or
Securities issued to any Holders in connection with any transfer or
assignment of all or any portion of the indebtedness evidenced by the
Indenture), and the other Instruments pursuant to the terms of the
Indenture, (v) any and all expenses incurred pursuant to this Deed, the
Indenture or any other Instrument incident to the collection of the
indebtedness secured hereby and the foreclosure hereof by action in any
court or by exercise of the power of sale herein contained, and (vi) any
and all other indebtedness now owing or which may hereafter be owing by
Grantor to Grantee and/or the Holders under or pursuant to the Indenture
and/or any of the other Instruments, however and whenever incurred or
evidenced, whether direct or indirect, absolute or contingent, due or to
become due, together with any and all renewal or renewals and extension or
extensions of said other indebtedness (the items set forth in clauses (i)
through (vi) hereof being hereinafter collectively referred to as the
"Indebtedness"), and"
------------
-3-
<PAGE>
is hereby deleted in its entirety and the following substituted in lieu thereof:
"(a) the debt evidenced by (i) the Securities in the aggregate
principal amount of Twenty Million Dollars ($20,000,000), (ii) the
Additional Securities in the aggregate principal amount of Ten Million
Dollars ($10,000,000), (iii) the Indenture, which Indenture is incorporated
by this reference and made a part of this Deed, (iv) any and all other sums
due or to become due under the Indenture, the Notes, this Deed, the other
Security Documents or any other security agreements, Additional Mortgages
(as hereinafter defined), financing statements, patent and trademark
security agreements, lease assignments, guaranties and other agreements,
instruments and written indicia of contractual obligations between Grantor
and Grantee pursuant to or in connection with the transactions contemplated
by the Indenture (the Indenture, the Notes, this Deed, the other Security
Documents and the related documents described in this clause (iv), all as
amended, supplemented or otherwise modified from time to time, being,
collectively, the "Instruments"), (v) any extensions, renewals,
-----------
replacements, substitutions or modifications of the Indenture or the Notes
(including, without limitation, any substitute or replacement Note or Notes
issued to any Holders in connection with any transfer or assignment of all
or any portion of the indebtedness evidenced by the Indenture), and the
other Instruments pursuant to the terms of the Indenture, (vi) any and all
expenses incurred pursuant to this Deed, the Indenture or any other
Instrument incident to the collection of the indebtedness secured hereby
and the foreclosure hereof by action in any court or by exercise of the
power of sale herein contained, and (vii) any and all other indebtedness
now owing or which may hereafter be owing by Grantor to Grantee and/or the
Holders under or pursuant to the Indenture and/or any of the other
Instruments, however and whenever incurred or evidenced, whether direct or
indirect, absolute or contingent, due or to become due, together with any
and all renewal or renewals and extension or extensions of said other
indebtedness (the items set forth in clauses (i) through (vii) hereof being
hereinafter collectively referred to as the "Indebtedness"), and",
------------
such that the term "Indebtedness" shall include the debt evidenced by the
Additional Securities.
3. Amendment. Paragraph 35 of the Security Deed is hereby amended by
---------
deleting the period following the word "Grantee" and adding the following to the
end of the first sentence thereof:
-4-
<PAGE>
", and pursuant to Section 9.01 or Section 9.02 of the Indenture."
4. Reaffirmation. Grantor hereby reaffirms, as of the date of this First
-------------
Amendment, the truth, accuracy and effectiveness of all of the warranties and
representations of Grantor contained in the Security Deed.
5. No Other Modifications. Except as expressly modified and amended by
----------------------
this First Amendment, all provisions, terms and conditions contained in the
Security Deed shall remain in full force and effect as originally executed and
delivered by Grantor.
6. No Novation. The execution and delivery of this First Amendment shall
-----------
not constitute a novation of the lien and encumbrance of the Security Deed,
which lien and encumbrance shall retain its first priority position as
originally filed for record in the Laurens County, Georgia records.
7. Binding Nature. This First Amendment shall be binding upon and inure
--------------
to the benefit of Grantor, Grantee, and their respective legal representatives,
successors and assigns.
8. Applicable Law. This First Amendment shall be governed by and
--------------
construed according to the laws the State of Georgia.
IN WITNESS WHEREOF, the undersigned have caused this First Amendment to be
executed under and delivered as of the day and year first above written.
Signed, sealed and delivered "GRANTOR"
in the presence of:
FORSTMANN & COMPANY, INC.,
a Georgia corporation
- - -----------------------
Witness
By:
----------------------------
Title:
- - ----------------------- ---------------------
Notary Public
My Commission Expires:
(CORPORATE SEAL)
- - -----------------------
(NOTARIAL SEAL)
[Signatures continued on next page]
This signature page is attached to and a part of that certain First
Amendment to Deed of Trust, Assignment of Leases and Rents,
-5-
<PAGE>
Security Agreement and Fixture Filing by and between Forstmann & Company, Inc.,
as "Grantor", and Shawmut Bank Connecticut, National Association, as Trustee, as
"Grantee".
-6-
<PAGE>
[Signatures continued from prior page]
Signed, sealed and delivered "GRANTEE"
in the presence of:
SHAWMUT BANK CONNECTICUT,
NATIONAL ASSOCIATION, as Trustee
- - -----------------------
Witness
By:
----------------------------
Title:
---------------------
- - ------------------------
Notary Public (BANK SEAL)
My Commission Expires:
________________________
(NOTARIAL SEAL)
This signature page is attached to and a part of that certain First
Amendment to Deed of Trust, Assignment of Leases and Rents, Security Agreement
and Fixture Filing by and between Forstmann & Company, Inc., as "Grantor", and
Shawmut Bank Connecticut, National Association, as Trustee, as "Grantee".
-7-
<PAGE>
CROSS REFERENCE: DEED BOOK 680, PAGE 213
LAURENS COUNTY, GEORGIA RECORDS
SUBORDINATION, CONSENT AND JOINDER OF HOLDER
--------------------------------------------
[original to be delivered by Diane White at closing and attached hereto]
-8-
<PAGE>
LENDER'S INTANGIBLE RECORDING
TAX APPORTIONMENT AFFIDAVIT
---------------------------
STATE OF GEORGIA )
)ss.:
COUNTY OF LAURENS )
Personally appeared before me, the undersigned officer duly authorized to
administer oaths in the foregoing state and county,
___________________________________, who, first being duly sworn, deposes and
says on oath as follows:
1. That (s)he is ____________________of Shawmut Bank Connecticut, National
Association, trustee ("Trustee") for the equal and ratable benefit of the
Holders (as defined herein), and in such capacity is authorized to make this
Affidavit on behalf of Trustee and the Holders.
2. That the principal place of business of Trustee and the Holders is
outside of Georgia.
3. That pursuant to an Indenture (the "Original Indenture") dated as of
April 5, 1993, between Forstmann & Company, Inc. ("Forstmann"), and Trustee,
Forstmann issued and delivered to Trustee its Senior Secured Floating Rate Notes
("Notes") secured by a Deed to Secure Debt, Assignment of Leases and Rents,
Security Agreement and Fixture Filing ("Deed to Secure Debt"), dated as of April
5, 1993, and recorded in Deed Book 697, page 219, Laurens County, Georgia
records, in the aggregate principal amount of Twenty Million Dollars
($20,000,000).
4. That the amount of intangibles tax payable with respect to said Notes
was the $25,000 maximum as provided under O.C.G.A. (S) 48-6-61.
5. That pursuant to an Amended and Restated Indenture (the "Amended
Indenture") dated as of March 30, 1994, between Forstmann and Trustee, Forstmann
will issue and deliver to Trustee its additional Senior Secured Floating Rate
Notes ("Additional Securities") secured by the accompanying First Amendment to
Deed to Secure Debt, Assignment of Leases and Rents, Security Agreement and
Fixture Filing ("First Amendment") in the aggregate principal amount of Ten
Million Dollars ($10,000,000). The holders of the Notes and Additional
Securities from time to time are referred to herein as the "Holders."
6. That the amount of intangibles tax payable with respect to said
Additional Securities is the $25,000 maximum as provided under O.C.G.A. (S) 48-
6-61.
7. That the Notes and Additional Securities are secured by instruments
affecting properties located within Baldwin County, Jefferson County, Laurens
County and Tift County in the State of Georgia (the "Real Estate").
<PAGE>
8. That based solely upon independent appraisals conducted by Valuation
Research Corporation as of February 15, 1992, the following percentages
represent the respective values of the Real Estate subject to the Deed to Secure
Debt, as amended by the First Amendment in each of Baldwin County, Jefferson
County, Laurens County and Tift County in the State of Georgia:
<TABLE>
<CAPTION>
County: Valuation: Percentage:
------- ---------- -----------
<S> <C> <C>
Baldwin $ 3,600,000.00 25.71%
Jefferson 1,300,000.00 9.29%
Laurens 6,600,000.00 47.14%
Tift 2,500,000.00 17.86%
------------- ------
$14,000,000.00 100.00%
</TABLE>
9. That the total amount of intangible recording tax therefore due in
the State of Georgia on the above and in respect of the Additional Securities is
$25,000.000 of which $6,425.00 is attributable to Baldwin County, $2,325.00 is
attributable to Jefferson County, $11,785.00 is attributable to Laurens County,
and $4,465.00 is attributable to Tift County.
10. That this Affidavit is given pursuant to O.C.G.A. (S) 48-6-69.
This 30th day of March, 1994.
SHAWMUT BANK CONNECTICUT, NATIONAL
ASSOCIATION, as Trustee
By:___________________________
Title:________________________
Sworn to and subscribed
before me this 30th day
of March, 1994.
__________________________
Notary Public,
State of New York
My Commission Expires
_________________________
<PAGE>
Exhibit 4.5
FIRST AMENDMENT TO PLEDGE AND SECURITY AGREEMENT
------------------------------------------------
THIS FIRST AMENDMENT TO PLEDGE AND SECURITY AGREEMENT (the "Amendment") is
made and entered into this 30th day of March, 1994, by FORSTMANN & COMPANY,
INC., a Georgia corporation ("Grantor"), and SHAWMUT BANK CONNECTICUT, NATIONAL
ASSOCIATION, a national banking association (the "Secured Party"), as Trustee
for the Holders under that certain Amended and Restated Indenture, of even date
herewith, between Grantor and the Secured Party (the "Indenture"), which amends
and restates that certain Indenture, dated as of April 5, 1993, between Grantor
and the Secured Party (the "Original Indenture"), as Trustee.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, in connection with the transactions contemplated by the Original
Indenture, Grantor and the Secured Party entered into that certain Pledge and
Security Agreement dated as of April 5, 1993 (the "Pledge Agreement"); and
WHEREAS, in connection with the transactions contemplated by the Indenture,
Grantor and the Secured Party desire to amend the Pledge Agreement in accordance
with the terms and conditions hereinafter set forth;
NOW, THEREFORE, FOR AND IN CONSIDERATION of the premises, the mutual
promises, covenants and agreements contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1. The first recital in the Pledge Agreement is hereby amended by deleting
the same in its entirety and inserting in lieu thereof the following:
"WHEREAS, pursuant to certain Purchase Agreements, dated as of April
5, 1993, each between Grantor and the respective initial Holders (the "1993
Purchase Agreements"), the initial Holders purchased from Grantor certain
Senior Secured Floating Rate Notes due October 30, 1997 (the "1993
Securities") in the aggregate principal amount of Twenty Million Dollars
($20,000,000.00);
WHEREAS, pursuant to certain Purchase Agreements, dated as of March
30, 1994, each between Grantor and the respective initial Holders (the
"1994 Purchase Agreements") (the 1993 Purchase Agreements and the 1994
Purchase Agreements are sometimes hereinafter collectively referred to as
the "Purchase Agreements"), the initial Holders have agreed to purchase
from Grantor certain Senior Secured Floating Rate Notes due October 30,
1997 (the
<PAGE>
"1994 Securities") (the 1993 Securities and the 1994 Securities
are sometimes hereinafter collectively referred to as the "Securities") in
the additional aggregate principal amount of Ten Million Dollars
($10,000,000.00); and"
2. Section 1 of the Pledge Agreement is hereby amended by deleting the
definition of "Indenture" contained therein in its entirety and inserting in
---------
lieu thereof the following:
""Indenture" shall mean that certain Amended and Restated Indenture
---------
between Grantor and the Secured Party, dated as of March 30, 1994 (which
amends and restates that certain Indenture between Grantor and the Secured
Party, dated as of April 5, 1993), as the same may from time to time be
amended, modified or supplemented."
3. Section 15 of the Agreement is hereby amended by deleting the same in
its entirety and inserting in lieu thereof the following:
"15. Intercreditor Agreement. This Agreement is subject to the
-----------------------
provisions of Section 10.06 of the Indenture and that certain Amended and
Restated Intercreditor Agreement, dated as of March 30, 1994, between the
Credit Agent and the Secured Party."
4. Schedule 1 to the Pledge Agreement is hereby amended by deleting the
same in its entirety and replacing it with Schedule 1 attached hereto.
5. Schedule 4 to the Pledge Agreement is hereby amended by deleting the
same in its entirety and replacing it with Schedule 4 attached hereto.
6. In furtherance of the amendments to the Pledge Agreement set forth
herein, and as collateral security for the prompt and complete payment and
performance when due of all of the "Secured Obligations" (as defined in the
Pledge Agreement as amended hereby, including, without limitation, all of the
unpaid principal amount of and accrued interest on the 1994 Securities), Grantor
hereby assigns, conveys, mortgages, pledges, hypothecates and transfers to the
Secured Party, for the equal and ratable benefit of the "Holders" (as defined in
the Indenture), and hereby grants to the Secured Party, for the equal and
ratable benefit of the Holders, a security interest in all of Grantor's right,
title and interest in, to and under the "Collateral" (as defined in the Pledge
Agreement), on the terms and conditions set forth in the Pledge Agreement (all
of which are hereby incorporated herein by reference).
7. Grantor hereby represents and warrants to the Secured Party that all
of Grantor's representations and warranties contained in the Pledge Agreement
(as amended hereby) are true and correct as of the date of this Amendment.
8. Except as expressly set forth herein, this Amendment shall not be
deemed to waive, amend or modify any term or condition of the Pledge Agreement,
which is hereby ratified and reaffirmed, and which shall remain in full force
and effect.
<PAGE>
9. This Amendment shall be governed by and construed in accordance with
the laws of the State of New York without regard to the provisions thereof
regarding conflicts of laws.
IN WITNESS WHEREOF, the undersigned have caused their duly authorized
representatives to execute this Agreement as of the day and year first above
written.
"Grantor"
FORSTMANN & COMPANY, INC.
By:
-------------------------
Title:
----------------------
"Secured Party"
SHAWMUT BANK CONNECTICUT, NATIONAL
ASSOCIATION, AS TRUSTEE
By:
-------------------------
Title:
----------------------
-3-
<PAGE>
SCHEDULE 1
TO
SECURITY AGREEMENT
LOCATIONS OF INVENTORY AND EQUIPMENT AND STATUS
-----------------------------------------------
[TO BE ADDED]
<PAGE>
SCHEDULE 4
TO
SECURITY AGREEMENT
UCC FINANCING STATEMENTS
------------------------
[TO BE ADDED]
<PAGE>
Exhibit 4.6
FIRST AMENDMENT TO TRADEMARK SECURITY AGREEMENT
-----------------------------------------------
(Foreign)
THIS FIRST AMENDMENT TO TRADEMARK SECURITY AGREEMENT (Foreign) (the
"Amendment") is made and entered into this 30th day of March, 1994, by FORSTMANN
& COMPANY, INC., a Georgia corporation ("Issuer"), and SHAWMUT BANK CONNECTICUT,
NATIONAL ASSOCIATION, a national banking association ("Shawmut"), as Trustee for
the equal and ratable benefit of the Holders under that certain Amended and
Restated Indenture, of even date herewith, between Issuer and Shawmut, as
Trustee (the "Indenture"), which amends and restates that certain Indenture,
dated as of April 5, 1993, between Issuer and Shawmut, as Trustee (the "Original
Indenture") (Shawmut in its capacity as Trustee is referred to herein as the
"Secured Party").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, pursuant to the Original Indenture, Issuer issued and delivered to
the purchasers thereof its Senior Secured Floating Rate Notes due October 30,
1997, in the aggregate principal amount of Twenty Million Dollars
($20,000,000.00) (the "1993 Securities");
WHEREAS, in connection with the transactions contemplated by the Original
Indenture, Issuer and the Secured Party entered into that certain Trademark
Security Agreement (Foreign), dated as of April 5, 1993 (the "Agreement"),
pursuant to which Issuer granted to the Secured Party a security interest in and
to the "Collateral" (as defined in the Agreement), including, without
limitation, the "Trademarks" and "Trademark Licenses" (as such terms are defined
in the Agreement, including, without limitation the registrations, recordings,
applications and agreements listed on Schedule I attached hereto and
----------
incorporated herein by reference), as security for the repayment of the 1993
Securities and certain other obligations of Issuer with respect thereto;
WHEREAS, pursuant to the Indenture, Issuer has issued and delivered to the
purchasers thereof its Senior Secured Floating Rate Notes due October 30, 1997,
in the additional aggregate principal amount of Ten Million Dollars
($10,000,000.00) (the "1994 Securities");
WHEREAS, after the date of the Agreement, Issuer filed the trademark
applications listed on Schedule II attached hereto and incorporated herein by
-----------
reference, which applications constitute "Trademarks" under the Agreement;
WHEREAS, Issuer has also agreed to grant to the Secured Party a security
interest in and to the Collateral as security for the repayment of the 1994
Securities and certain other obligations of Issuer with respect thereto; and
WHEREAS, Issuer and the Secured Party desire to amend the Agreement in
accordance with the terms and conditions hereinafter set forth;
<PAGE>
NOW, THEREFORE, FOR AND IN CONSIDERATION of the premises, the mutual
promises, covenants and agreements contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1. The first recital in the Agreement is hereby amended by deleting the
first sentence thereof in its entirety and inserting in lieu thereof the
following:
"A. Pursuant to that certain Indenture, dated as of April 5, 1993
(the "Original Indenture"), between Issuer and the Secured Party, Issuer
issued and delivered to the purchasers thereof its Senior Secured Floating
Rate Notes due October 30, 1997, in the aggregate principal amount of
Twenty Million Dollars ($20,000,000.00) (the "1993 Securities"), and
pursuant to that certain Amended and Restated Indenture, dated as of March
30, 1994 (as hereafter amended, modified or supplemented, the "Indenture"),
between Issuer and the Secured Party (which amended and restated the
Original Indenture), Issuer has issued and delivered to the purchasers
thereof its Senior Secured Floating Rate Notes due October 30, 1997, in the
additional aggregate principal amount of Ten Million Dollars
($10,000,000.00) (the "1994 Securities") (the 1993 Securities and the 1994
Securities, and any renewals, substitutions or modifications thereof or
notes issued pursuant to the Indenture in exchange therefor, are sometimes
hereinafter collectively referred to as the "Securities")."
2. The third recital of the Agreement is hereby amended by deleting the
first sentence thereof in its entirety and inserting in lieu thereof the
following:
"C. Issuer and the Secured Party are parties to that certain Pledge
and Security Agreement, dated as of April 5, 1993, which has been amended
by that certain First Amendment to Pledge and Security Agreement, dated as
of March 30, 1994, between Issuer and the Secured Party (as heretofore or
hereafter amended, the "Security Agreement")."
3. Schedule I to the Agreement is hereby amended by adding thereto the
trademark applications listed on Schedule II attached hereto.
4. In furtherance of the amendments to the Agreement set forth herein,
and as collateral security for the prompt and complete payment and performance
when due of all of the "Secured Obligations" (as defined in that certain Pledge
and Security Agreement, dated as of April 5, 1993, between Issuer and the
Secured Party, as amended by that certain First Amendment to Pledge and Security
Agreement of even date herewith between Issuer and the Secured Party, and
incorporated by reference in the Agreement (as amended hereby), including,
without limitation, all of the unpaid principal amount of and accrued interest
on the 1994 Securities), Issuer hereby grants to the Secured Party, for the
equal and ratable
-2-
<PAGE>
benefit of the "Holders" (as defined in the Indenture), a first priority
security interest in all of Issuer's right, title and interest in and to the
Collateral (including, without limitation, the trademark applications listed on
Schedule II attached hereto), on the terms and conditions set forth in the
- - -----------
Agreement (all of which are hereby incorporated herein by reference).
5. Issuer hereby represents and warrants to the Secured Party that all of
Issuer's representations and warranties contained in the Agreement are true and
correct as of the date of this Amendment.
6. Except as expressly set forth herein, this Amendment shall not be
deemed to waive, amend or modify any term or condition of the Agreement, which
is hereby ratified and reaffirmed, and which shall remain in full force and
effect.
7. This Amendment shall be governed by and construed in accordance with
the laws of the State of New York without regard to the provisions thereof
regarding conflicts of laws.
IN WITNESS WHEREOF, the undersigned have caused their duly authorized
representatives to execute this Agreement as of the day and year first above
written.
"Issuer"
FORSTMANN & COMPANY, INC.
By:
-------------------------
Title:
----------------------
"Secured Party"
SHAWMUT BANK CONNECTICUT, NATIONAL
ASSOCIATION, AS TRUSTEE
By:
-------------------------
Title:
----------------------
-3-
<PAGE>
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
On March 30, 1994, before me, the undersigned, personally appeared Rodney
J. Peckham, personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person who executed this instrument as Vice President and
Treasurer of Forstmann & Company, Inc. and acknowledged to me that said
corporation executed it pursuant to its by-laws or a resolution of its board of
directors.
----------------------------------
Notary Public in and for
said County and State
My commission expires:
----------------------------------
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE I
----------
Trademark and Service Marks
---------------------------
Registration Registration
Mark Country Date Number
- - ---- ------- ------------ ------------
<S> <C> <C> <C>
FORSTMANN WOOLENS Canada 4/9/32 251/54141
(and Design)
FORSTMANN Japan 11/30/88 2093567
FORSTMANN Australia 10/25/88 A498130
FORSTMANN Hong Kong 10/21/88 1348 of 1990
FORSTMANN France 7/25/89 1,543,041
FORSTMANN France 7/25/89 1,543,042
(Stylized)
FORSTMANN Switzerland 5/24/89 368950
(Stylized)
FORSTMANN United Kingdom 10/21/88 1361460
(Stylized)
FORSTMANN (New Austria 3/31/92 141094
Logo)
FORSTMANN (New Benelux 9/9/91 501284
Logo)
FORSTMANN (New Denmark 7/24/92 06646/1992
Logo)
FORSTMANN (New Switzerland 10/30/92 396272
Logo)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Trademark and Servicemark Applications
--------------------------------------
Application Serial
Mark Country Date Number
- - ---- ------- ------------ ------------
<S> <C> <C> <C>
FORSTMANN (New Canada 10/23/91 691949
Logo)
FORSTMANN (New Germany 12/12/91 F40611/24Wz
Logo)
FORSTMANN (New Ireland 12/2/91 91-6028
Logo)
FORSTMANN (New Italy 12/6/91 RM91C004322
Logo)
FORSTMANN (New Norway 12/3/91 916067
Logo)
FORSTMANN (New Portugal 12/11/91 278 997
Logo)
FORSTMANN (New Spain 12/31/91 1676604
Logo)
FORSTMANN (New Indonesia 2/8/92 H4.HC.
Logo) 01.01.1849-C92
FORSTMANN Italy 11/10/92 37306C/88
</TABLE>
Forstmann & Company has begun the process of applying for the registration of
(i) the FORSTMANN INTERNATIONAL logo in Mexico and Canada and (ii) the FORSTMANN
logo in Sweden.
<PAGE>
TRADEMARK LICENSES
------------------
Trademark Licenses with respect to which Issuer is a licensor:
NONE
Trademark Licenses with respect to which Issuer is a licensee:
1. License Agreement effective as of December 28, 1985, between J.P. Stevens &
Co., Inc., as licensor, and Forstmann & Company, Inc., as licensee.
2. Trademark License Agreement for Upholstery Products dated October 16, 1991,
between BASF Corporation, as licensor, and Forstmann & Company, Inc., as
licensee. (Licensing of Zeftron 200 Nylon trademark relating to products
with BASF's fibers or yarns for upholstery).
3. License Agreement dated August 29, 1986 between The Wool Bureau,
Incorporated, as licensor, and Forstmann & Company, Inc., as licensee.
(Licensing of Woolmark (design) trademark relating to pure wool products
and licensing of Woolblend trademark relating to products containing wool).
4. Agreement dated July 1, 1992 between Compagnia Tessile S.p.A., as licensor
and Forstmann & Company, Inc., as licensee. (Licensing of CARPINI
trademark in the format CARPINI USA FOR FORSTMANN INTERNATIONAL relating to
women's and men's apparel).
5. License Agreement dated as of June 1, 1992 between Morton International
Inc., as licensor, and Forstmann & Company, Inc., as licensee. (Licensing
of BIO-PRUF, BIO-PRUF TREATED, BIO-PRUF TREATED LOGO (designs) trademarks
relating to textile and polyethylene upholstery containing Morton's
products).
<PAGE>
<TABLE>
<CAPTION>
Schedule II
-----------
TRADEMARK APPLICATIONS
----------------------
Mark Country Application Date Serial Number
- - ------------ ------- ---------------- -------------
<S> <C> <C> <C>
FORSTMANN Canada 8/20/93 691,949
(New Logo)
FORSTMANN Germany 9/1/93 2,043,783
</TABLE>
<PAGE>
Exhibit 4.7
FIRST AMENDMENT TO TRADEMARK SECURITY AGREEMENT
-----------------------------------------------
(U.S.)
THIS FIRST AMENDMENT TO TRADEMARK SECURITY AGREEMENT (U.S.) (the
"Amendment") is made and entered into this 30th day of March, 1994, by FORSTMANN
& COMPANY, INC., a Georgia corporation ("Issuer"), and SHAWMUT BANK CONNECTICUT,
NATIONAL ASSOCIATION, a national banking association ("Shawmut"), as Trustee for
the equal and ratable benefit of the Holders under that certain Amended and
Restated Indenture, of even date herewith, between Issuer and Shawmut, as
Trustee (the "Indenture"), which amends and restates that certain Indenture,
dated as of April 5, 1993, between Issuer and Shawmut, as Trustee (the "Original
Indenture") (Shawmut in its capacity as Trustee is referred to herein as the
"Secured Party").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, pursuant to the Original Indenture, Issuer issued and delivered to
the purchasers thereof its Senior Secured Floating Rate Notes due October 30,
1997, in the aggregate principal amount of Twenty Million Dollars
($20,000,000.00) (the "1993 Securities");
WHEREAS, in connection with the transactions contemplated by the Original
Indenture, Issuer and the Secured Party entered into that certain Trademark
Security Agreement (U.S.), dated as of April 5, 1993 (the "Agreement"), and
recorded at Reel 950, Frame 224 in the records of the United States Patent and
Trademark Office in Washington, D.C., pursuant to which Issuer granted to the
Secured Party a security interest in and to the "Collateral" (as defined in the
Agreement), including, without limitation, the "Trademarks" and "Trademark
Licenses" (as such terms are defined in the Agreement, including, without
limitation the registrations, recordings, applications and agreements listed on
Schedule I attached hereto and incorporated herein by reference), as security
- - ----------
for the repayment of the 1993 Securities and certain other obligations of Issuer
with respect thereto;
WHEREAS, pursuant to the Indenture, Issuer has issued and delivered to the
purchasers thereof its Senior Secured Floating Rate Notes due October 30, 1997,
in the additional aggregate principal amount of Ten Million Dollars
($10,000,000.00) (the "1994 Securities");
WHEREAS, on August 20, 1993, Issuer filed the trademark application
described on Schedule II attached hereto and incorporated herein by reference,
-----------
which application constitutes a "Trademark" under the Agreement;
WHEREAS, Issuer has also agreed to grant to the Secured Party a security
interest in and to the Collateral as security for the repayment of the 1994
Securities and certain other obligations of Issuer with respect thereto; and
<PAGE>
WHEREAS, Issuer and the Secured Party desire to amend the Agreement in
accordance with the terms and conditions hereinafter set forth;
NOW, THEREFORE, FOR AND IN CONSIDERATION of the premises, the mutual
promises, covenants and agreements contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1. The first recital in the Agreement is hereby amended by deleting the
first sentence thereof in its entirety and inserting in lieu thereof the
following:
"A. Pursuant to that certain Indenture, dated as of April 5, 1993
(the "Original Indenture"), between Issuer and the Secured Party, Issuer
issued and delivered to the purchasers thereof its Senior Secured Floating
Rate Notes due October 30, 1997, in the aggregate principal amount of
Twenty Million Dollars ($20,000,000.00) (the "1993 Securities"), and
pursuant to that certain Amended and Restated Indenture, dated as of March
30, 1994 (as hereafter amended, modified or supplemented, the "Indenture"),
between Issuer and the Secured Party (which amended and restated the
Original Indenture), Issuer has issued and delivered to the purchasers
thereof its Senior Secured Floating Rate Notes due October 30, 1997, in the
additional aggregate principal amount of Ten Million Dollars
($10,000,000.00) (the "1994 Securities") (the 1993 Securities and the 1994
Securities, and any renewals, substitutions or modifications thereof or
notes issued pursuant to the Indenture in exchange therefor, are sometimes
hereinafter collectively referred to as the "Securities")."
2. The third recital of the Agreement is hereby amended by deleting the
first sentence thereof in its entirety and inserting in lieu thereof the
following:
"C. Issuer and the Secured Party are parties to that certain Pledge
and Security Agreement, dated as of April 5, 1993, which has been amended
by that certain First Amendment to Pledge and Security Agreement, dated as
of March 30, 1994, between Issuer and the Secured Party (as heretofore or
hereafter amended, the "Security Agreement")."
3. Schedule I to the Agreement is hereby amended by adding thereto the
trademark application described on Schedule II attached hereto.
4. In furtherance of the amendments to the Agreement set forth herein,
and as collateral security for the prompt and complete payment and performance
when due of all of the "Secured Obligations" (as defined in that certain Pledge
and Security Agreement, dated as of April 5, 1993, between Issuer and the
Secured Party, as amended by that certain First Amendment to Pledge and Security
Agreement of even date herewith between Issuer and the Secured Party, and
incorporated by reference in the Agreement (as amended hereby), including,
without limitation, all of the unpaid principal amount of and accrued interest
on the 1994 Securities), Issuer hereby grants to the Secured Party, for the
equal and ratable
-2-
<PAGE>
benefit of the "Holders" (as defined in the Indenture), a first priority
security interest in all of Issuer's right, title and interest in and to the
Collateral (including, without limitation, the trademark application described
on Schedule II attached hereto), on the terms and conditions set forth in the
Agreement (all of which are hereby incorporated herein by reference).
5. Issuer hereby represents and warrants to the Secured Party that all of
Issuer's representations and warranties contained in the Agreement are true and
correct as of the date of this Amendment.
6. Except as expressly set forth herein, this Amendment shall not be
deemed to waive, amend or modify any term or condition of the Agreement, which
is hereby ratified and reaffirmed, and which shall remain in full force and
effect.
7. This Amendment shall be governed by and construed in accordance with
the laws of the State of New York without regard to the provisions thereof
regarding conflicts of laws.
IN WITNESS WHEREOF, the undersigned have caused their duly authorized
representatives to execute this Agreement as of the day and year first above
written.
"Issuer"
FORSTMANN & COMPANY, INC.
By:
-------------------------
Title:
----------------------
"Secured Party"
SHAWMUT BANK CONNECTICUT, NATIONAL
ASSOCIATION, AS TRUSTEE
By:
-------------------------
Title:
----------------------
-3-
<PAGE>
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
On March 30, 1994, before me, the undersigned, personally appeared Rodney
J. Peckham, personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person who executed this instrument as Vice President and
Treasurer of Forstmann & Company, Inc. and acknowledged to me that said
corporation executed it pursuant to its by-laws or a resolution of its board of
directors.
----------------------------------
Notary Public in and for
said County and State
My commission expires:
----------------------------------
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE I
----------
Trademark and Service Marks
---------------------------
Registration Registration
Mark Country Date Number
- - ---- ------- ------------ ------------
<S> <C> <C> <C>
FORSTMANN FINNESSE United States 7/28/92 1,703,357
(Stylized Letters)
FORSTMANN NEW BREED United States 7/28/92 1,703,355
THE LONG AND SHORT
OF IT
(Stylized Letters)
Casuwools (Stylized United States 7/7/92 1,699,145
Letters)
CASUWOOL United States 1/28/92 1,673,877
FORSTMANN United States 5/8/90 1,595,460
FORSTMANN WOOLENS United States 11/19/68 860,612
FORSTMANN (and United States 5/18/65 789,758
Design)
FORSTMANN (and United States 10/6/53 580,698
Design)
FORSTMANN WOOLENS United States 10/31/53 580,939
QUALITY
CRAFTSMANSHIP STYLE
(and Design)
FORSTMANN (Stylized United States 11/22/49 517,965
Letters)
ANDOVER (Stylized United States 7/5/49 511,789
Letters)
HOCKANUM (Stylized United States 7/16/35 326,108
Letters)
WORUMBO (Stylized United States 4/20/26 211,703
Letters)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TRADEMARK AND SERVICEMARK APPLICATIONS
--------------------------------------
Application Serial
Mark Country Date Number
- - ---- ------- ----------- --------
<S> <C> <C> <C>
FORSTMANN
INTERNATIONAL
(and design) United States 9/21/92 74/315,333
</TABLE>
TRADEMARK LICENSES
------------------
Trademark Licenses with respect to which Issuer is a licensor:
NONE
Trademark Licenses with respect to which Issuer is a licensee:
1. License Agreement effective as of December 28, 1985, between J.P. Stevens &
Co., Inc., as licensor, and Forstmann & Company, Inc., as licensee.
2. Trademark License Agreement for Upholstery Products dated October 16, 1991,
between BASF Corporation, as licensor, and Forstmann & Company, Inc., as
licensee. (Licensing of Zeftron 200 Nylon trademark relating to products
with BASF's fibers or yarns for upholstery).
3. License Agreement dated August 29, 1986 between The Wool Bureau,
Incorporated, as licensor, and Forstmann & Company, Inc., as licensee.
(Licensing of Woolmark (design) trademark relating to pure wool products
and licensing of Woolblend trademark relating to products containing wool).
4. Agreement dated July 1, 1992 between Compagnia Tessile S.p.A., as licensor
and Forstmann & Company, Inc., as licensee. (Licensing of CARPINI
trademark in the format CARPINI USA FOR FORSTMANN INTERNATIONAL relating to
women's and men's apparel).
5. License Agreement dated as of June 1, 1992 between Morton International
Inc., as licensor, and Forstmann & Company, Inc., as licensee. (Licensing
of BIO-PRUF, BIO-PRUF TREATED, BIO-PRUF TREATED LOGO (designs) trademarks
relating to textile and polyethylene upholstery containing Morton's
products).
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE II
-----------
TRADEMARK APPLICATION
---------------------
Mark Country Application Date Serial Number
- - ---- ------- ---------------- -------------
<S> <C> <C> <C>
FAST FORWARD United States 8/3/93 74/420,131
FORMULA ONE United States 3/17/94 not yet available
</TABLE>
<PAGE>
Exhibit 4.8
FIRST AMENDMENT TO PATENT SECURITY AGREEMENT
--------------------------------------------
THIS FIRST AMENDMENT TO PATENT SECURITY AGREEMENT (the "Amendment") is made
and entered into this 30th day of March, 1994, by FORSTMANN & COMPANY, INC., a
Georgia corporation ("Issuer"), and SHAWMUT BANK CONNECTICUT, NATIONAL
ASSOCIATION, a national banking association ("Shawmut"), as Trustee for the
equal and ratable benefit of the Holders under that certain Amended and Restated
Indenture, of even date herewith, between Issuer and Shawmut, as Trustee (the
"Indenture"), which amends and restates that certain Indenture, dated as of
April 5, 1993, between Issuer and Shawmut, as Trustee (the "Original Indenture")
(Shawmut in its capacity as Trustee is referred to herein as the "Secured
Party").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, pursuant to the Original Indenture, Issuer issued and delivered to
the purchasers thereof its Senior Secured Floating Rate Notes due October 30,
1997, in the aggregate principal amount of Twenty Million Dollars
($20,000,000.00) (the "1993 Securities");
WHEREAS, in connection with the transactions contemplated by the Original
Indenture, Issuer and the Secured Party entered into that certain Patent
Security Agreement, dated as of April 5, 1993 (the "Agreement"), pursuant to
which Issuer granted to the Secured Party a security interest in and to the
"Collateral" (as defined in the Agreement), including, without limitation, the
"Patents" and "Patent Licenses" (as such terms are defined in the Agreement,
including, without limitation the agreements listed on Schedule I attached
----------
hereto and incorporated herein by reference), as security for the repayment of
the 1993 Securities and certain other obligations of Issuer with respect
thereto;
WHEREAS, pursuant to the Indenture, Issuer has issued and delivered to the
purchasers thereof its Senior Secured Floating Rate Notes due October 30, 1997,
in the additional aggregate principal amount of Ten Million Dollars
($10,000,000.00) (the "1994 Securities");
WHEREAS, Issuer has also agreed to grant to the Secured Party a security
interest in and to the Collateral as security for the repayment of the 1994
Securities and certain other obligations of Issuer with respect thereto; and
WHEREAS, Issuer and the Secured Party desire to amend the Agreement in
accordance with the terms and conditions hereinafter set forth;
<PAGE>
NOW, THEREFORE, FOR AND IN CONSIDERATION of the premises, the mutual
promises, covenants and agreements contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1. The first recital in the Agreement is hereby amended by deleting the
first sentence thereof in its entirety and inserting in lieu thereof the
following:
"A. Pursuant to that certain Indenture, dated as of April 5, 1993
(the "Original Indenture"), between Issuer and the Secured Party, Issuer
issued and delivered to the purchasers thereof its Senior Secured Floating
Rate Notes due October 30, 1997, in the aggregate principal amount of
Twenty Million Dollars ($20,000,000.00) (the "1993 Securities"), and
pursuant to that certain Amended and Restated Indenture, dated as of March
30, 1994 (as hereafter amended, modified or supplemented, the "Indenture"),
between Issuer and the Secured Party (which amended and restated the
Original Indenture), Issuer has issued and delivered to the purchasers
thereof its Senior Secured Floating Rate Notes due October 30, 1997, in the
additional aggregate principal amount of Ten Million Dollars
($10,000,000.00) (the "1994 Securities") (the 1993 Securities and the 1994
Securities, and any renewals, substitutions or modifications thereof or
notes issued pursuant to the Indenture in exchange therefor, are sometimes
hereinafter collectively referred to as the "Securities")."
2. The third recital of the Agreement is hereby amended by deleting the
first sentence thereof in its entirety and inserting in lieu thereof the
following:
"C. Issuer and the Secured Party are parties to that certain Pledge
and Security Agreement, dated as of April 5, 1993, which has been amended
by that certain First Amendment to Pledge and Security Agreement, dated as
of March 30, 1994, between Issuer and the Secured Party (as heretofore or
hereafter amended, the "Security Agreement")."
3. In furtherance of the amendments to the Agreement set forth herein,
and as collateral security for the prompt and complete payment and performance
when due of all of the "Secured Obligations" (as defined in that certain Pledge
and Security Agreement, dated as of April 5, 1993, between Issuer and the
Secured Party, as amended by that certain First Amendment to Pledge and Security
Agreement of even date herewith between Issuer and the Secured Party, and
incorporated by reference in the Agreement (as amended hereby), including,
without limitation, all of the unpaid principal amount of and accrued interest
on the 1994 Securities), Issuer hereby grants to the Secured Party, for the
equal and ratable
-2-
<PAGE>
benefit of the "Holders" (as defined in the Indenture), a first priority
security interest in all of Issuer's right, title and interest in and to the
Collateral, on the terms and conditions set forth in the Agreement (all of which
are hereby incorporated herein by reference).
4. Issuer hereby represents and warrants to the Secured Party that all of
Issuer's representations and warranties contained in the Agreement are true and
correct as of the date of this Amendment.
5. Except as expressly set forth herein, this Amendment shall not be
deemed to waive, amend or modify any term or condition of the Agreement, which
is hereby ratified and reaffirmed, and which shall remain in full force and
effect.
6. This Amendment shall be governed by and construed in accordance with
the laws of the State of New York without regard to the provisions thereof
regarding conflicts of laws.
IN WITNESS WHEREOF, the undersigned have caused their duly authorized
representatives to execute this Agreement as of the day and year first above
written.
"Issuer"
FORSTMANN & COMPANY, INC.
By:
-------------------------
Title:
----------------------
"Secured Party"
SHAWMUT BANK CONNECTICUT, NATIONAL
ASSOCIATION, AS TRUSTEE
By:
-------------------------
Title:
----------------------
-3-
<PAGE>
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
On March 30, 1994, before me, the undersigned, personally appeared Rodney
J. Peckham, personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person who executed this instrument as Vice President and
Treasurer of Forstmann & Company, Inc. and acknowledged to me that said
corporation executed it pursuant to its by-laws or a resolution of its board of
directors.
----------------------------------
Notary Public in and for
said County and State
My commission expires:
----------------------------------
<PAGE>
SCHEDULE I
----------
PATENTS
-------
PATENT NO. FILING DATE TITLE
- - ---------- ----------- -----
NONE
PENDING PATENT APPLICATIONS
---------------------------
APPLICATION NO. FILING DATE TITLE
- - --------------- ----------- -----
NONE
PATENT LICENSES
---------------
1. ZIRPRO License Agreement dated April 11, 1990, between The Wool Foundation
Nominee Company Limited, as licensor, and Forstmann & Company, Inc., as
licensee. (Licensing of patents on certain fire retardant processes, U.S.
Patent No, 4,160,051 and 3,857,727).
2. Sublicense Agreement dated October 1, 1992, between F.R. Systems
International U.S.A., Inc., as licensor, and Forstmann & Company, Inc., as
licensee (Licensing of patents on fire resistant coatings, United States
Patent 4,663,226 dated May 5, 1987).
<PAGE>
Exhibit 4.9
SEVENTH AMENDMENT TO LOAN AGREEMENT
-----------------------------------
THIS SEVENTH AMENDMENT TO LOAN AGREEMENT (this "Amendment"), made and
entered into as of March __, 1994, by and between FORSTMANN & COMPANY, INC., a
Georgia corporation ("Borrower"), and GENERAL ELECTRIC CAPITAL CORPORATION, a
New York corporation ("GE Capital"), as sole "Lender" under the "Loan Agreement"
hereinafter referred to and as agent for itself and the other "Lenders" who may
hereafter become parties to the Loan Agreement (GE capital, in such capacity,
the "Agent").
RECITALS:
--------
A. Borrower and GE Capital, as a Lender and as Agent, entered into
a certain Loan Agreement, dated as of October 30, 1992, as amended (the "Loan
Agreement"; capitalized terms used herein and not defined herein shall have the
meanings ascribed to them in the Loan Agreement) whereby, subject to the terms
and conditions set forth therein, GE Capital agreed to make certain financial
accommodations to Borrower.
B. Borrower has advised GE Capital that it intends to enter with
the Trustee into an Amended and Restated Indenture, pursuant to which Borrower
and the Trustee will amend the Securities Indenture to provide for the issuance
of additional Senior Secured Floating Rate Notes due October 30, 1997 in the
maximum aggregate principal amount of $10,000,000 (the "Additional Securities"),
the proceeds of which will be used for Borrower's working capital and general
corporate purposes, and will restate the Securities Indenture, as so amended,
in its entirety.
C. In connection with the issuance of the Additional Securities,
Borrower and the Trustee intend to enter into certain amendments of, and
amendments and restatements of, the Securities Security Documents.
D. At Borrower's request, pursuant to a Consent Letter dated as of
March ____, 1994 (the "Consent Letter"), GE Capital has consented to Borrower's
issuance of the Additional Securities and to the other matters described in the
preceding recitals, subject to the satisfaction of all conditions precedent set
forth in the Consent Letter.
E. In connection therewith, and in accordance with the provisions
of the Consent Letter, Borrower and GE Capital, as a Lender and as Agent, desire
to amend the Loan Agreement in the manner hereinafter set forth.
In consideration of the premises and the mutual covenants and
agreements herein contained, the parties hereto covenant and agree as follows:
<PAGE>
1. Amendments to Section 1.1 of the Loan Agreement.
-----------------------------------------------
(a) Section 1.1 of the Loan Agreement is hereby amended by adding
therein, in appropriate alphabetical order, the following defined terms:
"Additional Securities" means Borrower's Senior Secured Floating
---------------------
Rate Notes due October 30, 1997, in the aggregate original principal
amount of Ten Million Dollars ($10,000,000), issued pursuant to the
Restated Indenture, as such notes may be amended, modified, supple-
mented, extended, renewed, refinanced, refunded or replaced (and any
renewals, refundings and replacements of any thereof).
"Notes" means, collectively, the Securities and the Additional
-----
Securities.
"Restated Indenture" means the Amended and Restated Indenture,
------------------
dated as of March ____, 1994, executed between Borrower and the
Trustee in amendment and restatement of the Securities Indenture, as
such Amended and Restated Indenture may be amended, modified,
supplemented, extended, renewed, refunded or refinanced (and any
renewals, refundings and replacements of any thereof).
(b) Section 1.1 of the Loan Agreement is hereby further amended in
the following respects:
(i) The definition of "Asset Sale Provision" therein is hereby
deleted in its entirety and the following revised definition of "Asset Sale
Provision" substituted in lieu thereof:
"Asset Sale Provision" means Section 4.13 of the Restated
--------------------
Indenture (as in effect on March ____, 1994) or any successor
provision which is the same in substance as such Section 4.13.
(ii) The definition of "Intercreditor Agreement" therein is
hereby deleted in its entirety and the following revised definition of
Intercreditor Agreement substituted in lieu thereof:
"Intercreditor Agreement" means the Amended and Restated
-----------------------
Intercreditor Agreement, dated as of March ____, 1994, between the
Agent and the Trustee, amending and restated the Intercreditor
Agreement, dated as of April 5, 1993, between
-2-
<PAGE>
the Agent and the Trustee, as such Amended and Restated Intercreditor
Agreement may be amended, modified or supplemented hereafter.
(iii) The definition of "Lender's Primary Collateral" is hereby
amended by deleting the date "April 5, 1993" therein and substituting in
lieu thereof the date "March ____, 1994."
(iv) The definition of "Securities" is hereby amended by
inserting therein immediately after the words "Securities Indenture" the
parenthetical "(as amended and restated pursuant to the Restated
Indenture)".
(v) The definition of "Securityholders' Primary Collateral" is
hereby deleted in its entirety and the following revised definition of
"Noteholders' Primary Collateral" substituted in lieu thereof:
"Noteholders' Primary Collateral" has the meaning assigned to it
-------------------------------
in the Intercreditor Agreement, as in effect on March ____, 1994.
(vi) The definition of "Securities Security Documents" is
hereby deleted in its entirety and the following revised definition of
"Notes Security Documents" substituted in lieu thereof:
"Notes Security Documents" means the "Security Documents," as
------------------------
that term is defined in the Restated Indenture, exclusive, however, of
the Intercreditor Agreement.
(vii) The definition of "Trustee" is hereby amended by changing
the references to "Securities Indenture" therein to references to "Restated
Indenture".
2. Use of Certain Defined Terms. The terms "Securityholders'
----------------------------
Primary Collateral" and "Securities Security Documents," wherever such terms
appear in the Loan Agreement, shall be deemed to read "Noteholders' Primary
Collateral" and "Notes Security Documents," respectively.
3. Amendment to Section 4.7 of the Loan Agreement. The
----------------------------------------------
representation set forth at Section 4.7 of the Loan Agreement is hereby amended
to reflect that from and after the effective date of this Amendment, Borrower
will have Indebtedness under both the Securities and the Additional Securities
as permitted under Section 6.8 of the Loan Agreement.
-3-
<PAGE>
4. Amendments to Section 6.1 of the Loan Agreement.
-----------------------------------------------
(a) Section 6.1 of the Loan Agreement is hereby amended by
deleting clause (a)(v) thereof in its entirety and substituting in lieu thereof
the following revised clause (a)(v):
(v) for so long as any of the Notes remains outstanding, sales of
Noteholders' Primary Collateral permitted pursuant to the Asset Sale
Provision (to the extent not otherwise permitted by the preceding
clauses (ii) through (iv)).
(b) Section 6.1 of the Loan Agreement is hereby further amended by
deleting clause (b) thereof in its entirety and substituting in lieu thereof the
following revised clause (b):
(b) In the event of any sale or other disposition by Borrower of its
Property pursuant to the preceding clause (a) or otherwise with the
Majority Lenders' prior written consent, Borrower will cause the
proceeds of such sale (net of reasonable expenses of sale in the case
of sales of Property other than Inventory) to be deposited in the
Collection Account, except that for so long as any of the Notes
remains outstanding, proceeds of dispositions of Borrower's Property
constituting Noteholders' Primary Collateral may be held by the
Trustee in the "Proceeds Account" (as defined in the Asset Sale
Provision) or used by Borrower in the manner permitted or required by
the Asset Sale Provision; provided that (i) to the extent that the
-------------
proceeds of any sale or other disposition, or series of sales or dis-
positions, of Noteholders' Primary Collateral equal or exceed
$5,000,000, on the first date after the occurrence of such sale or
other disposition when Borrower may do so pursuant to Section 5 of
each of the Notes (as in effect on March __, 1994), or any successor
provision which is the same in substance as such Section 5, Borrower
will use such proceeds to redeem Notes in accordance with the
provisions of Section 5 of each of the Notes and Section 3.08 of the
Indenture (as in effect on March __, 1994), or any successor provision
which is the same in substance as such Section 3.08 and (ii) to the
extent that pursuant to the Asset Sale Provision and Section 3.09 of
the Indenture (as in effect on March __, 1994), or any successor
provision which is the same in substance as such Section 3.09,
Borrower is required to make an offer to redeem Notes in the amount of
any proceeds of sale in the Proceeds Account and
-4-
<PAGE>
such offer is not accepted by all holders of Notes to whom made, on
the first date thereafter when Borrower may do so pursuant to Section
5 of each of the Notes (as in effect on March __, 1994), or any
successor provision which is the same in substance as such Section 5,
Borrower will use any remaining such proceeds to redeem Notes in
accordance with the provisions of such Section 5 of each of the Notes
and Section 3.08 of the Restated Indenture (as in effect on March __,
1994), or any successor provision which is the same in substance as
such Section 3.08. To the extent that any net proceeds of sales of
Noteholders' Primary Collateral are used by Borrower as provided in
subclause (e)(i) of the Asset Sale Provision, any "Replacement Col-
lateral" (as that term is defined in the Asset Sale Provision) shall
be subject to a Lien in favor of the Agent having at least as
favorable a priority as the Agent's Lien in the Noteholders' Primary
Collateral that was sold as permitted by the Asset Sale Provision.
(c) Section 6.1 of the Loan Agreement is hereby further amended by
deleting clause (c) thereof in its entirety and substituting in lieu thereof the
following revised clause (c):
(c) The Agent shall have the right either (i) to direct Borrower to
deposit all proceeds of business interruption insurance into the Col-
lection Account or (ii) to direct Borrower to use a portion of the
proceeds of business interruption insurance to redeem Notes as
hereinafter provided and to pay the balance into the Collection
Account, and, in either case, Borrower will perform in accordance with
such instructions. In the event that the Agent directs Borrower in
the manner provided in clause (ii) of the preceding sentence,
proceeds of business interruption insurance shall be allocated
between amounts to be paid into the Collection Account and amounts to
be used to redeem Notes, on a pro rata basis, based on the maximum
amount of the Line of Credit hereunder ($85,000,000 on the date of
this Agreement) and the then outstanding principal balance of the
"Notes Obligations" (as that term is defined in the Intercreditor
Agreement), subject to the limitations set forth in Section 4.2 of
the Intercreditor Agreement; provided that if after giving effect to
any payment of such proceeds into the Collection Account, the
outstanding balance of Advances is reduced to zero, any remaining
proceeds may also be used
-5-
<PAGE>
to redeem Notes. Any redemption of Notes required by this Section
6.1 shall be effected by Borrower in accordance with the provisions of
Section 5 of each of the Notes and Section 3.08 of the Restated
Indenture (as in effect on March __, 1994), or any successor
provisions which are the same in substance as such Sections 5 and
3.08, on the first day after receipt of such proceeds when such
redemption may be effected pursuant to the provisions of such Section
5.
5. Amendment to Section 6.3 of the Loan Agreement.
----------------------------------------------
(a) Section 6.3 of the Loan Agreement is hereby amended by deleting
clause (c) thereof in its entirety and substituting in lieu thereof the
following revised clause (c):
and (c) regularly scheduled principal and interest payments,
mandatory redemptions, repayments, repurchases, prepayments and
sinking fund payments and optional redemptions to the extent required
by Section 6.1 hereof made by Borrower pursuant to the provisions of
the Notes and the Restated Indenture, as in effect on March __, 1994,
and any successor provisions which are the same in substance as such
provisions.
(b) Section 6.3 of the Loan Agreement is hereby further amended by
deleting the last sentence thereof in its entirety and substituting in lieu
thereof the following sentence:
Without limitation of the foregoing, Borrower hereby acknowledges and
agrees that optional redemptions (except redemptions from the pro-
ceeds of sales of Noteholders' Primary Collateral and proceeds of
business interruption insurance as required by Section 6.1 hereof),
repayments, prepayments or sinking fund payments with respect to the
Notes are Restricted Payments the making of which is prohibited
hereunder; provided that the foregoing shall not prohibit a
refunding, refinancing or replacement in whole or in part of the
Restated Indenture by a subsequent indenture or indentures complying
with all applicable provisions of this Agreement and the Intercreditor
Agreement.
6. Amendment to Section 6.7 of the Loan Agreement. Section 6.7 of
----------------------------------------------
the Loan Agreement is hereby amended by deleting clause (l) thereof in its
entirety and substituting in lieu thereof the following revised clause (l):
-6-
<PAGE>
(1) subject to the terms of the Intercreditor Agreement, Liens
granted to the Trustee as security for Borrower's obligations under
the Notes, the Notes Security Documents, and the Restated Indenture;
7. Amendment to Section 6.8 of the Loan Agreement. Section 6.8 of
----------------------------------------------
the Loan Agreement is hereby amended by deleting subclause (b)(ix) thereof in
its entirety and substituting in lieu thereof the following revised subclause
(b)(ix):
(ix) Indebtedness under the Securities and the Additional Securities,
in aggregate principal amounts not in excess of Twenty Million Dollars
($20,000,000) and Ten Million Dollars ($10,000,000), respectively, as
each such principal amount is reduced from time to time by any
optional or mandatory redemption, repayment, prepayment or sinking
fund payment made pursuant to the terms of the Restated Indenture
other than a reduction effected by a refunding, refinancing or
replacement in whole or in part of the obligations under the Restated
Indenture by obligations under any subsequent indenture or indentures
complying with all applicable provisions of this Agreement and the
Intercreditor Agreement (as in effect on the date hereof);
8. Amendment to Section 6.29 of the Loan Agreement. The Loan
-----------------------------------------------
Agreement is hereby further amended by deleting Section 6.29 thereof in its
entirety and substituting in lieu thereof the following revised Section 6.29:
6.29 Restated Indenture. Borrower shall not amend the Restated
------------------
Indenture or the Notes or consent to any amendment to the Restated
Indenture or the Notes that would provide for mandatory redemptions
in any event of the Additional Securities or mandatory redemptions of
the Securities in amounts greater than, or at intervals more frequent
than, those provided for in Section 6 of the form of Securities
attached as Exhibit A to the Restated Indenture, as in effect on the
date hereof, or acquiesce in any thereof, or effect any refunding,
refinancing or replacement which would have such effect, except, in
each case, as provided in the Asset Sale Provision and in Section 3.09
of the Restated Indenture, as in effect on the date hereof or any
successor provision which is the same in substance as such Section
3.09.
-7-
<PAGE>
9. Amendment to Section 9.1 of the Loan Agreement. Section 9.1 of
----------------------------------------------
the Loan Agreement is hereby amended by deleting clause (e) thereof in its
entirety and substituting in lieu thereof the following revised clause (e):
(e) Default as to Other Indebtedness. Borrower shall fail to
--------------------------------
make any payment when due (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise) with respect to any
Subordinated Indebtedness, the Notes or any other Indebtedness (other
than an Obligation) if the aggregate amount of such other Indebtedness
is Two Million Five Hundred Thousand Dollars ($2,500,000) or more; or
any breach, default or event of default shall occur, or any other
condition shall exist under any instrument, agreement or indenture
pertaining to any such Indebtedness (including, without limitation, a
"Change of Control", as defined in Section 4.18 of the Senior
Subordinated Note Indenture or a "Change of Control", as defined in
Section 4.18 of the Restated Indenture but exclusive of an "Asset
Sale", as that term is defined in the Restated Indenture, as in effect
on the date hereof), if the effect thereof (with or without the giving
of notice or lapse of time or both) is to cause an acceleration,
mandatory redemption or other required repurchase of such Indebtedness
(other than a regularly scheduled required prepayment or redemption),
or permit the holder or holders of such Indebtedness to accelerate the
maturity of any such Indebtedness or require a redemption or other
repurchase of such Indebtedness (other than a regularly scheduled
required prepayment or redemption); or any such Indebtedness shall be
otherwise declared to be due and payable (by acceleration or
otherwise) or required to be prepaid, redeemed or otherwise
repurchased by Borrower (other than by a regularly scheduled required
prepayment or redemption or a redemption required by the Asset Sale
Provision or Section 6.1 hereof) prior to the stated maturity thereof;
or the holder or holders of any Lien, in any amount, shall commence
foreclosure of such Lien upon property of Borrower having an aggregate
value in excess of Two Million Five Hundred Thousand Dollars
($2,500,000);
10. Amendment to Section 11.21 of the Loan Agreement. Section
------------------------------------------------
11.24 of the Loan Agreement is hereby amended by deleting such section in its
entirety and substituting in lieu thereof the following revised Section 11.24:
-8-
<PAGE>
11.24 Intercreditor Agreement.
-----------------------
(a) As between the Agent and the Trustee each of this Agreement
and the other Loan Documents is expressly made subject to the terms
of the Intercreditor Agreement. Additionally, as between themselves
and Borrower, the Agent and Lenders hereby agree that notwithstanding
anything contained herein or in any of the other Loan Documents to
the contrary (a) to the extent that pursuant to the terms of this
Agreement or any of the other Loan Documents and the Indenture or any
of the Notes Security Documents, Borrower is required to deliver over
the same property to the Agent or Lenders and to the Trustee or the
"Noteholders" (as that term is defined in the Restated Indenture), to
make a payment of the same funds to the Agent or Lenders and to the
Trustee or the Noteholders, to give any direction or authorization for
the benefit of the Agent or Lenders and the Trustee or Noteholders
which cannot be complied with in favor of both the Agent or Lenders
and the Trustee or Noteholders or to take any other action in favor
of both the Agent or Lenders and the Trustee or the Noteholders which
cannot be taken in favor of both the Agent or Lenders and the Trustee
or Noteholders, then Borrower shall make such delivery or payment,
give such direction or authorization or take such action in favor of
the Agent or Lenders if such payment, delivery, direction,
authorization or action relates to the Lenders' Primary Collateral and
in favor of the Trustee or Noteholders if such payment, delivery,
direction, authorization or action relates to the Noteholders' Primary
Collateral. In addition, Borrower, the Agent and Lenders hereby
agree that any representation in any of the Loan Documents that cannot
be true as to both the Trustee and/or the Noteholders and the Agent
and/or the Lenders in connection with the Noteholders' Primary
Collateral and the Lenders' Primary Collateral, respectively, or their
respective interests therein, shall be deemed to be true if it is true
with respect to (i) in the case of representations to the Agent and/or
Lenders, the Lender's Primary Collateral, and (ii) in the case of
representations to the Trustee and/or the Noteholders, the
Noteholders' Primary Collateral. The provisions of this Section
11.24(a) shall terminate on such date as the Intercreditor Agreement
terminates.
-9-
<PAGE>
(b) Each of the Lenders hereby acknowledges that it has
received an executed copy of the Intercreditor Agreement, has reviewed
the Intercreditor Agreement with counsel of its choice and understands
fully all terms and conditions of the Intercreditor Agreement. Each
of the Lenders hereby ratifies the execution and delivery by the Agent
of the Intercreditor Agreement on behalf of Lenders and agrees to be
bound thereby as to each and every provision thereof applicable to
such Lender, as fully as if such Lender were a party to the
Intercreditor Agreement. Without limiting the generality of the
foregoing, each Lender specifically agrees to be bound by Sections
3.5, 3.11(b) and 4.1(b) of the Intercreditor Agreement. Each Lender
further represents and warrants to the Agent that the Agent has all
requisite authority to bind such Lender by the Agent's execution and
delivery of the Intercreditor Agreement, and that no further consent
or approval on the part of such Lender is or will be required in
connection with the execution, delivery and performance of the
Intercreditor Agreement by the Agent.
11. Effectiveness of Amendment. This Amendment shall not become
--------------------------
effective unless and until all other conditions precedent to GE Capital's
consent under the Consent Letter, as set forth therein, have been satisfied.
12. Other Agreements.
----------------
(a) Except as set forth expressly herein and above, all terms of
the Loan Agreement and the other Loan Documents shall be and remain in full
force and effect and shall constitute the legal, valid, binding and enforceable
obligations of Borrower to the Agent and Lenders, subject to Debtor Relief Laws.
To the extent any terms and conditions in any of the other Loan Documents shall
contradict or be in conflict with any terms or conditions of the Loan Agreement,
after giving effect to this Amendment, such terms and conditions are hereby
deemed modified and amended accordingly to reflect the terms and conditions of
the Loan Agreement as modified and amended hereby.
(b) Borrower hereby affirms that each of the representations and
warranties of Borrower contained in the Loan Agreement or in any of the Loan
Documents is correct in all material respects on and as of the date hereof and
after giving effect to this Amendment. In addition, with respect to this
Amendment, Borrower warrants and represents as follows: The execution, delivery
and performance by Borrower of this Amendment and the execution, delivery and
performance by Borrower of the Restated Indenture and
-10-
<PAGE>
the other documents, instruments and agreements contemplated thereby, and the
issuance by Borrower of the Additional Securities (i) are within Borrower's
corporate power; (ii) have been duly authorized by all necessary or proper
corporate action; (iii) are not in contravention of any provision of Borrower's
certificate or articles of incorporation or bylaws; (iv) will not violate any
law or regulation, or any order or decree of any court or governmental
instrumentality; (v) will not conflict with or result in the breach or
termination of, constitute a default under or accelerate any performance
required by, any indenture, mortgage, deed of trust, lease, agreement or other
instrument to which Borrower is a party or by which Borrower or any of its
property is bound (after giving effect to the consents of the holders of the
Securities which have been obtained in connection with the issuance of the
Additional Securities); (vi) will not result in the creation or imposition of
any Lien upon any of the property of Borrower other than those in favor of the
Agent and the Trustee, all pursuant to the Loan Documents and the Notes Security
Documents; and (vii) do not require the consent, authorization or approval of,
or any declaration, notification, filing or registration with, any governmental
body, agency, authority or any other Person (including, without limitation, the
holders of the Securities, the holders of the Senior Subordinated Notes and
CIT), which have not been fully obtained, made or complied with. This
Amendment has been duly executed and delivered for the benefit of or on behalf
of Borrower and constitutes a legal, valid and binding obligation of Borrower,
enforceable against Borrower in accordance with its terms subject to Debtor
Relief Laws.
(c) Borrower hereby restates, ratifies and reaffirms each and every
term and condition set forth in the Loan Agreement and the other Loan Documents,
effective as of the date hereof, and represents that, no Default or Event of
Default has occurred and is continuing as of the date hereof.
(d) Borrower agrees to pay on demand all reasonable costs and out-
of-pocket expenses of GE Capital in connection with the preparation, execution,
delivery and enforcement of this Amendment, the closing hereof, and any other
transactions contemplated hereby, including the fees and out-of-pocket expenses
of King & Spalding, counsel to GE Capital.
(e) To induce the Agent and Lenders to enter into this Amendment,
Borrower hereby acknowledges and agrees that, as of the date hereof, there
exists no right of offset, defense or counterclaim in favor of Borrower as
against the Agent or Lenders with respect to the Obligations.
(f) This Amendment shall be governed by, and construed in
accordance with the laws of the State of New York applicable to contracts made
and performed in such State and all applicable laws of the United States of
America.
-11-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed under seal by their respective officers thereunto duly authorized,
as of the date first above written.
FORSTMANN & COMPANY, INC.
By:______________________________
Rod J. Peckham, Vice President
and Treasurer
GENERAL ELECTRIC CAPITAL CORPORATION, as Agent
and initial Lender
By:______________________________
Steven C. Bierman,
Vice President, GE Capital
Commercial Finance, Inc., being
duly authorized
-12-
<PAGE>
Exhibit 11.1
Forstmann & Company, Inc.
Computation of Per Share Earnings
<TABLE>
<CAPTION>
Thirteen Twenty-Six
Weeks Ended Weeks Ended
May 1,1994 May 1,1994
----------- -----------
<S> <C> <C>
Income applicable to common shareholders $5,229,000 $4,033,000
========== ==========
Average common shares and common
share equivalents outstanding:
Average common shares outstanding 5,586,795 5,588,035
Add average common share equivalents
- options to purchase common
shares, net 63,321 66,257
---------- ----------
Average common shares and common share
equivalents outstanding 5,650,116 5,654,292
========== ==========
Income per common share and common
share equivalent .93 .71
========== ==========
</TABLE>
NOTE: The information provided in this exhibit is presented in accordance with
Regulation S-K, Item 601(b)(11), while income per common share on the
Company's condensed statements of operations and retained earnings
(deficit) is presented in accordance with Accounting Principles Board
(APB) Opinion No. 15. This information is not required by Footnote 2 to
paragraph 14 of APB Opinion No. 15 as dilution is less than 3%.
<PAGE>
Exhibit 15.1
INDEPENDENT ACCOUNTANT'S REPORT
Forstmann & Company, Inc.:
We have made a review of the accompanying condensed balance sheet of Forstmann &
Company, Inc. as of May 1, 1994 and the related condensed statements of
operations and cash flows for the thirteen weeks and the twenty-six weeks ended
May 1, 1994 and May 2, 1993, respectively, and the condensed statement of
shareholders' equity for the twenty-six weeks ended May 1, 1994 in accordance
with standards established by the American Institute of Certified Public
Accountants. These financial statements are the responsibility of the Company's
management.
A review of interim financial information consists principally of applying
analytical procedures to financial data, and making inquires of persons
responsible for financial and accounting matters. It is substantially less in
scope than an audit conducted in accordance with generally accepted auditing
standards, the objective of which is the expression of an opinion regarding the
financial statements taken as a whole. Accordingly, we do not express such an
opinion.
Based on our review, we are not aware of any material modifications that should
be made to such condensed financial statements for them to be in conformity with
generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the balance sheet of Forstmann & Company, Inc. as of October 31, 1993
and the related statements of operations, shareholders' equity, and cash flows
for the fifty-two weeks then ended (not presented herein); and in our report
dated December 9, 1993, we expressed an unqualified opinion on those financial
statements. In our opinion, the information set forth in the accompanying
condensed balance sheet as of October 31, 1993 is fairly stated in all material
respects in relation to the balance sheet from which it has been derived.
/s/ Deloitte & Touche
- - ---------------------
Atlanta, Georgia
May 25, 1994
<PAGE>
Exhibit 23.1
June 14, 1994
Forstmann & Company, Inc.
1185 Avenue of the Americas
New York, NY 10036
Dear Sirs:
We have made a review, in accordance with standards established by the American
Institute of Certified Public Accountants, of the unaudited interim financial
information of Forstmann & Company, Inc. for the periods ended May 1, 1994 and
May 2, 1993, as indicated in our report dated May 25, 1994; because we did not
perform an audit, we expressed no opinion on that information.
We are aware that our report referred to above, which was included in your
Quarterly Report on Form 10-Q for the quarter ended May 1, 1994, is incorporated
by reference in Registration Statement No. 33-55770 on Form S-8.
We also are aware that the aforementioned report, pursuant to Rule 436(c) under
the Securities Act, is not considered a part of the Registration Statement
prepared or certified by an accountant or a report prepared or certified by an
accountant within the meaning of Sections 7 and 11 of that Act.
Yours truly,
/s/Deloitte & Touche
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<PAGE>
Exhibit 99
Contact: AT FORSTMANN:
William B. Towne
Executive Vice President
and Chief Financial Officer
(212) 642-6865
AT THE FINANCIAL RELATIONS BOARD:
Karen Griffiths
(212) 661-8030
FOR IMMEDIATE RELEASE
June 1, 1994
FORSTMANN ANNOUNCES RECORD SECOND QUARTER OPERATING AND NET INCOME
------------------------------------------------------------------
EARNINGS PER SHARE RISE 50%
---------------------------
New York, New York -- June 1, 1994 -- Citing shifts in its product mix
attributable to changing fashion trends, continued gains in manufacturing
efficiency and cost improvements, Forstmann & Company, Inc. (NASDAQ: FSTM)
today announced record operating results for the second quarter and six months
ended May 1, 1994.
Net sales for the second quarter were $76.5 million, an increase of 7% over
sales of $71.6 million in the comparable period in 1993. Earnings applicable to
common shareholders were a record $5.2 million compared to $3.5 million in the
second quarter of fiscal 1993. Earnings per share applicable to common
shareholders were $0.94 in the second quarter of fiscal 1994, an increase of
approximately 50% over $0.63 in the second quarter of fiscal 1993. As a result
of the quasi reorganization effected last year, income applicable to common
shareholders for the second quarter of fiscal 1993 included a one-time benefit
of $0.6 million, net of income taxes, or $0.10 per share.
For the six month period just ended, net sales were $114.0 million,
approximately equal to sales of $114.8 million in the first six months of the
prior year. Earnings applicable to common shareholders were $4.0 million
compared to $3.5 million in the first six months of 1993. Earnings per share
applicable to common shareholders were $0.72 in the first six months of 1994, an
increase of approximately 18% over $0.61 in the first six months of 1993. As a
result of the quasi reorganization effected last year, income applicable to
common shareholders for the first six months of fiscal 1993 included a one-time
benefit of $1.7 million, net of income taxes, or $0.31 per share. Excluding the
one-time benefit, earnings increased 145% in the first six months of fiscal 1994
versus the year ago period.
"Our performance is particularly encouraging given the general slowness in
apparel textiles in early 1994. We are pleased with our customers' reactions to
our new product programs which include Carpini (R) USA, converted fabrics and
career uniform fabrics. Our sales order backlog of $62.6 million as of the end
of May reflects continued shifts in our product mix and improvements in our
menswear business," said Christopher Schaller, President and Chief Executive
Officer. Mr. Schaller noted that last year's slightly higher backlog of $64.5
million included a product mix yielding lower gross profit margins.
-more-
<PAGE>
Forstmann is a leading designer, manufacturer and marketer of high quality,
fashion fabrics for use in the production of brand name and private label
apparel for men and women. The Company employs approximately 3,000 people and
has operating plants in Dublin, Milledgeville, Louisville and Tifton, Georgia,
where it makes a wide range of fabrics for apparel, contract upholstery and
panel systems and various specialty markets. The Company's corporate
headquarters and marketing offices are located in New York, New York.
-TABLES FOLLOW-
<PAGE>
Forstmann & Company
Page 3
FORSTMANN & COMPANY, INC.
SELECTED OPERATING RESULTS
(unaudited)
(amounts in thousands, except per share and share information)
<TABLE>
<CAPTION>
Thirteen Weeks Ended Twenty-Six Weeks Ended
May 1, May 2, May 1, May 2,
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $76,508 $71,649 $113,960 $114,773
Gross profit 18,566 17,097(1) 27,335 25,427(1)
Selling, general
& administrative expenses 5,367 5,329 10,945 9,784
Provision for uncollectible
accounts 200 1,015 1,419 1,159
Loss from disposal and
impairment of machinery
and equipment - 962 - 962
Operating income 12,999 9,791 14,971 13,522
Interest expense 4,261 4,042 8,115 7,792
Income tax provision -
principally deferred 3,452 2,203 2,708 2,206
Net Income 5,286 3,546 4,148 3,524
Income applicable to
common shareholders $5,229 $3,493 $4,033 $3,420
Per Share and share information:
Income per common share $0.94 $0.63 $0.72 $0.61
Weighted average common shares
outstanding 5,586,795 5,585,014 5,588,035 5,585,014
</TABLE>
(1) The thirteen and twenty-six weeks ended May 1, 1994 and May 2, 1993 include
the effects of the Company's quasi reorganization which was effected as of
the beginning of the Company's 1993 fiscal year. Gross profit for the
thirteen and twenty-six weeks ended May 2, 1993 include a one-time benefit
of $937,000 and $2,812,000 respectively, related to unfavorable wool
purchase commitments recorded in connection with the quasi reorganization
which were reversed into income in the respective periods.
<PAGE>
Forstmann & Company
Page 4
FORSTMANN & COMPANY, INC.
SELECTED BALANCE SHEET
(unaudited)
(amounts in thousands)
<TABLE>
<CAPTION>
May 1, October 31,
1994 1993(1)
------ -----------
<S> <C> <C>
Assets
Current assets $164,649 $130,972
Property, plant and equipment 77,952 76,521
Other assets 9,617 8,874
-------- --------
Total assets $252,218 $216,367
======== ========
Liabilities and Shareholders'
Equity
Current liabilities $ 30,106 $ 38,311
Long-term debt 173,554 136,038
Deferred tax liability 6,606 4,033
Accrued additional pension
liability in excess of
accumulated benefit
obligation 1,900 1,900
Senior preferred stock 2,310 2,195
Shareholders' equity 37,742 33,890
-------- --------
Total liabilities and
shareholders' equity $252,218 $216,367
======== ========
</TABLE>
(1) Certain prior year financial statement balances have been reclassified to
conform to the current year presentation.
